ENVIRONMENT & ECOLOGY

New frog species named Litoria Bella discovered in Australia A new frog species named Cape York graceful tree frog, scientifically known as Litoria Bella, was discovered recently in Australia’s largest virgin forest in Queensland. The study was published in the journal Zootaxa on 27 September 2016. The newly discovered species closely resembles the Graceful tree frog (Litoria Gracilenta). The research and discovery was done by Dr Jodi Rowley, a curator of amphibian and reptile conservation biology at the Australian Museum, along with scientists Keith McDonald, Stephen Richards and Greta Frankham. Highlights of the Cape York graceful tree frog or Litoria Bella • The Cape York Graceful Treefrog is known from between Moa Island in the Torres Strait in the north, to about 20 km south of Coen on the Cape York Peninsula in the south. • The southern-most location of the new species is separated by 220 km from the most northern record of the Graceful Treefrog in the Endeavour Valley near Cooktown. • The Cape York Graceful frogs have a near-immaculate green dorsum, bright orange digits, bluish purple thighs and white bones. • They also measure about four centimetres long, which is considered big for the species. • They spend most of their time in the tree canopy and come down to ponds when it rains or during breeding season. • The species was thought to occur all the way from north-eastern New South Wales to northern Cape York Peninsula in Queensland. The Study • One of the researchers from the team Keith McDonald from the Queensland museum had first laid eyes on this Cape York tree frog in 2000 during one of his field-work outings. • However, the frog was determined to be a new species on 27 September 2016 after undergoing rigorous tests for a year. • By looking at differences in its appearance, as well as its advertisement call and DNA, it was concluded that the Cape York Graceful Tree frog is a distinct species, bringing the number of known frog species in Australia to 239.

ENVIRONMENT & ECOLOGY

Hurricane Matthew Death toll mounts to 300 in Haiti Hurricane Matthew after claiming lives of at least 300 people in the Caribbean nation Haiti lashed Florida with winds of 125 mph on 7 October 2016. More than two million people were evacuated from the coastal areas of Florida, Georgia and South Carolina. North Carolina could also be affected as the storm moves north. President Barack Obama on 6 October 2016 declared a federal state of emergency in Florida as Hurricane Matthew's powerful winds began to be felt along the state's southeast coast. Hurricane Matthew that made its landfall in Haiti on 4 October 2016 with raging winds and storm leveled 80 percent of buildings in the peninsula’s main city, Jeremie. In Sud province 30000 homes were destroyed. The region's strongest storm in almost a decade made landfall on Haiti's Tiburon Peninsula as a Category 4 hurricane with sustained winds of 145 mph. Haiti Haiti, the poorest country in the Western Hemisphere, is already struggling to regain its footing almost seven years after an earthquake and ensuing cholera epidemic ravaged the nation. It is one of the most deforested countries in the world. The country is located on the island of Hispaniola, in the Greater Antilles archipelago of the Caribbean. It occupies the western three-eighths of the island, which it shares with the Dominican Republic. With an estimated 10.6 million people, Haiti is the most populous country in the Caribbean Community (CARICOM) and the second-most populous country in the Caribbean as a whole.

ENVIRONMENT & ECOLOGY

ASI protected historical monuments and archaeological sites declared polythene free zones All Archaeological Survey of India (ASI) protected historical monuments and archaeological sites on 6 October 2016 were declared Polythene Free Zones. An advisory has been issued to all State Governments/UTs to support ASI in keeping Monuments Polythene Free up to 300 meters from the protected boundaries of the monuments. In addition, Ministry of Culture sanctioned 350 crores rupees to provide facilities like Protected Boundaries, Toilets and Disabled Friendly Access in all ASI Protected Monuments.   The ASI has ranked top 25 Adarsh Monuments on the basis of cleanliness parameters such as amenities like toilets, green lawns, Polythene Free Zone, signage for awareness, disabilities access, drinking water and provision for garbage bins and more. A World Heritage site Rani ki Vav in Gujarat has been declared as the cleanest iconic place in India. About Rani ki Vav • Rani ki vav is an intricately constructed stepwell situated in the town of Patan in Gujarat. • It is located on the banks of Saraswati River. • It was built as a memorial to an 11th century AD king. • It was added to the list of UNESCO's World Heritage Sites on 22 June 2014. • It was built in the complex Maru-Gurjara architectural style with an inverted temple and seven levels of stairs and holds more than 500 principle sculptures.

ENVIRONMENT & ECOLOGY

New termite species named Chiraharitae discovered A new termite species, Glyptotermes Chiraharitae, was discovered at Kakkayam in the Malabar Wildlife Sanctuary, Kerala. The species has been named Chiraharitae after the tropical evergreen forests of the Western Ghats, where it was discovered. The research paper describing the new species was published last week in Zoosystema, the journal of Natural History Museum, Paris. About the newly discovered species • Termites are of three types: damp wood, dry wood and subterranean. Glyptotermes Chiraharitae species are of the damp wood category. • Chiraharitae infest parts of woods with high moisture content, the decaying or rotting areas in particular. • They are exclusively wood dwelling and do not require any contact with soil. • The flying adults of this species are approximately 10 mm long, while the soldiers are around 9.5 mm long. • Its relatives are known to attack mango, sal, Rhododendron, banyan trees, Artocarpus, silver oak, and jamun trees. • In India, there 285 species of termites and among them 61 are documented from Kerala.

ENVIRONMENT & ECOLOGY

HIMANSH, India’s remote and high-altitude station opened in Spiti, Himachal Pradesh The National Centre for Antarctic and Ocean Research (NCAOR) established a high altitude research station in Himalaya called HIMANSH. The station is situated above 13500 feet at a remote region in Spiti, Himachal Pradesh. The station was unveiled by M. Rajeevan, Secretary to the Ministry of Earth Sciences, on 9 October 2016. The ongoing initiatives by NCAOR will contribute to the integrated study the glaciers in the upper Indus basin (Chandra basin) in Himachal Pradesh and their contribution to discharge. Key highlights of HIMANSH • The station houses many instruments to quantify the glacier melting and its relation to changing climate. • Some of the instruments that are available at the research facility include, Automatic Weather Stations for weather monitoring, water level recorder for quantifying the glacier melt, ground penetrating radar to know the thickness of glaciers, geodetic GPS systems to study the glacier movements, etc. • The researchers will use the station as a base for undertaking surveys using Terrestrial Laser Scanners (TLS) and Unmanned Aerial Vehicles (UAV). About National Centre for Antarctic and Ocean Research • The National Centre for Antarctic and Ocean Research is an Indian research and development institution, situated in Vasco, Goa. • It was established on 25 May 1998, with Dr. P C Pandey as its founding director. • It is an autonomous Institution of the Department of Ocean Development (DOD), Government of India. • It is responsible for administering the Indian Antarctic Program and maintains the Indian Government's Antarctic research station, Maitri. • At present, NCAOR is an agency working under Ministry of Earth Sciences, Government of India since 2006, by the notification of the President of India. • NCAOR complex is a home to a special low-temperature laboratory and is setting up a National Antarctic Data Centre and a Polar Museum.

ENVIRONMENT & ECOLOGY

India decided to eliminate potent greenhouse gas HFC-23 by 2030 India on 13 October 2016 announced its decision to eliminate the HCF-23 gas. The decision was made in line to its commitment to combat the threat emanating from climate-damaging HFCs (hydrofluorocarbons). The announcement was made by Minister of State Environment, Forest and Climate Change (MoEFCC), Anil Dave at Kigali, Rwanda, at a meeting of parties to the Montreal Protocol, where final negotiations are taking place to substantially reduce the use of HFCs (hydrofluorocarbons) by 2030.  HFC–23 gas, a potent greenhouse gas, with Global Warming Potential of 14800, is produced during the manufacture of a common refrigerant gas, HCFC-22. If vented out in environment, is a threat to the environment. HCFC stands for hydrochloroflurocarbon. Key Highlights • Companies have to internalise the cost of this environmental externality and create sufficient storage facility to take care of down time and run the incinerators to ensure and not release of HFC–23 in the atmosphere. • The move will potentially check emissions of HFC-23 equivalent to 100 million tonnes of CO2 over the next 15 years, Delhi-based think tank Centre for Science and Environment. Montreal Protocol The Montreal Protocol on Substances that Deplete the Ozone Layer was designed to reduce the production and consumption of ozone depleting substances in order to reduce their abundance in the atmosphere, and thereby protect the earth’s fragile ozone Layer. The original Montreal Protocol was agreed on 16 September 1987 and entered into force on 1 January 1989. The Montreal Protocol includes a unique adjustment provision that enables the Parties to the Protocol to respond quickly to new scientific information and agree to accelerate the reductions required on chemicals already covered by the Protocol. These adjustments are then automatically applicable to all countries that ratified the Protocol. It has been ratified by 197 parties.

SCIENCE &TECH

World's first baby born from new procedure using DNA of three people The world’s first baby was born from a new procedure that combines the DNA of three people. The baby was born in Mexico. The baby was born on 6 April 2016 after his Jordanian parents travelled to Mexico where they were cared for by US fertility specialists. The baby was born using the new and controversial technology, called mitochondrial donation, which incorporates DNA from three persons. The five-month-old boy has the usual DNA from his parents, and a small amount of genetic code from a donor. How the treatment was done? • The baby’s mother carried genes for the fatal Leigh Syndrome, which harms the developing nervous system. • The faults affect the DNA in mitochondria, the tiny battery-like structures that provide cells with energy, and are passed down from mother to child. • A team of doctors, led by John Zhang, decided to attempt the controversial procedure of mitochondrial transfer in the hope that it would give the couple a healthy child. • The doctors took the nucleus from one of the woman’s eggs and inserted it into a healthy donor’s egg that had had its own nucleus removed. Then, the egg was fertilised with the husband’s sperm. • The team created five embryos but only one developed normally. This was implanted into the mother and the baby was born nine months later. What is Mitochondrial Donation? • Mitochondrial donation is a special form of in vitro fertilization in which the future baby's mitochondrial DNA comes from a third party. • The two most common techniques in mitochondrial donation are pronuclear transfer and maternal spindle transfer. • Due to the uncharted nature of producing a child with 3 sources of DNA, this subject is currently quite contentious in the field of bioethics, as is the case with many other gene therapies. • The treatment was legalised in the UK in 2015 but so far no other country has introduced laws to permit the technique. • In February 2016, a report was issued by the U.S. Food and Drug administration declaring that further research into mitochondrial donation is ethically permissible

SCIENCE &TECH

ISRO’s communication satellite GSAT-18 successfully launched from French Guiana India on 6 October 2016 successfully launched the communication satellite GSAT-18. The satellite was launched by a heavy duty rocket of Arianespace from the spaceport of Kourou in French Guiana. The European launcher Ariane-5 VA-231 injected GSAT-18 into a Geosynchronous Transfer Orbit (GTO) shortly after orbiting co-passenger Sky Muster II satellite for Australian operator, National Broadband Network. After its injection into GTO, ISRO's Master Control Facility (MCF) at Hassan took control of GSAT-18 and performed the initial orbit raising maneuvers using the Liquid Apogee Motor (LAM) of the satellite, placing it in circular Geostationary Orbit. GSAT-18  • GSAT-18 is designed to provide continuity of services on operational satellites in C-band, Extended C-band and Ku-bands. • Weighing 3404 kilograms at lift-off and having a mission life of about 15 years, GSAT-18 will strengthen ISRO's current fleet of 14 operational telecommunication satellites. • It carries 48 communication transponders to provide services in Normal C-band, Upper Extended C-band and Ku-bands of the frequency spectrum. • GSAT-18 carries Ku-band beacon as well to help in accurately pointing ground antennas towards the satellite. • It will enable the continuity of the vital communication services in the country by replacing the currently ageing satellites. GSAT-18 is the 20th satellite from ISRO to be launched by the European space agency and the mission is the 280th for Arianespace launcher family. ISRO, which has been dependent on Ariane-5 rocket for carrying its heavier satellites, is developing GSLV Mk III for this purpose. GSAT-18's co-passenger Sky Muster II, built by Space Systems Loral in California, is aimed at bridging the digital divide, especially in the rural and isolated regions of Australia. Kourou is a French territory located in northeastern coast of South America. The launch, which was originally scheduled for 5 October 2016, was deferred by 24 hours due to unfavourable weather conditions at Kourou.

SCIENCE &TECH

Apes can think like humans: Study A new study suggests that apes have a human-like ability to guess what others are thinking, even in cases when someone holds a mistaken belief. The findings were published on 6 October 2016 in the journal Science. The study • The study was led by Krupenye and Fumihiro Kano, a comparative psychologist at Kyoto University. • The apes were shown the videos of a capering actor dressed in a King Kong suit. • The video featured an actor dressed as King Kong, who hits a man holding a long pole before darting under one of two haystacks while the human looks on. In some scenarios, the King Kong character switches haystack while the human disappears out of view behind a door. The man then reappears and smacks the haystack he thinks his assailant is hidden under. • By using eye-tracking technology, the scientists showed that 17 out of 22 apes tested switched their gaze to show they had correctly anticipated when the man would target the wrong haystack. What are the findings? • The findings, in chimpanzees, bonobos and orangutans, are the first to clearly demonstrate that apes can predict another’s beliefs, even when they know that presumption is false. • On a psychology experiment, the apes were able to correctly anticipate that someone would look for a hidden item in a specific location, even if the apes knew that the item was no longer there. • The ability to predict that someone holds a mistaken belief, which psychologists refer to as a theory of mind, is seen as a landmark in cognitive development that children normally acquire by the age of five.

SCIENCE &TECH

Hubble Space Telescope detects Great Balls of Fire NASA’s Hubble Space Telescope in the first week of October 2016 detected Great Balls of Fire. These superhot blobs of gas, each twice as big as the planet Mars, were being ejected near a dying star. These plasma balls are moving so fast through space that it would take only 30 minutes for them to travel from Earth to the moon. The observations suggest that these balls of fire have been appearing every 8.5 years for at least the last four centuries. The gas balls were observed near a red giant called V Hydrae that is about 1200 light-years away from Earth. Significance If scientists can discover where these balls come from, it could also explain other weird shapes seen in the cloud of gas around dying stars, some of which have been difficult for scientists to explain. About Hubble Space Telescope • The Hubble Space Telescope is a space telescope that was launched into low Earth orbit in 1990. It remains in operation. It could last until 2030–2040. • It is one of the largest and most versatile vital research tool and a public relations boon for astronomy. • It is named after the astronomer Edwin Hubble, and is one of NASA's Great Observatories, along with the Compton Gamma Ray Observatory, the Chandra X-ray Observatory and the Spitzer Space Telescope. • With a 2.4-meter mirror, its four main instruments observe in the near ultraviolet, visible and near infrared spectra. • It was built by the United States space agency NASA, with contributions from the European Space Agency. • The Space Telescope Science Institute (STScI) selects Hubble's targets and processes the resulting data, while the Goddard Space Flight Center controls the spacecraft. • It is the only telescope designed to be serviced in space by astronauts. • Its scientific successor, the James Webb Space Telescope (JWST), is scheduled for launch in 2018.

SCIENCE &TECH

NASA develops electroactive bandages for wound healing The National Aeronautics and Space Administration (NASA) developed a high-tech electroactive bandage. The bandage creates an electric charge to help promote the healing process of wounds. Electroactive material is so sensitive that a push or even a blow on it can create an electric charge. Key features of the electroactive bandages • The fibres of the guaze are made of electroactive material Polyvinylidene Fluoride (PVDF). • The bandage is stimulated by the heat of the body and the pressure of cell growth. Therefore, no external power source is required in order for the bandage to promote wound healing. • The device uses electrical activity to facilitate the wound healing process while protecting the wound. • The bandage also minimises infection and related complications such as illness or amputation. • The bandage could be used by military personnel wounded in the field, patients who have undergone surgery or who have suffered a serious wound and astronauts in space.

SCIENCE &TECH

Researchers at IISER used human hair to produce cathodes for solar cells Researchers at the Indian Institute of Science Education and Research (IISER) in Kolkata have found a new way to produce cathodes for solar cell. The IISER researchers have used human hair to produce cost-effective, metal-free cathodes for use in solar cells. The results have been published in the journal Carbon. This is the first time where a bio-waste-derived electrode has been used as cathode in a quantum dot sensitised solar cell device. Key highlights • The graphitic porous carbon cathode shows an impressive performance to help converting visible sunlight to electricity, which is much higher than commercially available activated carbon cathodes. • It offers higher efficiency to convert visible sunlight to electricity. • The cathode was found to generate high open-circuit voltage, which is at par with conventional platinum and activated carbon cathodes. • Producing graphitic porous carbon cathode using human hair is also simple, quick and inexpensive. • Unlike in the case of other synthetic porous carbons, no physical or chemical activation process or templates were required to produce the pores of 2-50 nanometres diameter. • The porosity, along with high surface area to volume ratio, plays an important role in adsorption-desorption of electrolyte. • The cleaned and dry human hair was first treated with sulphuric acid at 165 degrees C for 25 minutes to achieve precarbonisation. • It was then heated to different temperatures in the presence of an inert gas for six hours to carbonise and bring better electrical conductivity for efficient charge transfer.

ECONOMY

CCEA approves implementation of Project SAKSHAM The Cabinet Committee on Economic Affairs (CCEA) on 28 September 2016 approved ‘Project SAKSHAM’. It is a New Indirect Tax Network (Systems Integration) of the Central Board of Excise and Customs (CBEC). It will help in integrating system of Central Board of Excise and Customs with the GST network before the roll out in April 2017. The total project cost involved is 2256 crore rupees which will be incurred over a period of seven years. The project SAKSHAM will help in • Implementation of Goods and Services Tax (GST) • Extension of the Indian Customs Single Window Interface for Facilitating Trade (SWIFT) • Other taxpayer-friendly initiatives under Digital India and Ease of Doing Business of Central Board of Excise and Customs The implementation strategy for the project will be to ensure readiness of CBEC's IT systems by 1 April 2017, when GST is to be introduced. The upgrade of the IT systems will be carried out while keeping the existing Tax-payer services running. As predicted, all taxpayers/importers/exporters/dealers under various indirect tax laws administered by CBEC, presently about 36 lakhs, are likely to go up to over 65 lakhs after introduction of GST. CBEC's IT systems need to integrate with the Goods & Services Tax Network (GSTN) for processing of registration, payment and returns data sent by GSTN systems to CBEC, as well as act as a front-end for other modules like Audit, Appeal, Investigation. There is no overlap in the GST-related systems of CBEC and GSTN. This IT infrastructure is also urgently required for continuation of CBEC's e-Services in Customs, Central Excise & Service Tax, implementation of tax¬payer services such as scanned document upload facility, extension of Indian Customs Single Window Interface for Facilitating Trade (SWIFT) initiative and integration with Government initiatives such as E-Nivesh, E-Taal, e-Sign. Background Introduction of GST will result in a several-fold increase in the number of taxpayers and resultant document load on the system. CBEC's current IT system was set up in 2008. It cannot cater to the increased load under GST without an immediate upgrade of its IT Infrastructure. Further, CBEC has implemented the Indian Customs Single Window Interface for Facilitating Trade (SWIFT) and is integrating other partner agencies involved in Customs clearance in order to make the process simple and fast. The Customs EDI system which is currently operational at about 140 locations in India has to be extended to many more locations with improved response time and better service delivery. Taxpayers have to be given a facility for Upload of Digitally Signed Scanned Documents in order to reduce the physical interface with tax authorities and to increase the speed of clearance. CBEC also aims to introduce mobile services for taxpayers and departmental users to increase the outreach of its services.

ECONOMY

Union Government decides to raise EPFO Investment in ETF from 5 to 10 per cent The Union Government on 30 September 2016 decided to raise the Employees Provident Fund (EPF) investment in Exchange Traded Fund (ETF) from existing 5 per cent to 10 per cent. The decision has been taken considering the good returns in ETF investment. An official release said, in the last one year, the Employees Provident Fund Organisation (EPFO) has invested 6577 crore rupees. The investment has yielded a good return of 13.24 per cent. The past performance of the last six months from April, 2016 to August, 2016 also showed gradual appreciation in the returns from 0.37 per cent in March 2016 to 13.24 per cent in August 2016. Five per cent EPF has been invested in NIFTY 50 and SENSEX. The pattern of investment prescribed by the Ministry of Finance has given guidelines for investment in equity from 5 per cent to 15 per cent.

ECONOMY

Union Government notifies constitution of Monetary Policy Committee The Union Government on 29 September 2016 notified the constitution of the Monetary Policy Committee (MPC). The Reserve Bank of India Act, 1934 (RBI Act) has been amended by the Finance Act, 2016,  to provide for a statutory and institutionalised framework for a Monetary Policy Committee, for maintaining price stability. As per the provisions of the RBI Act, out of the six Members of Monetary Policy Committee, three Members will be from the RBI. The other three Members of MPC will be appointed by the Central Government. In exercise of the powers conferred by section 45ZB of the Reserve Bank of India Act, 1934, the Union Government has accordingly constituted the Monetary Policy Committee of RBI, with the following composition: • The Governor of the Bank: Chairperson, ex officio • Deputy Governor of the Bank, in charge of Monetary Policy: Member, ex officio • One officer of the Bank to be nominated by the Central Board: Member, ex officio • Chetan Ghate, Professor, Indian Statistical Institute (ISI): Member • Pami Dua, Director, Delhi School of Economics (DSE): Member • Ravindra H. Dholakia, Professor, Indian Institute of Management (IIM) Ahmedabad: Member The Members of the Monetary Policy Committee appointed by the Union Government will hold office for a period of four years, with immediate effect or until further orders, whichever is earlier. About Monetary Policy Committee • The Monetary Policy Committee will be entrusted with the task of fixing the benchmark policy rate (repo rate) required to contain inflation within the specified target level. • A Committee-based approach for determining the Monetary Policy will add lot of value and transparency to monetary policy decisions. • The meetings of the Monetary Policy Committee will be held at least 4 times a year and it will publish its decisions after each such meeting.

ECONOMY

RBI releases fourth Bi-monthly Monetary Policy Statement, 2016-17 The Reserve Bank of India (RBI) on 4 October 2016 released the fourth Bi-Monthly Monetary Policy Statement 2016-17. The key announcement under the policy was the interest cut of 25 basis points. This move may lead to banks in lowering EMIs for housing, car loan and corporate borrowers. This policy decision was not only RBI Governor Urjit Patel’s maiden policy announcement but was also the first to be announced by the newly constituted Monetary Policy Committee (MPC). All the six members of MPC unanimously decided to cut repo rate by 0.25 per cent; bring in to a nearly six-year low of 6.25 per cent. This was also the first interest rate cut in last six months. According to the monetary policy statement, the decision to cut interest rates is consistent with the aim of achieving a midterm inflation target of 4 percent within a band of plus or minus 2 percent. Based on the assessment of the current and evolving macroeconomic situation, the Monetary Policy Committee (MPC) decided to: • Repo Rate: The policy repo rate under the liquidity adjustment facility (LAF) was reduced by 25 basis points from 6.5 per cent to 6.25 per cent with immediate effect. • Reverse Repo Rate: The reverse repo rate under the LAF stands adjusted to 5.75 per cent. • Marginal standing facility (MSF) Rate: The MSF rate was fixed at 6.75 per cent. • Bank Rate: The Bank Rate also stands at 6.75 per cent. The decision of the MPC is consistent with an accommodative stance of monetary policy in consonance with the objective of achieving consumer price index (CPI) inflation at 5 per cent by Q4 of 2016-17 and the medium-term target of 4 per cent within a band of +/- 2 per cent, while supporting growth. The main considerations underlying the decision are set out in the statement below. Assessment of the Economy • Global growth has been slowing more than anticipated through 2016 so far, with weak investment and trade damping aggregate demand. • Risks in the form of BREXIT, banking stress in Europe, rebalancing of debt-fuelled growth in China, rising protectionism and diminishing confidence in monetary policy have slanted the outlook to the downside. • World trade volume has contracted sharper than expected in the first half of 2016, and the outlook has worsened with the recent falling off of imports by Advanced Economies (AEs) from Emerging Market Economies (EMEs). Inflation remains subdued in AEs and has started to edge down in EMEs. • International financial markets were overwhelmed by the BREXIT vote in Q2, with equity markets losing valuations worldwide, currencies plunging and turning volatile, and investors rushing for safe havens. Markets, however, recovered quickly and reclaimed lost ground in Q3, with a return of risk appetite propelling capital flows back into EMEs. • Crude prices rose to a recent peak in Q2 of 2016, mostly on supply disruption in various parts of the world, and again in late September as the OPEC announced intentions of cutting back on supply; but, the upturn has been curbed by higher inventories. Assessment on the domestic front • Agriculture: The outlook for agricultural activity has brightened as the South West monsoon ended the season with a cumulative deficit of only 3 per cent below the long period average, with 85 per cent of the country’s geographical area having received normal to excess precipitation. • Kharif: Kharif sowing has surpassed last year’s acreage, barring cotton, sugarcane and jute and mesta. Accordingly, the first advance 2 estimates of kharif food grains production for 2016-17 by the Ministry of Agriculture have been placed at a record level, and higher than the target set for the year. • Industrial sector: The industrial sector, by contrast, suffered a manufacturing-driven contraction in early fiscal year Q2, after a sequential deceleration in gross value added in Q1. Even after trimming the statistical effects of the lumpy and order-driven contraction of insulated rubber cables, industrial production as measured by the index of industrial production (IIP) turned out to be slower than a year ago. • Steel: In August, steel production rose to a 37-month high and cement production maintained momentum - auguring well for construction activity - even though the output of core industries as a whole was weighed down by a decline in the production of coal, crude oil and natural gas and deceleration in refinery products and electricity generation. Nonetheless, business expectations polled in the Reserve Bank’s industrial outlook survey and by other agencies remain expansionary in Q2 and Q3. • Roads, Railways And Inland Waterways: The strong public investment in roads, railways and inland waterways, the recent efforts to unclog cash flows in large projects under arbitration, and the boost to spending from the 7th Pay Commission’s award, should improve the industrial outlook. • Services Sector: The acceleration in the pace of activity in Q1 appears to have been sustained. An increasing number of high frequency indicators are moving into positive territory, construction is boosted by policy initiatives, and public administration, defence and other services will be supported by the pay commission award. • Retail inflation: Measured by the headline CPI had been elevated by a sharp pick-up in the momentum of food inflation overwhelming favourable base effects during April-July. In August, however, the momentum of food inflation turned negative and surprised expectations; consequently, base effects in that month came into full play and pulled down headline inflation to an intra-year low. Fuel inflation has moderated steadily through the year so far. Inflation excluding food and fuel (including petrol and diesel embedded in transportation) has been sticky around 5 per cent, mainly in respect to education, medical and personal care services. • Liquidity conditions: It remained comfortable in Q3, with the Reserve Bank absorbing liquidity on a net basis through variable rate reverse repo auctions of varying tenors. Liquidity was injected through open market purchases of 200 billion rupees in line with the system’s requirements. As a result, the Weighted Average Call Money Rate (WACR) remained tightly aligned with the policy repo rate and, in fact, traded with a soft bias. Interest rates on commercial paper (CPs) and certificates of deposit (CD) also eased. • External Sector: Merchandise exports contracted in the first two months of Q2. Subdued domestic demand was, however, reflected in a faster contraction in imports. Moreover, the still soft crude prices pared off a fifth of the oil import bill and gold import volume slumped to a fifth of its volume a year ago. As a result of the same, the merchandise trade deficit narrowed by 10 billion US dollars in April-August on a year-on-year basis. • Foreign Direct Investment: The pace of foreign direct investment slowed compared to a year ago, portfolio flows were stronger after the BREXIT vote, galvanised by a search for returns in an expanding universe of negative yields. The level of foreign exchange reserves rose to 372 billion US dollars by 30 September 2016 – an all-time high. Outlook • The food inflation outlook will improved due to strong improvement in sowing, along with supply management measures. • Sharp drop in inflation reflects a downward shift in the momentum of food inflation, which holds the key to future inflation outcomes, rather than merely the statistical effects of a favourable base effect. • Government’s measures to curb the food inflation would help in moderating the momentum of food inflation in months ahead.

ECONOMY

Union Finance Ministry sets up Public Debt Management Cell Union Finance Ministry on 4 October constituted a Public Debt Management Cell (PDMC). The cell was created to streamline government borrowings and better cash management with the overall objective of deepening bond markets. The Joint Secretary (Budget), Department of Economic Affairs, Ministry of Finance would be the overall in-charge of the ODMC. As an interim arrangement, the PDMC will be housed at the RBI's Delhi office. In about two years, the PDMC will be upgraded to a statutory Public Debt Management Agency (PDMA). Highlights of PDMC • The interim arrangement will allow separation of debt management functions from RBI to PDMA in a gradual and seamless manner, without causing market disruptions. • It will have only advisory functions to avoid any conflict with the statutory functions of RBI. • It has been tasked to plan government borrowings, including market borrowings and other borrowings, like Sovereign Gold Bond issuance. • It will also advise government on matters related to investment, capital market operations, administration of interest rates on small savings among others. • The middle office of the Budget Division will be subsumed into PDMC with immediate effect. The transition process from PDMC to PDMA would be implemented by a Joint Implementation Committee (JIC), which will be chaired by Joint Secretary (Budget). Other members of the JIC will be from Government and RBI. As per the circular issued by the ministry, the JIC would operate under the supervision of the Monitoring Group on Cash and Debt Management (MGCDM) with Secretary, Economic Affairs and DG, RBI as co-chairpersons. The PDMC would be staffed by 15 debt managers from Budget Division, RBI, current Middle Office and other government units. Background To deepen Indian Bond market, the Finance Ministry Arun Jaitley proposed setting of a PDMA in his Budget Speech 2016-17. He said that he intend to set up a PDMA which will bring both India's external borrowings and domestic debt under one roof.