21 September 2024

• Economy: US Federal Reserve cut interest rates by 50 basis points in September 2024, citing rising unemployment (4.2 per cent in August 2024). The move has direct implications for capital flows into emerging markets including India.
• International: India achieved FATF "regular follow-up" status in its MER, covering anti-money laundering and counter-terrorist financing gaps.
• Security: Myanmar border fencing (Rs 31,000 crore) and scrapping of the Free Movement Regime continued to dominate security analysis.
• Technology: Fast Track Immigration Trusted Traveller Programme (FTI-TTP) was operational at Delhi and Mumbai airports.

GS area: Economy (international finance, monetary policy)

The US Federal Reserve (Fed) cut its benchmark federal funds rate by 50 basis points in September 2024, reducing it by the largest single-meeting cut since the 2008 financial crisis.

Key facts:

• Reason: Rising unemployment (4.2 per cent in August 2024, up from historic lows of 3.4 per cent in 2023) and moderating inflation prompted the Fed to shift from a restrictive to an accommodative stance.
• Impact on India:
  • Foreign Portfolio Investors (FPIs) seeking higher returns may increase capital flows to India. India's benchmark repo rate (6.5 per cent as of September 2024) offers a higher differential over the Fed rate than it did before the cut.
  • Rupee may strengthen against the US dollar as dollar weakens globally.
  • RBI faces increased pressure to cut its own policy rates to prevent excessive rupee appreciation and maintain export competitiveness.
  • Gold prices typically rise when the dollar weakens and US rates fall.
• Carry trade: A strategy where investors borrow in low-interest-rate currencies (like the US dollar) and invest in higher-yield currencies (like the Indian rupee). A widening US-India rate differential makes the India carry trade more attractive.
• Emerging market context: US rate cuts historically drive capital to emerging markets. The 2013 "Taper Tantrum" (when the Fed merely hinted at rate increases) showed how vulnerable EM currencies and bonds are to US monetary policy signals.

Static linkage: Monetary policy transmission, RBI, capital flows, exchange rate.

GS area: Health, Geography (world)

Jordan became the first country in the world to receive WHO verification for leprosy elimination, having reported no locally transmitted cases for over two decades.

Key facts:

• Leprosy: A chronic infectious disease caused by the bacterium Mycobacterium leprae. Primarily affects the skin, peripheral nerves and mucous membranes. Contrary to historical stigma, it is one of the least contagious diseases.
• Treatment: Multidrug therapy (MDT) is highly effective. A six-month or one-year regimen cures the patient.
• India's leprosy burden: India declared leprosy elimination (less than 1 case per 10,000 population) at the national level in 2005. However, some districts still have endemic transmission. India still accounts for the majority of global new leprosy cases.
• Jordan geography: Located in West Asia. Borders Saudi Arabia (south), Iraq (northeast), Syria (north), Palestinian West Bank and Israel (west). Capital: Amman. Gulf of Aqaba provides a short coastline (Red Sea).
• Jordan's development: Constitutional monarchy. Arab League founding member (1945). Known for political stability relative to its region.

Static linkage: Public health, WHO disease elimination, leprosy, West Asian geography.

GS area: Governance (immigration), Technology

The FTI-TTP became operational at Delhi and Mumbai international airports in September 2024.

Key details:

• Purpose: Expedite immigration clearance for pre-registered, low-risk travellers.
• Eligible: High Net Worth Individuals, CEOs and senior businesspersons, Overseas Citizens of India (OCI).
• Speed: 60 per cent faster than regular immigration queues.
• Application: Online application followed by biometric enrollment at airports or Foreign Regional Registration Offices (FRROs).
• Validity: Five years.
• Technology: Uses biometric verification (fingerprint and iris) to confirm identity, reducing manual document checks.
• Policy goal: Improving India's ease of travel rankings and supporting business investment flows.

Static linkage: Immigration governance, digital government, ease of doing business.

GS area: Governance (disaster management), Security

NDMA (National Disaster Management Authority) and Southern Command of the Indian Army jointly organised a two-day national symposium called Exercise AIKYA on disaster preparedness.

Key facts:

• Focus: Disaster preparedness, response simulation and technology integration for cyclone and flood-prone southern states.
• Southern Command role: The Indian Army's Southern Command covers peninsular India including the states most vulnerable to cyclones (Andhra Pradesh, Tamil Nadu, Odisha in its broader context) and floods.
• Defence forces in HADR: The Indian Army, Navy and Air Force have dedicated doctrine for Humanitarian Assistance and Disaster Relief (HADR). The NDRF (National Disaster Response Force) operates under NDMA.
• NDMA: Established under the Disaster Management Act 2005. Chaired by the Prime Minister.

Static linkage: Disaster Management Act, NDMA, NDRF, civil-military cooperation.

GS area: Science and Technology

Bellatrix Aerospace (Bengaluru startup) unveiled Project 200 at the Bengaluru Space Expo 2024. The project proposes ultra-low Earth orbit (ULEO) satellites at 180-250 km altitude.

Key advantages:

• Communication latency: Reduced by 50 per cent compared to conventional LEO satellites (400-800 km).
• Image resolution: Three times better for Earth observation applications.
• Cost reduction: Smaller satellite, lower launch cost.
• Challenge: At 180-250 km, atmospheric drag is significantly higher. Satellites at this altitude need propulsion to maintain orbit. Without propulsion, they de-orbit naturally within weeks.
• Years-long lifespan: Bellatrix claims advanced ion propulsion enables operational lifespans despite higher drag.
• Bengaluru Space Expo: India's major space industry exhibition. ISRO's IN-SPACe (Indian National Space Promotion and Authorisation Centre) participates actively to promote private space sector.

Static linkage: Space sector, NewSpace India Limited, IN-SPACe, private space industry.

GS area: International Relations, Geography

Anura Kumara Dissanayake (AKD) won Sri Lanka's presidential election and assumed office.

Key facts:

• Background: Former student leader, Marxist-Leninist politician. Led the National People's Power (NPP) coalition.
• Context: Sri Lanka is recovering from its worst economic crisis in 2022 (foreign exchange reserves depleted, fuel and medicine shortages, default on debt).
• Sri Lanka geography: Island nation in the Indian Ocean, south of India, with 22 million population. Fought a 26-year civil war (1983-2009) between the government and LTTE.
• India's interest: Sri Lanka is India's closest maritime neighbour. India provided substantial emergency assistance in 2022 ($4 billion in credit lines). China has invested heavily in the Hambantota port (leased to China for 99 years in 2017).
• AKD's policy: Committed to honouring IMF debt restructuring agreements. More cautious about Chinese investment than his predecessor.

Static linkage: India's maritime neighbourhood, Sri Lanka, Indian Ocean geopolitics.

• Contempt petition (Jharkhand): Jharkhand government filed against the Centre for delay in appointing the Jharkhand High Court Chief Justice. The collegium system requires the government to act on recommendations within a reasonable time.
• EV Charging guidelines (Ministry of Power): New guidelines specify a minimum charging station density of one per km² in urban areas by 2030 and a station every 20 km on highways. Lower electricity tariffs apply during solar hours (9 AM-4 PM) to incentivise daytime charging.