POLITY AND CONSTITUTION

1. LANGUAGES PANEL RECOMMENDATIONS AND A FRESH ‘HINDI IMPOSITION’ ROW

THE CONTEXT: Recently, the 11th volume of the Report of the Official Language Committee headed by Home Minister, which was submitted to President in September 2022 has triggered angry reactions from the Chief Ministers of Tamil Nadu and Kerala, who have described the Report as an attempt by the Union government to impose Hindi on non-Hindi-speaking states.

THE EXPLANATION:

What is this language panel led by Union Home Minister?

• The Committee of Parliament on Official Language was set up in 1976 under Section 4 of The Official Languages Act, 1963. Section 4 of the Act says “there shall be constituted a Committee on Official language, on a resolution to that effect being moved in either House of Parliament with the previous sanction of the President and passed by both Houses”.
• The Committee is chaired by the union Home minister, and has, in accordance with the provisions of the 1963 Act, 30 members — 20 MPs from Lok Sabha and 10 MPs from Rajya Sabha. The job of the Committee is to review the progress made in the use of Hindi for official purposes, and to make recommendations to increase the use of Hindi in official communications.

What has the panel recommended in its latest (2021) report?

• The contents of the report submitted to President on September 9 by Union Home Minister and other members of the Committee are not in the public domain. Sources close to the Committee said it has made around 100 recommendations, including that Hindi should be the medium of instruction in IITs, IIMs, and central universities in the Hindi-speaking states.
• “The language used for communication in the administration should be Hindi, and efforts should be made to teach the curriculum in Hindi, but the latter is not mandatory. Lower courts in Uttar Pradesh, Uttarakhand, Madhya Pradesh, Bihar, Haryana, and Rajasthan already use Hindi.
• High Courts in other states, where proceedings are recorded in English or a regional language can make available translations in Hindi, because verdicts of High Court of other states are often cited in judgments,” according to sources, referring to the recommendations.

Is this the first time that such recommendations have been made?

• The makers of the Constitution had decided that both Hindi and English should be used as official languages for the first 15 years of the Republic, but in the wake of intense anti-Hindi agitations in the south, the Centre announced that English would continue to be used even after 1965.
• On January 18, 1968, Parliament passed the Official Language Resolution to build a comprehensive programme to increase the use of Hindi for official purposes by the Union of India.
• With the active promotion of Hindi being mandated by Article 351 of the Constitution, the Official Language Committee was set up to review and promote the use of Hindi in official communications. The first Report of the Committee was submitted in 1987.
• The ninth Report, submitted in 2011 by the panel headed by then Home Minister, made 117 recommendations, including suggestions to increase the use of Hindi in computers in government offices.

What does the new education policy say about teaching in Hindi and other regional languages?

• The announcement of the new National Education Policy (NEP) in 2020 too had triggered controversy over this issue. Politicians from Southern India had alleged attempts to “impose Hindi and Sanskrit”; however, the Centre had said it was only promoting regional languages.
• The NEP says that mother tongue or the regional language would be the “preferred” mode of instruction until Class 5, and possibly Class 8.

2. THE SUPREME COURT TO EXAMINE VALIDITY OF 2016 NOTE BAN AND HOW IT WAS DONE

THE CONTEXT: Recently, the Constitution Bench questioned whether the government and the Reserve Bank of India (RBI) realised their stated objectives of choking black money, terror financing and fake currency through the policy to demonetise ₹500 and ₹1,000 notes in 2016.

THE EXPLANATION:

• According to Solicitor-General questioned the very maintainability of the case which concerned a purely economic policy of the government.
• Also, it must be noted that Demonetisation in 1946 and 1978 were implemented through separate Acts debated by Parliament. In 2016, it was done through a mere notification issued under provisions of the Reserve Bank of India Act, 1934. The court should declare the law or nothing would stop the government from repeating the exercise which had seen “horrendous consequences”.
• Citing the RBI’s annual report, submitted that ₹15.44 lakh crore worth of currency was demonetised. The withdrawn money amounted to 86.4% of the currency in circulation at the time. Only ₹16,000 crore out of the ₹15.44 lakh crore was not returned. According to experts only .0027% fake currency was “captured” following demonetisation.
• The court wondered whether the government had thought about the consequences before going ahead with the withdrawal of the banknotes. It scheduled the next hearing on November 9, 2022 and directed the government and the RBI to file comprehensive affidavits in response to then opponent’s submissions.

INTERNATIONAL RELATIONS

3. HOW MUCH CRUDE OIL DOES THE EU STILL IMPORT FROM RUSSIA?

THE CONTEXT: According to the International Energy Agency (IEA), Russian oil imports into the European Union and United Kingdom fell 35% to 1.7 million barrels per day (bpd) in August from 2.6 million bpd in January 2022, but the EU was still the biggest market for Russian crude.

THE EXPLANATION:

• Recently Poland said it had detected a leak in one pipeline in the Druzhba system that carries oil from Russia to Europe, an event that will add to concerns about Europe’s energy security after the Nord Stream gas pipeline leak.
• The UK has already stopped importing Russian crude following Moscow’s invasion of Ukraine, and the EU will ban imports from December in an attempt to strip the Kremlin of revenue to fund the war.
• The ban will most likely create a shortage of oil due to a general lack of spare crude volumes in the world.

What are the alternatives to Russian crude?

• Under the looming ban, the EU will need to replace an additional 1.4 million barrels of Russian crude, with some 300,000 bpd potentially coming from the United States and 400,000 bpd from Kazakhstan, the IEA has said.
• Norway’s largest oilfield Johan Sverdrup, which produces medium-heavy crude similar to Russia’s Urals, also plans to ramp-up production in the fourth-quarter, potentially by 220,000 bpd.
• The IEA says imports from other areas such as the Middle East and Latin America would be needed to fully meet EU demand.
• Some Russian oil will continue to flow into the EU via pipelines as the ban excludes some landlocked refineries unless Russia decides to stop the flows.

How much does the EU depend on Russian crude imports?

• Germany, the Netherlands and Poland were the top importers of Russian oil in Europe last year, but all three have capacity to bring in seaborne crude.
• Landlocked countries in Eastern Europe, such as Slovakia or Hungary, however, have few alternatives to pipeline supplies from Russia.
• The EU’s dependence on Russia has also been underpinned by companies such as Rosneft and Lukoil, controlling some of the bloc’s largest refineries.
• According to the IEA, Russian crude oil flows, based on loading data in August, rose month-on-month to Italy and the Netherlands, where Russian oil major Lukoil owns refineries.

VALUE ADDITION:
ABOUT NORD STREAM 2 GAS PIPELINE:

• In 2015, the Russian energy major Gazprom and five other European firms decided to build Nord Stream 2 which is valued at around $11 billion.
• The Approx 1,200-km pipeline will run from Ust-Luga in Russia to Greifswald in Germany through the Baltic Sea and will carry 55 billion cubic metres of gas per year.
• The under-construction pipeline will run along with the already completed Nord Stream 1 system, and the two together will supply an aggregate of 110 billion cubic metres of gas to Germany per year.
• The pipeline falls in the territory of EU members Germany and Denmark and is about 98% complete.

ENVIRONMENT, ECOLOGY AND CLIMATE CHANGE

4. THE FIRST WORLD SLOTH BEAR DAY-12TH OCTOBER

THE CONTEXT: The first ever World Sloth Bear Day celebrations by Wildlife SOS in Agra in collaboration with International Union for Conservation of Nature (IUCN) and the UP-Forest Department.

THE EXPLANATION:

• It was observed to generate awareness and strengthen conservation efforts around the unique bear species endemic to the Indian subcontinent.
• A proposal for observing the World Sloth Bear Day was mooted by Wildlife SOS India, an organisation involved in sloth bear conservation and protection for over two decades and the IUCN-Species Survival Commission sloth bear expert team accepted the proposal and declared the day to be celebrated worldwide.
• Sloth bears are identified by their very distinct long, shaggy dark brown or black fur, distinct white V-shaped chest patch and four-inch long ivory-coloured curved claws used for digging out termites and ants from rock-hard mounds.

Barbaric tradition being resolved

A statement issued by Wildlife SOS stated that the organisation rescued and rehabilitated over hundreds of “performing dancing bears, thereby resolving a 400-year-old barbaric tradition (of dancing bears) while also providing alternative livelihoods to the nomadic Kalandar community members “.

Conservation Status:

Listed under Schedule I of The (Wildlife Protection) Act of India, 1972 the species has the same level of protection as tigers, rhinos and elephants. They can occupy a wide variety of habitats, such as grasslands, thorn scrub and forests, but their range has shrunk considerably in recent years due to habitat loss.

IUCN Status: Vulnerable.
CITES listing: Appendix I

Habitat:

Sloth bears are one of the eight bear species found across the world, and they mainly inhabit the region of India, Nepal, Sri Lanka and presumably Bhutan.

5. TAMIL NADU NOTIFIES INDIA’S FIRST SLENDER LORIS SANCTUARY

THE CONTEXT: In a first in the country, the Tamil Nadu government notified the Kadavur slender loris sanctuary covering 11,806 hectares in Karur and Dindigul districts.

THE EXPLANATION:

• Slender lorises, which are small nocturnal mammals, are arboreal as they spend most of their life on trees.
• The species acts as a biological predator of pests in agricultural crops and benefits farmers. Listed as an endangered species by the International Union for Conservation of Nature, slender loris has a wide range of ecological roles in the terrestrial ecosystem.
• Also, it has been brought under Schedule I of the Wild Life (Protection) Act, 1972 in order to provide the highest level of legal protection

Habitat improvement

• The survival of the species depends on habitat improvement, conservation and mitigation of threats,
• The sanctuary will cover Vedasandur, Dindigul East and Natham taluks in Dindigul district and Kadavur taluk in Karur district.
• In significant steps towards conservation of wildlife, the State government notified India’s first Dugong Conservation Reserve in the Palk Bay,Kazhuveli bird sanctuary in Villupuram, Nanjarayan Tank birds sanctuary in Tiruppur and the State’s fifth elephant reserve at Agasthyamalai in Tirunelveli. Further, 13 wetlands were declared as Ramsar sites. These path-breaking initiatives in 15 months have put Tamil Nadu at a pivotal position in the field of conservation.

THREATS:

• As it is believed that these animals have some medicinal properties, they are captured and sold.
• Since there is great demand for keeping these animals as pets, they are illegally smuggled.
• Habitat loss, electrocution of live wires, and road accidents are other threats that have caused its populations to dwindle.

GOVERNMENT SCHEMES AND INITIATIVES IN NEWS

6. THE PM-DEVINE SCHEME

THE CONTEXT: The Union Cabinet has approved the Prime Minister’s Development Initiative for North East Region (PM-DevINE) – a new scheme for the Northeastern states which was announced in the Union Budget earlier this year. The scheme will be operational for the remaining four years of the 15th Finance Commission, from 2022-23 to 2025-26, and will have an outlay of Rs 6,600 crore.

THE EXPLANATION:

What is PM-DevINE?

• The new scheme, PM-DevINE, is a Central Sector Scheme with 100% Central funding and will be implemented by Ministry of Development of North Eastern Region (DoNER) through North Eastern Council or Central Ministries/ agencies.
• The PM-DevINE Scheme will have an outlay of Rs.6,600 crore for the four-year period from 2022-23 to 2025-26 (remaining years of 15th Finance Commission period).
• PM-DevINE will lead to creation of infrastructure, support industries, social development projects and create livelihood activities for youth and women, thus leading to employment generation.
• Measures would be taken to ensure adequate operation and maintenance of the projects sanctioned under PM-DevINE so that they are sustainable.
• To limit construction risks of time and cost overrun, falling on the Government projects would be implemented on Engineering-procurement-Construction (EPC) basis, to the extent possible.
• Efforts will be made to complete the PM-DevINE projects by 2025-26 so that there are no committed liabilities beyond this year.

What are the objectives of PM-DevINE?

The objectives of PM-DevINE are to:
(a) Fund infrastructure convergently, in the spirit of PM Gati Shakti;
(b) Support social development projects based on felt needs of the NER;
(c) Enable livelihood activities for youth and women;
(d) Fill the development gaps in various sectors.

Initiatives/activities of MDoNER:

NESIDS

• North East Special Infrastructure Development Scheme” (NESIDS) was approved by the Government of India as a Central Sector Scheme. Under the Scheme guidelines of NESIDS, 100% centrally funding is provided to the State Governments of North Eastern Region for the projects of physical infrastructure relating to water supply, power and connectivity enhancing tourism and Social infrastructure relating to primary and secondary sectors of education and health.

The North East Venture Fund (NEVF)

• Ministry of DoNER had joined with North Eastern Development Finance Corporation Ltd (NEDFi) to set up the North East Venture Fund, the first and the only Venture Fund for Northeast with an initial corpus of Rs. 100 crores.
• The fund targets to invest in Start-Ups and unique business opportunities to provide resources for new entrepreneurships. The main focus of North East Venture Fund (NEVF) is for mostly the enterprises involved in Food Processing, Healthcare, Tourism, segregation of services, IT, etc.

THE DATA POINT

THE PRELIMS PRACTICE QUESTION

QUESTION OF THE DAY

Q1. ‘Vyommitra’, recently seen in news, is

a) A Supercomputer developed by C-DAC.
b) A Humanoid designed and developed by ISRO to fly aboard unmanned test mission.
c) An asteroid which will be explored for minerals.
d) A space mission of ISRO to study atmosphere of Venus.

Answer: B

Explanation:

• Vyommitra, the humanoid designed and developed by the Indian Space Research Organisation (ISRO) to fly aboard unmanned test missions ahead of the Gaganyaan human spaceflight mission.
• The ISRO and the IISU were in the news when they unveiled Vyommitra, a “female” robot astronaut, in 2020. Vyommitra is a half-humanoid lacking lower limbs.
• The IISU was responsible for the design, development, and integration of the robot, while the Vikram Sarabhai Space Centre (VSSC) at Thumba here developed its fingers. The AI-enabled robot is designed to fly aboard a rocket, withstanding vibrations and shock during the flight.

1. Man’s search for something not man-made READ MORE
2. Adapt yourself READ MORE
3. Two tragic Heroes READ MORE

1. Enforce laws firmly to eradicate caste crimes READ MORE
2. Vishwaguru needs high HEI ranking READ MORE

1. We need a forest-led COP27: Technology, at best, can assist us, not lead us, on the pathway to a sustainable, regenerative and equitable world READ MORE
2. In maps: The extent of destruction being unleashed on the forests of Great Nicobar Island READ MORE
3. Climate litigation demands an environmental consciousness READ MORE

1. The Court and the problem with its collegium: There needs to be a better, broad-based and transparent method of appointing senior judges to the High Courts and the Supreme Court READ MORE
2. Measure topography to ensure the equitable delivery of goods and services to all READ MORE
3. Are Indian judges now playing a more public role from interviews to speeches? READ MORE

(Newspapers, PIB and other important sources)

Prelim and Main

1. The grandeur of the Chola Empire, one of the longest ruling dynasties in South India  READ MORE
2. Experts call for protection of sloth bear on first World Sloth Bear Day READ MORE
3. After inspection, India stops Maiden Pharma unit from making drugs READ MORE
4. Putin says Russia can supply EU via Nord Stream 2 READ MORE
5. August industrial production shrinks 0.8%, inflation drags READ MORE
6. India’s first sanctuary for endangered Slender Loris to be set up in Tamil Nadu READ MORE
7. IMF’s latest world economy report: Red flags for India READ MORE
8. NASA Confirms DART Mission Impact Changed Asteroid’s Motion in Space READ MORE
9. Under cheetah deal, sought India’s support on lifting ivory ban: Namibia READ MORE

Main Exam

GS Paper- 1

1. We need a forest-led COP27: Technology, at best, can assist us, not lead us, on the pathway to a sustainable, regenerative and equitable world READ MORE
2. In maps: The extent of destruction being unleashed on the forests of Great Nicobar Island READ MORE
3. Enforce laws firmly to eradicate caste crimes READ MORE

GS Paper- 2

POLITY AND GOVERNANCE

1. The Court and the problem with its collegium: There needs to be a better, broad-based and transparent method of appointing senior judges to the High Courts and the Supreme Court READ MORE
2. Measure topography to ensure the equitable delivery of goods and services to all READ MORE
3. Are Indian judges now playing a more public role from interviews to speeches? READ MORE

SOCIAL ISSUES

1. Vishwaguru needs high HEI ranking READ MORE

INTERNATIONAL ISSUES AND RELATIONS

1. Dangerous spiral: Only a compromise through talks can end the hostilities in Ukraine READ MORE
2. India needn’t worry about the US-Pak relationship READ MORE

GS Paper- 3

ECONOMIC DEVELOPMENT

1. Winter is coming: India’s growth impulses slowing; the IMF warns ‘worst yet to come’ READ MORE
2. Spend wisely: Global slowdown and domestic food inflation are growth constraints. Govts must stop freebies & hike capex READ MORE
3. Breathe easy when the rupee falls: Free currency depreciation will counter slowing growth without worsening other problems READ MORE
4. Green shoots: Reducing poverty, unemployment should be top priorities READ MORE

ENVIRONMENT AND ECOLOGY

1. Climate litigation demands an environmental consciousness READ MORE

GS Paper- 4

ETHICS EXAMPLES AND CASE STUDY

1. Man’s search for something not man-made READ MORE
2. Adapt yourself READ MORE
3. Two tragic Heroes READ MORE

Questions for the MAIN exam

1. India needs a better, broad-based and transparent method of appointing senior judges to the High Courts and the Supreme Court. In the light of the statement discuss whether the mechanism of collegium should be preplaced with new mechanism?
2. ‘Inclusive economic growth requires reaching out to the poorest of the poor’. Discuss why India needs dedicated and sustained efforts are made to pull millions of destitute citizens out of poverty and how can India achieve it?
3. India’s Judiciary has become a more public Judiciary in recent times but is hampering the image of this institution. Critically examine.

WSDP Bulletin

(13/10/2022)

• It is good that war is so horrible, or we might grow to like it.
• Technology, at best, can assist us, not lead us, on the pathway to a sustainable, regenerative and equitable world.
• There needs to be a better, broad-based, transparent method of appointing senior judges to the High Courts and the Supreme Court.
• Only a compromise through talks can end the hostilities in Ukraine.
• States can have differential sources of revenue. Alternatively, the cost of delivering that basket may vary across geographical zones. Measuring topography might be an idea worth toying with.
• Incidents of attacks on Dalits are depressingly common across the country, partly due to persistent feudal attitudes among a section of the upper caste population and the marginalised castes’ continuing social and economic vulnerability.
• Inclusive economic growth requires reaching out to the poorest of the poor.

50-WORD TALK

• Finance Minister Nirmala Sitharaman is correct to warn the West that current high gas prices will compel India to return to thermal power. Developed countries will have to choose between their political interests–exhibited by their sanctions on countries like Venezuela, Iran, and Russia–and their climate goals. They can’t have everything.
• The latest imbroglio over appointing SC judges has again exposed the collegium system’s weaknesses. With its opacity and inherent distrust among members, the system is caught in a trap of its own making. It’s time judges realise what they want the world to believe – that sunlight is the best disinfectant.

Things to Remember:

• For prelims-related news try to understand the context of the news and relate with its concepts so that it will be easier for you to answer (or eliminate) from given options.
• Whenever any international place will be in news, you should do map work (marking those areas in maps and exploring other geographical locations nearby including mountains, rivers, etc. same applies to the national places.)
• For economy-related news (banking, agriculture, etc.) you should focus on terms and how these are related to various economic aspects, for example, if inflation has been mentioned, try to relate with prevailing price rises, shortage of essential supplies, banking rates, etc.
• For main exam-related topics, you should focus on the various dimensions of the given topic, the most important topics which occur frequently and are important from the mains point of view will be covered in ED.
• Try to use the given content in your answer. Regular use of this content will bring more enrichment to your writing.

[WpProQuiz 352]

THE CONTEXT: The Indian government was planning to introduce a Bill, the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 during the recently concluded Winter Session of the Parliament to classify cryptocurrencies as financial assets while protecting the interests of small investors. The Bill also proposes to lay the groundwork for the creation of the official digital currency to be issued by the Reserve Bank of India (RBI) and regulated under the RBI Act.

Note: The Bill has not been introduced in the Winter Session.

WHAT IS CRYPTOCURRENCY?

A cryptocurrency is a medium of exchange such as the Indian Rupee, US dollar etc. Bitcoin, the first cryptocurrency, appeared in January 2009 and was the creation of a computer programmer using the pseudonym Satoshi Nakamoto.

The term cryptocurrency is used because the technology is based on public-key cryptography, meaning that the communication is secure from third parties. This is a well-known technology used in both online transactions and communication systems.

Public key cryptography involves a pair of keys known as a public key and a private key (a public key pair), which are associated with an entity that needs to authenticate its identity electronically or to sign or encrypt data. Each public key is published, and the corresponding private key is kept secret. Data that is encrypted with the public key can be decrypted only with the corresponding private key.

CRYPTOCURRENCY V/S NORMAL CURRENCY

Cryptocurrency

• Like the US dollar, cryptocurrency has no intrinsic value. Therefore, it is not redeemable for another commodity such as gold.
• Cryptocurrency is not backed by any central bank
• Cryptocurrency doesn’t have any physical form
• Its supply is not determined by a central bank and the network is completely decentralized, with all transactions performed by the users of the system.

US Dollar ($) or Indian currency (₹)

• It also has no intrinsic value.
• It is a legal tender, which implies it is backed by a central bank or the government. Thus, banks cannot refuse to accept it.
• The currency does have a physical form
• Its supply is determined by the central bank on the basis of inflation or contractionary or expansionist fiscal policies.

WHY DO CRYPTOCURRENCIES NEED TO BE REGULATED?

PREVENT MARKET MANIPULATION AND PROTECT INVESTORS:

• Market manipulation and price volatility are common in cryptocurrencies. Take, for example, Bitcoin, the world’s oldest and most popular cryptocurrency, which rose to all-time highs since the beginning of 2021, before plummeting and losing a huge amount of its value.
• So, the lack of authorised information on these digital assets and the technological complexities associated with them makes it imperative to put regulations in place for safeguarding investors.

PROVIDING MARKET INFORMATION

• Thousands of cryptocurrencies exist around the world. Most investors, however, are only familiar with a few of those, such as Bitcoin, Ether, Ripple, and Dogecoin among others. They hardly have any knowledge about the thousands of other virtual assets.
• So, to protect customers, a regulatory authority clearing cryptocurrency is required, which can disclose all information about the performance of the digital assets, their risks, and potential.

UNDERSTANDING RISKS ASSOCIATED WITH TECHNOLOGY

• Technology is advancing at a breakneck pace. This carries a significant danger, as such changes have the potential to render technology, including blockchain, outdated in the future.
• Given the rapid rate of technological change, information infrastructure and professional financial advisors skilled in cryptocurrency are required. That way, investors can understand the technological risks of cryptocurrencies and make informed decisions.

ENSURING ACCOUNTABILITY

• Investing in cryptocurrencies comes with another risk — online fraud. Hacking is a major threat worldwide, and cyber-attacks have become common. One cyber-attack could result in losses for investors who have put their savings in cryptocurrencies.
• Through regulations, the authorities can implement measures to help cryptocurrency investors protect their assets. Also, investors can address concerns or reclaim their investments in case they lose them.

MONEY LAUNDERING

• Any unregulated system has the ability to fund criminal acts. As a result, a client due diligence process akin to that of a bank is required.
• For long, it was theoretical that cryptos could be used for money laundering and for terror financing. Recently, it turned out that the Enforcement Directorate of India had identified that using cryptos, Rs 4,000 crores has been laundered out of India in the last one year.
• This can help in keeping track of investors’ real identities and verifying their locations when they are buying or selling cryptocurrencies. Any infringement of such norms should be met with severe sanctions.

TAX ON THE TRANSACTIONS

• Nearly 10 crore Indians already have investments exceeding a total of $10 million in them.
• This not only creates an avenue for the generation of tax revenue for the nation but also puts forth a Herculean challenge for the tax authorities who must track and tax transactions involving cryptocurrencies.

WHAT HAS BEEN THE STEPS TAKEN BY THE GOVERNMENT TO REGULATE THE CRYPTOCURRENCY?

Currently, there is no regulation or any ban on the use of cryptocurrencies in the country. The Reserve Bank of India’s (RBI) order banning banks from supporting crypto transactions, was reversed by the Supreme Court order of March 2020.

HERE WE EXAMINE THE REGULATORY JOURNEY OF CRYPTOCURRENCY IN INDIA SO FAR.

• In 2013, the Reserve Bank of India (RBI) issued a circular warning to the public against the use of virtual currencies. The bank warned users, holders, and traders of virtual currencies about the potential financial, operational, legal, customer protection, and security-related risks they are exposing themselves to.
• The central bank pointed out that it has been keeping a close eye on developments in the virtual currency world, including Bitcoins, Litecoins, and other altcoins.
• But as banks continued to allow transactions on cryptocurrency exchanges — on February 1, 2017, RBI released another circular, reiterating its concerns with virtual coins. And by the end of 2017, a warning was issued by RBI and the finance ministry clarifying that virtual currencies are not legal tender.
• At the same time, two Public Interest Litigations (PILs) were filed in the Supreme Court, one asking for a ban on buying and selling of cryptocurrencies in India, the other asking for them to be regulated. In November, the government formed a committee to study issues around virtual currencies and propose actions.
• At this time, there was no ban on cryptocurrencies and most banks allowed transactions from cryptocurrency exchanges.

2018-2020

• In March 2018, the Central Board of Direct Tax (CBDT) submitted a draft scheme to the finance ministry for banning virtual currencies.
• A month later, the RBI issued a circular that restrained banks and financial institutions from providing financial services to virtual currency exchanges.
• In April 2018, the finance ministry appointed committee proposed a draft Bill for the regulation of virtual currencies but did not recommend a ban. However, in February 2019, the committee proposed a fresh draft Bill that recommended a blanket ban.
• In March 2020 a significant development took place, the Supreme Court of India lifted the curb on cryptocurrency imposed by RBI, which restricted banks and financial institutions from providing access to banking services to those engaged in transactions in crypto assets.

2021

• In November 2021, the Standing Committee on Finance met representatives of crypto exchanges, Blockchain and Crypto Assets Council (BACC), among others, and came to the conclusion that cryptocurrencies should not be banned, but regulated.
• In the same month, Prime Minister Narendra Modi called a meeting on cryptocurrencies with senior officials. The indications are that strong regulatory steps will probably be taken to deal with the issue.
• Meanwhile, the Reserve Bank of India has repeatedly underlined its strong view against cryptocurrencies, saying these pose a serious threat to the macroeconomic and financial stability of the country. It has also raised doubts about the number of investors trading on cryptocurrencies and their claimed market value.
• During the winter session, the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 was listed for introduction in Parliament’s. However, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses.

Although, Government wants to regulate cryptocurrencies, RBI in a complete ban on such currencies. In December 2021 RBI Said that “Cryptocurrencies are a serious concern to RBI from a macroeconomic and financial stability standpoint”.

SO, IF BITCOIN IS LEGALISED IN INDIA, THE FOLLOWING WOULD HAPPEN:

• It would fall under the purview of RBI’s 1934 Act.
• Its investors would be taxed.
• RBI would issue guidelines regarding investment and purchase of Bitcoin.
• If any foreign payment is made through Bitcoins, it would fall under the purview of the FEMA Act.
• Returns from investment in Bitcoin would be taxed.

HOW THE CRYPTOCURRENCIES ARE BEING REGULATED AROUND THE WORLD?

• United States:The US has regulations under the central and state governments (similar to India), which means that rules differ from state to state. The overall sentiment, however, is positive.
• China:China has been the harshest towards cryptocurrencies, moving from initially welcoming crypto mining to completely banning it as of June 2021.
• United Kingdom:The UK does not have specific legislation on cryptocurrencies and the sector is currently governed by the Financial Conduct Authority (FCA), which grants licenses for crypto businesses and exchanges.
• El Salvador: The South American country became the first to officially declare Bitcoin legal tender.

THE BLOCKCHAIN TECHNOLOGY AND ITS USE IN CRYPTOCURRENCY

1. The blockchain is the technology underlying Bitcoin and other cryptocurrencies. In the blockchain, the data is stored in the cloud network. In the case of Bitcoin, the decentralized public ledger takes the place of cloud storage that keeps a record of all transactions that take place across the peer-to-peer network.
2. This technology allows participants to transfer assets across the Internet without the need for a broker or an intermediary (central third party).
3. Blockchain technology uses public-key cryptography to secure transactions. Public-key cryptography employs two keys: a public key and a private key. An individual party to the crypto transaction will have a public key and a private key. The public key is widely distributed across the network, while the private key is a secret key for the individual.
4. Using a private key, a digital signature can be created so that anyone with the corresponding public key can verify that the message was created by the owner of the private key and was not modified since (See the diagram: Digital Signature).
5.  Using this a transaction record is created. One transaction record is called one block. When other transactions happen in the future, those transactions are recorded once again in a block and connected to the earlier block in a chain network. This chain of transactions from the source of origin to the end is called the blockchain. Thus, you can backtrace the source money by travelling back in the chain.
6. Given the latest block, it is possible to access all previous blocks linked together in the chain, so a blockchain database retains the complete history of all assets and instructions executed since the very first one – making its data verifiable and independently auditable.

FEATURES OF BLOCKCHAIN

• Data is stored in a decentralized cloud network. In the case of Bitcoin, this cloud is the public transaction ledger.
• Blockchain code is resistant to counterfeiting since data once added, can’t be reversed.
• Data security is enabled by public-private key cryptography.

WHAT ARE THE DIFFERENCES BETWEEN PUBLIC AND PRIVATE BLOCKCHAINS?

There are different types of blockchain: some are open and public and some are private and only accessible to people who are given permission to use them.

PUBLIC BLOCKCHAIN

• A public blockchain is an open network. Anyone can download the protocol and read, write or participate in the network.
• A public blockchain is distributed and decentralised. Transactions are recorded as blocks and linked together to form a chain. Each new block must be time stamped and validated by all the computers connected to the network, known as nodes before it is written into the blockchain.
• All transactions are public, and all nodes are equal. This means a public blockchain is immutable: once verified, data cannot be altered.
• The best-known public blockchains used for cryptocurrency are Bitcoin and Ethereum: open-source, smart contract blockchains.

PRIVATE BLOCKCHAIN

• A private blockchain is an invitation-only network governed by a single entity.
• Entrants to the network require permission to read, write or audit the blockchain. There can be different levels of access and information can be encrypted to protect commercial confidentiality.
• Private blockchains allow organisations to employ distributed ledger technology without making data public.
• But this means they lack a defining feature of blockchains: decentralisation. Some critics claim private blockchains are not blockchains at all, but centralised databases that use distributed ledger technology.
• Private blockchains are faster, more efficient and more cost-effective than public blockchains, which require a lot of time and energy to validate transactions.

ADVANTAGES OF BLOCKCHAIN IN THE INDIAN CONTEXT

1. Online voting: With a unique digital identity to identify the voter and a private key, online voting can be facilitated. Since blockchain doesn’t allow reversing the data once entered, every voter using this option can exercise this privilege only once.
2. To trace black money: Provided people become completely cashless and shift to digital transactions. That is the biggest challenge since this operates on a digital network. Most blockchains are entirely open-source software. This means that anyone and everyone can view its code. This gives auditors the ability to review cryptocurrencies like Bitcoin for security.
3. Improve the efficiency of the approval process in the social benefits scheme: If personal health record is stored on a cloud network and secured with blockchain, every single addition of data by a medical practitioner will be recorded and connected to earlier blocks of data. Tracing the sequence of earlier treatments and medical tests will reduce the duplication of the same tests and treatment. This will make the process of approval of health insurance policies faster and more efficient. This is what Estonia has done and can be used in the Indian context to improve the efficiency of medical insurance schemes faster. Additionally, since the data is stored in the cloud, some person can sell it for clinical trials or experiments or research to a pharma company within a few seconds, since the digital data can be transferred in a few mouse clicks.
4. Reduces chances of fraud: Since all the data is stored in the cloud and encrypted and can be transferred across platforms, it will help to reduce frauds since this can be checked immediately. For e.g., if all the banks and insurance companies collaborate the data of blacklisted people on a common blockchain platform that they can check, chances are rare that the person under suspicion will be able to commit the same once again.  Since every single payment will be recorded on the blockchain network and transparent to authorized people on the blockchain network, it will reduce the chances of scams.
5. To reduce the burden of pending cases on courts: If all the land records are digitized and stored on the blockchain, each and every transaction can be back-traced with complete details including the identity of the person, time and place when the land title was transferred etc. This will help to immediately trace out frauds.
6. Protection of Aadhaar data by creating a Dynamic registry (a distributed database that updates as assets are exchanged on the digital platform: Since the blockchain stores all the records including, when the transaction has happened, who stored the data, who added value to it, it can be used to trace when and from where my Aadhar data was accessed by whom. This will help to trace the source of leakage if any fraud has happened by using Aadhar data.

WHAT ARE THE CURRENT BOTTLENECKS IN REGULATING CRYPTO?

TYPE OF REGULATION

• The Industry bodies demand self-regulation by crypto exchanges while the RBI wants complete ban. The government has set up committees and which said regulation by government. Thus, there seems to be divergence on this aspect.

WHETHER CRYPTO CAN BE REGULATED AT ALL?

• Some analysts point out that it is nearly impossible to regulate crypto currencies as they simply move to P2P exchanges outside India, may use hawala type informal system to get around regulation.
• Crypto exchanges that are operating outside India and accessible from India just like any other internet-based service will not follow the laws of the Indian government.
• How can one enforce any regulation brought in by the government in such a case?

CURRENCY OR COMMODITY?

• Cryptocurrency itself is a misnomer as its legal existence in most countries is that of a commodity and not a currency. What it implies is that most countries globally do not accept cryptos as legal tender.
• In the Indian context, this aspect need to be made clear and the regulation need to tailored accordingly

CAPACITY TO REGULATE

• Crypto is a cutting edge technological innovation that is being improved upon day by day. Thus to regulate them, the regulator should have the expertise, technical capacity etc.
• Whether the country especially the government sector has the talent pool is a debatable issue.

ISSUE OF PRIVATE AND PUBLIC  CRYPTO CURRENCY

• The Bill seeks to ban all private crypto currencies in India with some exceptions. But since the Bill is not in the open, what is public crypto and private crypto is open to interpretation.
• Whether the Central Bank Digital Currency will be the public crypto that will be allowed is also not clear?
• If RBI regulates crypto and is itself a player, that would create conflict of interest is another issue.

THE WAY FORWARD:

• Banning cryptocurrency is not a viable solution, so it must be regulated. Banning will lead to underground activities and people will continue illegal trading of these currencies.
• The decision for banning/regulation should be based on consensus and it should not be taken in a hurry.
• India can learn from other countries how to regulate such currencies and how to tax them (for example, Israel).
• Digital currencies have the potential to solve many issues, India needs to use it utility.
• Accepting cryptocurrency allows scope for effective regulation. RBI has already expressed interest in blockchain technology and is even planning to introduce its own Digital Rupee, much like the Digital Yuan. This entry into the e-money market could well be a balancing act by the RBI, perhaps making it a more acceptable fiat than crypto, while being well within the ambit of regulation.
• Cryptocurrency opens great opportunities for the economy. It poses an intriguing ‘regulator’s dilemma’ – striking a balance between technological progress ushering financial innovation while remaining as sovereign authority. The central bank can investigate what constitutes crypto and technologies like blockchain to assess its role in the value chain instead of banning it altogether.
• A comprehensive crypto currency Bill is the need of the hour.

THE CONCLUSION: India is considered an inspiration when it’s comes to frugal innovation. Combing the advantage of a highly skilled workforce in IT Sector, Artificial intelligence and encrypted data stored on the blockchain, India can be a scale up the efficiency of the delivery of its various schemes and the pace of delivery of justice. The need of the hour is to develop an architecture or an institution that can implement this at the grassroots level.