THE HINDU EDITORIAL : SEPTEMBER 17, 2018
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THE HINDU EDITORIAL : SEPTEMBER 17, 2018
THE HINDU EDITORIAL – September 17, 2018 is one of the must read section for the competitive exams like IBPS RRB PO, IBPS RRB Office Assistant 2018, RBI Grade “B” 2018 & NIACL Assistant 2018. These topics are widely expected to be asked in the reading comprehension , Cloze Test or Error Detection topics in the forthcoming exams. So gear up your Exam preparation and learn new words daily.
A) Where goes the rupee?
There are several moderate but effective instruments available to the government to help the rupee find an equilibrium
The travails of the rupee have dominated newspaper headlines over the last fortnight. Its value has fallen precipitously against the dollar, and is now hovering around the 72 level; it was just under 64 at the beginning of the year. There is now intense debate in the media on whether the Reserve Bank of India (RBI) should step in and take steps to defend the dollar.
The U.S. honeypot
Finance Minister Arun Jaitley has rightly observed that external factors are the cause. In particular, global capital and perhaps currency speculators have been flocking to the American economy. This is not really surprising because the U.S. economy has become a very attractive option. Some months ago, U.S. President Donald Trump announced a massive decrease in corporate tax rates. More recently, the U.S. Federal Reserve has also increased interest rates. The icing on the global investors’ cake is the booming U.S. economy.
Not surprisingly, the dollar has appreciated sharply against practically all other currencies too. For instance, it has moved up against both the euro and the pound. Developing economies are typically even harder hit since global portfolio investors tend to withdraw from these markets, perhaps because their economic or political fundamentals are relatively more unstable. Countries such as Turkey and South Africa have experienced significantly higher rates of devaluation than India.
A long time ago, the ‘standard’ or textbook prescription for countries with severe balance of payments deficits was to devalue their currencies. The underlying rationale was that devaluation decreases the price of exports in foreign countries and so provides a boost to exports by making them more competitive. Correspondingly, imports become more expensive in the domestic economy, in turn reducing the volume of imports. Unfortunately, this seemingly plausible reasoning does not always work. For instance, if several countries are devaluing at the same time — as it seems to be happening now — then none of these countries benefit from their exports being cheaper abroad. In other words, there may not be any surge in Indian exports following the current round of devaluation. Neither will there be a huge fall in imports. Crude oil is by far the biggest item in the list of Indian imports, and this is price-inelastic. Imports from China now constitute a tenth of overall imports. Since the yuan has also depreciated against the dollar, there is not much reason to believe that Chinese imports will be costlier than earlier.
Ripple effects
Fortunately, the RBI has a huge stock of foreign exchange reserves and so the balance of payments situation is not (at least in the immediate future) the main cause of anxiety for the steady decline in the value of the rupee. What must concern policy-makers is that the slide in the rupee can have adverse effects on the domestic economy. For instance, the surge in the landed price of crude oil has already resulted in a steep rise in the prices of petroleum and diesel. Diesel price hikes increase the cost of transportation of goods being transported by road. Unfortunately, many food items fall in this category. Obviously, any increase in food prices must set alarm bells ringing in the Union Finance Ministry. The devaluation will also increase prices of imported inputs, particularly those for which there are no alternative domestic sources of supply. This can have some effect on output expansion. Many domestic companies that have taken dollar loans will also face significantly higher servicing costs.
Corrective options
What are appropriate policy responses in such a situation? Should the monetary and fiscal authorities sit tight, hope and pray that self-correcting mechanisms will gradually cause the rupee to appreciate against the dollar? Or should the RBI and the government come out with guns blazing? Certainly, neither the government nor the RBI can afford the option of inaction. The other extreme of knee-jerk, overkill options must also be avoided. Luckily, there are several moderate but effective instruments available to the government.
Consider, for instance, the problems caused by the spiralling prices of petroleum products. Both the Central and State governments earn huge revenues from excise duties and value-added tax (VAT) on petrol and diesel. In fact, excise duties were raised in the recent past by the Central government when crude oil prices were low, merely as a revenue-gathering device. Now that the rupee cost of crude has shot through the roof, the Centre should certainly lower duties. Rates of VAT should also be lowered by State governments. A small reduction in VAT may even be revenue neutral since VAT is levied as a percentage of price paid by dealer. Some State governments have done so. However, the Centre and most States are busy passing on the buck, because no one wants to part with tax revenue.
The RBI has several policy options. It could, of course, take the most direct route — of offloading large amounts of dollars. This would increase the supply of dollars and so check the appreciation of the dollar, but at the cost of decreased liquidity. Clearly, this weapon has to be used with caution. Of course, the RBI does intervene in the foreign exchange market from time to time to manage a soft landing for the rupee, and this has to continue.
The Central bank now has an explicit inflation target of 4%, a level that is almost certain to be breached if the rupee remains at its current level. This is very likely to induce the Monetary Policy Committee (MPC) of the RBI to raise interest rates again in order to dampen inflationary tendencies. But, the MPC must moderate any rate increase. Any sharp increase has an obvious downside risk to it — any increase in interest rates can have an adverse effect on growth. This can actually backfire if profitability of companies goes down. Any ‘big’ negative change in profitability may make foreign portfolio investors pull out of Indian stocks and actually exacerbate the rupee’s woes.
The NRI route again
Perhaps the best option for the government would be to borrow from non-resident Indians (NRIs) by floating special NRI bonds that have to be purchased with foreign exchange, and with maturity periods of at least three years. Interest rates have to be attractive, and investors must of course be protected from exchange rate fluctuations. Since interest rates in countries like the U.K. and even the U.S. are quite low, the promised interest rate does not really have to be very high by prevailing Indian levels.
This has been tried before, the last time being in 2013 when too the rupee was under stress. It worked then and there is no reason why it should not work again.
Hopefully, the storm will pass over and the rupee will soon find an equilibrium. In the near future, the rupee is unlikely to return to anything below 70 to the dollar. This should not be cause for much concern because the economy will adjust to the lower value of the rupee. What must be avoided is any sharp fluctuation in the exchange rate — in either direction. Much will depend on whether the economy can continue to grow at a reasonably high rate, for this will steady the nerves of portfolio investors and prevent them from pulling out of the Indian stock market.
B) Lethal filth
The law should be enforced vigorously to eliminate manual scavenging in its entirety
The death of five young men who were employed to clean a septic tank in an upmarket residential community in New Delhi is a shocking reminder that India’s high-profile sanitation campaign has done little to alter some basic ground realities. Around the same time as the Delhi incident, five workers died in a septic tank in Odisha. The law is not being enforced, and there is no fear of penalties. The workers in Delhi were apparently asked to perform the task in violation of Section 7 of the Prohibition of Employment as Manual Scavengers and their Rehabilitation Act, 2013; a violation can be punished with two years of imprisonment or fine or both. Under the provision, no person, local authority or agency should engage or employ people for hazardous cleaning of sewers and septic tanks. Mechanised cleaning of septic tanks is the prescribed norm. But in spite of a well-funded programme such as the Swachh Bharat Abhiyan in operation, little attention is devoted to this aspect of sanitation. The requirements of worker safety and provision of safety gear for rare instances when human intervention is unavoidable are often ignored. Mere assertions by the Centre that it is pressing State governments to prosecute violators, therefore, ring hollow. More and more incidents are being reported of workers dying in septic tanks. In the absence of political will and social pressure, more lives could be lost because more tanks are being built in rural and urban areas as part of the drive to construct toilets.
If the law on manual scavenging is to be effective, the penalties must be uniformly and visibly enforced. It is equally important for State governments to address the lack of adequate machinery to clean septic tanks. The Ministry of Drinking Water and Sanitation in its manual of 2016 on toilet design acknowledges that in rural areas, mechanical pumps to clear septic tanks are not available. In the southern States, sanitation has expanded along with urbanisation, but it has brought with it a higher number of deaths as workers clean septic tanks manually. For instance, Tamil Nadu recorded 144 fatalities of workers engaged for septic tank cleaning in the past three years, according to official data. On the other hand, toilet designs proposed by the government include those in which fully composted waste must be removed from pits every two years. The Centre must ensure that this does not become a fresh avenue to oppress members of some communities who are expected to perform such work, reflecting social inequalities. India’s sanitation problem is complex, and the absence of adequate toilets is only one lacuna. The Swachh Bharat Abhiyan should make expansion of the sewer network a top priority and come up with a scheme for scientific maintenance that will end manual cleaning of septic tanks. The law should be enforced vigorously to eliminate manual scavenging in its entirety.
VOCABULARY
1) travails
Meaning : engage in painful or laborious effort.
Tamil Meaning : துயரங்கள்
Synonyms : agony
Antonyms : comfort
Example : “creation may travail in pain but it cannot escape its destiny”
2) precipitously
Meaning : very steeply.
Tamil Meaning : திடீர்
Synonyms : abrupt
Antonyms : calm
Example : “off the coast, the depth of the sea floor drops precipitously”
3) hovering
Meaning : remain in one place in the air.
Tamil Meaning : மிதவை
Synonyms : flicker , flutter
Antonyms : rest
Example : “Army helicopters hovered overhead”
4) speculators
Meaning : a person who invests in stocks, property, or other ventures in the hope of making a profit.
Tamil Meaning : உளவு
Synonyms : explorer , gambler
Antonyms : assumer
Example : “financial speculators exploiting small changes in markets to make money”
5) flocking
Meaning : a number of birds of one kind feeding, resting, or travelling together.
Tamil Meaning : மந்தை
Synonyms : colony , throng
Antonyms : separate
Example : “a flock of gulls”
6) booming
Meaning : a loud, deep, resonant sound.
Synonyms : explosion
Antonyms : collapse
Example : “the deep boom of the bass drum”
7) portfolio
Meaning : a large, thin, flat case for loose sheets of paper such as drawings or maps.
Synonyms : case
Antonyms : disorder
Example : “under his arm he carried a large portfolio of drawings”
8) rationale
Meaning : a set of reasons or a logical basis for a course of action or belief.
Tamil Meaning : காரணம்
Synonyms : hypothesis , motivation
Antonyms : proof
Example : “he explained the rationale behind the change”
9) plausible
Meaning : (of an argument or statement) seeming reasonable or probable.
Tamil Meaning : நம்பத்தகுந்த
Synonyms : logical , credible
Antonyms : impossible
Example : “a plausible explanation”
10) fluctuation
Meaning : an irregular rising and falling in number or amount; a variation.
Tamil Meaning : ஏற்ற இறக்கமான
Synonyms : variation
Antonyms : stability
Example : “fluctuations in the yearly values could be caused by a variety of factors”
11) depreciated
Meaning : diminish in value over a period of time.
Tamil Meaning : தணி
Synonyms : depress , diminish
Antonyms : compliment
Example : “the latest cars will depreciate heavily in the first year”
12) anxiety
Meaning : a feeling of worry, nervousness, or unease about something with an uncertain outcome.
Tamil Meaning : பதட்டம்
Synonyms : disquiet , misery
Antonyms : belief
Example : “he felt a surge of anxiety”
13) surge
Meaning : a sudden powerful forward or upward movement, especially by a crowd or by a natural force such as the tide.
Tamil Meaning : எழுச்சி
Synonyms : flood , growth
Antonyms : decline
Example : “flooding caused by tidal surges”
14) steep
Meaning : (of a slope, flight of stairs, or angle) rising or falling sharply; almost perpendicular.
Tamil Meaning : செங்குத்தான
Synonyms : abrupt , sharp
Antonyms : gradual
Example : “she pushed the bike up the steep hill”
15) fiscal
Meaning : relating to government revenue, especially taxes.
Tamil Meaning : நிதி
Synonyms : budgetary
Antonyms : exempt
Example : “monetary and fiscal policy”
16) blazing
Meaning : (of an argument) very heated.
Tamil Meaning : ஒளிவீசும்
Synonyms : fiery , flaming
Antonyms : stoic
Example : “she had a blazing row with Eddie and stormed out”
17) afford
Meaning : have enough money to pay for.
Tamil Meaning : வாங்க
Synonyms : allow , bear
Antonyms : refuse
Example : “the best that I could afford was a first-floor room”
18) levied
Meaning : impose (a tax, fee, or fine).
Tamil Meaning : விதிக்கப்பட்டிருந்தது
Synonyms : collect , exact
Antonyms : give
Example : “a tax of two per cent was levied on all cargoes”
19) appreciation
Meaning : recognition and enjoyment of the good qualities of someone or something.
Tamil Meaning : பாராட்டு
Synonyms : gratitude , recognition
Antonyms : decrease
Example : “I smiled in appreciation”
20) intervene
Meaning : take part in something so as to prevent or alter a result or course of events.
Tamil Meaning : தலையீடு
Synonyms : arbitrate , involve
Antonyms : combine
Example : “he acted outside his authority when he intervened in the dispute”
21) breach
Meaning : an act of breaking or failing to observe a law, agreement, or code of conduct.
Tamil Meaning : மீறினால்
Synonyms : crack , rupture
Antonyms : agreement
Example : “a breach of confidence”
22) induce
Meaning : succeed in persuading or leading (someone) to do something.
Tamil Meaning : தூண்ட
Synonyms : activate , generate
Antonyms : destroy
Example : “the pickets induced many workers to stay away”
23) dampen
Meaning : make slightly wet.
Tamil Meaning : குறைக்கும்
Synonyms : bedew , dabble
Antonyms : collect
Example : “the fine rain dampened her face”
24) inflationary
Meaning : characterized by or tending to cause monetary inflation.
Tamil Meaning : பணவீக்க
Synonyms : expansion , hike
Antonyms : abridgment
Example : “the Prime Minister came close to accusing the Chancellor of starting the inflationary spiral”
25) adverse
Meaning : preventing success or development; harmful; unfavourable.
Tamil Meaning : பாதகமான
Synonyms : conflicting , unfortunate
Antonyms : assisting
Example : “taxes are having an adverse effect on production”
26) exacerbate
Meaning : make (a problem, bad situation, or negative feeling) worse.
Tamil Meaning : அதிகப்படுத்தும்
Synonyms : aggravate , intensify
Antonyms : alleviate
Example : “the exorbitant cost of land in urban areas only exacerbated the problem”
27) woes
Meaning : great sorrow or distress (often used hyperbolically).
Tamil Meaning : இன்னல்களை
Synonyms : anguish gloom
Antonyms : benefit
Example : “the Everton tale of woe continued”
28) prevail
Meaning : prove more powerful or superior.
Tamil Meaning : மேம்படு
Synonyms : prove , triumph
Antonyms : forfeit
Example : “it is hard for logic to prevail over emotion”
29) sanitation
Meaning : conditions relating to public health.
Tamil Meaning : துப்புரவு
Synonyms : hygiene
Antonyms : dirtiness
Example : “they could afford to erect new dwellings with a reasonable standard of construction and sanitation”
30) enforced
Meaning : caused by necessity or force; compulsory.
Tamil Meaning : வலுக்கட்டாயமான
Synonyms : prescribed , required
Antonyms : volitional
Example : “a period of enforced idleness”
31) apparently
Meaning : clearly visible or understood; obvious.
Tamil Meaning : வெளிப்படையான
Synonyms : supposed , probable
Antonyms : unlikely
Example : “for no apparent reason she laughed”
32) Scavengers
Meaning : an animal that feeds on carrion, dead plant material, or refuse.
Tamil Meaning : துப்புறவுத்
Synonyms : hunter , scrounger
Antonyms : contaminator
Example : “carcasses are usually quickly disposed of by scavengers”
33) sewers
Meaning : an underground conduit for carrying off drainage water and waste matter.
Synonyms : gutter cesspool
Antonyms : hilltop
Example : The length of sewers in the main system is about 288 m., and their construction has cost about eight millions.
34) devoted
Meaning : give all or most of one’s time or resources to (a person or activity).
Tamil Meaning : ஒதுக்க
Synonyms : apply , assign
Antonyms : keep
Example : “I wanted to devote more time to my family”
35) intervention
Meaning : the action or process of intervening.
Tamil Meaning : தலையீடு
Synonyms : mediation
Antonyms : incitation
Example : “a high degree of state intervention in the economy”
36) pits
Meaning : set someone or something in conflict or competition with.
Tamil Meaning : குழி
Synonyms : mine , shaft
Antonyms : bulge
Example : “you’ll get the chance to pit your wits against the world champions”
37) composted
Meaning : decayed organic material used as a fertilizer for growing plants.
Tamil Meaning : உரம்
Synonyms : fertilizer , humus
Example : “cover with a layer of fine compost”
38) lacuna
Meaning : an unfilled space; a gap.
Tamil Meaning : இடைவெளி
Synonyms : break , cavity
Antonyms : closure
Example : “the journal has filled a lacuna in Middle Eastern studies”
39) tendencies
Meaning : an inclination towards a particular characteristic or type of behaviour.
Tamil Meaning : போக்கு
Synonyms : bias , penchant
Antonyms : hate
Example : “for students, there is a tendency to socialize in the evenings”
40) fatalities
Meaning : helplessness in the face of fate.
Tamil Meaning : இறப்பு
Synonyms : accident casualty
Antonyms : birth
Example : “a sense of fatality gripped her”
THE HINDU EDITORIAL : SEPTEMBER 15, 2018
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