- RBI TO CARRY OUT US-STYLE ‘OPERATION TWIST’ TO BRING DOWN INTEREST RATES
- US INDIA DEFENCE COOPERATION
- GANDHI PRIZE
- DISSENT IN DEMOCRACY
RBI TO CARRY OUT US-STYLE ‘OPERATION TWIST’ TO BRING DOWN INTEREST RATES
Why in news?
Reserve Bank of India (RBI) announced a simultaneous sale and purchase of government bonds under the Open Market Operations mechanism, on lines of the “Operation Twist” that was last adopted by the US Federal Reserve in 2013.
What is it?
‘Operation Twist’ is when the central bank uses the proceeds from sale of short-term securities to buy long-term government debt papers, leading to easing of interest rates on the long term papers.
The name “Operation Twist” was given by the mainstream media due to the visual effect that the monetary policy action was expected to have on the shape of the yield curve.
If we visualize a linear upward sloping yield curve, this monetary action effectively “twists” the ends of the yield curve, hence, the name Operation Twist.
To put another way, the yield curve twists when short-term yields go up and long-term interest rates drop at the same time.
- The yield of a bond is the effective rate of return that it earns.
- But the rate of return is not fixed — it changes with the price of the bond.
Bond Yield curve:
- A yield curve is a graphical representation of yields for bonds (with an equal credit rating) over different time horizons.
- If bond investors expect the economy to grow normally, then they would expect to be rewarded more (that is, get more yield) when they lend for a longer period. This gives rise to a normal — upward sloping — yield curve.
- The steepness of this yield curve is determined by how fast an economy is expected to grow. When the economy is expected to grow only marginally, the yield curve is “flat”.
- Yield inversion happens when the yield on a longer tenure bond becomes less than the yield for a shorter tenure bond. A yield inversion typically portends a recession. An inverted yield curve shows that investors expect the future growth to fall sharply.
US INDIA DEFENCE COOPERATION
The Industrial Security Annex (ISA), signed between India and the U.S. at the second 2+2 dialogue in Washington, will open the door for U.S. defence companies to partner with the Indian private sector for several multibillion dollar deals in the pipeline, including the one for 114 fighter jets. The two sides also took stock of the steps being taken to operationalize the foundational agreement, the Communications Compatibility and Security Agreement (COMCASA).
ISA is a part of the General Security Of Military Information Agreement
(GSOMIA), which India signed with the U.S.
We hope that this [ISA] will enable smooth transfer of classified technology and information between private entities of the U.S. and India
After decade long negotiations, India signed the Logistics Exchange Memorandum of Understanding (LEMOA) and COMCASA last year.
What is COMCASA?
COMCASA stands for Communications Compatibility and Security Agreement and is one of the four foundational agreements that the U.S. signs with allies and close partners to facilitate interoperability between militaries and sale of high end technology.
COMCASA allows India to procure transfer specialised equipment for encrypted communications for US origin military platforms like the C-17, C-130 and P-8Is. Currently, these platforms use commercially available communication systems.
This will also enable greater communications interoperability between the militaries of India and the US. Data acquired through such systems cannot be disclosed or transferred to any person or entity without India’s consent.
India had signed the General Security Of Military Information Agreement (GSOMIA) in 2002 and the Logistics Exchange Memorandum of Agreement (LEMOA) in 2016. The last one remaining is the Basic Exchange and Cooperation Agreement for Geo-spatial Cooperation (BECA).
Why in news?
Portuguese Prime Minister Antonio Costa announced the setting up of a Gandhi Citizenship Education Prize while attending the second meeting of the National Committee for the Commemoration Mahatma Gandhi’s 150th Birth Anniversary
Every year, the prize would be inspired by Gandhi’s thoughts and first edition of the prize would be dedicated to animal welfare.
Where is Portugal?
India and Portugal have seen many ups and downs in their bilateral relations. It was started with India’s freedom in 1947 but there was a sudden decline in 1950 due to the issue of Goa, Daman, and Diu. Both the countries cut off their diplomatic relations in 1955 and it further declined as Portugal refused to recognize Indian sovereignty.
In 1974, India and Portugal started their diplomatic relations with a new government in Portugal. However, trade relations grew in 1991 as both countries agreed over overseas export of various products from India like carpets, gems, leathers, footwear, coffee, tea, and textiles.
Dissent in democracy
The duty of the state to preserve public order should never extend to the suppression of political views contrary to those of the government
The State-wide clamping of prohibitory orders under Section 144 of the Code of Criminal Procedure in Uttar Pradesh and Karnataka are stark examples of the misuse of regulatory power to suppress the lawful exercise of constitutional rights
The State-wide clamping of prohibitory orders under Section 144 of the Code of Criminal Procedure in Uttar Pradesh and Karnataka are stark examples of the misuse of regulatory power to suppress the lawful exercise of constitutional rights the action of the police in Bengaluru and Delhi in preventing protesters from gathering, and the denial of permission to hold any protests in several other places, was excessive.