INDIAN GOVERNMENT BONDS IN JP MORGAN INDEX FROM JUNE 28

• Inclusion of Indian Government Bonds (IGBs) in JP Morgan Government Bond Index, Emerging Market (GBI-EM)

Key Details:

• Inclusion Date: From June 28, 2024, to March 31, 2025.
• Gradual inclusion over 10 months.

Background:

• Inclusion will attract dollar inflows into India.
• Helps stabilize financing of the current account gap.

JP Morgan’s Announcement:

• Announced in September 2023, effective June 2024.
• India will initially have a 1% weightage in the index, rising to 10% over 10 months (1% weight per month).
• Higher weightage will prompt global investors to allocate more funds for Indian debt.

Eligible Indian Government Bonds:

• 23 IGBs meet index eligibility criteria.
• Combined notional value: Rs 27 lakh crore ($330 billion).
• Only IGBs under the Fully Accessible Route (FAR) are eligible.
• FAR introduced in March 2020 by RBI to enable non-residents to invest in specified Government of India securities.
• Eligible bonds must have a notional outstanding above $1 billion and at least 2.5 years remaining maturity.

Impact of Bond Inclusion:

• Expected inflows: $2 billion to $2.5 billion per month during the 10-month period.
• Total expected inflows: $20 billion to $25 billion.

Benefits:

• Lower risk premia.
• Helps finance fiscal and current account deficits.
• Enhances liquidity and ownership base of government securities (G-secs).
• Potentially lowers funding costs.
• Supports development of domestic capital markets.

Potential Downsides:

• Marginal direct positive effects on India’s credit profile in the near term.
• Higher inflows could boost the rupee.
• Inflationary pressure as RBI mops up dollars and releases equivalent rupees.

LEBANON

Lebanon might be “returned to the Stone Age,” according to Israel, which has given a dire warning if conflict breaks out with Hezbollah.

Context:

• Hezbollah is a political party and paramilitary organization that is Shia Islamist in Lebanon. Hezbollah and Israel are still at odds, and its activities have important regional ramifications.

About Lebanon:

• Located in Western Asia on the eastern shore of the Mediterranean Sea, Lebanon is a small Middle Eastern country.
• Its land borders are shared by Israel to the south and Syria to the east and north.
• The Mediterranean Sea encircles the western portion of Lebanon, and it also has maritime boundaries with Cyprus.

Disputed Border:

• Israel and Lebanon’s contested boundary is one of the hotly debated topics.
• The war between Israel and Hezbollah in southern Lebanon in 2006 is just one chapter in the complicated history of the Israel-Lebanon conflict.
• Following Israel’s 2000 pullout from southern Lebanon, the UN drew the Blue Line, which is still a sensitive topic.

FINANCIAL ACTION TASK FORCE (FATF)

India performed exceptionally well in the Mutual Evaluation that the Financial Action Task Force (FATF) carried out between 2023 and 2024.

Background:

• The Financial Action Task Force (FATF) acknowledged India’s excellent technical compliance with anti-money laundering (AML), counterterrorism financing (CFT), and counterproliferation funding (CPF) regulations.

About Financial Action Task Force (FATF)

• Established in 1989, the Financial Action Task Force (FATF) is an international intergovernmental organization.
• Its initial goal was to investigate and create countermeasures for money laundering.
• The FATF extended its mandate to include measures to counter terrorism financing following the US attacks of 9/11.
• It increased its efforts to stop the financing of the spread of weapons of mass destruction (WMD) in April 2012.

Membership:

• 39 nations are members, India included.
• Participating regional bodies include the Gulf Cooperation Council and the European Commission.
• India became a full member in 2010 after initially joining as an observer in 2006.

Functions:

• establishes global norms.
• evaluates the conformity of nations.
• finds flaws and encourages changes to policy.

Lists:

• The FATF keeps two lists up to date:
• Black List: Jurisdictions at high risk that have serious shortcomings in their efforts to prevent money laundering and the funding of terrorism.
• Grey List: Areas that are subject to more scrutiny.
• Iran and North Korea are currently included on the black list.

Protection of Children from Sexual Offences (POCSO) Act

Gujarat High Court Bail Case

Grant of Bail:

• Gujarat High Court granted bail to a juvenile accused of rape and charged under the POCSO Act.
• Juvenile Justice Board and children court required to examine if he understood the consequences of his alleged offences.

Background:

• Juvenile was in a relationship with a minor schoolmate.
• The girl died by suicide after her elder sister found her with the juvenile, scolded, and beat her.
• Protection of Children from Sexual Offences (POCSO) Act

Purpose:

• Addresses sexual exploitation and abuse of children.
• Enacted following India’s ratification of the UN Convention on the Rights of the Child in 1992.

Key Features:

• Gender-Neutral: Defines a child as any person under 18.
• Mandatory Reporting: Non-reporting is a crime, punishable for institutional heads.
• No Time Limit: Allows reporting abuse at any time.
• Confidentiality: Protects the victim’s identity, disclosure only allowed by special courts.

Key Provisions:

• Child Definition: Any person below 18 years.
• Investigation & Trial: Investigation within 2 months, trial within 6 months.
• Aggravated Sexual Assault: Includes cases involving mentally ill children or offenders in positions of trust (e.g., armed forces, public servants, family members).
• Punishment: Minimum 10 years to life imprisonment for aggravated penetrative sexual assault.
• Child Protection: Avoids re-victimization during judicial processes; mandatory reporting.
• Punishment for Non-Reporting: Six months imprisonment or fine for failing to report.
• Child Trafficking: Punishment for trafficking children for sexual purposes.
• False Complaints: Punishment for false complaints or untrue information.
• 2019 Amendment: Increased minimum punishment from 7 to 10 years, and 20 years to life imprisonment for penetrative sexual assault on children below 16.