Current Affairs 24 September 2022 – IAS Current Affairs
Current Affairs 24 September 2022 focuses on Prelims-Mains perspective. Major events are :
Quad Grouping
Source: Hindu
GS II: International Relation
What is discussed under Quad Grouping?
- What is Quad?
- Opportunities for India Under Quad Arrangement
- Issues Related to Quad
Why in News?
- Foreign ministers of the Quad countries – India, Australia, Japan, and the United States – met in New York on the margins of the UN General Assembly.
- The countries signed the Quad Humanitarian Assistance and Disaster Relief (HADR) Partnership for the Indo-Pacific, which was discussed and agreed upon at the Quad’s Tokyo summit.
Key Highlights
- The guidelines will allow the four countries to collaborate and coordinate more on issues such as climate catastrophe response.
- Other projects are in the works, such as the STEM fellowship and the economic framework as well as marine domain knowledge.
- The member nations will coordinate their disaster response efforts in the Indo-Pacific area with other national and international agencies, as well as commercial non-governmental groups, under the HADR.
Opportunities for India Under Quad Arrangement
- Countering China
Image by PublicDomainPictures from Pixabay - The marine space is far more vital to China than opportunistic land grabs in the Himalayas.
- In the case of Chinese border aggression, India, in collaboration with the Quad nations, has the capacity to impair Chinese commerce.
- Emerging as a net security provider
- The introduction of the concept of ‘Indo-Pacific’ has heightened great power interest in the maritime sector.
- With India in the epicentre of the Indo-Pacific geopolitical imagination, the vision of a “broader Asia” that may extend its influence beyond geographical bounds can be realised.
Issues Related to Quad
- Despite the possibility of collaboration, the Quad remains a mechanism without a stated strategic objective.
- The Quad’s whole concentration on the Indo-Pacific transforms it into a marine rather than a land-based association, raising issues about whether collaboration extends beyond the Asia-Pacific and Eurasian areas.
- The fact that India is the sole member who opposes a treaty alliance arrangement has hindered progress toward a greater Quadrilateral engagement.
What is QUAD?
- In the aftermath of the 2004 Indian Ocean tsunami, Australia, Japan, India, and the United States organised a Regional Core Group.
- In 2006, Japanese Prime Minister Shinzo Abe advocated an “Arc of Freedom and Prosperity.”
- The inaugural Quad meeting took place in May 2007 as officials convened for the ASEAN Regional Forum conference.
- It seeks to secure and maintain an Indo-Pacific area that is “free, open, and prosperous.”
Significance of QUAD grouping
- All four countries have a strong interest in keeping the Indo-Pacific power balance steady and avoiding a regional state from becoming dominant.
- All four governments are interested in discouraging the use of force or coercion to settle political and territorial conflicts in the area.
- All four governments are committed to the present Indo-Pacific rules-based economic system.
- This is founded on free trade, open investment environments, open competitive tenders, the rule of law, and strong governance standards, all of which continue to benefit everyone.
- All four countries are in favour of strengthening liberal democratic governance in the Indo-Pacific.
- The region has not been immune to the global slide in political and civil liberties adherence.
Banking System Liquidity
Source: Indian Express
GS III: Indian Economy
What is discussed under Banking System Liquidity?
- What Is Banking System Liquidity?
- Triggering Factors of Deficit
- How Does It Affect Consumers?
- How Can RBI Deal With This Situation?
Why in News?
- For the first time, the financial system’s liquidity condition deteriorated.
- In comparison, the liquidity surplus in November 2021 was Rs 8 lakh crore as the Reserve Bank of India (RBI) provided liquidity support to the economy dealing with the aftereffects of the Covid epidemic.
What Is Banking System Liquidity?
- In the banking sector, liquidity refers to easily available cash that banks require to satisfy short-term commercial and financial demands.
- On any given day, the banking system’s liquidity is considered to be in deficit if it is a net borrower from the RBI under the Liquidity Adjustment Facility (LAF).
- It is said to be in surplus if it is a net lender to the RBI.
- The LAF refers to the actions of the RBI that inject or absorb liquidity into or out of the banking sector.
Triggering Factors of Deficit
- Increase in loan demand.
Image by Free stock photos from www.rupixen.com from Pixabay - The recent advance tax outflow, which is a quarterly occurrence, has exacerbated the issue.
- The RBI continues to intervene to keep the rupee from falling against the US currency
- The uptick in the bank credit
- Advance tax payments by corporates
- The intervention of the RBI into the forex market
- Incremental deposit growth not keeping pace with credit demand
How Does It Affect Consumers?
- A lack of liquidity might cause a rise in the yields on government assets, which would then lead to an increase in consumer interest rates.
- On September 21, 2022, the 10-year government bond rate jumped to 7.23%, up from 7.18% on August 20, 2022.
- Short-term interest rates will rise quickly as a result of tighter liquidity and the RBI’s rate hike.
- A hike in the repo rate will increase the cost of financing.
- Banks will raise their repo-linked lending rates as well as the marginal cost of funds-based lending rate (MCLR), which is related to all loans.
- Consumers will face higher borrowing rates as a result of this increase.
How Can RBI Deal With This Situation?
- If the current liquidity imbalance is transitory and mostly due to advance tax flow, the RBI may not need to intervene because the money will soon return to the system.
- However, if it is of a long-term character, the RBI may be forced to take action to strengthen the system’s liquidity position.
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