Daily Current Affairs : 20th June 2020

Daily Current Affairs for UPSC CSE

Topics Covered

  1. Financial Action Task Force
  2. PM Street Vendor’s AtmaNirbhar Nidhi (PM SVANidhi)
  3. China – Bangladesh Relationship and  Asia Pacific Trade Agreement (APTA)
  4. Contribution to NDRF
  5. Juneteenth
  6. Why China trade ban is a bad idea
  7. Facts for Prelims

1 . Financial Action Task Force

Context : Indian officials, including representatives from enforcement agencies, attended the 32nd special Eurasian Group on Combating Money Laundering and Financing of Terrorism (EAG) plenary meeting, under the aegis of the Financial Action Task Force. The meeting was held online.

About Financial Action Task Force

  • The Financial Action Task Force (FATF) is an inter-governmental body established in 1989 by the Ministers of its Member jurisdictions.
  • Financial Action Task Force (FATF) was established in July 1989 by a Group of Seven (G-7) Summit in Paris, initially to examine and develop measures to combat money laundering. In October 2001, the FATF expanded its mandate to incorporate efforts to combat terrorist financing, in addition to money laundering.  In April 2012, it added efforts to counter the financing of proliferation of weapons of mass destruction.
  • The objectives of the FATF are to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system. 
  • The FATF is therefore a “policy-making body” which works to generate the necessary political will to bring about national legislative and regulatory reforms in these areas.
  • The FATF has developed the FATF Recommendations, or FATF Standards, which ensure a co-ordinated global response to prevent organised crime, corruption and terrorism. They help authorities go after the money of criminals dealing in illegal drugs, human trafficking and other crimes.  The FATF also works to stop funding for weapons of mass destruction.
  • They form the basis for a co-ordinated response to these threats to the integrity of the financial system and help ensure a level playing field. 
  • The FATF’s decision making body, the FATF Plenary, meets three times per year.  
  • The FATF currently comprises 37 member jurisdictions and 2 regional organisations (GCC, European Commission) representing most major financial centres in all parts of the globe.
  • India is a member of FATF while Pakistan is not a member
  • India is a voting member of the FATF and APG, and co-chair of the Joint Group where it is represented by the Director General of India’s Financial Intelligence Unit (FIU).

Eurasian Group on Combating Money Laundering

  • The EAG was established on 6 October 2004 in Moscow by the decision of the Inaugural Conference and at the initiative of the Russian Federation, supported by the FATF, IMF, World Bank and several other countries.
  • The EAG is an FATF-style regional body and became an  Associate Member of the FATF in June 2010.
  • The creation of an FATF-style regional body (FSRB) for countries of the Eurasian region that have not been part of existing FSRBs, is to play an important role in combating the threat of terrorism and increasing the transparency and security of financial systems of the region. The EAG objective is to incorporate these countries into the global system on anti-money laundering and combating the financing of terrorism (AML/CFT).
  • Currently it comprises nine countries: India, Russia, China, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, Uzbekistan and Belarus. Observer status has been granted to 15 countries and 23 international organizations.

The main goals of the EAG are to:

  • Facilitate implementation of international standards;
  • Carry out joint programs within the FIU sphere of competency;
  • Conduct evaluations of the effectiveness of existing AML/CFT mechanisms;
  • Coordinate technical assistance cooperation;
  • Analyze trends (typologies) in the AML/CFT sphere and exchange experience in combating these crimes

2 . PM Street Vendor’s AtmaNirbhar Nidhi (PM SVANidhi)

Context: Street vendors are likely to start getting small loans starting July under a special micro-credit scheme launched by the government as part of the COVID-19-related economic relief package, the Union Housing and Urban Affairs Ministry said on Friday.

About the News

  • The Ministry signed a memorandum of understanding with the Small Industries Development Bank of India to be the implementing agency for the PM Street Vendors AtmaNirbhar Nidhi scheme
  • Under the scheme, vendors can apply for working capital loans of up to ₹10,000 to restart work after the lockdown. The loans will have to be repaid in a year in monthly installments.

About PM Street Vendor’s AtmaNirbhar Nidhi (PM SVANidhi) A Special Micro-Credit Facility for Street Vendors

  • It is a Central Sector Scheme to facilitate street vendors to access affordable working capital loan for resuming their livelihoods activities, after easing of lockdown.
  • Objectives:
    • (i) To facilitate working capital loan up to `10,000 at subsidized rate of interest;
    • (ii) To incentivize regular repayment of loan
    • To reward digital transactions.
  • Salient features:
    • (i) Initial working capital of up to `10,000/-
    • (ii) Interest subsidy on timely/ early repayment @ 7%
    • (iii) Monthly cash-back incentive on digital transactions
    • (iv) Higher loan eligibility on timely repayment of the first loan
  • Target beneficiary: Street vendors/ hawkers vending in urban areas, as on or before March 24, 2020, including the vendors of surrounding peri-urban and rural areas. 
  • Who will provide credit: Scheduled Commercial Banks, Regional Rural Banks, Small Finance Banks, Cooperative Banks, Non-Banking Financial Companies, Micro-Finance Institutions and SHG Banks.
  • Tenure: The Scheme shall be implemented up to March, 2022.
  • No collateral security is required

3 . China – Bangladesh Relationship

Context: In a significant show of economic diplomacy in South Asia, China has announced tariff exemption for 97 per cent of exports from Bangladesh. And diplomatic sources of Bangladesh have described the Chinese move as a “major success” in Dhaka-Beijing relationship

About the News

  • The Ministry of Foreign Affairs of Bangladesh announced that 97 percent of items covering fisheries and leather products would be exempted of Chinese tariffs.
  • Beijing’s decision came a month after Prime Minister Sheikh Hasina and President Xi Jinping discussed enhancing bilateral relation in the background of the economic hardship triggered by the COVID-19 pandemic.
  • Bangladesh is among the Least Developed Countries (LDCs) and that is why this decision was taken by China.


  • It is expected to help Bangladesh cushion the economic impact of the pandemic and also emerge as a possible beneficiary alongside Vietnam and Chile of the U.S.-China trade war.
  • Bangladesh imports around $ 15 billion in Chinese goods but its China-bound exports had been very low in comparison..
  • Bangladesh already receives tariff-exemption for 3,095 items under the Asia Pacific Trade Agreement (APTA). As a result of the latest announcement, a total of 8,256 goods from Bangladesh will be exempted of Chinese tariffs.
  • It wont have any specific impact on India’s relationship with Bangladesh but China is influence in one more neighbourhood nation

 Asia Pacific Trade Agreement (APTA)

  • Asia-Pacific Trade Agreement (APTA) is a preferential regional trade agreement formerly known as the Bangkok Agreement.
  • APTA aims to promote economic development of its members through the adoption of mutually beneficial trade liberalization measures that contribute to regional trade expansion and economic cooperation. Over time it refocused from the initial negotiation of tariff concessions on merchandise trade to at present negotiating liberalization in investment, services trade and trade facilitation. It is also continuously working on improving and modernizing its Rules of origin for trade in goods.
  • Participating States: People’s Republic of Bangladesh; People’s Republic of China; Republic of India; Lao People’s Democratic Republic; Republic of Korea; Democratic Socialist Republic of Sri Lanka; Mongolia (has concluded its bilateral negotiations on tariff concessions with the current Participating States, and is soon to become the seventh member of APTA.)

4 . Contribution to NDRF

Context: The Finance Ministry has given approval to a proposal to allow individuals and institutions to contribute directly to the National Disaster Relief Fund (NDRF).


  • This is a significant development at a time when many have expressed concerns about donations sent to the PM CARES Fund or the Prime Minister’s National Relief Fund, as both claim they are not public authorities subject to questions under the Right to Information Act.
  • The NDRF was set up in accordance with Section 46 of the Disaster Management Act, 2005. It is meant to “meet the expenses for emergency response, relief and rehabilitation” for any disaster situation. Although Section 46 includes a clause for grants made by any person or institution, provisions for such donations had not been made

NDRF has been covered in detail under Current Affairs of 18th June

5 . Juneteenth

Context : The United States marked the end of slavery by celebrating Juneteenth on Friday, with the annual unofficial holiday taking on renewed significance as millions of Americans confront the nation’s living legacy of racial injustice.

Juneteenth history: How it came to signify the end of slavery

  • Juneteenth commemorates June 19, 1865, when Maj. Gen. Gordon Granger arrived in Galveston, Texas and read a federal order abolishing the institution of slavery in the state
  • The moment was significant. Texas had been the last of the Confederate states where enslavement continued, despite President Abraham Lincoln’s Emancipation Proclamation to end slavery in 1863 and despite the end of the Civil War on April 9, 1865.
  • Texas was the most remote state in the Confederacy, and it took Union forces until June to reach Texas in sufficient numbers to announce and enforce the federal order that ended slavery there. (The 13th Amendment, which added the abolishment of slavery to the Constitution, passed Congress in January 1865, but wasn’t ratified and adopted until December 1865.)
  • Since June 19, 1865, Americans have observed and celebrated Juneteenth as Emancipation Day, a day of freedom. In 1980, Texas began marking Juneteenth as an official state holiday, the first state to do so. Now, nearly all states commemorate or observe Juneteenth to some degree.

Emancipation Proclamation

  • President Abraham Lincoln issued the Emancipation Proclamation on January 1, 1863, as the nation approached its third year of bloody civil war.
  • The proclamation declared “that all persons held as slaves” within the rebellious states “are, and henceforward shall be free.”
  • Despite this expansive wording, the Emancipation Proclamation was limited in many ways. It applied only to states that had seceded from the United States, leaving slavery untouched in the loyal border states. It also expressly exempted parts of the Confederacy (the Southern secessionist states) that had already come under Northern control. Most important, the freedom it promised depended upon Union (United States) military victory.
  • Although the Emancipation Proclamation did not end slavery in the nation, it captured the hearts and imagination of millions of Americans and fundamentally transformed the character of the war. After January 1, 1863, every advance of federal troops expanded the domain of freedom. Moreover, the Proclamation announced the acceptance of black men into the Union Army and Navy, enabling the liberated to become liberators. By the end of the war, almost 200,000 black soldiers and sailors had fought for the Union and freedom.
  • From the first days of the Civil War, slaves had acted to secure their own liberty. The Emancipation Proclamation confirmed their insistence that the war for the Union must become a war for freedom. It added moral force to the Union cause and strengthened the Union both militarily and politically. As a milestone along the road to slavery’s final destruction, the Emancipation Proclamation has assumed a place among the great documents of human freedom.

6 . Why China trade ban is a bad idea


Trade deficits are not necessarily bad

  • One of the main reasons why banning trade has been the first reaction is the notion that having a trade deficit is somehow a “bad” thing. The fact is altogether different. Trade deficits/surpluses are just accounting exercises and having a trade deficit against a country doesn’t make the domestic economy weaker or worse off.
  • For instance, if one looks at the top 25 countries with whom India trades, it has a trade surplus with the US, the UK and the Netherlands but that doesn’t mean the Indian economy is stronger or better off than any of these three.
  • Similarly, it has a trade deficit with the other 22 of them (including China) — regardless of their size and geographic location. This list includes France, Germany, Nigeria, South Africa, UAE, Qatar, Russia, South Korea, Japan, Vietnam, Indonesia among others.
  • A trade deficit with China only means that Indians buy more Chinese products than what Chinese from India. But per se that is not a bad thing because it shows that Indian consumers — who made these purchase decisions individually and voluntarily — are now better off than what they would have been had they bought either, say, a Japanese or French or even an Indian alternative. Essentially, it shows that Indian consumers, as well as the Chinese producers, gained through trading. It is this very process that generates the gains from trade. Both sides are better off than what they would have been without trade.
  • Running persistent trade deficits across all countries raises two main issues :
    • One, does a country have the foreign exchange reserves to “buy” the imports. Today, India has more than $500 billion of forex — good enough to cover imports for 12 months.
    • It also shows that India is not capable of producing for the needs of its own people in the most efficient manner.

Will hurt the Indian poor the most

  • More often than not, the poorest consumers are the worst-hit in a trade ban of this kind because they are the most price-sensitive.
  • For instance, if Chinese ACs were replaced by either costlier Japanese ACs or less efficient Indian ones, richer Indians may still survive this ban — by buying the costlier option — but a number of poor, who could have otherwise afforded an AC, would either have to forgo buying one because it is now too costly (say a Japanese or European firm) or suffer (as a consumer) by buying a less efficient Indian one.
  • Similarly, the Chinese products that are in India are already paid for. By banning their sale or avoiding them, Indians will be hurting fellow Indian retailers. Again, this hit would be proportionately more on the poorest retailers because of their relative inability to cope with the unexpected losses.

Will punish Indian producers and exporters

  • Some may argue that trading with China hurts many Indian producers. This is true, but it is also true that trading hurts only the less efficient Indian producers while helping the more efficient Indian producers and businesses.
  • It is important to note that the list of Indian consumers of Chinese imports does not comprise just those who consume the final finished good from China; several businesses in India import intermediate goods and raw materials, which, in turn, are used to create final goods — both for the domestic Indian market as well as the global market (as Indian exports).
  • Contrary to popular belief an overwhelming proportion of Chinese imports are in the form of intermediate goods such as electrical machinery, nuclear reactors, fertilisers, optical and photographic measuring equipment organic chemicals etc. Such imports are used to produce final goods which are then either sold in India or exported.
  • A blanket ban on Chinese imports will hurt all these businesses at a time when they are already struggling to survive, apart from hitting India’s ability to produce finished goods.

Will barely hurt China

  • It will hurt India and Indian far more than it will hurt China.
  • While China accounts for 5% of India’s exports and 14% of India’s imports — in US$ value terms — India’s imports from China (that is, China’s exports) are just 3% of China’s total exports. More importantly, China’s imports from India are less than 1% of its total imports.
  • The point is that if India and China stop trading then — on the face of it — China would lose only 3% of its exports and less than 1% of its imports, while India will lose 5% of its exports and 14% of its imports.
  • Moreover, if one takes the notion of not letting China profit from the Indian purchasing power strictly, then Indians should also avoid buying all products that use Chinese goods and labour. So, forget the several obvious Chinese brands and products, Indian consumers would have to go about figuring out if China gains any money from, say, the iPhones that are sold in India. Or if the steel used in a European gadget is Chinese or not.
  • The trouble is this is a near-impossible task not just because of China’s centrality in global trade and global value chains but also because even teams of bureaucrats will find it tough to map Chinese involvement in all our trade on a real-time basis.

India will lose policy credibility

  • It has also been suggested that India should renege on existing contracts with China. Again, while in the short-term this may assuage hurt sentiments, it would be hugely detrimental for a country such as India which has been trying to attract foreign investment.
  • One of the first things an investor — especially foreign — tracks is the policy credibility and certainty. If policies can be changed overnight, if taxes can be slapped with retrospective effect, or if the government itself reneges on contracts, no investor will invest. Or, if they do, they will demand higher returns for the increased risk.

7 . Facts for Prelims

Keeladi / Keezhadi Excavation

  • Keezhadi excavation site is a Sangam period settlement that is being excavated by the Archaeological Survey of India and the Tamil Nadu Archaeology Department.
  • This site is located 12 km southeast of Madurai in Tamil Nadu, near the town of Keezhadi in Sivagangai district.

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