India 7th in FDI inflows
(GS-II: Important International Institutions)
The United Nations Conference on Trade and Development’s (Unctad) has released the annual World Investment Report.
Highlights of the Report:
India is ranked seventh despite a 30% decline in foreign direct investment (FDI) into the country.
The United States ($367 billion) remained the top recipient of FDI.
China ($181 billion) and Hong Kong ($141 billion) also retained second and third position respectively.
Among the top 10 host economies, only India saw a decline in its inflows.
However, outward FDI from India rose 43 per cent to $15.5 billion in 2021.
What is FDI?
Foreign direct investment (FDI) is an investment from a party in one country into a business or corporation in another country with the intention of establishing a lasting interest. With FDI, foreign companies are directly involved with day-to-day operations in the other country.
About United Nations Conference on Trade and Development (UNCTAD):
It is a permanent intergovernmental body established by the United NationsGeneral Assembly in 1964.
It is part of the UN Secretariat.
It reports to the UN General Assembly and the Economic and Social Council, but has its own membership, leadership, and budget.
It is also a part of the United Nations Development Group.
Objectives and roles:
It supports developing countries to access the benefits of a globalized economy more fairly and effectively. Along with other UN departments and agencies.
It also measures the progress made in the Sustainable Development Goals, as set out in Agenda 2030.
Reports published by UNCTAD are:
Why bond yields are rising?
(GS-III: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment)
The Reserve Bank of India has hiked rates to rein in inflation, which is expected to remain above 7% until at least September.
However, with this, the bond yields have also risen to their highest levels in three years.
What does it mean?
The rise in yields means markets have already factored in the worst of the rate movements.
The rise indicates that the cost of funds in the financial system is rising and so are interest rates.
The rise means the government will have to pay more as yield (or return to the investors), leading to a rise in cost of borrowings.
This will put upward pressure on general interest rates in the banking system.
Impact on Investors:
The rise in yields means investors expect higher interest rates and are selling their bonds, because higher rates would result in a decline in the bond price of existing bonds (and thereby capital loss on sale before maturity).
Debt investors are set to get impacted. When yields rise and bond prices fall, net asset values of debt funds, which hold a sizeable chunk of government securities in their portfolios, will also decline.
It will also impact corporate bonds, which are priced higher than government bonds.
Rising bond yields are generally not good news for equity investors as they raise the cost of funds for companies and start hurting their earnings.
Bond Yields vs Equity:
Bond yields have an inverse relationship with equities as a rise in bond yields means that the risk premium on equities will have to go up.
Relationship between Bond Price and Yield:
A bond’s price moves inversely with its yield or interest rate; the higher the price of a bond, the lower the yield.
The reason for the inverse relationship between price and yield is due, in part, to bonds being fixed-rate investments.
Investors might sell their bonds if it’s expected that interest rates will rise in the coming months and opt for the higher-rate bonds later on.
Conversely, bond investors might buy bonds, driving the prices higher, if they believe interest rates will fall in the future because existing fixed-rate bonds will have a higher rate or yield.
Fast radio burst
(GS-III: Awareness in Space)
Astronomers have reported a fast radio burst (FRB) whose characteristics are different from almost all other FRBs previously detected, except one.
The latest FRB (Named FRB 20190520B), unlike many other FRBs, emits frequent, repeating bursts of radio waves. Only one FRB has been previously observed to behave this way.
What are FRBs?
FRBs are bright flashes of light that appear for a few milliseconds and then vanish.
The first FRB was discovered in 2007. Since then 140 more were discovered until June 2021.
How are they produced?
The astronomers have suggested that the candidates for the sources of FRBs are the superdense neutron stars left over after a supernova, or magnetars (neutron stars with ultra-strong magnetic fields).
What are Magnetars?
A magnetar is a type of neutron star.
They are the most powerful magnets in the cosmos.
Their magnetic fields are 5,000 trillion times more powerful than that of the Earth.
QS World University Rankings 2023
(GS-II: Issues related to Education)
Leading global higher education analysts QS (Quacquarelli Symonds) has released the 19th edition of one of the most-consulted international university rankings.
It is the only international ranking to have received the approval of International Ranking Expert Group (IREG).
How are institutions ranked?
QS uses six indicators to compile the ranking: Academic reputation (AR), employer reputation (ER), citations per faculty (CPF), faculty/student ratio, international faculty ratio and international student ratio.
Performance of Indian Institutions:
The latest edition features 41 Indian universities, of which 12 improved their positions, 12 remained stable, 10 declined and seven are new entries.
The IISc ranks 155th globally, and is the global leader in the citations per faculty (CpF) indicator, which QS uses to evaluate the impact of the research produced by universities.
The IISc is the fastest rising South Asian university among the top-200 universities in the QS rankings, having climbed 31 places year on year.
The IIT Bombay, which was the top Indian university in QS World University Rankings of the previous edition, is the second best Indian institution this time and climbed five places globally to reach the 172 rank.
The third best Indian university is the Indian Institute of Technology, Delhi (IITD), followed by IIT Madras and IIT Kanpur.
Jindal Global University is the top-ranked private institute in India.