News: The Reserve Bank of India’s Monetary Policy Committee (MPC) on Wednesday voted unanimously to raise the repo rate by 50 basis points to 4.90% in a bid to slow inflation which it estimates will average 7.5% in the current April-June quarter.
About the Repo Rate and Reverse Repo Rate:
Repo rate is the rate at which the central bank of a country (Reserve Bank of India in case of India) lends money to commercial banks in the event of any shortfall of funds. Repo rate is used by monetary authorities to control inflation.
In the event of inflation, central banks increase repo rate as this acts as a disincentive for banks to borrow from the central bank. This ultimately reduces the money supply in the economy and thus helps in arresting inflation.
The central bank takes the contrary position in the event of a fall in inflationary pressures. Repo and reverse repo rates form a part of the liquidity adjustment facility.
It is the interest rate at which the central bank of a country lends money to commercial banks.
The central bank in India i.e. the Reserve Bank of India (RBI) uses repo rate to regulate liquidity in the economy.
In banking, repo rate is related to ‘repurchase option’ or ‘repurchase agreement’.
When there is a shortage of funds, commercial banks borrow money from the central bank which is repaid according to the repo rate applicable.
The central bank provides these short terms loans against securities such as treasury bills or government bonds. This monetary policy is used by the central bank to control inflation or increase the liquidity of banks. The government increases the repo rate when they need to control prices and restrict borrowings.
On the other hand, the repo rate is decreased when there is a need to infuse more money into the market and support economic growth.
An increase in repo rate means commercial banks have to pay more interest for the money lent to them and therefore, a change in repo rate eventually affects public borrowings such as home loan, EMIs, etc.
From interest charged by commercial banks on loans to the returns from deposits, various financial and investment instruments are indirectly dependent on the repo rate.
Reverse Repo Rate:
This is the rate the central bank of a country pays its commercial banks to park their excess funds in the central bank. Reverse repo rate is also a monetary policy used by the central bank (which is RBI in India) to regulate the flow of money in the market.
When in need, the central bank of a country borrows money from commercial banks and pays them interest as per the reverse repo rate applicable. At a given point in time, the reverse repo rate provided by RBI is generally lower than the repo rate.
While repo rate is used to regulate liquidity in the economy, reverse repo rate is used to control cash flow in the market. When there is inflation in the economy, RBI increases the reverse repo rate to encourage commercial banks to make deposits in the central bank and earn returns.
This in turn absorbs excessive funds from the market and reduces the money available for the public to borrow.
2. KHEER BHAWANI TEMPLE
News: The Ministry of Home Affairs said on Wednesday that around 18,000 Kashmiri Pandits and other devotees visited the Kheer Bhawani temple in Kashmir Valley’s Ganderbal district on Jyeshtha Ashtami.
About Kheer Bhawani Temple:
Kheer Bhawani, Ksheer Bhawani or the Ragnya Devi temple is a Hindu temple situated at a distance of 25 kilometres (16 mi) north-east of Srinagar, Jammu and Kashmir, India, in the village of Tulmul in Ganderbal. It is dedicated to the Hindu goddess Kheer Bhavani constructed over a sacred spring.
As is the custom with Hindu deities, the goddess has many names including Ragyna or Rajna, along with variations in honorifics such as devi, mata or bhagavati.
The term kheer refers to a milk and rice pudding that is offered to propitiate the goddess. Kheer Bhawani is sometimes translated as ‘Milk Goddess’.
The worship of Kheer Bhawani is universal among the Hindus of Kashmir, most of them who worship her as their protective patron deity Kuladevi.
3. INTERNATIONAL LABOUR CONFERENCE (ILC)
News: Social security concerns of Indians working abroad will be among the issues raised by Labour and Employment Minister Bhupender Yadav at the ongoing International Labour Conference (ILC) of the International Labour Organization (ILO).
About International Labour Conference:
Once a year, the ILO organises the International Labour Conference in Geneva to set the broad policies of the ILO, including conventions and recommendations.
Also known as the “international parliament of labour”, the conference makes decisions about the ILO’s general policy, work programme and budget and also elects the Governing Body.
Each member state is represented by a delegation: two government delegates, an employer delegate, a worker delegate and their respective advisers.
All of them have individual voting rights and all votes are equal, regardless the population of the delegate’s member State.
The employer and worker delegates are normally chosen in agreement with the most representative national organizations of employers and workers.
Usually, the workers and employers’ delegates coordinate their voting. All delegates have the same rights and are not required to vote in blocs.
Delegate have the same rights, they can express themselves freely and vote as they wish. This diversity of viewpoints does not prevent decisions being adopted by very large majorities or unanimously.
Heads of State and prime ministers also participate in the Conference. International organizations, both governmental and others, also attend but as observers.
About International Labour Organisation (ILO):
The International Labour Organization (ILO) is a United Nations agency whose mandate is to advance social and economic justice through setting international labour standards.
Founded in October 1919 under the League of Nations, it is the first and oldest specialised agency of the UN. The ILO has 187 member states: 186 out of 193 UN member states plus the Cook Islands.
It is headquartered in Geneva, Switzerland, with around 40 field offices around the world, and employs some 3,381 staff across 107 nations, of whom 1,698 work in technical cooperation programmes and projects.
The ILO’s labour standards are aimed at ensuring accessible, productive, and sustainable work worldwide in conditions of freedom, equity, security and dignity.
They are set forth in 189 conventions and treaties, of which eight are classified as fundamental according to the 1998 Declaration on Fundamental Principles and Rights at Work; together they protect freedom of association and the effective recognition of the right to collective bargaining, the elimination of forced or compulsory labour, the abolition of child labour, and the elimination of discrimination in respect of employment and occupation.
The ILO is a major contributor to international labour law.
Within the UN system the organization has a unique tripartite structure: all standards, policies, and programmes require discussion and approval from the representatives of governments, employers, and workers.
This framework is maintained in the ILO’s three main bodies: The International Labour Conference, which meets annually to formulate international labour standards; the Governing Body, which serves as the executive council and decides the agency’s policy and budget; and the International Labour Office, the permanent secretariat that administers the organization and implements activities.
The ILO has 187 state members. 186 of the 193 member states of the United Nations plus the Cook Islands are members of the ILO.
The UN member states which are not members of the ILO are Andorra, Bhutan, Liechtenstein, Micronesia, Monaco, Nauru, and North Korea.
4. MUTUAL LOGISTICS SUPPORT BETWEEN INDIA AND VIETNAM
News: India and Vietnam on Wednesday signed a Memorandum of Understanding (MoU) on mutual logistics support during the ongoing visit of Defence Minister Rajnath Singh to the Southeast Asian nation.
The Defence Ministers signed the ‘Joint Vision Statement on India-Vietnam Defence Partnership towards 2030’, which will significantly enhance the scope and scale of existing defence cooperation.
In these times of increasing cooperative engagements between the defence forces of the two countries, this is a major step towards simplifying procedures for mutually beneficial logistic support and is the first such major agreement which Vietnam has signed with any country.
Our close defence and security cooperation is an important factor of stability in the Indo-Pacific region.
India has signed several logistics agreements including with all Quad countries, France, Singapore and South Korea beginning with the Logistics Exchange Memorandum of Agreement with the U.S. in 2016.
Logistics agreements are administrative arrangements facilitating access to military facilities for exchange of fuel and provisions on mutual agreement simplifying logistical support and increasing operational turnaround of the military when operating away from India.
Both Ministers also agreed for early finalisation of $US 500 million Defence Line of Credit extended to Vietnam.
Singh also announced gifting two simulators and monetary grant towards setting up of Language and IT Lab at Air Force Officers Training School for capacity building of Vietnamese armed forces.
Singh began his official visit by paying respects to President Ho Chi Minh at his Mausoleum in Hanoi.
India and Vietnam share a Comprehensive Strategic Partnership since 2016 and defence cooperation is a key pillar of this partnership. Vietnam is an important partner in India’s Act East policy.