1. A) A first step

With the introduction of a new financial instrument, India is a step closer to building a vibrant market for commodities. Success in the long journey, however, will require avoiding some policy mistakes of the past. The Multi Commodity Exchange has introduced gold option contracts for the first time in India. The derivative instrument allows investors to enter into contracts to either buy or sell gold sometime in the future at a pre-determined price, thus allowing investors to hedge any volatility in the price of the metal, for a price. The fact that options usually also turn out to be cheaper than binding future agreements will help in the wider participation of investors in the realm of commodity speculation. As Finance Minister Arun Jaitley stated during the launch of the derivative at the MCX, gold options will also help bring into formal channels more of the gold that is traded. Notably, the introduction of gold options is in line with the government’s announcement last year that it would take steps towards introducing new varieties of commodity derivatives in the market. MCX, in fact, has said it might seek permission to write options contracts on other commodities which, based on their current futures trading volumes, satisfy rules set by SEBI. To improve market efficiency, the market regulator is also mulling the entry of mutual funds and portfolio management services into the business of investing in commodity derivatives. Naturally, some concerns have been expressed over financial speculation. The benefits of well-regulated commodity speculation, however, are likely to outweigh the potential systemic risk from asset bubbles. Options, like other financial derivatives, allow price risks to be transferred between market players in an efficient manner. The business of anticipating prices in the future is left to professional speculators while their clients benefit from the prospect of stable prices. In the process, financial derivatives can facilitate the conduct of real economic activity in higher risk segments — including in agriculture and industrial activity — that would not happen otherwise. Confusion over this has led to an unjustified hostility towards financial speculation, as well as some hasty policy measures. Almost a decade ago, a rapid increase in food prices pushed the government to impose a blanket ban on any speculation on agricultural products. While it may have been relevant for the specific circumstances, the wide-ranging nature of the move slowed the development of a healthy market for commodity speculation. The government should now resist similar temptation and focus instead on real-time monitoring systems. Apart from the standardised derivatives approved by SEBI for trading in exchanges, a framework that promotes over the-counter products will help improve the scope for risk mitigation. The debut of gold options should be seen as a step towards greater reforms.

  1. B) West Asia, post-IS

The capture of Raqqa, the Islamic State’s de facto capital in Syria, by U.S.-backed Kurdish and Arab troops this week is a crushing blow to the group. The IS, which once controlled territories as large as the U.K., is now concentrated in some pockets in Iraq and Syria. It lost Mosul, Iraq’s second largest city, to government troops earlier this year. With the loss of Raqqa to the Syria Democratic Forces (SDF), its self-proclaimed “Caliphate” is now practically over. The last major population centre the group has control over is eastern Syria’s Deir ez-Zor, which is also increasingly under attack by Russia-backed Syrian government troops. In both Iraq and Syria, though different actors battled the IS, the strategy to counter the group was almost similar. In Iraq, government troops were joined by Kurdish Peshmerga and Shia militias in ground battles while the U.S. provided air cover. In Syria, the SDF, with cover by U.S. aircraft cover, and Syrian government forces aided by the Russian Air Force opened multiple fronts against the IS. Under pressure from all sides, the group finally crumbled. Its high-tech propaganda, which telecast beheadings and mass shootings, is now absent. Its organisational network is a shambles. Its top leaders are either dead or on the run. But the war is not over yet. The IS was originally an insurgent group that transformed itself into a proto-state with a global appeal. That state is militarily destroyed, but IS, the movement, is far from over. As al-Qaeda in Iraq, the IS’s predecessor, retreated to the deserts and regrouped during 2008-2011, the IS could also retreat to the lawless parts of Iraq and Syria and wait for the right moment to strike back. With terror attacks in faraway locations such as Paris and Brussels and lone wolf attacks by individuals inspired by its world view, the IS has already proved it could continue its lethal campaign even while under military pressure. And the geopolitics of West Asia suggests that the troubled, chaotic countries from where the IS emerged are likely to continue being troubled in the near future. Till now a common enemy had brought them together. With the IS challenge fading, cracks are visible in the coalition. Iraqi government troops and the Kurdish Peshmerga which fought together against the IS in Mosul are now fighting each other in Kirkuk. Even in Syria, once the IS is defeated the regime could turn its focus on the Kurdish autonomous region. Turkey too has raised strong opposition to Washington arming the Kurds. Such voices will only grow in strength with the Kurds gaining increasing prominence in the battlefield. Now the question is whether the stakeholders have a larger vision for a post-IS West Asia in which the fundamental issues that helped the rise of groups like the IS can be addressed. Mere military victories do not usher in long-term changes.


1) Vibrant

Meaning: Full of energy and life.

Example: A vibrant cosmopolitan city.

Synonym: Spirited, Lively

Antonym: Idle, Weak

2) Derivative

Meaning: Originating from, based on, or influenced by.

Example: Darwin’s work is derivative of the moral philosophers.

Synonym: Imitative, Unoriginal

Antonym: Original, Unique

3) Hedge

Meaning: A way of protecting oneself against financial loss or other adverse circumstances.

Example: Index-linked gilts are a useful hedge against inflation.

Synonym: Safeguard, Protection

Antonym: Insecurity, Uncertainty

4) Volatility

Meaning: Liability to change rapidly and unpredictably, especially for the worse.

Example: The succession of new rulers contributed to the volatility of the situation.

5) Realm

Meaning: A field or domain of activity or interest/ A kingdom.

Example: An overall Labour majority is not beyond the realms of possibility.

Synonym: Domain, Sphere

6) Speculation

Meaning: Investment in stocks, property, etc. in the hope of gain but with the risk of loss.

Example: A company’s move into property speculation.

Synonym: Conjecture, Theorizing

7) Seek

Meaning: Ask for (something) from someone.

Example: He seeks help from the police.

Synonym: Request, Solicit

Antonym: Ignore

8) Regulator

Meaning: A person or body that supervises a particular industry or business activity.

Example: Regulators of privatized utilities.

9) Mulling

Meaning: Think about (something) deeply and at length.

Example: She began to mull over the various possibilities.

Synonym: Ponder, Consider

Antonym: Ignore, Disregard

10) Portfolio

Meaning: A range of investments hold by a person or organization.

Example: A portfolio of insured municipal securities.

Synonym: Investments, Shares

11) Outweigh

Meaning: Be heavier, greater, or more significant than.

Example: The advantages greatly outweigh the disadvantages.

Synonym: Exceed, Be superior to

Antonym: Fall behind, Lose

12) Systemic

Meaning: Relating to a system, especially as opposed to a particular part.

Example: The disease is localized rather than systemic.

Synonym: Constructional, Organizational

13) Anticipating

Meaning: Look forward to.

Example: Stephen was eagerly anticipating the break from the routine of business.

Synonym: Look forward to, Await

14) Prospect

Meaning: The possibility or likelihood of some future events occurring.

Example: There was no prospect of a reconciliation.

Synonym: Hope, Expectation

Antonym: Hopelessness, Impossibility

15) Conduct

Meaning: The manner in which an organization or activity is managed or directed.

Example: The conduct of the elections.

Synonym: Management, Managing

Antonym: Mismanagement, Disorganisation

16) Unjustified

Meaning: Not shown to be right or reasonable.

Example: Unjustified price increases.

Synonym: Irrational, Unreasonable

Antonym: Reasonable, Justified

17) Hostility

Meaning: Hostile behaviour; unfriendliness or opposition.

Example: Their hostility to all outsiders.

Synonym: Antagonism, Unfriendliness

Antonym: Kindness, Respect

18) Impose

Meaning: Require (a duty, charge, or penalty) to be undertaken or paid.

Example: A fine may be imposed.

Synonym: Levy, Charge

Antonym: Disorder, Displace

19) Temptation

Meaning: The desire to do something, especially something wrong or unwise.

Example: He resisted the temptation to call Celia at the office.

Synonym: Desire, Urge

Antonym: Dislike, Hate

20) Framework

Meaning: An essential supporting structure of a building, vehicle, or object.

Example: A conservatory in a delicate framework of iron.

Synonym: Frame, Substructure

21) Mitigation

Meaning: The action of reducing the severity, seriousness, or painfulness of something.

Example: The identification and mitigation of pollution.

Synonym: Alleviation, Reduction

Antonym: Increase

22) Debut

Meaning: A person’s first appearance or performance in a particular capacity or role.

Example: The film marked his debut as a director.

Synonym: Inception, Inauguration

Antonym: Final, Conclusion

23) De facto

Meaning: Existing or holding a specified position in fact but not necessarily by legal right.

Example: A de facto one-party system.

Synonym: Real, Effective

24) Backed

Meaning: Give financial, material, or moral support to.

Example: His mother backed him up on everything.

Synonym: Support, Favour

Antonym: Opposed, Discouraged

25) Battled

Meaning: A sustained fight between large organized armed forces.

Example: The battle lasted for several hours.

Synonym: Fight, Conflict

Antonym: Peace, Agree

26) Militias

Meaning: A military force that engages in rebel or terrorist activities in opposition to a regular army.

Example: Other militias would emerge that no one has ever heard of today.

Synonym: Platoon, Brigade, Regiment

27) Air cover

Meaning: Protection by aircraft for land-based or naval operations in war situations.

Example: They provide air cover for United Nations convoys of relief supplies.

28) Crumbled

Meaning: Break or fall apart into small fragments, especially as part of a process of deterioration.

Example: The plaster started to crumble.

Synonym: Disintegrate, Fall down

Antonym: Build, Improve

29) Propaganda

Meaning: Information, especially of a biased or misleading nature, used to promote a political cause or point of view.

Example: He was charged with distributing enemy propaganda.

Synonym: Information, Promotion

30) Beheadings

Meaning: The action of cutting off a person’s head, especially as a form of execution.

Example: The beheading of the aristocracy during the French Revolution.

31) Shambles

Meaning: A state of total disorder.

Example: My career was in a shambles.

Synonym: Mess, Chaos

Antonym: Calm, Harmony

32) Insurgent

Meaning: A person fighting against a government or invading force; a rebel or revolutionary.

Example: An attack by armed insurgents.

Synonym: Rebel, Revolutionary

Antonym: Obedient, Subordinate

33) Retreated

Meaning: Withdraw from enemy forces as a result of their superior power or after a defeat.

Example: The French retreated in disarray.

Synonym: Withdraw, Retire

Antonym: Forward, Forge

34) Lone wolf

Meaning: A terrorist or other criminal who acts alone rather than as part of a larger organization.

Example: Resources for tracking down potential lone wolves radicalized online.

Synonym: Eccentric, Individualist

35) Lethal

Meaning: Sufficient to cause death.

Example: A lethal cocktail of drink and pills.

Synonym: Fatal, Deadly

Antonym: Harmless, Helpful

36) Chaotic

Meaning: In a state of complete confusion and disorder.

Example: The political situation was chaotic.

Synonym: Disorderly, Disordered

Antonym: Calm, Normal

37) Coalition

Meaning: A temporary alliance for combined action, especially of political parties forming a government.

Example: A coalition between Liberals and Conservatives.

Synonym: Alliance, Union

Antonym: Disunion, Division

38) Arming

Meaning: Used to refer to something powerful or protective.

Example: They have extended the arm of friendship to developing countries.

Synonym: Reach, Power

Antonym: Dissuade, Hurt

39) Stakeholders

Meaning: A person with an interest or concern in something, especially a business

Example: The agreement is aimed at safe-guarding the interest of all the stakeholders.

40) Usher                

Meaning: Cause or mark the start of something new.

Example: The railways ushered in an era of cheap mass travel.

Synonym: Herald, Ring in

Antonym: Disembark, Cease

Related Editorials – Previous Days

THE HINDU EDITORIAL : October 13, 2017

THE HINDU EDITORIAL : October 14, 2017