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Cabinet approves launch of Bharat Bond Exchange Traded Fund

 

Paper: GS 3

 

Topic:  Indian Economy and issues relating to planning, mobilisation of resources, growth, development and employment

The Cabinet Committee on Economic Affairs, chaired by Prime Minister Shri Narendra Modi has given its approval for creation and launch of Bharat Bond Exchange Traded Fund (ETF) to create an additional source of funding for Central Public Sector Undertakings (CPSUs) Central Public Sector Enterprises (CPSEs), Central Public Financial Institutions (CPFIs) and other Government organizations.  Bharat Bond ETF would be the first corporate Bond ETF in the country.

Features of Bharat Bond ETF:

 

ETF will be a basket of bonds issued by CPSE/CPSU/CPFI/any other Government organization Bonds (Initially, all AAA rated bonds)

  • Tradable on exchange
  • Small unit size Rs 1,000
  • Transparent NAV (Periodic live NAV during the day)
  • Transparent Portfolio (Daily disclosure on website)
  • Low cost (0.0005%)

 

Bharat Bond ETF Structure:

 

  •   Each ETF will have a fixed maturity date
  •   The ETF will track the underlying Index on risk replication basis, i.e. matching Credit Quality and Average Maturity of the Index
  •   Will invest in a portfolio of bonds of CPSE, CPSU, CPFI or any other Government organizations that matures on or before the maturity date of the ETF
  • As of now, it will have 2 maturity series – 3 and 10 years. Each series will have a separate index of the same maturity series.

 

Index Methodology:

 

  • Index will be constructed by an independent index provider – National Sock Exchange
  • Different indices tracking specific maturity years – 3 and 10 years

 

Benefits of Bharat Bond ETF to investors:

 

  • Bond ETF will provide safety (underlying bonds are issued by CPSEs and other Government owned entities), liquidity (tradability on exchange) and predictable tax efficient returns (target maturity structure).
  • It will also provide access to retail investors to invest in bonds with smaller amount (as low as Rs. 1,000) thereby providing easy and low-cost access to bond markets.
  • This will increase participation of retail investors who are currently not participating in bond markets due to liquidity and accessibility constraints.
  • Tax efficiency compared to Bonds as coupons from the Bonds are taxed at marginal rates. Bond ETFs are taxed with the benefit of indexation which significantly reduces the tax on capital gains for investor.

 

Ministry of Civil Aviation Launches Round 4 of RCS- UDAN

 

Paper: GS 3

 

Topic:  Infrastructure – Energy, Ports, Roads, Airports, Railways etc.

the Ministry of Civil Aviation has launched the 4th round of Regional Connectivity Scheme (RCS)-  Ude Desh Ka Aam Nagrik( UDAN) to further enhance the connectivity to remote and regional areas of the country. Focus of this round would be the priority areas like NER, Hilly States, J&K, Ladakh and Islands.

This scheme is a part of the National Civil Aviation Policy and is funded jointly by the GoI and the state governments. The following are its salient features:

  • The scheme duration is for 10 years
  • Airlines participating in UDAN are selected through a competitive bidding process
  • The Central government will provide the following:
    • Subsidy to cover Value Gap funding (VGF) for participating airlines
    • Concessional GST on tickets booked using the scheme
    • Code sharing for flights under the policy
  • State Governments will extend the following measures:
    • GST reduction to 1% for 10 years
    • Coordination with oil companies to facilitate refuelling facilities
    • Provide land for airport and ancillary development
    • Trained security personnel
    • Utilities at subsidised rates
    • 20% of VGF
  • Airport operators such as AAI will provide the following concessions:
    • No parking, landing and storage charges at participating airports
    • Nil TNLC (Terminal Navigation Landing Charges)
    • Allow ground handling by the airline selected through the bidding process
    • RNCF (Route Navigation and Facilitation Charges) will be discounted to 42.4% of normal rates by the Airports Authority of India

Value Gap Funding is not provided to cargo airlines. All other terms and conditions remain the same as passenger airlines. The fares are graded based on distance and flight hours for both fixed-wing and rotary-wing services. The RCS subsidy is funded by a levy of Rs 5000 per flight on major routes. Flights regulated under this policy framework can be booked from the UDAN website and major travel portals by passengers.

Swachhta Pakhwada

 

Paper: GS 2

 

Topic:  Government policies and interventions aimed at development in various sectors and issues arising out of their design and implementation

 

  • It is an environment awareness campaign under Swachh Bharat Mission.
  • It is for achieving total sanitization and cleanliness by October 2, 2019 under Swachh Bharat Mission.
  • Under the campaign a theme wise “Swachh Bharat Fortnight” is being organised by different Ministries.
  • It is a voluntary exercise and objective is to create awareness, target programmes, invite pledges, spending of CSR etc.
  • It has also been followed by private institutions and corporates groups.

 

                                    CYCLONE BULBUL

 

Paper: GS 1

 

Topic:  Important Geophysical phenomena such as earthquakes, Tsunami, Volcanic activity, cyclone etc.

  • The depressionover the east-central and southeast Bay of Bengal and North Andaman Sea has turned into a severe cyclonic storm.
  • The landfall of the cyclone is expected between Sagar Islands (West Bengal)and Khepupara (Bangladesh).
  • The cyclone has been namedby