[WpProQuiz 354]

[WpProQuiz 353]

THE CONTEXT: An ongoing debate in India is whether or not Indian non-banking fi nancial companies (NBFCs) are “shadow banks”. This question appears important because we have learned from the ongoing global financial crisis that shadow banking might create systemic risks which have been defined “broadly as the expected losses from the risk that the failure of a significant part of the financial sector leads to a reduction in credit availability with the potential for adversely affecting the real estate and economy at large.

WHAT IS SHADOW BANKING?

• Shadow banking is a blanket term to describe financial activities that take place among non-bank financial institutions outside the scope of federal regulators. These include investment banks, mortgage lenders, money market funds, insurance companies, hedge funds, private equity funds and payday lenders, all of which are a significant and growing source of credit in the economy.
• Although these entities do not accept traditional demand deposits offered by banks, they do provide services similar to what commercial banks offer.
• The shadow banking system had overtaken the regular banking system in offering loans in US before the financial crisis erupted in 2008.

WHAT ARE THE RISKS ASSOCIATED WITH SHADOW BANKING?

• The 2008 financial crisis has shown that shadow banking can be a source of systemic risk to the banking system. The risks can be transmitted directly and through the interconnectedness of partially-regulated entities with the banking system.

WHY IS RBI TIGHTENING SHADOW BANKING RULES?

• The Reserve Bank is simply following the trend of global central banks increasing surveillance on shadow banking. Basel III norms require central banks to tighten supervision on shadow banks across the globe through steps such as defining minimum capital.

WHAT STEPS ARE RBI TAKING?

• The Usha Thorat committee has come out with draft regulations on NBFCs, such as increasing tier I capital and risk weight on certain assets. After the recommendations, smaller NBFCs with asset size of less then 25 crore are likely to go out of business.

WHAT IS THE GLOBAL SITUATION?

• The size of shadow banking has reached a record $67 trillion in 2011, according to a report by the Finance Stability Board, a regulatory task force for the world’s group of 20 economies. America has the biggest shadow banking system, followed by the Eurozone and the United Kingdom.

Key Takeaways:

• The shadow banking system consists of lenders, brokers, and other credit intermediaries who fall outside the realm of traditional regulated banking.
• It is generally unregulated and not subject to the same kinds of risk, liquidity, and capital restrictions as traditional banks are.
• The shadow banking system played a major role in the expansion of housing credit in the run up to the 2008 financial crisis, but has grown in size and largely escaped government oversight even since then.

WHY SHADOW BANKING SHOULD WORRY POLICYMAKERS?

• RBI has warned that economic disruptions may intensify systemic risks to India’s financial sector primarily because NBFCs remain vulnerable with their deteriorating asset quality and reluctance of the market to lend them money.
• The banking regulator RBI issued a clear warning in its Fiscal Stability Report, that the economic disruptions may intensify risks to its shadow banking firms, the Non-Banking Financial Companies (NBFCs), “and consequently” the systemic risks to the entire financial sector.

THREAT TO INDIA’S FINANCIAL SYSTEM

• The threats to the NBFCs come from two sources: (i) their deteriorating asset quality and (ii) continued reluctance of market to lend money in the aftermath of implosion in two leading NBFC players, Infrastructure Leasing & Financial Services Limited (IL&FS) and Dewan Housing Finance Corporation Ltd (DHFL) in 2018 and 2019. Both were taken over by the RBI for loan defaults and now face bankruptcy proceedings.
• About 50% of the NBFCs’ aggregate assets were under the moratorium on loan repayment as per the latest analysis. Banks, which have been fighting shy of lending directly to the industry because of growing threat of bad loans (non-performing assets or NPAs), increased their lending to the NBFCs in recent years, as a result of which bank lending accounted for 28.9% of the total NBFC borrowings in December 2019 – up from 23.1% in March 2017.
• The RBI noted that notwithstanding this support from banks, the real risks to the NBFCs’ liquidity come from declining market borrowings. It said that under the stress tests, 11.2% to 19.5% of NBFCs would not be able to comply with the minimum regulatory capital requirements (CRAR) of 15%.

The following graph maps the NBFCs’ assets quality (GNPA and NNPA ratios) and capital-to-risk-assets ratio (CRAR) since FY14.

In the meanwhile, the NBFCs have grown in influence, as is evident from the RBI data mapped below, against the GDP (at constant prices).

• Shadow banking not only poses a threat to India but is equally a risk to the global financial order. For better appreciation, the 2007-08 financial crisis needs to be revisited.

ENDURING OVERALL GROWTH IN SHADOW BANKING

• When the world woke up and started monitoring shadow banking, Kodres recorded the growth in their assets. In 2015, she wrote, their assets in the US was 28% of the total financial sector (down from 32% in 2011); in the euro area, it was 33% (up from 32% in 2011) and globally they accounted for $92 trillion (up from $62 trillion in 2007 and $59 trillion during the crisis).
• One big initiative to monitor shadow banking was the multinational Financial Stability Board (FSB), set up in 2011. India is a part of this initiative.
• But Kodres was not happy. She commented: “The authorities (monitoring shadow banking) are making progress, but they work in the shadows themselves – trying to piece together disparate and incomplete data to see what, if any, systemic risks are associated with the various activities, entities, and instruments that comprise the shadow banking system.”
• Initially, the FSB defined shadow banks broadly to include all entities “outside the regulated banking system that perform core banking function”, which meant credit intermediation (taking money from savers and lending it to borrowers) and they were called Non-Banking Financial Intermediation (NBFI).
• In its latest report of January 2020, the FSB divided those into three categories: (a) MUNFI (Monitoring Universe of Non-bank Financial Intermediation): “broad measure” of all NBFIs that are not central banks, banks or public financial institutions (b) OFIs (Other Financial Intermediaries): a subset of MUNFI that excludes insurance corporations, pension funds or financial auxiliaries and (c) NBFIs: “narrow measure” of NBFI comprising of non-banks that authorities have identified as the ones that may pose bank-like financial stability risks and/or regulatory arbitrage.
• The NBFIs (narrow measure) are the ones identified as posing systemic risks.

HEIGHTENED SYSTEMIC RISKS FROM SHADOW BANKING

• The 2020 FSB report shows that global estimates for the MUNFI assets stood at $183.6 trillion in 2018 or 49% of the total financial assets ($379 trillion). Of this, OFIs accounted for $114.3 trillion (30% of the total); NBFI for $50.9 trillion (13.4% of the total), and the rest for $18 trillion.
• The FSB 2020 report says the “systemic risk” comes from activities that are “typically performed by banks, such as maturity/liquidity transformation and the creation of leverage”.
• The alarming aspect of the NBFI is that it is growing.
• The FSB 2020 report says it “has grown faster than GDP since 2012, increasing to 77% of all participating jurisdictions’ GDP in 2018 from 64% in 2012. This trend is observed in most jurisdictions”.
• The FSB measures 29 jurisdictions (including India and China), representing over 80% of global GDP.

GROWTH IN INDIA’S SHADOW BANKING (NBFCS)

• What does the FSB of 2020 say about India? (India’s NBFCs correspond to the NBFIs.)  It shows India is an outlier – in a negative way.

Here are two examples –

• India recorded 22.4% growth in OFI assets in 2018, while the global growth was 0.4%.
• As for NBFIs (NBFCs in India), a major drawback is their over-dependence on short-term funding for long-term lending (technically called EF2 function).
• Globally, such funding accounted for 7% of the total in 2018 and it grew 6.9%. In sharp contrast, India recorded a 17.4% growth in 2018. As for its share in the total NBFC funding, the RBI’s banking trend report released in December 2017 revealed that it stood at an unbelievably high of 99.7%.
• In the NBFC context, short-term means a period of up to three years and long-term for up to 15 years, as in the case of housing and infrastructure loans. Why such anomaly continues in the NBFCs’ functioning is an abiding mystery.
• Little wonder, when the NBFC crisis hit India in 2018 and 2019, the two big players to implode (IL&FS and DHIL) were associated with infrastructure and housing sectors, though this is only one part of the saga.

IS SHADOW BANKING A SERIOUS THREAT IN EMERGING MARKETS?

• The IL&FS crisis has exposed the vulnerabilities of non-bank lending. But in India,the problem is one of a huge bad debt pile-up despite low credit disbursal.
• Everyone seems to have woken up to the fact that global debt levels are too high and portent difficulties ahead. As Figure 1 indicates, the levels of credit to GDP, which were so high as to be unsustainable and resulted in the big crisis of 2008, have increased even more since then.
• There was a phase of deleveraging in the advanced economies until around 2014, and in developing countries and emerging markets until 2011, but since then, credit/debt has been expanding again.
• So much so that the credit GDP levels in 2017 were 15 per cent higher than in 2008 in the advanced economies, and more than 80 per cent higher for emerging markets (Figure 1).
• More recently, the attention has shifted from bank lending to shadow banking activities, which are by those institutions that do not collect deposits but still provide loans. These include a variety of institutions, ranging from trusts, investment funds and similar corporations to kerb lenders.
• Because they do not come under the regulatory framework for banks, yet tend to be interlinked with them in various ways, there are concerns that over lending and default in such institutions can destabilise the financial system.

LINGERING FRAGILITIES

• Ever since the IL&FS crisis broke in India, there has been much discussion of the fragilities posed by non-bank lending and the potential for financial and economic crises in emerging markets that could be led by the collapse of shadow banks. This is in no small measure due to the significant role played by such shadow lending in the core capitalist countries (especially the US) in the build-up to the Great Financial Crisis in 2008.
• However, since then, shadow lending appears to have reduced, or at least been contained relative to GDP, as indicated by Figure 2. For the G20 countries taken as a group, credit from non-banks as a per cent of GDP was about 6 percentage points lower in 2017 than in 2007, while bank credit had actually increased by 15 percentage points. This suggests that excessive debt creation is much more a problem of the banking sector as a whole than the non-bank or shadow bank sector.
• Table 1 provides data for some important advanced and emerging economies to assess the extent to which this argument is valid. Significantly, the reliance on shadow banking appears to have reduced significantly in the advanced economies by 2015-17 from what it was during 2008-10, other than in Germany where it seems to have remained at roughly the same level of around 30 per cent. Even the increase in bank credit was confined to Japan and South Korea, rather than the US, UK or Germany, where it has fallen relative to the levels of 2008-10.

WAY FORWARD:

• It is also increasingly suggested that the problem of shadow banking has become more significant in emerging markets rather than in advanced economies, and that the dramatic increase in such loans in these economies is what will be associated with the next big systemic risk to global finance.
• In particular, it is suggested that the rapid increase of shadow banking in Asia, especially China, points to the likely area of greatest future concern.

CONCLUSION:

NBFC sector has been stung by a crisis set off by the shock collapse of non-bank lender IL&FS group in 2018. India’s shadow banks, which lend to everyone from teashop merchants to property tycoons, get a mixed bill of health in Bloomberg’s latest check. Revitalization of the industry, whose woes mounted when major mortgage lender Dewan Housing Finance Corp. missed repayments, is key to helping staunch a further slowdown in the nation’s economy. In a sign that creditors remain jittery, borrowing costs rose. The extra yield investors demand to hold five-year AAA rated bonds from shadow banks over government notes increased, one of the gauges shows. Shadow lender woes have made it harder for policy makers to prop up the economy, which grew at its weakest pace since 2009. The slowdown hurts borrowers’ ability to repay debt, and has prompted the central bank to predict that an improvement in banks’ bad-loan ratios will reverse. So, it is established that Indian NBFCs are shadow banks and they do pose systemic risks to certain extent. Hence, the RBI should make a long term policy for Indian NBFC sector to mitigate any risk that may crop up in the already fragile financial sector in India.

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.

[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.

POLITY AND CONSTITUTION

1. WHAT LAWS REGULATE SURROGACY IN INDIA?

THE CONTEXT: Recently, the Tamil film celebrities are under the scanner after announcing that they have become parents of twin boys. The state government is now inquiring if the power couple violated the country’s surrogacy laws.

THE EXPLANATION:

What are the conditions for allowing surrogacy, as per the law?

• In India, for a long time, foreign couples opted for surrogacy due to its good and affordable medical system. Over the years, the government has put restrictions on the practice with the stated aim of regulation.
• Surrogacy is defined by law as “a practice whereby one woman bears and gives birth to a child for an intending couple” and intends to hand over the child to them after the birth, as per The Surrogacy (Regulation) Act, 2021 (SRA).
• It further allows for surrogacy to be available only to infertile Indian married couples. The other legislation on this matter, the Assisted Reproductive Technology (ART) (Regulation) Act, 2021, defines ART procedures as all techniques that attempt to obtain a pregnancy by handling the sperm or the oocyte (the immature female egg) outside the human body and transferring into the reproductive system of a woman.
• This is open to married couples, live-in partners, single women, and also foreigners. ART procedures include gamete donation, intrauterine insemination, and in-vitro fertilisation or IVF.

The SRA Act says:

• The surrogate should be married and have a child of her own. Restricting altruistic surrogacy to legally wedded infertile Indian couples, the Act sets an age limitation for the couple where a husband must be between 26 and 55 years of age and a wife between 23 and 50 years.
• Further, Indian couples with biological or adopted children are prohibited to undertake surrogacy, save for some exceptions such as mentally or physically challenged children, or those sufferings from a life-threatening disorder or fatal illness.

How does opting for surrogacy work?

• Relevant authorities have been set up by the Act at several levels to check whether these specifications have been met. All surrogacy clinics must be registered with the government and only then can they conduct the procedure. According to the Health Ministry, the estimated number of clinics practising surrogacy in India is likely to be less than 1,000.
• The central and the state governments are to constitute the National Surrogacy Board (NSB) and the State Surrogacy Boards (SSB), respectively. Functions of the NSB include advising the central government, laying down the code of conduct of surrogacy clinics and reviewing the implementation of the Act. Similarly, appropriate authorities are constituted at national and state levels to grant or suspend clinics’ licences, to check on complaints of breach of the Act’s provisions and carry out other similar tasks.
  For example,
• Certificates of proven infertility/expert medical reports of either spouse or of intending couple from a District Medical Board are mandatory. A certificate of eligibility issued by the appropriate authority shows the criteria have been met – both by the to-be parents and the surrogate woman.
• Other requisite authorities, such as the Director or in-charge of the surrogacy clinic must also be satisfied that conditions have been met.
• Commercial surrogacy, among other offences, can lead to imprisonment for a term of at least 10 years and a fine extending to Rs 10 lakh.

2. BOMBAY HC ASKS UNION GOVT TO MAKE IPC SECTION 498A ‘COMPOUNDABLE’

THE CONTEXT: Recently,the Bombay high court has asked the Union government to consider making cases under the Indian Penal Code (IPC) Section 498A (cruelty to wife by husband, relatives) a compoundable offence.

THE EXPLANATION:

A division bench of Justices in an order said the importance of making IPC Section 498A ‘compoundable’ can hardly be overlooked or understated, noting that every day a minimum of 10 petitions are heard seeking quashing of cases under the section by consent since it is non-compoundable.

Description of IPC Section 498A:

According to section 498A of Indian penal code, Whoever, being the husband or the relative of the husband of a woman, subjects such woman to cruelty shall be punished with imprisonment for a term which may extend to three years and shall also be liable to fine.

What are Non-Compoundable Offences?

• Non-Compoundable offenses are some offenses, which cannot be compounded. They can only be quashed. The reason for this is, because the nature of the offense is so grave and criminal, that the Accused cannot be allowed to go scot-free. Here, in these types of cases generally, it is the “state”, i.e. police, who has filed the case, and hence the question of the complainant entering into compromise does not arise.
• All those offenses, which are not mentioned in the list under Section (320) of CrPC, are non-compounds.
• Under a non-compoundable offense, a private party as well as the society, both are affected by such offenses.
• In a Non-compoundable offense, no compromise is allowed. Even the court does not have the authority and power to compound such an offense. A full trial is trial that ends with the acquittal or conviction of the offender, based on the evidence given.

Example of Non-Compoundable Offences (Where Court’s Permission is Required):

• Voluntarily causing hurt by dangerous weapons or means.
• Causing grievous hurt by doing an act so rashly and negligently as to endanger human life or the personal safety of others.
• Wrongfully confining a person for three days or more.
• Assault or criminal force to woman with intent to outrage per modesty.

3. TAMIL NADU: UNDERSTANDING THE IMPACT OF THE 7.5% RESERVATION FOR GOVT SCHOOL STUDENTS IN NEET

THE CONTEXT: In April 2022 the Madras High Court upheld the constitutional validity of a State law passed in October 2020 to provide 7.5% horizontal reservation to students who pass out of government schools and clear the National Entrance-cum-Eligibility Test (NEET), in medical admissions.

THE EXPLANATION:

Why was Tamil Nadu opposed to NEET?

• Among the States that were strident in their opposition to NEET (National Eligibility-cum-Entrance Test) was Tamil Nadu. The opposition was manifest in protests on the streets and in the corridors of justice.
• One of the primary arguments that were made was that NEET would push certain categories of students out of the race for MBBS degrees, and its goal of providing equitable opportunities for all would be frustrated.
• Students from government schools and rural areas would not be able to afford the coaching that would be essential for the competitive test, the State government argued. The State wanted to continue its own criteria for entry of students from government schools and rural areas into medical colleges — candidates were being accommodated with a computed aggregate score of relevant subjects in the Class XII examination.

The Special Case:

• Tamil Nadu is a special case when it comes to both reservations and NEET, the entrance test for medical education.
• Nearly 69% of the seats are reserved in the state through a constitutional amendment – much above the 50% limit that applies to the rest of India. Additionally, 97.2% of the population in the state is classified as a Scheduled Caste, Scheduled Tribe or Other Backward Class – the highest in India.

Understanding the 7.5% quota

• The existing reservation structure for medical students in Tamil Nadu is 31% for Open Competition (OC), 30% for Backward Class (out of which 3.5% is reserved for BCM, 20% for MBC, 18% for SC and 1% for ST. Within this, 7.5% of the community within each can attain reservation.
• The horizontal quota ensures that there is a minimum representation of a specific group within each of the vertical quotas. For example, a women’s horizontal quota of 10% would mean that at least 10% of the seats in OC, BC, MBC, SC, and others are filled with women candidates.
• This means that the 7.5% quota doesn’t change the 69% caste-based reservation, but ensures that 7.5% within each is reserved specifically for the students of government schools.

Who goes to government schools?

• Analysing the main provisional merit list, and the merit list specifically for the government school pupils for the 2020-21 session, allows us to compare the community mix of the two lists. In the government students list, MBC students comprise 34% as compared to 23% in the main list i.e., approximately 48% more in proportionate terms.
• In contrast, the BC students show a proportionate decrease of 24% – from 45% in the main list to 35% in the government school students list. This indicates the higher level of deprivation within the MBC as compared to the BC category.
• The third category of SCs also shows that there is an increase of 20% in the government school students list as compared to 17% for the main list. These three together account for 90% of the government school list.

What lies a head?

• This innovative reservation policy adopts a wider definition of deprivation than mere caste. While caste is a rigid and static characteristic of an individual and family, schooling is not. Improved economic outcomes of families lead to students being enrolled into private schools i.e., the scope of this policy is dynamic rather than static.
• This policy’s success can be seen from the numbers which have clearly improved the representation of government school students within undergraduate admissions. It further needs to be investigated if this policy has impacted different castes within the same group.
• The lopsided distribution of benefits within the same block of castes is an identified problem, and whether this policy has helped reach those untouched by reservations would be critical to examine.

INTERNATIONAL RELATIONS

4. HISTORIC DEAL BETWEEN ISRAEL-LEBANON: TERMS, SIGNIFICANCE

THE CONTEXT: In a major diplomatic breakthrough, Israel announced a “historic” deal with Lebanon, aimed at resolving a long-running maritime border dispute over Mediterranean waters. Israel and Lebanon do not have official diplomatic relations and the two countries remain technically at war.

THE EXPLANATION:

A long history of conflict

• Israel and Lebanon have been at war for decades since 1948, with both countries staking claim over a swathe of territory in the Mediterranean Sea, which contains part of the Karish gas field and Qana, a prospective gas field.
• Negotiations pertaining to the Israeli-Lebanese border dispute over gas-rich waters off the countries’ Mediterranean coasts have been ongoing since October 2020.
• The Karish gas field, which is being developed by Israel, has come under threat from Hezbollah, Lebanon’s powerful political and militant group backed by Iran.

What the agreement does:

• While Israel is already producing natural gas at nearby fields, what this agreement does is that it resolves a territorial dispute in the eastern Mediterranean sea, in an area that Lebanon wants to explore for natural gas.
• The gas field in question is located on the maritime boundary between the two countries and this agreement would allow both countries to get royalties from the gas. It also sets a border between the maritime waters of Lebanon and Israel for the first time.
• According to a New York Times report, the agreement is also expected to avert the immediate threat of conflict between Israel and Hezbollah militants in Lebanon, after fears of escalation if negotiations fell apart.
• The report states that analysts hope that the agreement will create new sources of energy and income for both countries, particularly important for Lebanon, which is facing a crippling energy and financial crises.
• It could also have a potentially wider impact: it would likely provide Europe with a potential new source of gas amid energy shortages caused by the Russian invasion of Ukraine.

Crucial gas exports

• As for what the deal looks like, the U.S. proposal essentially divides the sea border in two, with the first 3 miles from the shore marked as Israel’s border, which has been treated as such for several years. Beyond that, the border will track along a line demarcated by Lebanon, called Line 23, meaning that each country’s exclusive economic zone (EEZ) will be clearly outlined.

5. INDIA’S REQUEST FOR ACTION AGAINST PANNUN REJECTED: WHAT IS THE INTERPOL, AND WHAT IS A RED NOTICE?

THE CONTEXT: Recently,the Interpol has rejected a second request by India to issue a Red Corner Notice against Gurpatwant Singh Pannun, the Canada-based founder and legal advisor of the pro-Khalistan outfit Sikhs for Justice (SFJ), whom the Union Ministry of Home Affairs has listed as a “terrorist” under the Unlawful Activities (Prevention) Act (UAPA).

THE EXPLANATION:

• The Interpol has said India has failed to provide sufficient information to support its case, and that the UAPA has been criticised for being “misused” to target minority groups and human rights activists without “respecting” their right to due process and a fair trial.
• While acknowledging that Pannun is a “high-profile Sikh separatist”, the Interpol has said that his activities have a “clear political dimension”, which cannot be the subject of a Red Corner Notice according to Interpol’s Constitution.

What is the Interpol?

• The Interpol, or International Criminal Police Organization, is an inter-governmental organisation comprising 195 member countries, which helps police forces in all these countries to better coordinate their actions. According to the Interpol website, the organisation enables member countries to share and access data on crimes and criminals, and offers a range of technical and operational support.
• The Interpol general secretariat coordinates the organisation’s day-to-day activities. It is run by a secretary general (currently Jurgen Stock of Germany, who has been Interpol’s chief executive since 2014), with its headquarters in Lyon, France, with a global complex for innovation in Singapore, and several satellite offices in different regions.

TYPES OF NOTICES:

ECONOMIC DEVELOPMENTS

6. IMF CUTS INDIA’S FY23 ECONOMIC GROWTH TO 6.8%, SAYS WORST YET TO COME FOR GLOBAL ECONOMY

THE CONTEXT: According to the International Monetary Fund,the world, including India, will experience an overall slowdown in the next year (2023) owing to the impact of the Russia-Ukraine war, tightening monetary conditions globally, the highest inflation in decades, and lingering effects of the pandemic.

THE EXPLANATION:

• India is projected to grow at 6.8% in the current fiscal year, following 8.7% growth in fiscal year that ended March 31 as per figures released in the IMF’s October 2022 World Economic Outlook: Countering the Cost-of-Living Crisis at the start of the World Bank IMF Annual Meetings.
• Growth rate for this year for India has been revised downward by 0.6 percentage points relative to the IMF’s June 2022 forecast, following a weaker output in the second quarter, and subdued external demand. The forecast for the next fiscal year remains unaltered at 6.1%.
• “India has been doing fairly well in 2022 and is expected to continue growing fairly robustly in 2023.

Inflation above target

• Inflation in India was above the RBI’s target, Experts adding that the fiscal and monetary policy should be “probably be on the tightening side”. The IMF has projected 6.9% consumer price inflation this year and 5.1% next year.
• The IMF expects inflation in India to return to the inflation tolerance band… in fiscal year 2023-24, “and additional monetary tightening is going to ensure that that happens”.
• For the world as a whole, growth will slow down from 6.0% in 2021 to 3.2% in 2022 and 2.7% in 2023. This is reflective of a U.S. GDP contraction in first half of 2022, a Euro Area contraction in second half, extended COVID-19 outbreaks in China and a property sector crisis.

VALUE ADDITION:
About IMF:

• The formation of the IMF was initiated in 1944 at the Bretton Woods Conference. IMF came into operation on 27th December 1945 and is today an international organization that consists of 189 member countries.
• Headquartered in Washington, D.C., IMF focuses on Fostering global monetary cooperation, Securing financial stability, Facilitating and promoting international trade, employment, and economic growth around the world.

The IMF is a specialized agency of UN.

• The IMF became operational on 27th December 1945 with 29 member countries that agreed to bound to this treaty. It began its financial operations on 1st March 1947. Currently, the IMF consists of 189 member countries.

PRELIMS PRACTICE QUESTION

QUESTION OF THE DAY

Q1. Consider the following statements about Mahakal Temple of Ujjain:
1. It is the only jyotirlinga facing north, while all other face south direction.
2. Kalidasa has described temple in Meghadutam.
3. The present structure of temple is built by Maratha general Ranoji Shinde.
Which of the statements given above is/are correct?
a) 1 and 2 only
b) 2 and 3 only
c) 3 only
d) 1 and 3 only

Answer: B
Explanation:
About Mahakal temple:

• Puranas say that Lord Shiva pierced the world as an endless pillar of light, called the jyotirlinga. There are 12 jyotirlinga sites in India, considered a manifestation of Shiva.
• Besides Mahakal, these include Somnath and Nageshwar in Gujarat, Mallikarjuna in Andhra Pradesh, Omkareshwar in Madhya Pradesh, Kedarnath in Uttarakhand, Bhimashankar, Trimbakeshwar and Grishneshwar in Maharashtra, Viswanath at Varanasi, Baidyanath in Jharkhand, and Rameshwar in Tamil Nadu.
• Mahakal is the only jyotirlinga facing the south, while all the other jyotirlingas face east. This is because the direction of death is believed to be the south. In fact, people worship Mahakaleshwar to prevent an untimely death.
• In the early part of the Meghdutam (Purva Megha) composed in the 4th century, Kalidasa gives a description of the Mahakal temple. It is described as one with a stone foundation, with the ceiling on wooden pillars. There would be no shikharas or spires on the temples prior to the Gupta period.
• The city of Ujjain was also one of the primary centres of learning for Hindu scriptures, called Avantika in the 6th and 7th centuries BC. Later, astronomers and mathematicians such as Brahmagupta and Bhaskaracharya made Ujjain their home.
• In the 18th century, an observatory was built here by Maharaja Jai Singh II, known as the Vedh Shala or Jantar Mantar, comprising 13 architectural instruments to measure astronomical phenomena.
• In the 13th century, the temple complex was destroyed by Turk ruler Shams-ud-din Iltutmish during his raid on Ujjain.
• The present five-storeyed structure was built by the Maratha general Ranoji Shinde in 1734, in the Bhumija, Chalukya and Maratha styles of architecture. A century later, its marble walkways were restored by the Scindias.

[WpProQuiz 351]

THE CONTEXT: December 12 marked the five-year anniversary of the Paris Agreement. The international community, including the European Union (EU) and India, gathered at the Climate Ambition Summit 2020 to celebrate and recognize our resolve in working towards a safer, more resilient world with net-zero emissions.

ABOUT PARIS AGREEMENT

• The Paris Agreement is a legally binding international treaty on climate change. It was adopted by 196 Parties at COP 21 in Paris, on 12 December 2015 and entered into force on 4 November 2016.
• Its goal is to limit global warming to well below 2, preferably to 5 degrees Celsius, compared to pre-industrial levels.
• To achieve this long-term temperature goal, countries aim to reach global peaking of greenhouse gas emissions as soon as possible to achieve a climate neutral world by mid-century.
• The Paris Agreement is a landmark in the multilateral climate change process because, for the first time, a binding agreement brings all nations into a common cause to undertake ambitious efforts to combat climate change and adapt to its effects.

IMPLEMENTATION OF PARIS AGREEMENT

Implementation of the Paris Agreement requires economic and social transformation, based on the best available science. The Paris Agreement works on a 5- year cycle of increasingly ambitious climate action carried out by countries. By 2020, countries submit their plans for climate action known as nationally determined contributions (NDCs).

Nationally Determined Contributions (NDCs)

In their NDCs, countries communicate actions they will take to reduce their Greenhouse Gas emissions in order to reach the goals of the Paris Agreement. Countries also communicate in the NDCs actions they will take to build resilience to adapt to the impacts of rising temperatures.

Long-Term Strategies

To better frame the efforts towards the long-term goal, the Paris Agreement invites countries to formulate and submit by 2020 long-term low greenhouse gas emission development strategies (LT-LEDS).

LT-LEDS provide the long-term horizon to the NDCs. Unlike NDCs, they are not mandatory. Nevertheless, they place the NDCs into the context of countries’ long-term planning and development priorities, providing a vision and direction for future development.

Is the Paris agreement binding?

The legal nature of the deal–whether it will be binding–had been a hotly debated topic in the lead up to the negotiations. The agreement walks a fine line, binding in some elements like reporting requirements, while leaving other aspects of the deal—such as the setting of emissions targets for any individual country—as non-binding.

Difference between Paris Climate and Kyoto Protocol

• The Kyoto Protocol had a differentiation between developed and developing countries listed as Annex 1 countries and non-Annex 1 countries But, in the Paris agreement, there is no difference between developing and developed countries.
• The Kyoto Protocol aimed at 6 major greenhouse gases but the Paris Agreement is focused on reducing all anthropogenic greenhouse gases causing climate change.

Talanoa dialogue

• The UNFCCC Climate Change Conference (COP23) was held in Bonn, Germany and was presided over by Government of Fiji. It concluded with countries putting in place a roadmap for ‘Talanoa Dialogue’, a year-long process to assess countries’ progress on climate actions.

What is Talanoa?

• Talanoa is a traditional approach used in Fiji and the Pacific to engage in an inclusive, participatory and transparent dialogue;
• The purpose of Talanoa is to share stories, build empathy and trust;
• During the process, participants advance their knowledge through common understanding;
• It creates a platform of dialogue, which results in better decision-making for the collective good;
• By focusing on the benefits of collective action, this process will inform decision-making and move the global climate agenda forward.

The significance of Talanoa dialogue

• The goal of the Paris Agreement on climate change, as agreed at the Conference of the Parties in 2015, is to keep global temperature rise this century to well below 2 degrees Celsius above pre-industrial levels. It also calls for efforts to limit the temperature increase even further to 1.5 degrees Celsius.

The Under2 Coalition

• The Under2 Coalition is a coalition of subnational governments that aims to achieve greenhouse gases emissions mitigation. It started as a memorandum of understanding, which was signed by twelve founding jurisdictions on May 19, 2015 in Sacramento, California. Although it was originally called the Under2 MOU, it became known as the Under2 Coalition in 2017.
• As of September 2018, the list of signatories has grown to over 220 jurisdictions which combined encompasses over 1.3 billion people and 43% of the world economy.
• The intent of the memorandum signatories is for each to achieve Greenhouse gas emission reductions consistent with a trajectory of 80 to 95 percent below 1990 levels by 2050and/or achieving a per capita annual emission goal of less than 2 metric tons by 2050.
• Currently, Telangana and Chhattisgarh are signatories to this pact from India, as compared to representations from the other top emitters: 26 subnational governments in China and 24 in the U.S. Greater representation of Indian States is crucial.

FRAMEWORK OF PARIS AGREEMENT

The Paris Agreement provides a framework for financial, technical and capacity building support to those countries who need it.

Finance

The Paris Agreement reaffirms that developed countries should take the lead in providing financial assistance to countries that are less endowed and more vulnerable, while for the first time also encouraging voluntary contributions by other Parties. Climate finance is needed for mitigation, because large-scale investments are required to significantly reduce emissions. Climate finance is equally important for adaptation, as significant financial resources are needed to adapt to the adverse effects and reduce the impacts of a changing climate.

Technology

The Paris Agreement speaks of the vision of fully realizing technology development and transfer for both improving resilience to climate change and reducing GHG emissions. It establishes a technology framework to provide overarching guidance to the well-functioning Technology Mechanism. The mechanism is accelerating technology development and transfer through it’s policy and implementation arms.

Capacity-Building

Not all developing countries have sufficient capacities to deal with many of the challenges brought by climate change. As a result, the Paris Agreement places great emphasis on climate-related capacity-building for developing countries and requests all developed countries to enhance support for capacity-building actions in developing countries.

ENHANCED TRANSPARENCY FRAMEWORK (ETF)

With the Paris Agreement, countries established an enhanced transparency framework (ETF). Under ETF, starting in 2024, countries will report transparently on actions taken and progress in climate change mitigation, adaptation measures and support provided or received. It also provides for international procedures for the review of the submitted reports.

The information gathered through the ETF will feed into the Global stocktake which will assess the collective progress towards the long-term climate goals.

This will lead to recommendations for countries to set more ambitious plans in the next round.

INDIA AND PARIS AGREEMENT

India has not only achieved its targets but has exceeded them beyond expectations as per the Prime Minister. He delivered a virtual speech at the Climate Ambition Summit that India has reduced its global emissions by 21 percent compared to 2005 and is on its way to do more.

• India mentioned that it has not caused the climate change crisis and it is meeting its obligations under the Paris Climate Accord.
• It stated that the developed nations have been the highest carbon emitters and thus, were responsible for global warming.
• It mentioned that besides India, only Bhutan, the Philippines, Costa Rica, Ethiopia, Morocco and Gambia were complying with the accord.

India’s Intended Nationally Determined Contribution (INDC)

• To reduce the emissions intensity of its GDP by 33 to 35 percent by 2030 from 2005 level.
• To create an additional carbon sink of 2.5 to 3 billion tonnes of CO2 equivalent through additional forest and tree cover by 2030.
• A total of 40% of the installed capacity for electricity will be from non-fossil fuel sources.

India’s effort to address Climate Change

The Government of India has launched eight Missions under the National Action Plan on Climate Change (NAPCC) for assessment of the impact and actions required to address climate change. These eight missions are:

1. National Solar Mission
2. National Mission for Enhanced Energy Efficiency
3. National Mission on Sustainable Habitat
4. National Water Mission
5. National Mission for Sustaining the Himalayan Ecosystem
6. National Mission for A Green India
7. National Mission for Sustainable Agriculture
8. National Mission on Strategic Knowledge for Climate Change

Recent developments

• India has achieved a reduction of 21% in emission intensity of its GDP between 2005 and 2014, which fulfills its pre-2020 voluntary target.
• The Renewable energy installed capacity has increased by 226% in the last 5 years and stands more than 87 GW.
• The Government has provided 80 million LPG connections in rural areas, providing them with clean cooking fuel and a healthy environment.
• More than 360 million LED bulbs have been distributed under the UJALA scheme, which has led to energy saving of about 47 billion units of electricity per year and reduction of 38 million tonnes of CO2 per year.
• It leapfrogged from Bharat Stage-IV (BS-IV) to Bharat Stage-VI (BS-VI) emission norms by April 1, 2020 which was earlier to be adopted by 2024.

FIVE YEARS AFTER PARIS AGREEMENT

All states have submitted their national contributions to mitigate and adapt to climate change. Distant hypothetical targets are being set. Seems like we are still speeding in the wrong direction or we are lagging far behind.

(1) Unclear targets and response

The world is still unclear since five years as to how the net-zero pledges will translate into shorter term targets. Few of the countries that have announced ambitious long-term goals have implemented national policies to reach them in time.

(2) Degradation isn’t stopped

Meanwhile, we continue to destroy the world’s carbon sinks, by cutting down forests – the world is still losing an area of forest the size of the UK each year, despite commitments to stop deforestation – as well as drying out peatlands and wetlands, and reducing the ocean’s capacity to absorb carbon from the air.

(3) Countries aren’t scaling up their targets

Although 151 states have indicated that they will submit stronger targets before December 31, only 13 of them, covering 2.4 per cent of global emissions, have submitted such targets. While states have been slow to update their national contributions for 2025-2030, several have announced exaggeratedly high “net zero” targets in the recent past.

WAY FORWARD:

• The Paris agreement still provides the best hope of avoiding the worst ravages of climate breakdown: the question is whether countries are prepared to back it up with action, rather than more hot air.
• Renewing the shorter term commitments is the best way ahead.
• Making promises for the 2050s-60s is one thing, but major policy changes are needed now to shift national economies on to a low-carbon footing.
• None of these (net zero) targets will be meaningful without very aggressive action in this decade. Diplomacy is inevitably a tool in global climate action.

CONCLUSION:

For many, there is a mismatch between short-term actions and long-term commitments. A credible short-term commitment with a clear pathway is the key. Not all states will be in a position to pledge net-zero targets, nor should they be expected to. All states, including India, can, however, pledge actions that are credible, accountable and fair. Our real test on climate change is on building a new domestic consensus that can address the economic and political costs associated with an internal adjustment to the prospect of a great global reset.

POLITY AND CONSTITUTION

1. CJI LALIT RECOMMENDS JUSTICE CHANDRACHUD’S NAME AS HIS SUCCESSOR

THE CONTEXT: Chief Justice of India U U Lalit recommended the second most senior judge of the Supreme Court Justice Dhananjaya Yashwant Chandrachud as his successor.

THE EXPLANATION:

• As per convention, the government writes to the outgoing CJI before his retirement and the CJI recommends the name of the most senior judge as the successor about a month before retirement.
• Once a new name is recommended, the incumbent CJI usually refrains from taking decisions on appointment of judges.

The Collegium system

• The collegium system is the way by which judges of the Supreme Court and High Courts are appointed and transferred. The collegium system is not rooted in the Constitution or a specific law promulgated by Parliament; it has evolved through judgments of the Supreme Court.
• The Supreme Court Collegium is a five-member body, which is headed by the incumbent CJI and comprises the four other senior most judges of the court at that time. A High Court collegium is led by the incumbent Chief Justice and four other senior most judges of that court. By its very nature, the composition of the collegium keeps changing.
• Judges of the higher judiciary are appointed only through the collegium system, and the government has a role only after names have been decided by the collegium. Names recommended for appointment by a High Court collegium reach the government only after approval by the CJI and the Supreme Court collegium.
• The role of the government in this entire process is limited to getting an inquiry conducted by the Intelligence Bureau (IB) if a lawyer is to be elevated as a judge in a High Court or the Supreme Court. The government can also raise objections and seek clarifications regarding the collegium’s choices, but if the collegium reiterates the same names, the government is bound to appoint them.
• Critics have pointed out that the system is non-transparent, since it does not involve any official mechanism or secretariat. It is seen as a closed-door affair with no prescribed norms regarding eligibility criteria, or even the selection procedure. There is no public knowledge of how and when a collegium meets, and how it takes its decisions. There are no official minutes of collegium proceedings.

SOCIAL ISSUES

2. ADDRESS STIGMA IN MENTAL HEALTH, SAYS LANCET COMMISSION

THE CONTEXT: On World Mental Health Day, (10^th October) the Lancet released a new report calling for radical action to end stigma and discrimination in mental health, indicating that 90% of people living with mental health conditions feel negatively impacted by stigma and discrimination.

THE EXPLANATION:

• The report was the result of the labours of the new Lancet Commission on Ending Stigma and Discrimination in Mental Health, a grouping of over 50 contributors from across the world, including people with lived experience of a mental health condition.
• According to the data, 80% of surveyed said stigma and discrimination can be worse than the condition itself. Additionally, 90% of those surveyed felt that media could play a major role in reducing stigma.
• The commission reviewed the evidence on effective interventions to reduce stigma and called for immediate action from governments, international organisations, employers, healthcare provider and media organisations, along with active contributions from people with lived experience, to work together to eliminate mental health stigma and discrimination.
• As per the commission, stigma can “cause social exclusion and disempowerment of people with mental health conditions leading to discrimination and human rights violations, including problems in accessing healthcare, challenges in securing employment, and increased likelihood of health complications leading to early death”.
• Also, experts highlighted there is a gradual reduction of stigma in the country, it continues to be a real and present problem.
• The women with a diagnosis of severe mental disorder and their family members do face more stigma which has ramifications for marriage and employment preventing social inclusion. They also made a mention of the Indian visual media that still perpetuate mental illnesses negatively, exacerbating the impact of stigma.
• For instance, it has recommended that all countries take action to decriminalise suicide, therefore reducing the stigma around suicide and leading to fewer occurrences.

INTERNATIONAL RELATIONS

3. INDIA GETS 4TH SET OF SWISS BANK ACCOUNT DETAILS: SIGNIFICANCE

THE CONTEXT: Recently,India has received the fourth set of Swiss bank account details of its nationals and organisations as part of an annual information exchange, under which Switzerland has shared particulars of nearly 34 lakh financial accounts with 101 countries.

THE EXPLANATION:

Significance of India receiving information from Switzerland

• This is the fourth tranche of information that India has received from Switzerland since the two countries entered into an Automatic Exchange Of Information (AEOI) agreement in January 2018. The first such exchange with India took place in 2019.
• In an effort to bring in transparency and restrict money laundering, the Swiss Federal Office has given a detailed account of the massive AEOI 2022 exchange exercise: the country has just concluded its exchange of information with 101 countries; with details of around 3.4 million financial accounts.
• Some countries which have been added to the Swiss AEOI list for the first time are Turkey, Peru and Nigeria. The Swiss Federal Tax Administration office has also informed that with 74 of these 101 countries, the information exchange was reciprocal.

What is the volume, nature of data?

• In 2019, prior to India receiving its first batch of banking information via the AEOI, according to sources, India would be among 73 countries that would be receiving the data and in their (India’s) case “several dispatches” would be required, giving an indication of the large volume of account holders.
• This time, the Federal Tax Administration has informed that the nature of the financial information includes the name, address, country of residence, tax identification number, information concerning the reporting financial institution, and account balance and capital information, giving an insight into the exact nature of the transmitted data.

Guidelines for exchange of such sensitive banking information

• The guidelines and parameters for the AEOI are set by the Paris-based international body, the Organisation for Economic Co-operation and Development (OECD). The annual exercise of AEOI exchange, such as the current Swiss bonanza of banking details, is strictly meant for “tax only” purposes and in India, kept in the custody of and for action by the Central Board of Direct Taxes (CBDT).
• Under the OECD’s guidelines, no details of the quantum of funds or the names of account holders are to be publicized. In 2014, the OECD developed the Common Reporting Standard (CRS) which allows every country to obtain data from Financial Institutions (FIs) and “automatically” exchange it with countries with which AEOI agreements are in order every year.

What is the scope of India’s AEOI network?

• Under the OECD umbrella of AEOI, India presently shares bulk financial and banking information with 78 countries and receives the same from 107 countries, with Switzerland known to be sharing some of the most voluminous data.
• Due primarily to the large volume of FI data coming in from now a 100 countries, the CBDT last year set up a network of Foreign Asset Investigation Units (FAIUs) in 14 of its investigation wings, to which the information of that region which has reached India via the AEOI route is transmitted in a secure manner.

VALUE ADDITION:

OPEC

• The Organisation for Economic Co-operation and Development (OECD) is a group of 37 member countries that discuss and develop economic and social policy.
• OECD members are typically democratic countries that support free-market economies.
• The stated goal of the Organisation for Economic Co-operation and Development (OECD) is to shape policies that foster prosperity, equality, opportunity and well-being for all.
• The Organisation for Economic Co-operation and Development (OECD) was established on Dec. 14, 1960, by 18 European nations, plus the United States and Canada.

4. MULTINATIONAL JATE “ANTI-TERROR EXERCISE 2022”

THE CONTEXT: Recently, Pakistan has been invited to the closing ceremony, of the ongoing Joint Anti-Terror Exercise (JATE) under the ambit of the Shanghai Cooperation Organisation (SCO) being hosted by India.

THE EXPLANATION:

• The National Security Guard (NSG) is hosting the multinational JATE “Manesar Anti-Terror 2022” under the framework of the SCO Regional Anti-Terrorist Structure (RATS), at the NSG Manesar Garrison.
• An Indian delegation had participated in the closing ceremony of the two-week-long JATE-2021 hosted by Pakistan at the National Counter Terrorism Centre, Pabbi, in Khyber Pakhtunkhwa, in September 2021.
• The exercise is aimed at exchanging expertise and best practices and build synergy between the Counter Terrorism Forces of the SCO RATS member countries to enhance capabilities for conducting anti-terrorist operations and countering other security threats collectively.

AIM OF THE EXERCISE

• “JATE is being conducted with a view to practice and master various drills and procedures involved in Counter Terrorism operations including Cordon & Search, Compound Clearance, Close Quarter Battle and medical evacuation.
• The exercise is aimed at enhancing synergy and interoperability among Special Services and Law Enforcement Agencies of Shanghai Cooperation Organisation (SCO) member countries for combating international terrorism, practice mechanisms to respond to a crisis situation and capacity building of the forces.
• RATS, headquartered in Tashkent, is a permanent organ of the SCO which serves to promote cooperation of member states against terrorism, separatism and extremism.

ECONOMIC DEVELOPMENT

5. TOKENISATION FOR CREDIT AND DEBIT CARD TRANSACTIONS

THE CONTEXT: Recently, the Reserve Bank of India’s card-on-file (CoF) tokenisation norms have kicked in, which aim at improved safety and security of card transactions.

THE EXPLANATION:

What is tokenisation?

Tokenisation refers to the replacement of actual card details with a unique alternate code called the ‘token’, which shall be unique for a combination of card, token requester, (i.e. the entity which accepts requests from the customer for tokenisation of a card and passes it on to the card network to issue a corresponding token) and the device.

How did India decide to carry out tokenisation?

• In September 2021, the RBI prohibited merchants from storing customer card details on their servers with effect from January 1, 2022, and mandated the adoption of card-on-file (CoF) tokenisation as an alternative.
• Following a series of representations from several industry players and digital payment platforms who anticipated disruption in online transactions from January 1, 2022, the RBI extended the implementation date of card-on-file (CoF) tokenisation norms by another six months to June 30, 2022.
• The June 2022 deadline was further extended as the RBI felt that although considerable progress had been made in terms of token creation and transaction processing based on these tokens had also commenced, the concept was yet to gain traction across all categories of merchants. Subsequently, the deadline was extended till September 30, 2022.

SCIENCE AND TECHNOLOGY

6.‘SPACE ECONOMY MAY TOUCH $13 BN BY 2025’

THE CONTEXT: According to a joint report prepared by EY and the Indian Space Association (ISpA), an apex industry association of space and satellite companies in the country stated Indian space economy is set to reach $13 billion by 2025.

THE EXPLANATION:

• The report also said the space launch segment would grow fastest at a CAGR of 13% spurred by growing private participation, latest technology adoption and low cost of launch services.
• On the country’s satellite manufacturing opportunity, it said in 2020 it was $2.1 billion and this would reach $3.2 billion by 2025.
• Launch services, which is the most in-demand commercial service for the global space industry, is expected to see a rise in India with the advent of private companies such as Skyroot Aerospace, Agnikul Cosmos and Bellatrix Aerospace. These services, which will seek to emulate the successes seen by private global entities such as USA’s SpaceX and Rocket Labs, France-based Arianespace and even India’s ISRO, hope to capture a significant share of an increasing demand for launching satellites into orbit.
• Also, by 2025, satellite manufacturing would be the second fastest-growing segment in the Indian space economy. Space parks that are coming up across the country would give a fillip to companies operating across the space value chain, especially manufacturing, found the study.

VALUE ADDITION:

1. The Indian space sector has been globally recognized for building cost-effective satellites, launching lunar probes and taking foreign satellites to space. The global space economy is estimated at ~US$ 423 billion. Currently, India constitutes 2-3% of the global space economy.
2. From 1999 till December 2021, a total of 342 foreign satellites from 34 countries have been successfully launched on board Indian Polar satellite Launch Vehicle (PSLV) on a commercial basis.
3. India is the sixth-largest player in the industry internationally having 3.6% of the world’s space-tech companies (as of 2021). U.S. holds the leader’s spot housing 56.4% of all companies in the space-tech ecosystem. Other major players include U.K. (6.5%), Canada (5.3%), China (4.7%) and Germany (4.1%).
4. India’s space programme has attracted global attention for its accelerated rate of development, with a critical appreciation for the following extraordinary explorations:

• Mars Orbiter Mission (MOM) or Mangalyaan
• Chandrayaan-2 Mission(India’s 2nd mission to the moon)
• AstroSat Mission (India’s 1st observatory mission for astronomy)
• Aditya-L1 Mission (India’s 1st solar observatory in space)

5. ISRO has forged a strong relationship with many industrial enterprises, both in the public and private sector, to implement its space projects.
6. With the ISRO undertaking the development of cutting-edge technologies and interplanetary exploratory missions, there is a tremendous scope in contributions to the realization of operational missions and new areas such as satellite navigation.

PRELIMS PRACTICE QUESTION

QUESTION OF THE DAY

Q1. India is hosting ‘Manesar Anti-Terror 2022’ under the ambit of –

a) SCO

b) SAARC

c) ASEAN

d) QUAD

Answer: A

Explanation:

• India is currently hosting the multilateral anti-terror exercise ‘Manesar Anti-terror 2022’ under the ambit of the Shanghai Cooperation Organisation (SCO) Regional Anti-Terrorism Structure scheduled from October 8 to 13.

THE CONTEXT: On February 11, 2022,the Securities and Exchange Board of India (SEBI) passed an order involving the country’s largest stock exchange-The National Stock Exchange. Apart from highlighting the issue of corporate misgovernance, the whole episode has raised questions on the role of the capital market regulator. In this article, we examine the issue in detail.

ALL YOU NEED TO KNOW ABOUT THE NSE IMBROGLIO

THE SEBI FINDINGS

• The National Stock Exchange (NSE)’s former Managing Director (MD) and Chief Executive Officer (CEO) is penalized for misusing her office for:
• making appointments,
• concealing confidential information pertaining to operations of the exchange,
• and making incorrect and misleading submissions to the Securities and Exchange Board of India (SEBI).
• The regulator states that her unknown spiritual guru influenced her decision making.
• The former NSE Chief is also being examined for a case registered in May 2018 pertaining to alleged abuse of a trading software of the exchange and the SEBI order comes in this backdrop (Read Ahead).

IMPROPER PERSONNEL MANAGEMENT

• The former NSE head appointed a person as the Chief Strategic Officer (CSO) of the exchange despite the latter not having any exposure to capital markets.
• SEBI notes that the exchange had not advertised any vacancy pertaining to the appointment of CSO
• SEBI notes that his previous work experience was not relevant to his new consultancy position at NSE. With recurrent appraisals and performance ratings, his compensation rose to ₹4.21 crore within two years(1.8 crore when he joined)

DIVULGING CONFIDENTIAL INFORMATION

• The regulator found the former NSE Chief guilty of divulging confidential information pertaining to the NSE’s organizational appointments, financial results and projections, dividend pay-out ratio and board meeting consultations to her unknown spiritual guru.

FAILURE OF THE NSE BOARD

• The NSE Board was found guilty of not informing the market’s regulator and opting to keep it under wraps.

PENALTIES IMPOSED

• The former NSE Chief has been forbidden from dealing in stocks, etc. for a period of three years, alongside a penalty of ₹3 crore.
• The erstwhile CSO has been restrained from associating with any market infrastructure institution or an intermediary for three years. He would also have to pay a penalty of ₹2 crore.
• NSE has been ordered not to launch any new product for the next six months.

AN ANALYSIS OF THE NSE SCAM?

BLOW TO CAPITAL MARKETS

• The NSE is a Market Infrastructure Institution that provides facilities for trading stocks and other products in the capital market.
• The scam has sent alarm bells to the investors and trading community and even has the potential to undermine the economic security of the nation apart from hugely denting investors’ confidence.
• The government has already indicated that it will initiate measures to sustain investors’ confidence in the Indian capital market.

POOR CORPORATE GOVERNANCE

• The approach by the Board of NSE amounted to a cover-up of the entire episode so that no outsider, including the regulator, would ever come to know.
• The public interest and shareholder directors collectively decided to not document the board discussion with respect to the irregularities of the management, thereby abdicating their primary responsibilities.
• Instead of sacking her, the Board allowed her to resign with respectable compensation and buried the matter, reflecting the complete collapse of corporate governance in NSE.

REWARDING MALFEASANCE

• The entire Board’s complicity is further indicated by the fact that, despite being aware that the MD-cum-CEO was divulging confidential information of the NSE to an anonymous individual and had recruited and excessively rewarded another individual, the Board allowed her to resign on December 2, 2016.
• For good measure, the Board placed on record her “sterling contribution and approved a 44-crore severance package!

CONDUCT OF DIRECTORS OF GOVT COMPANIES/BANKS

• Senior executives of the LIC, the SBI group and the Stock Holding Corporations etc, are part of the BoD who are delegated to protect the interests of their companies. But they have not raised any alarm but went along with the questionable approach of the management.
• Their role highlights a troubling issue that when they are on the Board of prominent private sector companies, they apparently abandon their own companies.
• And it also seems they are ready to align themselves and take instructions from the executive management of the private sector companies. It raises questions for the public about how the parent companies themselves are managed.

REGULATOR’S CONDUCT

• The SEBI’s order on the NSE saga and the delay of six years in concluding the probe raises troubling questions on the regulator’s role (Read Ahead)

A SERIES OF SCAMS IN NSE

• The current scam comes in the backdrop of a progressing CBI led investigation into the co-location scam and other glaring irregularities in NSEs.
• This point out that the NSE’s financial success and near-monopoly has clouded the judgement of the NSE leadership or they believe to be above the rule of law.

WHAT IS THE CO-LOCATION SCAM?

WHAT ARE CO-LOCATION FACILITIES?

• There are dedicated spaces in the exchange building, right next to the exchange servers, where high-frequency and algo traders can place their systems or programs.

BENEFITS OF THESE FACILITIES

• With the co-location facilities being extremely close to stock exchange servers, traders here have an advantage over other traders due to the improvement in latency (time taken for order execution).
• But the co-location is mainly used only by institutional investors and brokers for their proprietary trader. Retail investors have a negligible presence here.

UNFAIR ACCESS TO SERVERS

• The scam in NSE’s co-location facility took place almost a decade ago. It was alleged that one of the trading members, OPG Securities, was provided unfair access between 2012 and 2014 that enabled him to log in first to the server and get the data before others in the co-location facility.
• It was alleged that the owner and promoter of said private company abused the server architecture of NSE in conspiracy with unknown officials of NSE, SEBI etc.
• This preferential access allowed the algo trades of this member to be ahead of others in the order execution.

ROLE OF WHISTLEBLOWER AND MEDIA

• The scam came to light due to a whistle-blower’s complaint to SEBI in 2015, in which the entire modus operandi of the people gaming the system was laid out.
• When Money life(a media outlet) exposed the scam, the NSE management adopted a high-handed attitude, slapping a ₹100 crore defamation suit against Money life.
• The matter moved to Bombay High Court, which came down hard on NSE and dismissed its suit. Further, NSE was told to pay ₹50 lakh as the penalty for its arrogant attitude in responding to the media.

EXTENT OF LOSS

• The point to note is that there is no way of proving any loss to any investors or traders due to this scam. The SEBI order of 2019 directed OPG Securities and its directors to disgorge unfair gains of ₹15.7 core with the interest of 12 per cent from April 7, 2014, as a notional loss.

PENALTY ON NSE

• In 2016, SEBI asked NSE to carry out a forensic audit of its systems and deposit the entire revenue from its co-location facilities into an escrow account. Deloitte was tasked with the job of conducting a forensic audit of NSE’s systems.
• In 2019, SEBI passed its order on the issue, asking NSE to pay ₹625 crore with an interest of 12 per cent and also barred NSE from raising money from stock market for six months.

CORRECTIVE MEASURES

• NSE has changed its order execution protocol in the co-location facility to Multicast TBT from April 2014, thus plugging the loophole that allowed some to game the system.

THE SECURITIES AND EXCHANGE BOARD OF INDIA: AN OVERVIEW

CONSTITUTION OF SEBI

• The Securities and Exchange Board of India was constituted as a non-statutory body on April 12, 1988, through a resolution of the Government of India.
• The Securities and Exchange Board of India was established as a statutory body in the year 1992 and the provisions of the Securities and Exchange Board of India Act, 1992 (15 of 1992) came into force on January 30, 1992.

PROTECTIVE FUNCTION OF SEBI

• Checking price rigging
• Prevent insider trading
• Promote fair practices
• Create awareness among investors
• Prohibit fraudulent and unfair trade practices

REGULATORY FUNCTION OF SEBI

• Designing guidelines and code of conduct for the proper functioning of financial intermediaries and corporate.
• Regulation of takeover of companies
• Conducting inquiries and audits of exchanges
• Registration of brokers, sub-brokers, merchant bankers etc.
• Levying of fees
• Performing and exercising powers
• Register and regulate credit rating agency

DEVELOPMENT FUNCTION OF SEBI

• Imparting training to intermediaries
• Promotion of fair trading and reduction of malpractices
• Carry out research work
• Encouraging self-regulating organizations
• Buy-sell mutual funds directly from AMC through a broker

OBJECTIVES OF SEBI

• Protection to the investors: The primary objective of SEBI is to protect the interest of people in the stock market and provide a healthy environment for them.
• Prevention of malpractices: This was the reason why SEBI was formed. Among the main objectives, preventing malpractices is one of them.
• Fair and proper functioning: SEBI is responsible for the orderly functioning of the capital markets and keeps a close check over the activities of the financial intermediaries such as brokers, sub-brokers, etc.

POWERS OF SEBI

SEBI is a quasi-legislative, quasi-judicial and quasi-executive body.

• SEBI has the power to regulate and approve any laws related to functions in the stock exchanges.
• It has the powers to access the books of records and accounts for all the stock exchanges and it can arrange for periodical checks and returns into the workings of the stock exchanges.
• It can also conduct hearings and pass judgments if there are any malpractices detected on the stock exchanges.
• When it comes to the treatment of companies, it has the power to get companies listed and de-listed from any stock exchange in the country.
• It has the power to completely regulate all aspects of insider trading and announce penalties and expulsions if a company is caught doing something unethical.

GOVERNANCE OF SEBI

The SEBI Board consist of nine members-

• One Chairman appointed by the Government of India
• Two members who are officers from Union Finance Ministry
• One member from the Reserve Bank of India
• Five members appointed by the Union Government of India

ENFORCEMENT OF LAWS

• SEBI enforces provisions of the SEBI Act, the Depositories Act 1996, the Securities Contracts (Regulation) Act, 1956, among others.
• A Securities Appellate Tribunal established under section 15-K of the Securities and Exchange Board of India Act hears appeal from the orders of SEBI which can be challenged in the SC only.

A QUESTION MARK ON SEBI’S REGULATORY ROLE

INEXPLICABLE DELAY

• Though SEBI began investigations in 2016, it has taken six years to arrive at this order. However, SEBI’s order raises more questions than it answers as it has not taken the issue into a logical conclusion.

DILUTION OF OFFENCE

• The order passed by SEBI’s whole-time member contains no provision for conducting any investigation into the possible criminal aspects of the then NSE Chief’s conduct.
   It appears that SEBI sees her criminal offence of sharing NSE’s internal confidential information with an unknown person as indiscretion.
   But converting a grave criminal offence into a regulatory indiscretion may set a dangerous precedent for the entire capital market ecosystem.

POOR CAPACITY OF SEBI

• Multiple complaints were lodged in SEBI against the then NSE MD & CEO, which led SEBI to investigate her case.
   If SEBI lacked the capability or capacity to take the investigation further, it should have sought the assistance of other investigating agencies.
• The NSE Board chairman, upon discovering that Chitra was sharing information regarding NSE with her Himalayan Yogi, apprised the NSE Board members in a closed-door meeting. And that information was too sensitive to be even recorded in minutes of the board meeting.

NO FEAR FOR REGULATOR

• NSE had knowledge that she shared sensitive information with the alleged yogi and NSE Board had concealed this information from SEBI Long after she had resigned, and only when SEBI probed, NSE directed Ernst & Young to figure out the identity the alleged Yogi.
   The whole episode reflects poorly on the status and respect the SEBI commands or put in other words; the regulated seems to have scant regard for the regulator and seems to believe that the system can be gamed and they will never get caught.

LOST OPPORTUNITY FOR REFORMS

• SEBI missed an opportunity to make an example of the CMD’s case as a warning to rogue managers. However, the meagre penalty meted out by SEBI indicates the regulator is as keen as NSE to close the case rather than address the ethical and legal cracks within the system. Penalty imposed on her is ₹3 crore – less than 7% of her severance package of ₹44 crore.

SEBI’S FAILURE TO UPHOLD NATIONAL INTEREST

• By relegating this case to a mere issue of breach of compliance, SEBI has effectively turned a possible criminal offence into a civil case. This case will embolden more who may now find it easier to abuse their official positions to compromise their own company’s integrity or hurt national interest.

ABDICATION OF AUTHORITY

• Despite being armed with exceptional powers among financial regulators to summon market participants and to search and seize evidence, SEBI failed to show the intent to get to the bottom of the scam while the trail was still hot.

REVITALIZING THE REGULATOR AND REFORMING THE NSE: THE WAY FORWARD

SCALE UP THE RESOURCE BASE

• SEBI as a regulator has to scrutinize millions of transactions done almost every minute in the stock market and that by itself makes its task herculean. The problem is compounded by the need to act swiftly, and naturally, there are limitations.
   Hence, the resource base of SEBI, especially human infrastructure, needs to be scaled up so also its technological capability through AI, etc.

FAST TRACK REFORMS IN NSE

• A leading stock exchange like NSE is a systemically important institution as it serves an economic function and is the symbol of the free market. Any disruption in the NSE has a repercussion on the economy and the country.
   The NSE leadership needs to put their house in order by upholding the laws of the land and also by holding accountability of the management to the Board, which also need to be accountable to the public.
   Processes and practices currently in place at NSE need to be revisited so that such an event doesn’t re-occur at such an important market infrastructure institution.

ACTIONS BY SEBI

• SEBI has also instituted various changes in the governance of market infrastructure institutions (MIIs), including board committee structures and oversights, the tenor of management, accountability for lapses at MIIs etc., which can strengthen the control environment.

FULFILLING SEBI’S MANDATE

• SEBI has been tasked with preserving the integrity of the capital market and institutionalizing good governance in the stock market ecosystem.
   For the sake of millions who trust SEBI to preserve the integrity of the Indian capital market, the regulator must fix the systemic deficiencies in Indian exchange.
   It must not be seen as favouring or taking a soft approach to matters of regulatory violation, especially by powerful players.

EXPECTATION FROM THE NEW SEBI CHIEF

• Regulating the stock exchanges in an independent and efficient manner, especially when doubts have risen regarding the functioning of the NSE, should be high on the list of tasks for the newly appointed chairperson of SEBI.

ROLE OF PMO AND OTHERS

• The SEBI order itself seems incomplete and there seems to be something more than what meets the eye. This could require further investigation by other agencies, and the Finance Ministry and the Prime Minister’s Office needs to act expeditiously.
   The CBI investigation into this scam also need to be fast-tracked and should be done in a professional manner to unearth the truth and to prosecute and punish the guilty.

REGULATING THE REGULATOR

• The SEBI order has done more damage to its own credibility and many questions have remained unanswered. Thus, a thorough inquiry into the investigation conducted by SEBI by independent agencies needs to be undertaken to find out if any extraneous considerations were involved in the manner of investigation or its findings.
   This does not in anyway will deem to be an encroachment into the regulator’s autonomy but will be a step towards improving regulatory quality.
   Additionally, a Regulatory Impact Assessment need to be conducted to assess the functioning of SEBI and the Parliament’s control over it need to be strengthened through standing committee oversight, periodic reports, etc.

RESTRUCTURING THE BOARD OF NSE

• Persons occupying key management positions at important institutions, even if professionals, should be rotated at reasonable intervals.
• Allowing an individual to turn into a permanent fixture as CEO or MD is a bad idea. It is improper for an outgoing CEO/MD to continue on the Board.
• And it is worse if this happens when the ex-CEO’s deputy assumes charge as the new CEO. Not only can this create situations of nexus, but it can also tie down the successor from initiating a clean-up of legacy structures.

WHISTLEBLOWER PROTECTION

• As it was a whistle-blower letter that alerted SEBI to the irregularities at NSE, MIIs must be asked to put in place well-defined employee whistleblower mechanisms, where complaints can be lodged directly with the concerned.

1. The identity of the whistle-blower must be strictly protected to prevent vindictive action.

PROFESSIONAL CONDUCT OF THE GOVT COMPANY/BANK REPRESENTATIVES

• The LIC is coming to the market for its initial public offering, and prospective shareholders and policyholders have a right to demand an explanation from LIC on the unprofessional conduct of its representatives on NSE in this period.
• Similarly, shareholders of SBI also should demand an explanation from SBI on the conduct of its officers when deputed as directors in other companies.
• The govt should take note of the negligence/irresponsibility of these members and stringent actions need to be taken against them if found to be complicit.

THE CONCLUSION: Despite the capture of power by a few individuals and the governance infractions they indulged in, few can dispute that the National Stock Exchange (NSE) has served Indian financial markets extremely well in the three decades of its existence. Its state-of-the-art electronic platform and reliable trading and settlement systems have ensured that there were no systemic failures through the worst of upheavals. It is therefore critical for the government and the regulator to get to work on fixing the loopholes in the governance structures at the NSE so that such infractions don’t recur. Clearly, the regulator needs to introspect on its actions both in the co-location and ‘yogi’ scams and learn from the mistakes.

[WpProQuiz 350]

INTERNATIONAL RELATIONS

1.WHAT IS VIRTUAL WATER TRADE?

THE CONTEXT: Recently, India banned the exports of broken rice and imposed a 20 per cent duty on the exports of various grades of rice amid high cereal inflation and uncertainties with respect to domestic supply.
THE EXPLANATION:
• The world rice market is thin, given that 90 per cent of production is consumed domestically. As a result, any small change in exports and imports has an enormous impact on prices, especially if it leads to panic buying of food grains by rich countries.
• While the actual impact of the export restriction policy on domestic prices is a matter of empirical scrutiny, and the government has intended to regulate domestic prices and safeguard food security, frequent changes in export policies undoubtedly have long-term ramifications.
• India exports rice to more than 130 countries, constituting around 40 per cent of the global rice trade. The decision to curb rice exports has, unfortunately, been taken when global food prices are already rising. The export uncertainties will affect the credibility of Indian exporters, create a disincentive for future exports, and will enable buyers to shift towards other major rice-exporting countries.
• In India, around 49 per cent of rice cultivation depends on groundwater, which is depleting rapidly. As per the latest data available from the Food and Agriculture Organisation (FAO), agricultural water withdrawal as a percentage of total available renewable water resources has increased from 26.7 per cent in 1993 to 36 per cent in 2022. Similarly, the total per capita renewable water resources have also declined from 1,909 cubic meters to 1,412 cubic meters during this period.
• The water-intensive nature of rice cultivation, along with frequent export restrictions will adversely affect the long-run sustainability of rice production. Further, India’s export restrictions will adversely affect several low-income and low-middle-income countries like Bangladesh, Senegal, Nepal and Benin, which are among the largest importers of Indian rice.

VIRTUAL WATER TRADE (VWT)
• Rice exports are leading to an indirect export of water to other countries — a phenomenon known as virtual water trade (VWT). The relative per capita water availability in India is lower than a majority of its major importing countries. The other major exporters of rice, such as Thailand and Vietnam, also have better per capita water availability in comparison to India. Out of 133 countries in which India has positive net rice exports, only 39 countries have relatively lower per capita renewable water resources. Out of these 39 countries, 12 countries are high-income countries with the ability to buy food at a higher price.
• Though Minimum Support Prices (MSPs) are announced for a large number of crops, India’s food security policies, especially how they are implemented, favour mainly rice and wheat. Furthermore, procurement is skewed towards selected northern states such as Punjab and Haryana where water availability is lower than in several other states.
• India’s rice yield is also lower than the world average. India’s yield is better than Thailand and Pakistan but worse than Vietnam, China and the US. The cost of cultivation in India is also increasing, and hence there will be a need for a higher MSP to make production remunerative. This will exacerbate the pressure to re-think its price-support-backed food security mechanism.

VALUE ADDITION: MAJOR RICE PRODUCING STATES IN INDIA
As of 2020-21, the top 3 rice-producing states of India are:
1. West Bengal
2. Uttar Pradesh
3. Punjab
Around 36% of India’s total rice production is from these 3 states. West Bengal contributed 13.62% of the total rice produced in India. Uttar Pradesh contributed 12.81% of the total rice produced in India. Punjab accounted for 9.96% of the total rice produced in India.
Rice is a Kharif crop. Rice requires an annual rainfall of more than 100 cm. It requires high humidity and high temperature. The required temperature is more than 25 degrees celsius.

ECONOMIC DEVELOPMENTS

2. PILOT LAUNCH OF E-RUPEE FOR SPECIFIC USE CASES: WHAT IS THE RBI’S PLAN

THE CONTEXT: Recently, the Reserve Bank of India (RBI) indicated that it will soon commence limited pilot launches of e-rupee (e`), or Central Bank Digital Currency (CBDC) or digital rupee, for specific use cases.
THE EXPLANATION:
It has hinted at two broad categories for the use of e-rupee — retail and wholesale — taking the payment system in the country to a new level where the common people and businesses will be able to use the digital currency seamlessly for various transactions.

What’s RBI’s plan?
• The central bank said that the development of CBDC could provide the public a risk-free virtual currency that will give them legitimate benefits without the risks of dealing in private virtual currencies.
• The approach for issuance of CBDC will be governed by two basic considerations — to create a digital rupee that is as close as possible to a paper currency and to manage the process of introducing digital rupee in a seamless manner. The central bank also feels that it is desirable for CBDCs to have offline capabilities to make it a more attractive and accessible medium of payment for a wide category of users.
• E-rupee is the same as a fiat currency and is exchangeable one-to-one with the fiat currency. Only its form is different. It can be accepted as a medium of payment, legal tender and a safe store of value. The digital rupee would appear as liability on a central bank’s balance sheet.

What are the types of e-rupee?
• Based on the usage and the functions performed by the digital rupee and considering the different levels of accessibility, CBDC can be demarcated into two broad categories — general purpose (retail) (CBDC-R) and wholesale (CBDC-W), the RBI’s concept note says.
• Retail CBDC is an electronic version of cash primarily meant for retail transactions. It will be potentially available for use by all — private sector, non-financial consumers and businesses — and can provide access to safe money for payment and settlement as it is a direct liability of the central bank.
• However, the RBI has not explained how e-rupee can be used in merchant transactions in the retail trade.

What are the forms of CBDC?
• The central bank says e-rupee, or CBDC, can be structured as token-based or account-based. A token-based CBDC would be a bearer instrument like banknotes, meaning whosoever holds the tokens at a given point in time would be presumed to own them. In a token-based CBDC, the person receiving a token will verify that his ownership of the token is genuine.
• A token-based CBDC is viewed as a preferred mode for CBDC-R as it would be closer to physical cash.
• An account-based system would require maintenance of record of balances and transactions of all holders of the CBDC and indicate the ownership of the monetary balances. In this case, an intermediary will verify the identity of an account holder. This system can be considered for CBDC-W.

What’s the model for issuance?
There are two models for issuance and management of CBDCs under the RBI’s consideration — direct model (single tier model) and indirect model (two-tier model). In the direct model, the central bank will be responsible for managing all aspects of the digital rupee system such as issuance, account-keeping and transaction verification.

VALUE ADDITION:
What is Fiat Currency?
• Fiat money is government-issued currency that is not backed by a physical commodity, such as gold or silver, but rather by the government that issued it.
• The value of fiat money is derived from the relationship between supply and demand and the stability of the issuing government, rather than the worth of a commodity backing it as is the case for commodity money.
• Most modern paper currencies are fiat currencies, including the U.S. dollar, the euro, and other major global currencies.

Fiat Money vs Legal Tender
• Fiat money has no intrinsic value, while legal tender is any currency declared legal by a government.
• Governments can issue fiat currency and make it legal tender by setting it as the standard for debt repayment.
• The benefit of fiat money is that it gives central banks greater control over the economy, but governments can print too much money and create hyperinflation.
• The U.S. dollar , Indian Rupee etc are both fiat money and legal tender.

3. THE NOBEL PRIZE IN ECONOMICS: BERNANKE, DIAMOND, DYBVIG

THE CONTEXT: According to Royal Swedish Academy of Sciences, Ben Bernanke, Douglas Diamond and Philip Dybvig won the 2022 Nobel Economics Prize “for research on banks and financial crises”.
THE EXPLANATION:
• The Economics Prize has gone to the three individuals for their role in research related to how banks function. “Modern banking research clarifies why we have banks, how to make them less vulnerable in crises and how bank collapses exacerbate financial crises.
• The foundations of this research were laid by Ben Bernanke, Douglas Diamond and Philip Dybvig in the early 1980s. Their analyses have been of great practical importance in regulating financial markets and dealing with financial crises.
It also noted, “Later, when the pandemic hit in 2020, significant measures were taken to avoid a global financial crisis. The laureates’ insights have played an important role in ensuring these latter crises did not develop into new depressions with devastating consequences for society.” Here is the role each of them played in the development of this research.
Ben S. Bernanke
According to sources, the research laid the foundation of some crucial questions on banks: “If banking collapses can cause so much damage, could we manage without banks? Must banks be so unstable and, if so, why? How can society improve the stability of the banking system? Why do the consequences of a banking crisis last so long? And, if banks fail, why can’t new ones immediately be established so the economy quickly gets back on its feet?”
Douglas W. Diamond and Philip H. Dybvig
• Both Diamond and Dybvig worked together to develop theoretical models explaining why banks exist, how their role in society makes them vulnerable to rumours about their impending collapse, and how society can lessen this vulnerability. These insights “form the foundation of modern bank regulation”.
• The model captures the central mechanisms of banking, as well as its weaknesses. It is based upon households saving some of their income, as well as needing to be able to withdraw their money when they wish. That this does not happen at the same time for every household allows for money to be invested into projects that need financing. They argue, therefore, that banks emerge as natural intermediaries that help ease liquidity.
• But with massive financial crises that have been witnessed in history, particularly in the US, it is often discussed how banks need to be more careful about assessing the loans they give out, or how bailing out banks in crisis.

INDIAN AGRICULTURE

4. WHY INDIA’S AGRI PRODUCTION STATS NEED A GROUND REALITY CHECK

THE CONTEXT: According to the National Statistical Office’s (NSO) household consumer expenditure (HCE) survey for 2011-12, the monthly per capita consumption of milk was 4.33 litres in rural India and 5.42 litres in urban India.
THE EXPLANATION:
• Taking an average of 5 litres (5.15 kg; 1 litre of milk = 1.03 kg), this translates into an annual consumption of nearly 75 million tonnes (mt) for a population of 1,210.85 million as per the 2011 Census.
• This figure includes only milk consumed by households — directly and as curd, butter, ghee, paneer, etc. at home. It excludes milk consumed by businesses — tea shops, hotels, and ice-cream, sweetmeat, chocolate and biscuit makers. If this milk is assumed to be 25% over and above that consumed by households, it adds up to about 94 mt — or a daily per capita availability of 212 gm.

What production data show?
• Going by Department of Animal Husbandry & Dairying (DAHD) statistics, India’s milk production in 2011-12 was 127.9 mt with a daily per capita availability of 289 gm. These were 210 mt and 427 gm respectively in 2020-21.
• Unfortunately, there is no published HCE survey data after 2011-12. In all likelihood, the gap between the NSO’s consumption-based estimates and the DAHD’s production numbers would only have widened.

• Between 2013-14 and 2020-21, India’s milk production grew at an average 6.2% a year. (Table) But this isn’t reflected in the marketing of liquid milk by dairy cooperatives, which grew by just over 3% annually in volume terms during this period.
• In the private sector, growth in the average sales of 12 major dairy companies averaged 4.93% in nominal terms between 2014-15 and 2020-21. After adjusting for an average wholesale price inflation of 3% for “dairy products” over this period, their real sales growth was slightly more than 1.9%.

Demand is the key
• Knowing what and how much Indians are consuming — which only a comprehensive nationwide HCE survey can reveal — is useful for analysis of demand and supply in other farm produce too. It helps in framing policies better, whether on fixation of minimum support prices and tariffs or on crop diversification.
• For example, the monthly per capita household consumption of all cereals in the 2011-12 survey was assessed at 11.22 kg for rural India, and 9.28 kg for urban India. At an average of 10 kg, the annual household cereal consumption requirement for 1,400 million people today would be around 168 mt.
• Assuming 25% additional consumption in processed form (bread, biscuits, cakes, noodles, vermicelli, flakes, etc.), and another 25 mt of grain (mainly maize) for feed or starch, the total yearly demand would be around 235 mt.

ENVIRONMENT, ECOLOGY AND CLIMATE CHANGE

5. THE GLOBAL FOREST SECTOR OUTLOOK 2050

THE CONTEXT: The report titled “The global forest sector outlook 2050: Assessing future demand and sources of timber for a sustainable economy” was released recently by the United Nations Food and Agriculture Organization (FAO) at the 26th Session of the Food and Agriculture Organization Committee on Forestry in Rome.
THE EXPLANATION:
• The newly released report estimates an increased demand for wood products like mass timber and manmade cellulose fibre that are used as alternatives to non-renewable materials. Their demand may surge by up to 272 million cubic metres by 2050.
• This is expected to create over 1 million jobs in developing countries. The report forecasts that the consumption of primary processed wood products will increase to 3.1 billion cubic meters by 2050. This estimation is based on the Global Forest Products Model, which uses historical patterns of the production and trade of wood products.
• The report also forecasted that the industrial roundwood (IRW) will be vulnerable to uncertainties caused by climate-change influenced government interventions in naturally regenerated production forests and the expansion of planted forests. The future demands for IRW will be met by both planted forests mainly from Global South and naturally regenerated temperate and boreal forests.
• In 2020, about 44 per cent of the IRW production was provided by regenerated temperate and boreal forests. During the same year, the planted forests contributed to around 46 per cent of the IRW supply.
• In the future, an additional 33 million hectares of “highly productive plantation forest” will be required to meet the demand in 2050, if the area of naturally regenerated forests remain intact.
• A total annual investment of 40 billion USD will be required to maintain and expand the IRW production by 2050. Another yearly funding of 25 million USD will be required for the modernization and establishment of industries.
• In 2050, consumption of wood energy will be concentrated in sub-Saharan Africa and South Asia, where fuelwood is traditionally used by communities. Firewood will also be used in modern biomass to generate renewable energy.
• In 2020, the global consumption of fuelwood was 1.9 billion cubic meters. In 2050, this figure is expected to increase 11 to 42 per cent by reaching 2.1 to 2.7 billion cubic meters.

VALUE ADDITION:
FAO:
• It is a specialized agency of the United Nations that leads international efforts to defeat hunger. Headquarters: Rome, Italy.
• Founded: 16 October 1945.
• Goal of FAO: Their goal is to achieve food security for all and make sure that people have regular access to enough high-quality food to lead active, healthy lives.
Important reports and Programmes:
• Global Report on Food Crises.
• Every two years, FAO publishes the State of the World’s Forests.
• FAO and the World Health Organization created the Codex Alimentarius Commission in 1961 to develop food standards, guidelines and texts.
• In 1996, FAO organized the World Food Summit. The Summit concluded with the signing of the Rome Declaration, which established the goal of halving the number of people who suffer from hunger by the year 2015.
• In 1997, FAO launched TeleFood, a campaign of concerts, sporting events and other activities to harness the power of media, celebrities and concerned citizens to help fight hunger.

PRELIMS PERSPECTIVE

6. THE SUN TEMPLE MODHERA

THE CONTEXT: The Prime Minister who is on visit to his home state of Gujarat ahead of the state assembly elections visited Modhera which is famous for its Sun Temple.
THE EXPLANATION:
• During his visit he declared Modhera village in Gujarat as India’s first 24×7 solar-powered village, talked about how invaders in the past tried their best to raze the historic Sun Temple in Modhera and the atrocities they committed on the people of the region.
• Sun Temple Modhera Sun Temple at Modhera is one of the few shrines that are dedicated to the Sun God. Situated on the banks of Pushpavati River in Modhera, Sun Temple is easily accessible from Ahmedabad, the largest city of Gujarat.
• In 1026, the temple was built by King Bhimdev of the Solanki dynasty (believed to be the descendants of the lineage of Sun God). This ancient temple revives the reminiscences of Sun Temple at Konark in Orissa. Turning in the pages of history, one can notice the mention of Modhera in the scriptures like Skanda Purana and Brahma Purana.
Architecture
• The brilliant architecture of the temple is one of its own class. The temple encompasses three different yet axially-aligned and integrated constituents.
• As per the Konark Temple, this shrine is designed in a manner, so that the first rays of the Sun cast on the image of the Lord Surya. The Temple was plundered by Mahmud Ghazni; still the architectural grandeur is not vanished.

OTHER SUN TEMPLES IN INDIA- PRELIMS PERSPECTIVE
1. Bhramanya Dev Temple At Unao, Madhya Pradesh.
2. Dakshinaarka Temple At Gaya, Bihar. …
3. Konark Sun Temple, Odisha. …
4. Sun Temple At Modhera, Gujarat. …
5. Vivasvan Sun Temple, Gwalior, Madhya Pradesh.
6. Arasavalli- Suryanarayana Temple, Andhra Pradesh.

THE PRELIMS PRACTICE QUESTIONS

QUESTION OF THE DAY

Q1. The term Solidity, Rusk, Haskell, sometimes seen in news, are –
a) Exo-planets explored by NASA missions
b) Programming languages used in crypto-currency
c) International initiatives for climate change actions
d) Non-profit organisations working for human rights protection

Answer: B
Explanation:
• Solidity is the programming language mainly used on the blockchain platform Ethereum.
• In the crypto world, Rust is commonly associated with the Solana blockchain, which is known for its high speeds and relatively low transaction fees.
• Haskell is not well-known, and that it is not a popular programming language for beginners. Haskell is classified as a purely functional programming language, and is hard to learn.

[WpProQuiz 349]

THE CONTEXT: A WTO panel, in its ruling on December 14, 2021, recommended India to withdraw its subsidies on sugar under the Production Assistance, the Buffer Stock, and the Marketing and Transportation Schemes as they are violative of the WTO norms and rules. Ruling in favour of Brazil, Australia and Guatemala in their trade dispute against India over its sugar subsidies, the WTO panel has stated that the support measures are inconsistent with WTO trade rules. This article analyse this issue in detail.

ANALYSIS OF THE ISSUE

COMPLAINT AGAINST INDIA

• Australia, Brazil, and Guatemala said India’s domestic support and export subsidy measures appeared to be inconsistent with various articles of the WTO’s Agreement on Agriculture and the Agreement on Subsidies and Countervailing Measures (SCM).

SUBSIDIES BEYOND DE MINIMIS LEVEL

• All three countries complained that India provides domestic support to sugarcane producers that exceed the de minimis level of 10% of the total value of sugarcane production. They said it was inconsistent with the Agreement on Agriculture. (READ AHEAD).

OTHER POINTS OF CHALLENGES.

• They also raised the issue of India’s alleged export subsidies, subsidies under the production assistance and buffer stock schemes, and the marketing and transportation scheme.
• Australia accused India of “failing” to notify its annual domestic support for sugarcane and sugar subsequent to 1995-96, and its export subsidies since 2009-10, which it said were inconsistent with the provisions of the SCM Agreement.

PROCESS AT WTO

• The consultation followed between these countries and India did not resolve the issue.
• These countries then approached the Dispute Settlement Body (DSB) with the complaint that set up three panels to inquire into the allegations. These panels ruled against India.

THE PANELS’ FINDINGS.

• From 2014-15 to 2018-19, India’s domestic support to sugarcane producers exceeded the permitted level of 10% of the total value of sugarcane production.
• Therefore, India is acting inconsistently with its obligations under the Agreement on Agriculture.
• On the export subsidy, the panel also found that the support provided by India violated its obligations and India’s failure to notify its support measures to relevant WTO Committees also violated WTO norms.

THE PANELS’ RECOMMENDATIONS

• The panel asked India to bring its support measures in conformity with WTO rules and withdraw the prohibited subsidies.

WHAT HAS BEEN INDIA’S RESPONSE?

RESPONSE OF THE COMMERCE MINISTRY

• The findings of the panel were “completely unacceptable” to India.
• Australia, Brazil, and Guatemala had wrongly claimed that domestic support provided by India to sugarcane producers is in excess of the limit allowed by the WTO and that India provides prohibited export subsidies to sugar mills.
• The panel’s findings were “erroneous”, “unreasoned”, and “not supported by the WTO rules.
• The Panel has also evaded key issues which it was obliged to determine. Similarly, the Panel’s findings on alleged export subsidies undermine logic and rationale.
• As of now, there is no export subsidy on sugar, and hence the ruling will have no impact on the sugar export.

ON DOMESTIC SUPPORT/SUBSIDY.

• India held that its subsidy does not come under the meaning of market price support under the AoA. It pointed out that the FRP is paid to the sugar mills and not to the sugarcane producers.
• It argued that as per the meaning of market price support, it would be violated only when the govt pays for or procures the agricultural product.
• The panel rejected this argument — saying “market price support does not require governments to purchase or procure the relevant agricultural product”.

APPEAL TO APPELLATE BODY(AB)

• India has appealed against the ruling of the World Trade Organization’s (WTO) trade dispute settlement panel.
• India filed the appeal in the WTO’s Appellate Body, the final authority on such trade disputes.
• Pending the disposal, India is not bound to implement the orders of the DSB Panel. The AB has not been operational due to vacancies that the USA has consistently refused to fill.

CLARIFYING CONCEPTS: THE WTO TERMINOLOGIES

WHAT IS AoA?

To reform the agriculture trade and to improve the predictability and security of importing and exporting countries, the World Trade Organization came up with the agriculture agreement. It was negotiated during the Uruguay Round of the General Agreement on Tariffs and Trade, and entered into force with the establishment of the WTO on January 1, 1995. The three provisions/pillars that the agriculture agreement focuses on are –

• Market access — the use of trade restrictions, such as tariffs on imports
• Domestic support — the use of subsidies and other support programmes that directly stimulate production and distort trade
• Export competition — export subsidies and other government support programmes that subsidize exports.

DOMESTIC SUPPORT

• There are two categories of domestic support — support with no, or minimal, distortive effect on trade on the one hand (often referred to as “Green Box” measures) and trade-distorting support on the other hand (often referred to as “Amber Box” measures).
• For example, government-provided agricultural research or training is considered the former type, while government buying-in at a guaranteed price (“market price support”) falls into the latter category.
• Under the Agreement on Agriculture, all domestic support favouring agricultural producers is subject to rules. The Green Box also provides for the use of direct payments to producers, which are not linked to production decisions, i.e. although the farmer receives a payment from the government, this payment does not influence the type or volume of agricultural production (“decoupling”).
• The “Blue Box” exemption category covers any support measure that would normally be in the “Amber Box”, but which is placed in the “Blue Box” if the support also requires farmers to limit their production.
• All domestic support measures which do not correspond to the exceptional arrangements known as the “Green” and “Blue” boxes, are considered to distort production and trade and therefore fall into the “Amber Box” category.

DE MINIMIS LEVEL

• Minimal amounts of domestic support that are allowed even though they distort trade — up to 5% of production value for developed countries, 10% for developing.
• All domestic support measures favouring agricultural producers that do not fit into any of the above exempt categories are subject to reduction commitments. This domestic support category captures policies, such as market price support measures, direct production subsidies or input subsidies.
• However, under the de minimis provisions of the Agreement there is no requirement to reduce such trade-distorting domestic support in any year in which the aggregate value of the product-specific support does not exceed 5 percent of the total value of production of the agricultural product in question.
• In addition, non-product specific support of less than 5 percent of the value of total agricultural production is also exempt from reduction. The 5 per cent threshold applies to developed countries, whereas in the case of developing countries, the de minimis ceiling is 10 percent.

AGGREGATE MEASUREMENT OF SUPPORT

• The AMS represents trade-distorting domestic support and is referred as the “amber box”. As per the WTO norms, the AMS can be given up to 10 % of a country’s agricultural GDP in the case of developing countries.
• On the other hand, the limit is 5% for a developed economy. This limit is called de minimis level of support. It means that the AMS and the De Minimis Level are similar. Both relates to the Amber box.

SCM

• The Agreement on Subsidies and Countervailing Measures (Subsidies Agreement) of the World Trade Organization (WTO) provides rules for government subsidies and applying remedies to address subsidized trade that has harmful commercial effects.
• These remedies can be pursued through the WTO’s dispute settlement procedures, or through a countervailing duty (CVD) investigation which can be undertaken unilaterally by any WTO member government.
• Countervailing measures may be used against subsidies when imports of subsidized goods harm a competing domestic industry. They are used to offset the effect of the subsidy by, for example, imposing a countervailing duty (limited to the amount of the subsidy) on the import of subsidized goods or securing quid pro quo commitments from the subsidizing country (that it will abolish or restrict the subsidy, or that exporters will raise prices).
• Export subsidies which are in full conformity with the Agriculture Agreement are not prohibited by the SCM Agreement, although they remain countervailable. Domestic supports which are in full conformity with the Agriculture Agreement are not actionable multilaterally, although they also may be subject to countervailing duties.

DISPUTE SETTLEMENT BODY (DSB)

• Settling disputes is the responsibility of the Dispute Settlement Body (the General Council in another guise), which consists of all WTO members. The Dispute Settlement Body has the sole authority to establish “panels” of experts to consider the case and accept or reject the panels’ findings or the results of an appeal. It monitors the implementation of the rulings and recommendations and can authorize retaliation when a country does not comply with a ruling.
• Under the Subsidies Agreement, if a WTO member government believes that non permissible subsidy is being granted or maintained by another member government, it can request consultations with that government under the WTO’s dispute settlement procedures.
• If no mutually agreeable solution is reached in initial consultations, the matter can be referred to the WTO’s Dispute Settlement Body (DSB), which consists of representatives of all WTO members.
• The DSB establishes a panel, which reports its findings to the parties to the dispute with in a time frame. If the panel finds that the measure in question is a prohibited subsidy, the subsidizing government must withdraw it without delay.
• But when the appeal is filed in the AB and not yet decided, the practice is that the member country does not withdraw the subsidy immediately. The DSB can only reject the recommendations of the Panel on consensus among the members.

APPELLATE BODY

• The Appellate Body was established in 1995 under Article 17 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU). It is a standing body of seven persons that hears appeals from reports issued by panels in disputes brought by WTO Members. The Appellate Body can uphold, modify or reverse the legal findings and conclusions of a panel. Appellate Body Reports are adopted by the Dispute Settlement Body (DSB) unless all members decide not to do so. The Appellate Body has its seat in Geneva, Switzerland.
• Currently, the Appellate Body is unable to review appeals given its ongoing vacancies. The term of the last sitting Appellate Body member expired on 30 November 2020.

NAIROBI PACKAGE

• The Nairobi Ministerial conference was held in 2015. WTO members decided to eliminate the export subsidies on agriculture and make new rules on export measures that have a covalent effect. To implement this decision, the developed countries will remove all the subsidies on export immediately. Developing countries will have a little longer period to eliminate the subsidies except for a few agricultural products.
• The decision was taken to give effect to the sustainable development goal on zero hunger and also help the farmers of the developing countries who face intense competition against the rich countries and the artificially boosted exports by the help of subsidies.
• Members also collectively agreed to find a permanent solution for developing countries to use the public stockholding programs for food security purposes. Negotiation on a special safeguard mechanism, which allows the developing countries to raise tariffs temporarily on agricultural products in cases of import surges or price falls, was also agreed upon by the ministers.

BALI PACKAGE 2013

• Members agreed to refrain from challenging the breach of domestic support commitments that resulted from developing countries’ public stockholding programs for food security if they met certain conditions. They also decided to negotiate towards the permanent solution for public stockholding for security purposes.
• A more transparent tariff rate quota administration was called for whereby the governments were not allowed to create trade barriers by distributing quotas among importers.
• The list of general services includes more spending on land use, Land Reforms water management, and other poverty reduction programs that come under the green box( Green box is domestic support which is allowed without any limit as it does not distort the trade) were to be expanded.
• A declaration on the reduction of all forms of export subsidies and enhancement of transparency and monitoring was made.
• The Bali package also provides for a peace clause that protects the food procurement programs of developing countries from the action of other WTO members if the developing country branches the subsidy ceiling as given.
• In 2018-19 India became the first WTO member country to invoke this clause in the financial year. India stated that its rice production was $43.67 billion and it provided subsidies of $ 5 billion to the farmers, which is more than the de minimis level of 10%. To safeguard its domestic support policy the Indian government invoked the peace clause.

PUBLIC STOCKHOLDING FOR FOOD SECURITY PURPOSES: ANOTHER PRESSING ISSUE

Some governments use public stockholding programmes to purchase, stockpile and distribute food to people in need. While food security is a legitimate policy objective, some stockholding programmes are considered to distort trade when they involve purchases from farmers at prices fixed by the governments, known as “supported” or “administered” prices.

In India’s case the subsidies provided to run the food security programme (NFSA) as per the developed member countries are trade distorting and they fall under the   Amber box. As per AMS, the total support in monetary terns should not exceed 10 percent of the total value of agri production as on 1986-88. The government buys the produce at MSP which subsidises the prices of food grains. In the instant case (sugar subsidy), the public stock holding programme per se was not challenged but one specific component “buffer stock” of sugar, presumably related to the subsidised sugar provision to the Antyodaya Anna Yojna category under the NFSA. But India argues that the public stockholding programme is vital for its food security, nutritional needs, supporting the marginalised farmers, and meeting the goals of SDGs.

At the 2013 Bali Ministerial Conference, ministers agreed that, on an interim basis, public stockholding programmes in developing countries would not be challenged legally even if a country’s agreed limits for trade-distorting domestic support were breached. They also agreed to negotiate a permanent solution to this issue.

A decision on public stockholding taken at the 2015 Nairobi Ministerial Conference reaffirmed this commitment and encouraged WTO members to make all concerted efforts to agree on a permanent solution.

In the MC III, the G 33 is seeking a permanent solution to the stockholding issue.

VARIOUS SUBSIDIES PROVIDED BY INDIA FOR SUGAR SECTOR

SCHEME FOR EXTENDING FINANCIAL ASSISTANCE TO SUGAR UNDERTAKINGS (SEFASU-2014)

• The Government on 3.1.2014 notified a Scheme for Extending Financial Assistance to Sugar Undertakings (SEFASU-2014) envisaging interest free loans by bank as additional working capital to sugar mills, for clearance of cane price arrears of previous sugar seasons and timely settlement of cane price of current sugar season to sugarcane farmers. Rs. 6484.77 crore has been disbursed under the scheme. For five years, the interest burden on this loan is borne by the Government through Sugar Development Fund.

SOFT LOAN TO SUGAR MILLS TO FACILITATE CLEARANCE OF CANE PRICE ARREARS

• A scheme was notified on in 2015 to provide soft loan to sugar mills to facilitate clearance of cane price arrears of current sugar season 2014-15. Rs. 4213 cores have been disbursed under the scheme. The Government bore interest subvention during moratorium period of one year. About 32 lakh farmers have been benefited.

OTHERS

• The procurement at the Fair and Remunerative Prices and the PDS operations for sugar for AAY card holders etc.

EXPORT SUBSIDY

• There is no export subsidy for sugar as of now.

WHAT IS THE WAY FORWARD?

OVERHAULING THE AoA

• The genesis of the problem lies in the skewed nature of many agreements that are set in stone at WTO.
• The agreements that were negotiated during the Uruguay Round of the General Agreement on Trade and Tariffs, which governed global trade before the establishment of WTO on January 1, 1995.
• The most egregious of these is AOA which astute negotiators pushed through from the rich world to suit their interests.

RE WORKING OF SUBSIDIES AND RE DEFINITION OF “ BOXES”.

• Those considered non-distorting are listed in the green box, the minimally distorting ones come under the blue box while subsidies seen as causing serious market distortions are categorised as amber box subsidies.
• Nearly all the rich countries’ subsidies fall into the green box while those of developing nations are mostly in the amber box.
• There is no expenditure limit on the subsidies that fall into the first two boxes while the amber box subsidies have to be limited to 10 per cent of the value of agricultural production for developing countries and 5 per cent for developed countries.

PRO ACTIVE LOBBYING BY G-33

• The G 33 needs to work in a coordinated manner and position itself as a pressure group to safeguard and promote the developing countries’ interests transparently. The forthcoming MC 12, scheduled to be held in Geneva at the end of 2021 has been postponed which will provide more time for the G 33 to develop consensus and common strategy on issue like Public Stock holding, food security, fisheries subsidy, domestic support etc.
• The momentum generated  from the G-33 Virtual Informal Ministerial Meeting organized by Indonesia in December 2021 needs to be harnessed and follow up actions needs to be continued at official level.

APPEALING THE DECISION

• India has appealed the ruling on sugar subsidy and as the AB is not functional as of now it provides enough space to India for recalibrating the content and compositions of its subsidies if need be.

LEARNING FROM SETBACKS.

• Of late India has been at the receiving end of the WTO dispute resolutions and many decisions  have gone against it like the Domestic Content  Requirement  on solar panels, the export subsidy schemes in 2019, and the recent challenges. It means that there is a requirement  for India to bring its subsidy/support regime in consistent  with the WTO norms and at the same time devise such innovative measures that comply with WTO regimes.

THE CONCLUSION: The WTO system is the sheet anchor for a rule based multilateral trading system. Thus, the dispute setline and adherence to the rulings is necessary for realizing the objective. But that does not mean the sovereign rights of a country to devise policies for the welfare and development of a country should be forfeited. What is necessary is to create a healthy balance between the two and that’s why there has to be synergy between foreign trade policy and domestic agricultural policies which are dynamically linked with the WTO norm and rules.

INDIAN POLITY AND GOVERNANCE

1. THE ONLINE GAMING MARKET IN INDIA, AND PROPOSED RULES TO REGULATE IT

THE CONTEXT: Recently, an inter-ministerial task force, set up by the Ministry of Electronics and Information Technology (MeitY) to propose contours of a national-level legislation to regulate online gaming, has proposed the creation of a central regulatory body for the sector, clearly defining what games of skill and chance are, and bringing online gaming under the purview of the Prevention of Money Laundering Act, 2002, among other things.

THE EXPLANATION:

The task force, set up by MeitY in May 2022, included the CEO of government think tank Niti Aayog, and secretaries of ministries including IT, Home, Finance, Information and Broadcasting, and Consumer Affairs, among others. The task force is understood to have prepared a final report of its recommendations and submitted it to the IT Ministry.

Why a central-level law?

• Online gaming so far has been a state subject, but state governments have said they find it extremely difficult to enforce certain rules like geo-blocking certain apps or websites within the territory of their state. Also, there is a concern that rules passed in one state are not applicable in another, which has caused inconsistency in how the online gaming industry is regulated in the country. State governments also do not have enough blocking powers like the Centre to issue blocking orders for offshore betting sites.
• Stakeholders have highlighted a number of societal concerns that can arise from the proliferation of online games in the country. There have been a number of reported incidents of people losing large sums of money on online games, leading to suicides in various parts of the country.
• Along with that, there is currently no regulatory framework to govern various aspects of online gaming companies such as having a grievance redressal mechanism, implementing player protection measures, protection of data and intellectual property rights, and prohibiting misleading advertisements.
• For online gaming businesses, the inconsistency has led to uncertainty. The thinking within the government is to have a nodal agency that will address all issues related to online gaming, including introducing a uniform law to determine what forms of online gaming are legally allowed.

How big is the online gaming market in India?

• The revenue of the Indian mobile gaming industry is expected to exceed $1.5 billion in 2022, and is estimated to reach $5 billion in 2025. The industry in the country grew at a CAGR of 38% between 2017-2020, as opposed to 8% in China and 10% in the US. It is expected to grow at a CAGR of 15% to reach Rs 153 billion in revenue by 2024. India’s percentage of new paying users (NPUs) in gaming has been the fastest growing in the world for two consecutive years, at 40% in 2020 and reaching 50% in 2021.
• According to a report by EY and FICCI, transaction-based games’ revenues grew 26% in India, with the number of paying gamers increasing by 17% from 80 million in 2020 to 95 million in 2021.

What are the recommendations of the task force?

• According to a source aware of the task force’s report, a central-level law for online gaming should apply to real money and free games of skill, including e-sports, online fantasy sports contests, and card games among others. Casual games with no real money element in the form of stakes may be kept outside the scope of such rules, unless they have a high number of users in India, or permit the publication or transmission of information in the nature of any inappropriate content like violence, nudity, addictive content or misleading content.
• It has also recommended creating a regulatory body for the online gaming industry, which will determine what qualifies as a game of skill or chance, and accordingly certify different gaming formats, seek compliance and enforcement.
• A three-tier dispute resolution mechanism, similar to that prescribed under the Information Technology Rules, 2021 for online streaming services, consisting of a grievance redressal system at the gaming platform level, self regulatory body of the industry, and an oversight committee led by the government should be put in place for online gaming.
• Any online gaming platform – domestic or foreign– offering real money online games to Indian users will need to be a legal entity incorporated under Indian law. These platforms will also be treated as ‘reporting entities’ under the Prevention of Money Laundering Act, 2002, and will be required to report suspicious transactions to the Financial Intelligence Unit-India.

Which ministry will be in charge of the regulation?

• The task force has suggested that MeitY may act as the nodal ministry to regulate online gaming, except for the e-sports category on which the Department of Sports can take the lead. The scope of the regulation by MeitY should only cover online gaming, that is, games of skill, and the issues of online betting and gambling being games of chance in nature should be excluded from its scope, the task force is learnt to have recommended.
• Certain other aspects of online gaming such as advertisements, code of ethics relating to content classifications etc. could be regulated by the Information and Broadcasting Ministry, while the Consumer Affairs Ministry can regulate the sector for unfair trade practices.

INTERNATIONAL RELATIONS

2. BURKINA FASO MILITARY COUP

THE CONTEXT: The recent coup d’état resulted in the overthrowing of the Interim President Paul-Henri SandaogoDamiba and army Captain Ibrahim Traore taking over the government.

THE EXPLANATION:

• On September 30, 2022, the second coup took place in Burkina Faso this year, resulting dissolution of the traditional government and suspension of the constitution.
• The interim President Damiba was overthrown because of his alleged involvement in the African country’s Islamic insurgency.
• Earlier this year, on January 24, Burkina Faso’s Army led by Damiba disposed President Roch Kabore, who held the office for more than 6 years. The coup came in response to several days of unrest in the country’s capital Ouagadougou.
• The civilian government was ousted for its inability to address deteriorating security situation and the inability to unite the country.
• Since 2015, Burkina Faso has been witnessing escalating violence mainly because of rebel fighters having close ties with extremist Islamic groups – al-Qaeda and the ISIL.
• The country has since become an epicentre for conflict in the Sahel, resulting in deaths of thousands of people and displacing 2 million others.
• The Damiba-led coup led to the suspension of Burkina Faso from Economic Community of West African States (ECOWAS).
• After Damiba took over the government, there has been a 23 per cent increase in attacks from armed factions.
• The military government was able to control just 60 per cent of the country and the remaining territory was outside its control.
• The Damiba government was facing criticism because of its pro-France stance, amid the rising sentiments against the former colonizer.
• According to the UN, Burkina Faso is among the few West African nations facing “alarming levels” of hunger. It is currently witnessing the worst hunger crisis in 6 years, with over 630,000 individuals at the brink of starvation.
• Now, the military government led by Traore announced that a new interim leader (either civilian or military) will be appointed by the end of this year and it will honour the agreement with ECOWAS and oversee the return of civilian government by 2024.

DEFENCE AND SECURITY AFFAIRS

3. AATMANIRBHAR IN DEFENCE PRODUCTION

THE CONTEXT: According to a study released by the Stockholm International Peace Research Institute (SIPRI), a widely respected independent resource on global security, India ranks fourth among 12 Indo-Pacific nations in self-reliant arms production capabilities

THE EXPLANATION:

• The study, which measures self-reliance until 2020, is based on three indicators of self reliance in each country:
• Arms procurement — imports, licensed and domestic production as a proportion of the government’s total procurement of major conventional arms.
• Arms industry — the study presents the five largest arms companies in each country, where data are available, ranked by sales of arms and military services in 2020 to both domestic and export customers;
• Uncrewed maritime vehicles, the sea equivalent of drones — covering both uncrewed surface vehicles (USVs) and uncrewed underwater vehicles (UUVs), meant to provide a qualitative understanding of how countries are engaging domestic research institutes and firms to produce such cutting edge systems.
• The study’s choice of maritime domain was because the Indo-Pacific region is a “maritime theatre”, and most of its flashpoints involve navies. The 12 countries in the study were selected because they have the highest military spending in the region — Australia, China, India, Indonesia, Japan, South Korea, Malaysia, Pakistan, Singapore, Taiwan, Thailand and Vietnam.
• According to the study, understanding and determining the extent of self-reliance in the Indo-Pacific region, which has several ongoing flashpoints, is crucial for trust and confidence-building among states. This region has also seen a growing allocation by states for defence procurement. Eighteen arms manufacturing companies based in the region were ranked among the world’s largest arms companies in 2020.
• “[I]n a region where tensions among neighbours are rising, this report contributes to transparency with regards to levels of self-reliance in domestic arms production, allowing for an independent assessment of the region’s respective arms industries,” the study says.
• China was the world’s fifth largest arms importer in 2016-20. Its self-reliance policies, and its high economic growth in that period meant that the Chinese arms industry now increasingly fulfills the requirements of the People’s Liberation Army (PLA). Its high volume of imports in absolute terms accounts for only 8 per cent of total procurement for the period, the lowest share for any of the 12 governments studied in this report.

• China’s arms industry primarily involves nine large state-owned enterprises (SOEs). All eight companies for which data are available are in the top 100, with four in the top 10 in 2020. Four are dominant in the aerospace and aviation sectors, two in land systems, one in electronics, one in shipbuilding, and one in nuclear power.
• India is ranked as the second largest importer of arms for its armed forces in 2016-20. India is highly dependent on imports of complete foreign major arms, including many produced under licence or as components for its domestic production.
• Of India’s total volume of procurement in 2016–20, 84 per cent was of foreign origin. Domestic arms companies provide only 16 per cent of its total procurement. According to the study, the significant arms sales of local firms and the high level of licensed production push India to fourth position in the list.
• Hindustan Aeronautics Ltd, Indian Ordnance Factories, Bharat Electronics, Mazagaon Docks and Cochin Shipyard are among the major Indian arms servicing companies. Ashok Leyland, one of the largest suppliers of trucks to the Indian Army, is the only company ranked in the top 50 in the Indo-Pacific.

PRELIMS PERSPECTIVE

4. SASTRA RAMANUJAN PRIZE FOR 2022

THE CONTEXT: The SASTRA Ramanujan Prize was recently bestowed to Yunqing Tang – an Assistant Professor at the University of California.

THE EXPLANATION

• The SASTRA Ramanujan Prize for 2022 was conferred to Yunqing Tang for her works in arithmetic and geometry of modular curves and Shimura varieties.
• Tang was recently involved in a joint research on modular equation in collaboration with Frank Calegari and Vesselin Dimitrov. This research is closely linked to Indian Mathematician Srinivasa Ramanujan’s work.
• Yunqing Tang is a Chinese-born Assistant Professor at the University of California, Berkeley.
• She completed her B.Sc in Peking University in 2011, after which she received her PhD in Harvard in 2016 under the guidance of Mark Kisin.
• SASTRA Ramanujan Prize will be conferred to Tang at the International Conference on Number Theory, which will be held from December 20 to 22 this year at SASTRA University

About SASTRA Ramanujan Prize

The prestigious award was instituted by the Shanmugha Arts, Science, Technology & Research Academy (SASTRA) in the year 2005. It includes a cash prize of 10,000 USD. The award recognizes individuals aging 32 and below who have made significant contributions in the field of mathematics that is broadly influenced by Srinivasa Ramanjuan. The first to receive this award was Manjul Bhargava and Kannan Soundararajan.

Who was Srinivasa Ramanujan?

• Srinivasa Ramanujan was an Indian mathematician who made major contributions to mathematics despite lacking formal training in the field. He made notable breakthroughs in mathematical analysis, infinite series, number theory and continued fractions. He solved mathematical problems that were previously thought to be unsolvable.
• Ramanujan was born on December 22, 1887 and passed away at the age of 32 on April 26, 1920. During his short life, Ramanujan compiled nearly 3,900 results, mostly identities and equations. Most notable of them are Ramanujan prime, the Ramanujan theta function, mock theta functions and partition formulae.

GOVERNMENT SCHEMES AND INTERVENTIONS

5. BHARAT SKILLS FORUM

THE CONTEXT: Bharat Skills Forum is a new feature of the Bharat skills learning platform.

THE EXPLANATION:

• The Bharat Skills Forum, which was added to the Bharat skills learning platform, enables sharing of books, videos, question banks, handwritten trainers’ and trainees’ notes, PDFs, scanned copies etc., in any language to interested learners.
• This new feature will act as a digital warehouse for skilling community by providing wide-range of digital content.

What is Bharat skills platform?

• Launched in 2019, the Bharat skills is an online training platform that provides skills concerning Industrial Training Institutes (ITI) ecosystems.
• It is the central digital repository for skills that provides easy access to digital study materials such as e-books, question banks, learning videos etc., as well as updated curriculum for courses provided under the Craft Instructor Training Scheme (CITS), Craftsmen Training Scheme (CTS) and Apprenticeship Training Scheme (ATS). It provides unique centralized, scalable and thriving assistance ecosystem with the help of industrial partners.
• Through this, students and teachers can learn skills related to Industrial Revolution 4.0 to meet the demands of the industry. Currently, the content in this platform is developed by the National Instructional Media Institute (NIMI) and Directorate General of Training (DGT).

About Directorate General of Training (DGT)

• The Directorate General of Training (DGT) comes under the aegis of the Union Ministry of Skill Development and Entrepreneurship (MSDE). It is government agency involved in providing vocational training for Indian youth under the Skill India Programme – the flagship scheme of the Indian government.
• It has a network of around 15,000 Industrial Training Institutes (ITIs), National Skills Training Institutes, National Skills Training Institutes for Women and other central training institutes. These institutes provide training to over 24 lakh students each year, catering to the industrial demands on skilled workforce.
• They play an important role in providing skilled manpower for various sectors of the Indian economy.

MISCELLANEOUS

6. THE NOBEL PEACE PRIZE WINNERS FOR 2022

THE CONTEXT: The Nobel Peace Prize for 2022 has been awarded to human rights advocate Ales Bialiatski from Belarus, the Russian human rights organisation Memorial, and the Ukrainian human rights organisation Center for Civil Liberties, the Norwegian Nobel Committee announced.

THE EXPLANATION:

• The laureates represent civil society in their home countries, said the committee, “They have for many years promoted the right to criticise power and protect the fundamental rights of citizens. They have made an outstanding effort to document war crimes, human right abuses and the abuse of power. Together they demonstrate the significance of civil society for peace and democracy”.
• With the awardees being from Belarus, Ukraine, and Russia, an implicit message has been sent about the ongoing conflict between Russia and Ukraine. “The Norwegian Nobel Committee wishes to honour three outstanding champions of human rights, democracy and peaceful co-existence in the neighbour countries Belarus, Russia and Ukraine”,
• The three prize winners: Belarus’s Ales Bialiatski
• According to the website, “Ales Bialiatski was one of the initiators of the democracy movement that emerged in Belarus in the mid-1980s.” Before 1991, when the former Soviet Union fell and independent countries emerged, many countries in Central Asia and Europe saw pro-independence movements. Belarus President Alexander Lukashenko has been in power since 1994 – when the post first came into being.
• Bialiatski is also credited with founding the organisation Viasna (Spring) in 1996 in response to the controversial constitutional amendments that gave the president dictatorial powers. Over time, Viasna evolved into a “broad-based human rights organisation that documented and protested against the authorities’ use of torture against political prisoners”.
• Having been imprisoned earlier for three years, he was arrested most recently after the large-scale demonstrations against the regime in 2020 and is still detained without trial. In 2020, he was one of the three recipients of the Right Livelihood Award by the Swedish Right Livelihood Foundation, sometimes referred to as the “Alternative Nobel”.

Russian human rights organisation, Memorial

The committee said the organisation was established in 1987, “by human rights activists in the former Soviet Union who wanted to ensure that the victims of the communist regime’s oppression would never be forgotten.” Nobel Peace Prize laureate Andrei Sakharov, who won the prize in 1954, and human rights advocate Svetlana Gannushkina were among the organisation’s founders. “Memorial is based on the notion that confronting past crimes is essential in preventing new ones”.

THE PRELIMS PRACTICE QUESTIONS

QUESTION OF THE DAY

Q1. There has been a recent proposal to establish International Dark Sky Reserve in India. In which of the following state/U.T is it proposed to be located?

a) Maharashtra

b) Pondicherry

c) Chandigarh

d) Ladakh

Answer: D

Explanation:

• Ladakh government along with the IIA (Indian Institute of Astrophysics (IIA), Bengaluru) and India’s Scientific Ministries is laying the groundwork to have Hanle declared as an International Dark Sky Reserve by the International Dark-Sky Association (IDSA).
• A Dark Sky Reserve is public or private land with a distinguished nocturnal environment and starry nights that has been developed responsibly to prevent light pollution.
• Since 1988, the U.S.-based nonprofit IDSA has been advocating the cause of minimizing light pollution and certifies places where night skies are least polluted as International Dark Sky Reserves or sanctuaries. Between 2001 and January 2022, there have been 195 sites recognised as International Dark Sky Places globally, the IDSA said.
• The IIA already manages the Indian Astronomical Observatory (IAO) complex at Hanle, Ladakh.
• Here, scientists have been carrying out astronomical observations using the existing gamma ray, an infrared and an optical telescope to study exoplanets, galaxies and stars through the pristine skies of Hanle.

THE CONTEXT: To understand why, how and what of the COVID-19 being declared as a ‘notified disaster’, one should know first about disaster, how disaster is categorized and funding is determined by the Centre. In brief, one should have understanding of some legal and procedural aspects of the NDMA 2005.

DO YOU KNOW?

As you are aware that the NDMA 2005 was one of the very significant legislation of 2005 and first important landmark legislation for a holistic disaster management in India which is blueprint for making India a disaster resilient country. The law has become basis for taking a series of steps by the government to establish policy, procedural and institutional mechanisms for disaster management in India.

THE KEY FEATURES OF THE NDMA 2005

The law lays down following key mechanisms to make India a disaster resilient country and match to the global standards in disaster management. The key features are:

1. It envisages for an institutional mechanism from top to bottom for decision making, planning, relief and rescue
2. It envisages for laying down a disaster management policy and plan at national and state level
3. It deals with disaster management holistically consisting of pre-disaster, during disaster and post disaster cycle
4. It envisages for two separate funds knows as DMMF/DMRF for centre and SDMMF/SDMRF for states
5.  It lays down for a dedicates disaster management force known as NDRF capable of tackling all types of disaster through land, air and sea
6. It also has also provisions for promoting research and studies through IIDM, New Delhi.

At the apex, it is the national disaster management authority headed by the Prime Minister which is responsible for taking important decisions related to disaster management in India followed by several committees, ministries and departments.

HOW DOES THE TERM ‘DISASTER’ IS DEFINED BY THE NDMA?

As per the Disaster Management Act, 2005, “disaster” means a catastrophe, mishap, calamity or grave occurrence in any area, arising from natural or man-made causes, or by accident or negligence which results in substantial loss of life or human suffering or damage to, and destruction of, property, or damage to, or degradation of, environment, and is of such a nature or magnitude as to be beyond the coping capacity of the community of the affected area. A natural disaster includes earthquake, flood, landslide, cyclone, tsunami, urban flood, heatwave; a man-made disaster can be nuclear, biological and chemical.

HOW THE TERM DISASTER IS CLASSIFIED?

We often hear demands by the states to declare a calamity as national disaster from the Centre. You also know that at times there is difference in view on whether a disaster should be declared as national disaster.

But you will wonder to notice the fact that there is no any defined standards or legal provision for the categorization of disasters. The NDMA is silent on this provision that it doesn’t have a clearly defined mechanism for the classification of the disasters. Rather, the classification is done on the case by case basis. For instance, learning from the past experiences, the disasters have been classified as

CLASSIFICATIONS

DISASTERS

A. A calamity of unprecedented severity

1. The 1999 super cyclone in Odisha
2. The 2001 Gujarat earthquake

B. Calamities of severe nature

1. The flash floods in Uttarakhand
2. Cyclone Hudhud
3. The Kerala floods

C. Notified disaster

1. COVID-19

DOES IT MEAN THE TERM NATIONAL DISASTER WHICH IS OFTEN USED HAS NO LEGAL BASIS?

Yes, the term has no legal basis and it is used in general parlance by the governments and media. For instance, the state of Kerala demanded that the flood should be declared as National Disaster but the central government replied that there is no such term like national disaster.

The central government examine the proposal of the Kerala and the MoS (Home) replied to a question in Parliament “The existing guidelines of State Disaster Response Fund (SDRF)/ National Disaster Response Fund (NDRF), do not contemplate declaring a disaster as a ‘National Calamity’.” There is no provision, executive or legal, to declare a natural calamity as a national calamity. It is used more in general parlance.

Therefore, there is no provision in the law or rules for the government to designate a disaster a “national calamity” and the guidelines of the NDRF and SDRFs don’t contemplate declaring a disaster a national calamity. The Centre also informed the Kerala High Court that there was no legal provision to declare a disaster as a national calamity, amid demands for declaring the floods as a national disaster.

DOES IT MEAN THERE HAS BEEN NO EFFORTS TO DEFINE THE STANDARDS OF DISASTERS?

In 2001, the National Committee on Disaster Management under the chairmanship of the then Prime Minister was mandated to look into the parameters that should define a national calamity. However, the committee did not suggest any fixed criterion.

The 10th Finance Commission (1995-2000) examined a proposal that a disaster be termed “a national calamity of rarest severity” if it affects one-third of the population of a state. The panel did not define a “calamity of rare severity” but stated that a calamity of rare severity would necessarily have to be adjudged on a case-to-case basis taking into account, inter-alia,

1. The intensity and magnitude of the calamity,
2. Level of assistance needed,
3. The capacity of the state to tackle the problem,
4. The alternatives and flexibility available within the plans to provide succour and relief

WHY IS IT IMPORTANT TO CLASSIFY A CALAMITY OR DISASTER?

Simply because it is the categorization which ultimately determines the quantum of relief sanctioned by the CENTRE to the states under the SDRFs. If a disaster is categorized as ‘rare severe nature’ then accordingly the state will receive the relief from the Centre.

WHICH AUTHORITY IS RESPONSIBLE FOR CATEGORISING THE DISASTERS?

The classification is the responsibility of the NDMA which is headed by the Prime Minister. But in actual practice, it is done by the national executive committee headed by the Home Secretary and is notified by the Ministry of Home Affairs. In general, it can be said that disasters are categorized and notified by the Ministry of Home Affairs.

WHAT HAPPENS IF A CALAMITY IS SO CATEGORISED?

1. When a calamity is declared to be of “rare severity”/”severe nature”, support to the state government is provided at the national level. The Centre also considers additional assistance from the NDRF.
2. A Calamity Relief Fund (CRF) is set Up, with the corpus shared 3:1 between Centre and state.
3. When resources in the CRF are inadequate, additional assistance is considered from the National Calamity Contingency Fund (NCCF), funded 100% by the Centre.
4. Relief in repayment of loans or for grant of fresh loans to the persons affected on concessional terms, too, are considered once a calamity is declared “severe”.

HOW IS THE FUNDING DECIDED?

1. For calamity with national ramifications: As per the National Policy on Disaster Management, 2009, the National Crisis Management Committee headed by the Cabinet Secretary deals with major crises that have serious or national ramifications.
2. For other calamities:For calamities of severe nature, inter-ministerial central teams are deputed to the affected states for assessment of damage and relief assistance required. An inter-ministerial group, headed by the Union Home Secretary, studies the assessment and recommends the quantum of assistance from the NDRF/National Calamity Contingency Fund (NCCF). Based on this, a high-level committee comprising the Finance Minister as chairman and the Home Minister, Agriculture Minister, and Planning Commission Deputy Chairman as members approves the central assistance.

HOW MUCH FUNDS HAS THE CENTRE BEEN DISBURSING UNDER THE NDRF?

According to a reply in Parliament by MoS (Home) in January 2020, the Centre released Rs 3,460.88 crore in 2014-15, Rs 12,451.9 crore in 2015-16, and Rs 11,441.30 crore in 2016-17 under the NDRF to various states. In 2017-18 until December 27, it had disbursed Rs 2,082.45 crore. State-wise figures showed that the highest amounts for 2016-17 were released to

1. Karnataka (Rs 2,292.50 crore),
2. Maharashtra (Rs 2,224.78 crore) and
3. Rajasthan (Rs 1,378.13 crore).

HOW ARE THE NDRF AND THE SDRFS FUNDED?

The funding of the NDRF: The NDRF is funded through a National Calamity Contingent Duty levied on pan masala, chewing tobacco and cigarettes, and with budgetary provisions as and when needed. A provision exists to encourage any person or institution to make a contribution to the NDRF.

The 14th Finance Commission recommended changes to this structure once the cess was discontinued or subsumed within the Goods and Services Tax. However, the government, instead, decided to continue with the National Calamity Contingent Duty even in the GST regime.

The funding of the SDRF:

1. The SDRF corpus is contributed by the Union government and the respective State governments in a 75:25 ratio for general category States and 90:10 for Special Category States.
2. The allocation of the SDRF for each State is done by the Finance Commission, and the Centre contributes its specified share each financial year.
3. The Central share of SDRF is released in two equal instalments, in June and then in December.

What has been the trend in budgetary allocations to the NDRF and SDRFs?

The Union government has maintained a steady flow of funds to the NDRF each year, ranging from ₹5,690 crore in 2015-16 to a budgeted amount of ₹2,500 crore for the current financial year. In addition, the Centre has also been contributing to the SDRFs every year, amounting to ₹ 8,374.95 crore in 2016-17 and ₹7,281.76 crore in 2017-18.

HOW DO OTHER COUNTRIES CLASSIFY DISASTERS?

In the US, the Federal Emergency Management Agency (FEMA) coordinates the government’s role in disaster management. When an incident is of such severity and magnitude that effective response is beyond the capabilities of state and local governments, the Governor or Chief Executive of a tribe can request federal assistance under the Stafford Act. In special cases, the US President may declare an emergency without a request from a Governor. The Stafford Act authorises the President to provide financial and other assistance to local and state governments, certain private non-profit organisations, and individuals following declaration as a Stafford Act Emergency (limited) or Major Disaster (more severe).

WEAKNESSES IN CATEGORISATION AND FUNDING OF DISASTERS

When there is lack of institutionalized and standardized mechanisms for the categorization and determining the quantum of funds to states then it results into

1. Ad hocism in the process of determining the funds
2. Politics into who should get what? Since India is a federal state and the states are dependent on Centre, hence the decisions are politically motivated
3. It results into delay in sanctioning of relief materials to states like in case of COVID-19 the states have complained for scarcity of funds and delay in release of funds by the Centre.
4. It affects decentralized governance system
5. It promotes tensions and conflicts in union-states relations

CONCLUSION AND WAY FORWARD

To deal effectively with the disasters when they strike, it is essential to have a robust mechanism for categorization and immediate relief package to the states. Since India is a federal state in which the states are heavily dependent on the Centre, hence without an institutionalized standard for the transfer of disaster funds, there can be huge loss to human life, resources and will become a hurdle in making Indian society disaster resilient.

Hence, the government should improve the NDMA 2005 by taking the following steps:

1. There should be standards set for categorizations of disasters in consultation with state governments
2. The quantum of funds should be clearly linked with the levels of disasters categorized
3. The funds should be immediately transferred when the disaster strikes

The disaster management in India has improved since 2005 due to adoption of a new legal and institutional framework according to which the Centre has also come up with the National Disaster Management Policy 2009 and the National Disaster Management Plan 2016. The states have also taken similar steps. But still there is huge scope for improvement in disaster management in India based on the COVID-19 experiences and other recent disasters like Kerala flood and cyclones in South India.

INTERNATIONAL RELATIONS

1. INDIA ABSTAINS ON SRI LANKA VOTE AT UN HUMAN RIGHTS COUNCIL

THE CONTEXT: Recently India abstained from voting on a resolution on Sri Lanka at the UN Human Rights Council, while observing that Sri Lanka’s progress in implementing commitments on the 13th Amendment, meaningful devolution and early provincial elections remains “inadequate”.

THE EXPLANATION:

• According to India’s statement,“Achieving prosperity for all Sri Lankans and realising the legitimate aspirations of Tamils of Sri Lanka for prosperity, dignity and peace are two sides of the same coin”.
• As an immediate neighbour, India has “substantively contributed” to the relief, rehabilitation, resettlement and reconstruction process in Sri Lanka after 2009 and more recently provided “unprecedented assistance” to the people of Sri Lanka to face the challenges of the recent economic crisis, India had abstained last year, too (2021).
• Further, India has “taken note” of the Sri Lankan government’s commitments on the implementation of commitments “in the spirit of the 13th Constitutional Amendment”, meaningful devolution and the early conduct of provincial elections, Also, underscoring India’s long-standing concern over power devolution in Sri Lanka, an issue that also found mention in the resolution.

What is the legislation?

• It is an outcome of the Indo-Lanka Accord of July 1987, signed by the then Prime Minister Rajiv Gandhi and President J.R. Jayawardene, in an attempt to resolve Sri Lanka’s ethnic conflict that had aggravated into a full-fledged civil war, between the armed forces and the Liberation Tigers of Tamil Eelam, which led the struggle for Tamils’ self-determination and sought a separate state.
• The 13th Amendment, which led to the creation of Provincial Councils, assured a power sharing arrangement to enable all nine provinces in the country, including Sinhala majority areas, to self-govern.
• Subjects such as education, health, agriculture, housing, land and police are devolved to the provincial administrations, but because of restrictions on financial powers and overriding powers given to the President, the provincial administrations have not made much headway.
• In particular, the provisions relating to police and land have never been implemented. Initially, the north and eastern provinces were merged and had a North-Eastern Provincial Council, but the two were de-merged in 2007 following a Supreme Court verdict.

Why is the 13th Amendment significant?

• Till date, the 13th Amendment represents the only constitutional provision on the settlement of the long-pending Tamil question. In addition to assuring a measure of devolution, it is considered part of the few significant gains since the 1980s, in the face of growing Sinhala-Buddhist majoritarianism from the time Sri Lanka became independent in 1948.

ENVIRONMENT, ECOLOGY AND CLIMATE CHANGE

2. WHAT IS GRAP AND HOW ARE ITS MEASURES TO COMBAT DELHI-NCR’S AIR POLLUTION DIFFERENT THIS YEAR?

THE CONTEXT: Recently, the Commission for Air Quality Management (CAQM) that measures under ‘Stage-1’ of the Graded Response Action Plan (GRAP) will be enforced in the NCR with immediate effect.

THE EXPLANATION:

• The order came after Delhi’s AQI deteriorated to be in the ‘poor’ category .Other parts of the NCR, including Gurgaon, Noida and Greater Noida, also recorded ‘poor’ air quality.

What is the Graded Response Action Plan?

• GRAP is a set of emergency measures that kick in to prevent further deterioration of air quality once it reaches a certain threshold. Stage 1 of GRAP is activated when the AQI is in the ‘poor’ category (201 to 300), and for instance, the AQI in Delhi was 211.
• The second, third and fourth stages will be activated three days ahead of the AQI reaching the ‘very poor’ category (301 to 400), ‘severe’ category (401 to 450) and ‘severe +’ category (above 450) respectively. For this, the CAQM is relying on air quality and meteorological forecasts by the Indian Institute of Tropical Meteorology (IITM) and the India Meteorological Department (IMD).
• Measures being imposed under the previous categories will continue even when the subsequent category is activated, that is, if measures under Stage-2 are activated, measures under Stage-1 will continue to remain in place.

How is the GRAP different this year?

• The CAQM revised the Graded Response Action Plan earlier this year. The GRAP was first notified in January 2017 by the Ministry of Environment, Forest and Climate Change. This was based on a plan that was submitted by the Central Pollution Control Board (CPCB) in November 2016.
• According to the notification, the task of implementing the GRAP fell on the now dissolved Environment Pollution (Prevention and Control) Authority for the NCR. From 2021 onwards, the GRAP is being implemented by the CAQM.
• In the version of the GRAP that was notified in 2017, measures kicked in after pollution concentrations reached a certain level. This year, measures are pre-emptive and will kick in based on forecasts in an attempt to prevent the AQI from deteriorating further. The older version of the GRAP was enforced based only on the concentration of PM2.5 and PM10.
• This year, GRAP is being enforced based on the AQI, which takes other pollutants also into account, such as ozone, sulphur dioxide and oxides of nitrogen.

What are the measures that will be enforced this year?

• Some of the measures in the revised GRAP are also different this year. For the first time, it specifies that State governments in the NCR may impose restrictions on BS-III petrol and BS-IV diesel four wheelers under Stage-3, or when the AQI is likely to reach the ‘severe’ category.
• In the ‘severe +’ category, GRAP imposes a ban on plying of four-wheelers in Delhi and NCR districts bordering Delhi, except for BS-VI vehicles and those plying for emergency or essential services. Under this category, there will also be a ban on the movement of Delhi registered, diesel-operated medium and heavy goods vehicles in Delhi, with exceptions for those carrying essential commodities or providing essential services.
• Restrictions on some construction activities will also set in earlier in the revised GRAP. A ban on construction activities (except for those involving railways, projects of national security, hospitals, metro services, and linear public projects like highways, roads) will be imposed under the ‘severe’ category. In the previous plan, the construction ban was implemented only in the ‘severe +’ category.
• Construction activities on linear public projects like highways, roads, flyovers, pipelines and power transmission, will be banned under the ‘severe +’ category this year.

What are some other measures being considered

• Under the ‘severe +’ category, State governments may consider additional emergency measures like the closure of schools, plying of vehicles on an odd-even basis, and decide on allowing public, municipal and private offices to work on 50% strength and the rest to work from home.

What are citizens required to do?

• The revised GRAP also has a set of measures for the public to follow – under the ‘poor’ category, this includes keeping vehicle engines tuned, ensuring PUC certificates are updated and switching off vehicle engines at red lights. Under the ‘very poor’ category, it is suggested that citizens use public transport and replace air filters in their automobiles.
• Under the ‘severe’ category, a recommendation is made to work from home if possible, and not use coal and wood for heating. Under the ‘severe +’ category, GRAP advises people with chronic diseases and children and the elderly to avoid outdoor activities.

VALUE ADDITION:

About the Commission for Air Quality Management (CAQM):

• The Commission was first formed by an ordinance in October 2020.
• The erstwhile Environment Pollution (Prevention and Control) Authority, or EPCA had been dissolved to make way for the Commission.
• The Commission will be a statutory authority.
• The Commission will supersede bodies such as the central and state pollution control boards of Delhi, Punjab, Haryana, UP and Rajasthan.
• In 2021, the Parliament approved the Commission for Air Quality Management in National Capital Region and Adjoining Areas Bill.

Composition:

Chairperson: To be chaired by a government official of the rank of Secretary or Chief Secretary.

• The chairperson will hold the post for three years or until s/he attains the age of 70 years.
• It will have members from several Ministries as well as representatives from the stakeholder States.
• It will have experts from the Central Pollution Control Board (CPCB), Indian Space Research Organisation (ISRO) and Civil Society.

GOVERNMENT SCHEMES IN NEWS

3. ANIMAL ADOPTION SCHEME

THE CONTEXT: Recently, the National Zoological Park has come up with an amazing animal adoption scheme which will offer the animal lovers to participate in wildlife conservation. In this scheme, zoos offer the zoo animals/animal species in their collection to the general public for taking care of them.

THE EXPLANATION:

How does an Animal Adoption Scheme Work?

• To adopt an animal, there is a form available on the official website of National Zoological Park. Any interested individual can choose which animals would interest them and pay for their care by entering into an agreement with zoo management after filling up the application form. The payment may be paid by Account Payee Cheque, Demand Draft, Credit or Debit Card to the National Zoological Park, New Delhi.
• After the successful registration, the adapter will get a membership card mentioning his name and animal name. After getting the membership card, the adopter will be allowed to enter the zoo during visiting hours once every month on showing the card. It should be noted that visits of adopters may be stopped during any outbreak of a pandemic or zoonotic disease, etc.

What is the rate list for adopting animals?

• The rates for adopting animals will be depending on the species and the approval for the same is still awaited. The starting range for adopting birds can be from Rs. 700 and Rs 6,00,000  for lions, tigers, rhinos and elephants while the cost for adopting leopards is Rs. 3,60,000 per year.

What is the validity of an adoption membership card?

• According to the notice released by the zoo authorities, the adoption of zoo animals will be for one or two years which can be withdrawn but the payable amount will not be refunded. The revenue generated from the animal adoptions scheme will go back to the zoo on a quarterly basis for the welfare activities for the animals and its personnel.

THE PRELIMS PERSPECTIVE

4. WHAT IS MOONLIGHTING?

THE CONTEXT: In July 2022, Kotak Securities said in a study that at least 60% of 400 employees surveyed said they themselves had or knew someone who had engaged in moonlighting.

THE EXPLANATION:

What is meant by Moonlighting?

• Moonlighting or employees working for remuneration with entities other than their employers — has been a hot topic in recent months.  During the pandemic, those with desk jobs had more time on their hands and thus it was easier to take on a few projects outside of work.

What does the law say?

• Moonlighting is not defined in any of the statutes in India, no Constitutional Court has rendered a decision on the subject”.
• However, there are enactments that deal with double employment. Section 60 of the Factories Act deals with restriction on double employment stating that “No adult worker shall be required or allowed to work in any factory on any day on which he has already been working in any other factory, save in such circumstances as may be prescribed”. However, this enactment is applicable only to employees working in factories.
• There are State enactments which deal with employment of persons working in offices, banks, shops, etc. In Tamil Nadu, it is termed as “The Tamil Nadu Shops & Establishments Act, 1947”. However, there is no provision wherein dealing with dual employment.
• However, moonlighting is subject to law of the land. Experts refers to the Supreme Court’s observation in the case of Glaxo Laboratories (I) Limited vs Labour Court, Meerut and others. The apex court held that “The employer has hardly any extra territorial jurisdiction. He is not the custodian of general law and order situation nor the Guru or mentor of his workmen for their well-regulated cultural advancement.
• If the power to regulate the behavior of the workmen outside the duty hours and at any place wherever they may be was conferred upon the employer, contract of service may be reduced to contract of slavery.” This case was not specifically about moonlighting but the court’s observation gives us an idea as to how the law may view such cases. Moonlighting is subject to law of the land.
• The sphere of employment cannot be extended by the employer beyond working hours and outside his place of employment, which is the principle laid down in the above judgment. In other words, the employee can choose to arrange his affairs as he pleases beyond the working hours of the employer.

5. WHO WAS BEGUM SAMRU, THE NAUTCH-GIRL TURNED RULER OF SARDHANA

THE CONTEXT: The first week of October is said to mark the 200th anniversary of the completion of the Basilica of Our Lady of Graces, one of India’s minor basilicas situated in Sardhana in Uttar Pradesh.

THE EXPLANATION:

• It was constructed in 1822 by Begum Samru, a woman of humble origins that came to be popularly known as the only Catholic queen of India. For the bicentennial celebration of the church’s completion, the life and times of this remarkable figure that began her life as a concubine, and died as one of India’s richest and most powerful women.

Who was Begum Samru?

• Begum Samru (1750’s – 1836) was a figure that defied any fixed identity. She was a Muslim who converted to Catholicism, a nautch-girl (dancing girl) who became a warrior and an aristocrat, and was described by her contemporaries as dressing more like a man than a woman, sporting a dark turban and ever-puffing away at a hookah.
• She was a shrewd leader who was able to find a favourable position in the ever-dynamic political terrain of 18th century northern India. While she had first supported the waning Mughal empire, from the 1790’s the Begum began to provide service to the rising Marathas, before joining the British to ensure that she could maintain her landholding rights if they emerged victorious.
• Some sources claim that Begum Samru, birth name Farzana, was born to a second wife of a poor noblemen in present day Meerut, while others claim she was of Kashmiri descent. She spent her early years as a nautch (dancing girl) in a tawaif’s (courtesan) kotha (household) in Delhi.

MISCELLANEOUS

6. NOBEL PRIZE IN LITERATURE 2022: ANNIE ERNAUX, BEARING WITNESS TO WOMEN’S EXPERIENCES AND MEMORY

THE CONTEXT: The Nobel Prize for Literature 2022 has gone to French author Annie Ernaux, for, according to the Swedish Academy, “the courage and clinical acuity with which she uncovers the roots, estrangements and collective restraints of personal memory”.

THE EXPLANATION:

• Ernaux, 82, has seen a sharp increase in popularity in the English-speaking world since 2019, after her seminal work ‘The Years’, translated by Alison L Strayer, was shortlisted for the Man Booker international prize. Her book on her illegal abortion in the 1960s, ‘Happening’ (first published in 2001) has also been in the limelight after abortion rights were curtailed in the US.
• As the Nobel citation says, Ernaux’s work — ranging from a history of France to her first sexual experience and the shame around it to her mother’s illness and death to her abortion to her class-linked shame – meticulously mines her own memory and life experiences with “courage and clinical acuity”.
• Her treatment of her memories is unsparing but unembellished – she travels back to the moment she is writing about as completely as possible, without giving herself the benefit and wisdom of hindsight, putting on paper the raw vulnerability of the moment. As anchors, she uses songs, slogans, meals from the time she is writing about, which many say blurs the line between fiction and autobiography.

THE PRELIMS PRACTICE QUESTIONS

QUESTION OF THE DAY

1.Consider the following statements about Pharmaceutical Export Promotion Council of India (Pharmexcil):

1. It is a statutory body.
2. It is set up by Ministry of Commerce and Industry for promotion of pharmaceutical exports from India.
3. Its headquarter is located in Hyderabad.

Which of the statements given above is/are correct?

a) 1 and 2 only

b) 2 only

c) 2 and 3 only

d) 1 and 3 only

Answer: C

Explanation:

Pharmaceutical Export Promotion Council of India (Pharmexcil)

• It is the authorized agency of the government of India for promotion of pharmaceutical exports from India.
• It was set up under the provisions of Foreign Trade Policy by the Ministry of Commerce and Industry in May 2004.
• Various pharmaceutical products, namely, bulk drugs, formulations, Biotech Products, Indian Systems of medicines, herbal products, diagnostics, clinical research, etc. are covered under its purview.
• Pharmexcil takes up several external trade promotion activities by organizing trade delegations outside India, arranging buyer-seller meetings, international seminars, etc.
• The agency’s headquarters is located in Hyderabad.

[WpProQuiz 348]

THE CONTEXT: Australia has declared a state of emergency for the state of New South Wales (NSW) along with a catastrophic fire warning the highest level of bush fire danger in light of widespread bushfires that have left at least three people dead. Bushfires are a routine occurrence in the country, but this bushfire season is believed to be the worst and has started even before the beginning of the Southern Hemisphere summer.

PRESENT ISSUE OF FOREST FIRE

AMAZON FOREST FIRE

• The Amazon rainforest, which is home to a fifth of the world’s land species and more than 30 million people, including hundreds of indigenous people, experienced the third-worst forest fires in the last ten years.
• The region has experienced more than 74,155 fires since January, according to data from Brazil’s National Institute of Space Research (INPE).
• In 2019 September 19,925 fires broke out, 19.6 per cent less than the number of fire outbreaks same period last year, according to the latest INPE data. In September 2018, there were 24,803 outbreaks in the Amazon.

CALIFORNIA FIRE

• Brush fire in Ventura county, north of Los Angeles, grew rapidly on Friday, even as calmer winds have allowed fire crews to increase containment of other wildfires plaguing California.
• The forest fire in California is frequently in a year.

BANDIPUR NATIONAL PARK

• A five-day fire that raged through the Bandipur Tiger Reserve has reportedly burnt more than 15,400 acres of forests.
• Between February 21 and 25, 2019 the reserve saw 127 fire counts in various ranges of the 912 sq km forest.

FOREST FIRE

• The most common hazard in forests is forests fire. Forests fires are as old as the forests themselves. They pose a threat not only to the forest wealth but also to the entire regime to fauna and flora seriously disturbing the bio-diversity and the ecology and environment of a region.
• During summer, when there is no rain for months, the forests become littered with dry senescent leaves and twinges, which could burst into flames ignited by the slightest spark.
• The Himalayan forests, particularly, Garhwal Himalayas have been burning regularly during the last few summers, with colossal loss of vegetation cover of that region.
• Forest fire causes imbalances in nature and endangers biodiversity by reducing faunal and floral wealth. Traditional methods of fire prevention are not proving effective and it is now essential to raise public awareness on the matter, particularly among those people who live close to or in forested areas.

CAUSES OF FOREST FIRE

Causes of forest fires can be divided into two broad categories

1. Environmental (which are beyond control) and
2. Human related (which are controllable).

Environmental causes

• Are largely related to climatic conditions such as temperature, wind speed and direction, level of moisture in soil and atmosphere and duration of dry spells.
• Other natural causes are the friction of bamboos swaying due to high wind velocity and rolling stones that result in sparks setting off fires in highly inflammable leaf litter on the forest floor.

Human related causes

Result from human activity as well as methods of forest management.  These can be intentional or unintentional, for example:

• Graziers and gatherers of various forest products starting small fires to obtain good grazing grass as well as to facilitate gathering of minor forest produce like flowers of Madhuca indica and leaves of Diospyros melanoxylon
• The centuries old practice of shifting cultivation (especially in the North-Eastern region of India and in parts of the States of Orissa and Andhra Pradesh). etc..

Classification of Forest Fire Forest fire can broadly be classified into three categories;

1. Natural or controlled forest fire.
2. Forest fires caused by heat generated in the litter and other biomes in summer through carelessness of people (human neglect) and
3. Forest fires purposely caused by local inhabitants.

Types of Forest Fire: There are two types of forest fire

1. Surface Fire and
2. Crown Fire

Surface Fire

• A forest fire may burn primarily as a surface fire, spreading along the ground as the surface litter (senescent leaves and twigs and dry grasses etc) on the forest floor and is engulfed by the spreading flames.

Crown Fire

• The other type of forest fire is a crown fire in which the crown of trees and shrubs burn, often sustained by a surface fire.
• A crown fire is particularly very dangerous in a coniferous forest because resinous material given off burning logs burn furiously.
• On hill slopes, if the fire starts downhill, it spreads up fast as heated air adjacent to a slope tends to flow up the slope spreading flames along with it. If the fire starts uphill, there is less likelihood of it spreading downwards.

EFFECT OF FOREST FIRE

Fires are a major cause of forest degradation and have wide ranging adverse ecological, economic and social impacts, including:

• Loss of valuable timber resources
• Degradation of catchment areas
• Loss of biodiversity and extinction of plants and animals
• Loss of wildlife habitat and depletion of wildlife
• Loss of natural regeneration and reduction in forest cover
• Global warming etc…

VARIOUS INITIATIVES

MoEFCC guidelines

MoEFCC issued a set of national guidelines for forest fire prevention and control in 2000. These guidelines call for:

• Identification and mapping of all fire prone areas,
• Compilation and analysis of database on forest fire damages,
• Development and installation of fire damage rating system and fire forecasting system,
• All preventive measures to be taken before the beginning of the fire season

National Master Plan for Forest Fire Control

The main objectives are:

• To strengthen the organizations responsible for forest fire management
• To coordinate international transfer of technology and training in the field of forest fire management
• Creation of a strong database for: number of fires, area burnt, damage to flora and fauna, effect of fire on land and soil and measures taken
• Assessment of ecological, social, and economic impact of fires
• Strong national extension strategy for people’s awareness and their participation in forest fire management through Joint Forest Management and NGOs

Forest Fire Prevention and Management Scheme

In 2017, Intensification of Forest Management Scheme was revised and replaced as Forest Fire Prevention & Management Scheme. The main objectives of the scheme are as follows:

• Minimise forest fire incidences and help in restoring productivity of forests in affected areas
• Encourage partnership with forest fringe communities for forest protection
• Prepare fire danger rating system and devise forest fire forecasting system

Pre-Warning Alert System

• Forest Survey of India has developed Pre-Warning Alert System.
• It gives alerts to state forest departments based on parameters like forest cover, forest types, climatic variables (temperature, rainfall) and recent fire incidences over the area

NDMA Guidelines

Major recommendations include:

• Incorporate Forest Fire Prevention and Management (FFPM) in existing policy and planning documents
• Establish National Forest fire Knowledge Network
• Capacity building of forest officials for better use of early warning systems
• Assess risk and prepare vulnerability and risk maps
• Document national and international good practices and utilise them for making forest fire management more effective and practical
• Increase community awareness

Draft National Forest Policy, 2018

• It calls for safeguarding ecosystems from forest fires, mapping the vulnerable areas and developing and strengthening early warning systems and methods to control fire, based on remote sensing technology and community participation.

FAO Recommendations on Forest Fire Management

• To conduct comprehensive analysis of the forest fire situation in India, including the study of number of fires and area burnt; the effects of ecological, economic and social impacts, current capacity for forest fire management at the National and States levels, including review of existing laws, regulations and policies covering forest fire management.
• To design a training package on strategic forest fire management planning which would enable Indian foresters to prepare site specific fire plans for all the forest types in the country
• To conduct training courses for the foresters and planners, who would then be capable of preparing strategic Forest Fire Management Plans and providing identical training to large number of field foresters throughout the country.
• To develop minimum one model State Forest Fire Management Plan to serve as an example for subsequent State plans and National plan. Plans are to be organized into a series of program components, which can be considered for development assistance by international donors and financiers.

ISSUES AND CHALLENGES:

1. Lack of appropriate policy: In India there are no clear guidelines for forest fire management. In November 2017, National Green Tribunal (NGT) had asked the Environment Ministry to evolve a national policy for prevention and control of forest fires. However, no progress has been made so far.
2. Lack of funding: the allocation of funds to the states for forest fire management is largely insufficient. Further, a large amount of the money allocated under the forest management schemes are not released
3. Early Warning: Unlike western countries, forest fire in India is largely man-made which makes it difficult to predict
4. Lack of community participation: In most of the Indian states, community participation in forest fire management has been poor
5. Lack of manpower: Lack of manpower hinders clearing of fire lines and also affects the patrolling of forest areas.
6. Climate Change: The forest fire management in India do not include climate change aspects in planning, policy formulations and implementation stages

WAY FORWARD:

Policy

At the national level, a cohesive policy or action plan should be formulated to set forth the guiding principles and framework for FFPM. The policy and programmes for forest fire management should incorporate the dimension of climate change

Management

Forest fire prevention and management practices used by state forest departments also need to be strengthened

Funding and Human Resource

Greater funding for construction of watchtowers and crew stations and for frontline officers and seasonal firewatchers to spot fires is needed. Further, adequate training should be provided to field officers, seasonal firewatchers, and community volunteers involved in firefighting.

Technology

Modern firefighting techniques such as the radio-acoustic sound system for early fire detection and Doppler radar should be adopted.

Data and information

There is a need to support forest fire management through improved data and research to fill critical knowledge gaps

Awareness

Awareness generation for forest communities and visitors is important to prevent loss of life and injuries. Further, regular drills on escape methods and routes based on forest types should be conducted.

Best Practices:

1.Canadian Forest fire Danger Rating System:

• The system collects data on fuels, weather, topography, foliar moisture content (how much moisture is in the leaves and pine needles), and type and duration of prediction.
• The data helps managers of various fire agencies determine the areas that are most vulnerable to fires and allocate their resources accordingly. Further, the Canadian Forest Fire Behaviour Prediction (FBP) System helps managers assess how far a specific fire can spread and its severity.

2. Role of forest community: Best Practice in India:

• Bilapaka village in Mayurbhanj District of Odhisa: The villagers have set up the Bilapaka Jangal Surakshya Parichalana Committee (BJSPC).
• The villagers have developed an effective warning mechanism and a process to immediately stop small fire incidents

CONCLUSION: A significant amount of technical options to assist Forest Department in increasing their resilience, preparedness and response capacities against forest fire are known and available at regional, national and international levels. However, the spectrum of available options is often not known or easily accessible. To make Forest Fire Management more effective, it is of utmost significance that available options are systematically assessed, documented, shared and adapted to location specific needs in a participatory way.

STATISTICAL REPORT:

Forest Fires Report in India:

• Ministry of Environment, Forests and Climate Change (MoEFCC) and World Bank recently released a joint report on forest fires in India.

Highlights:

• At least 60% of districts in India are affected by forest fires each year.
• The top 20 districts in terms of area affected by fire from 2003 to 2016 account for 48% of the total fire-affected area and they mostly fall in Central India.
• The 16 of the top 20 districts in terms of fire frequency are located mainly in the Northeast.
• Here, forest fires tend to be concentrated in a smaller area that is subject to repeated burning.
• The peak fire season is the most concentrated (shortest) in the Northeast and the Northern state of Bihar.
• Fires in other regions, particularly districts in Central and Southern India, are more expansive.
• Districts experiencing widespread and frequent forest fires include areas of dry and moist deciduous forest.
• These include the borderlands of Chhattisgarh, Maharashtra, and Telangana that are affected by fire on a nearly annual basis.
• Notably, between 2006 and 2015, forest fires were detected in just under half (281 of 614) of the protected areas in India.

What are the proposed reasons?

• In line with other parts of the world, people are the main driver of fires in India.
• Forest fires are distributed close to people and infrastructure in India.
• Also, India’s monsoons are largely responsible for the seasonal nature of forest fires in the country.
• Forest fires peak during the dry months of March or April before the arrival of the monsoon.
• The fire season mainly occurs during the four-month period between February 15 and May 15.
• Besides, the reduced contrast in land-sea temperatures had weakened the engine that drives the monsoon.
• But it is not yet clear how the drying of the monsoon has affected the intensity or frequency of forest fires.

Significance:

• Forest fires contribute to global warming and hence climate change, by releasing carbon stored in trees, undergrowth and soil into the atmosphere.
• Given this, the report gains significance with recent Intergovernmental Panel on Climate Change’s special report on global warming.
• The findings are crucial for India’s own pledge on creating additional carbon sink of 2.5 to 3 billion tonnes of Co2-equivalent by 2030.
• In the long run, climate shifts due to anthropogenic global warming may further alter India’s forest landscape and fire regime.
• Also, the MoEF issued national guidelines on Forest Fire Prevention and Management (FFPM) in 2000.
• But these are no longer being implemented in true spirit.
• The Comptroller and Auditor General (CAG) has documented the shortage of dedicated funding for FFPM at the central and state levels.
• The recent report is thus expected to be a key input in issuing a national policy on FFPM.

INDIAN POLITY AND GOVERNANCE

1. THE CRITERION FOR SC STATUS

THE CONTEXT: The Supreme Court of India has sought the most recent position of the Union government on a batch of petitions challenging the Constitution (Scheduled Castes) Order of 1950, which allows only members of Hindu, Sikh and Buddhist religions to be recognised as SCs.
THE EXPLANATION:
Who all are included in the Constitution Order of 1950?
• When enacted, the Constitution (Scheduled Castes) Order of 1950, initially provided for recognising only Hindus as SCs, to address the social disability arising out of the practice of untouchability.
• The Order was amended in 1956 to include Dalits who had converted to Sikhism and once more in 1990 to include Dalits who had converted to Buddhism. Both amendments were aided by the reports of the Kaka Kalelkar Commission in 1955 and the High Powered Panel (HPP) on Minorities, Scheduled Castes and Scheduled Tribes in 1983 respectively.
• On the other hand, the Union government in 2019 rejected the possibility of including Dalit Christians as members of SCs, rooting the exclusion on an Imperial Order of 1936 of the then colonial government, which had first classified a list of the Depressed Classes and specifically excluded “Indian Christians” from it.

Why are Dalit Christians excluded?
• Ever since the amendment to include Sikhs as SCs in 1956, the Office of the Registrar General of India (RGI) has been reluctant in expanding the ambit of the Order beyond members of Hinduism or Sikhism. Responding to the Ministry of Home Affairs’s (MHA) 1978 request for an opinion on the inclusion of Dalit Buddhists and Christians, the RGI had cautioned the government that SC status is meant for communities suffering from social disabilities arising out of the practice of untouchability, which it noted was prevalent in Hindu and Sikh communities.
• It also noted that such a move would significantly swell the population of SCs across the country. However, the amendment to include Buddhist converts as SCs was passed in 1990, which at the time did not require the approval of the RGI — a mandate introduced in the rules for inclusion framed in 1999.
• In 2001, when the RGI again opined against including Dalit Christians and Muslims as SCs, it referred to its 1978 note and added that like Dalit Buddhists, Dalits who converted to Islam or Christianity belonged to different sets of caste groups and not just one, as a result of which they cannot be categorised as a “single ethnic group”, which is required by Clause (2) of Article 341 for inclusion.
• Moreover, the RGI opined that since the practice of “untouchability” was a feature of Hindu religion and its branches, allowing the inclusion of Dalit Muslims and Dalit Christians as SCs could result in being “misunderstood internationally” as India trying to “impose its caste system” upon Christians and Muslims.
• The 2001 note also stated that Christians and Muslims of Dalit origin had lost their caste identity by way of their conversion and that in their new religious community, the practice of untouchability is not prevalent.

Is there a case for inclusion?
• The petitions arguing for inclusion have cited several independent Commission reports that have documented the existence of caste and caste inequalities among Indian Christians and Indian Muslims, noting that even after conversion, members who were originally from SCs continued to experience the same social disabilities.
• This was substantiated in the First Backward Classes Commission’s report in 1953, the Report of the Committee on Untouchability Economic and Educational Development Of the Scheduled Castes in 1969, the HPP report on SCs, STs, and Minorities in 1983, the Mandal Commission Report, the report of the Prime Minister’s High-Level Committee formed in 2006, a 2008 study conducted by the National Commission for Minorities, the Ranganath Misra Commission Report and several other studies.
• In addition to this, the petitions have argued against the proposition that caste identity is lost upon conversion, noting that even in Sikhism and Buddhism, casteism is not present and yet they have been included as SCs. Furthermore, the above-mentioned reports argue that caste-based discrimination continues even after conversion, hence entitling these communities to SC status.
• However, the Union government refuses to accept the reports of the Commissions on the basis that these reports do not have enough empirical evidence to support their claims.

2. THE PARLIAMENT COMMITTEES, THEIR LEADERS, AND THEIR ROLE IN LAW-MAKING

THE CONTEXT: According to opposition party, a revamp of the Standing Committees of Parliament could potentially worsen the relations between the government and opposition parties.
THE EXPLANATION:
Of the 22 committees announced the Congress has the post of chairperson in only one, and the second largest opposition party, Trinamool Congress, none. The ruling NDA has the chairmanship of the important committees on Home, Finance, IT, Defence and External Affairs.
What are Committees of Parliament, and what do they do?
• Legislative business begins when a Bill is introduced in either House of Parliament. But the process of lawmaking is often complex, and Parliament has limited time for detailed discussions. Also, the political polarization and shrinking middle ground has been leading to increasingly rancorous and inconclusive debates in Parliament — as a result of which a great deal of legislative business ends up taking place in the Parliamentary Committees instead.
• A Parliamentary Committee is a panel of MPs that is appointed or elected by the House or nominated by the Speaker, and which works under the direction of the Speaker. It presents its report to the House or to the Speaker.
• Parliamentary Committees have their origins in the British Parliament. They draw their authority from Article 105, which deals with the privileges of MPs, and Article 118, which gives Parliament authority to make rules to regulate its procedure and conduct of business.

What are the various Committees of Parliament?
• Broadly, Parliamentary Committees can be classified into Financial Committees, Departmentally Related Standing Committees, Other Parliamentary Standing Committees, and Ad hoc Committees.
• The Financial Committees include the Estimates Committee, Public Accounts Committee, and the Committee on Public Undertakings. These committees were constituted in 1950.
• Seventeen Departmentally Related Standing Committees came into being in 1993, when Shivraj Patil was Speaker of Lok Sabha, to examine budgetary proposals and crucial government policies. The aim was to increase Parliamentary scrutiny, and to give members more time and a wider role in examining important legislation.
• The number of Committees was subsequently increased to 24. Each of these Committees has 31 members — 21 from Lok Sabha and 10 from Rajya Sabha.
• Ad hoc Committees are appointed for a specific purpose. They cease to exist after they have completed the task assigned to them, and have submitted a report to the House. The principal Ad hoc Committees are the Select and Joint Committees on Bills. Committees like the Railway Convention Committee, Committee on Food Management and Security in Parliament House Complex, etc. also come under the category of Ad hoc Committees.
• Parliament can also constitute a Joint Parliamentary Committee (JPC) with a special purpose, with members from both Houses, for detailed scrutiny of a subject or Bill. Also, either of the two Houses can set up a Select Committee with members from that House. JPCs and Select Committees are usually chaired by ruling party MPs, and are disbanded after they have submitted their report.

How important are the recommendations of the Committees?
• Reports of Departmentally Related Standing Committees are recommendatory in nature. They are not binding on the government, but they do carry significant weight. In the past, governments have accepted suggestions given by the Committees and incorporated them into the Bill after it has come back to the House for consideration and passage. These panels also examine policy issues in their respective Ministries and make suggestions to the government.
• The government has to report back on whether these recommendations have been accepted. Based on this, the Committees table Action Taken Reports, detailing the status of the government’s action on each recommendation.
• However, suggestions by the Select Committees and JPCs — which have a majority of MPs and heads from the ruling party — are accepted more frequently.

SOCIAL ISSUES

3. WORLD BANK SAYS 70 MILLION PLUNGED INTO POVERTY IN 2020: WHAT CAUSED SETBACKS IN INDIA, WORLD

THE CONTEXT: According to a new World Bank report, titled “Poverty and Shared Prosperity 2022: Correcting Course”, the Covid pandemic has been the biggest setback to global poverty alleviation in decades.
THE EXPLANATION:
According to the report, “The world is unlikely to meet the goal of ending extreme poverty by 2030 absent history-defying rates of economic growth over the remainder of this decade”.

What has the report found?
• The report states that global poverty reduction has been slowing down since 2015 but the Covid pandemic and the war in Ukraine have completely reversed the outcomes.
• By 2015, the global extreme-poverty rate had been cut by more than half. Since then, poverty reduction has slowed in tandem with subdued global economic growth. The economic upheavals brought on by COVID-19 and later the war in Ukraine produced an outright reversal in progress.”

• As such, the global goal of ending extreme poverty by 2030 would not be achieved.
• In 2020 alone, the number of people living below the extreme poverty line rose by over 70 million; the largest one-year increase since global poverty monitoring began in 1990. As a result, an estimated 719 million people subsisted on less than $2.15 a day by the end of 2020.
• Inequalities, too, have risen the poorest people bore the steepest costs of the pandemic: income losses averaged 4 per cent for the poorest 40 per cent, double the losses of the wealthiest 20 per cent of the income distribution. Global inequality rose, as a result, for the first time in decades.
• Global median income declined by 4 per cent in 2020—the first decline since measurements of median income began in 1990.

What about India’s poverty levels?
Poverty has gone up in India too.
• “Previous estimates suggested a poverty headcount rate at the US$1.90 poverty line of 10.4 percent in 2017…The latest estimate based on Sinha Roy and van der Weide (2022) shows that poverty at the US$1.90 poverty line was 13.6 percent in 2017,” finds the report.
• However, the report uses data from Centre for Monitoring Indian Economy (CMIE), because there are no official estimates of poverty available since 2011.
• “The most recent survey data released by the National Sample Survey Office of India used to measure poverty is the 2011/12 National Sample Survey (NSS). The government decided not to release the 2017/18 NSS round because of concerns about data quality,” it states.
• But it could not have left India out of the poverty estimates simply because India is one of the countries with the biggest poor population. “Because of India’s size, the lack of recent survey data for the country significantly affects the measurement of global poverty, as was evident in Poverty and Shared Prosperity 2020.”
• It states that given the country’s size and importance for global and regional poverty estimates, the CMIE data helps fill an important gap.

What are the suggested solutions?
• According to President of World Bank Group, “fiscal policy—prudently used and considering the initial country conditions in terms of fiscal space—does offer opportunities for policy makers in developing economies to step up the fight against poverty and inequality”.
• To be sure, the average poverty rate in developing economies would have been 2.4 percentage points higher without a fiscal response. Yet government spending proved far more beneficial to poverty reduction in the wealthiest countries, which generally managed to fully offset Covid-19’s impact on poverty through fiscal policy and other emergency support measures.
• Developing economies had fewer resources and therefore spent less and achieved less: upper-middle-income economies offset just 50 per cent of the poverty impact, and low- and lower-middle income economies offset barely a quarter of the impact.

The World Bank has three specific suggestions when it comes to fiscal policy.
1: Choose targeted cash transfers instead of broad subsidies.
2: Prioritize public spending for long-term growth.
3: Mobilize tax revenues without hurting the poor.

INTERNATIONAL RELATIONS

4. WHAT IS OPEC+ AND WHY HAVE THEY SLASHED OIL PRODUCTION?

THE CONTEXT: The grouping of the world’s largest oil-producing countries, the Organisation of the Petroleum Exporting Countries (OPEC) and its allies, together known as OPEC+, decided to cut oil production by 2 million barrels per day (bpd).
THE EXPLANATION:
• According to sources, this is the largest cut since the beginning of the Covid-19 pandemic. Brent crude, the international benchmark, was up 28 cents or 0.3%, at $92.08 a barrel after the cut was announced.
• In light of recent falling gas prices, OPEC+ officials had decided in September to reduce oil output by a modest 100,000 bpd after they first agreed in the previous month to increase production by the same amount.

What is OPEC+?
• Established in 1960 by founding members Iran, Iraq, Kuwait, Saudi Arabia and Venezuela, OPEC has since expanded and now has 13 member states. With the addition of another 11 allied major oil-producing countries that include Russia, the grouping is known as OPEC+.
• The objective of the organisation is to “coordinate and unify the petroleum policies of its Member Countries and ensure the stabilisation of oil markets in order to secure an efficient, economic and regular supply of petroleum to consumers, a steady income to producers and a fair return on capital for those investing in the petroleum industry”.
• Previously controlled by western-dominated multinational oil companies known as the “Seven Sisters,” OPEC sought to give the oil-producing nations greater influence over the global petroleum market. They account for roughly 40 per cent of the world’s crude oil and 80 per cent of the globe’s oil reserves, according to estimates from 2018. They usually meet every month to determine how much oil the member states will produce.
• However, many allege that OPEC behaves like a cartel, determining the supply of oil and influencing its price in the world market.

Why are they slashing production?
• Oil prices skyrocketed after Russia’s invasion of Ukraine in February, and have since begun to soften over the past few months, before dropping sharply to under $90 in September due to fears of a recession in Europe and reduced demands from China because of its lockdown measures.
• Today’s cut is the biggest of its kind since 2020 when OPEC+ members slashed outputs by 10 million bpd during the Covid-19 pandemic, Reuters reported. The reductions would boost prices and be extremely beneficial for the Middle Eastern member states, to whom Europe has turned for oil after levelling sanctions against Russia since it invaded Ukraine.
• OPEC+ members are concerned that a faltering global economy would reduce the demand for oil, and the cuts are seen as a way to protect profits. Increased oil prices, which first occurred during the invasion of Ukraine, have helped Saudi Arabia, one of the founding members of OPEC, become one of the world’s fastest-growing economies.

HEALTH ISSUES

5. NEW RESEARCH: SCIENTISTS ENGINEER MOSQUITOES THAT CAN’T SPREAD MALARIA, OFFER HOPE OF ERADICATING DISEASE

THE CONTEXT: Scientists have genetically modified mosquitoes to slow the growth of malaria-causing parasites in their guts — an advancement that can help prevent transmission of the disease to humans.
THE EXPLANATION:
• The disease is transmitted between people through a female mosquito after it bites someone infected with the malaria parasite. The parasite develops into its next stage in the mosquito’s gut and travels to its salivary glands, ready to infect the next person it bites.
• Now, the mosquitoes have been engineered to produce compounds that slow the growth of malaria-causing parasites.
• Though only around 10 per cent of mosquitoes live long enough for the infectious parasite to develop, malaria remains one of the most devastating diseases globally, putting at risk about half of the world’s population. In 2021, it infected 241 million people and killed 627,000 people.

The research
• Researchers from the Institute for Disease Modelling at the Bill and Melinda Gates Foundation developed a model to assess the impact of such modifications and found it could be effective even where transmission is high. While the technique, described in a paper published in Science Advances journal on September 21, has been shown to dramatically reduce the possibility of malaria spreading in a lab setting, if proven in the real world it could offer a powerful new tool to help eliminate malaria.
• Researchers from the Transmission: Zero team at Imperial College London, UK, genetically modified the main malaria-carrying species of mosquito in sub-Saharan Africa, Anopheles gambiae, such that the mosquito produced antimicrobial peptides in its gut when it had a blood meal.

How it works
• The peptides impair the malarial parasite’s development and also cause the mosquitoes to have a shorter life span. The co-first author of the study, Tibebu Habtewold, said new tools are increasingly needed as mosquitoes develop resistance to insecticides and treatments.
• To prevent malaria spread via genetic modification, the change needs to be spread from lab-bred mosquitoes to wild ones. The innovation is so designed that it can be coupled with existing ‘gene drive’ technology.
• “Gene drive is one such powerful weapon that in combination with drugs, vaccines and mosquito control can help stop the spread of malaria and save human lives,” study co-lead author Professor George Christophides said. Gene drive would cause the anti-parasite genetic modification to be preferentially inherited, making it spread more widely among any natural populations.

Applicability
• It would, however, require extremely careful planning to minimise risks before any field trials. The Transmission:Zero team is, therefore, creating two separate but compatible strains of modified mosquitoes — one with the anti-parasite modification and one with the gene drive.
• They can then test the anti-parasite modification on its own first, adding in the gene drive once it has been shown to be effective. With partners in Tanzania, the team set up a facility to conduct some first tests. They are also risk-assessing potential releases of modified mosquitoes and taking into account potential hazards, but are hopeful that their intervention can help eradicate malaria.

SCIENCE AND TECHNOLOGY

6. THE NOBEL PRIZE 2022: MAKING CHEMISTRY CLICK

THE CONTEXT: The 2022 Nobel Prize in Chemistry has been awarded to chemists Carolyn R. Bertozzi and K. Barry Sharpless from the U.S., and Morten Meldal from Denmark, for their work in the field of click chemistry and bioorthogonal chemistry.
THE EXPLANATION:
• Dr. Sharpless was the first scientist to work on what is today called click chemistry – a branch of science that explores the assembly of molecules. In fact, this is not his first Nobel Prize in Chemistry. He previously won the award in 2001.

What is click chemistry?
• In simple terms, click chemistry is a functional field where molecules snap together quickly and efficiently – literally like a click.
• Dr. Sharpless talked about the field in the research paper in 2001, where he defined it as a “set of powerful, highly reliable, and selective reactions for the rapid synthesis of useful new compounds and combinatorial libraries through heteroatom links”. In the same paper, he talked about the need to develop synthetic strategies instead of trying to imitate naturally occurring compounds. He is of the view that even if click chemistry is unable to provide exact replicas of natural molecules, it can help find molecules that fulfil the same purpose.
• According to Dr. Sharpless, a reaction should be able to occur in the presence of oxygen and in water for it to be called that of click chemistry.

The need for click chemistry
• Replicating reactions that involve bonds between carbon atoms – that are vital to the existence of life – is expensive and often leads to side reactions and loss of material. Instead of trying to make carbon atoms react with each other, Dr. Sharpless’s research focuses on using smaller molecules that already have a complete carbon frame, The Nobel Foundation noted. These molecules can further be linked using oxygen or nitrogen atoms as bridges. Simpler reactions, “where there is a strong intrinsic drive for the molecules to bond together”, may avoid the loss of material as well as the unwanted side reactions.

[WpProQuiz 347]

THE CONTEXT: The recent incidents of landslides in Himalayan states and the Western Ghats have again put the spotlight on the need for early detection, warning, and prevention systems and adopting sustainable solutions for better management of landslides disasters in India. This article analyses causes, impact & suggestive steps regarding Landslides.

WHAT IS A LANDSLIDE?

• Landslide is a physical phenomenon when a part of rock, and/or debris/ soil fall due to the action of gravity.
• It is caused by a set of terrain-specific geo-factors (e.g., slope, lithology, rock structure, land use/ cover, geomorphology, etc.) and in general is triggered by heavy rainfall or earthquake tremors.
• In Indian terrain, landslide events are mostly triggered by monsoonal rainfall but examples of earthquake-triggered landslides are also not uncommon in India (e.g., Uttarkashi Earthquake, Chamoli Earthquake, Sikkim Earthquake, etc).
• The entire Himalayan tract, hills/ mountains in sub-Himalayan terrains of North-east India, Western Ghats, the Nilgiris in Tamil Nadu Konkan areas are landslide-prone.

RECENT LANDSLIDE DISASTERS

ü  On 26th July, nine people lost their lives when a landslide suddenly flung boulders down a hill in Himachal Pradesh’s Kinnaur district.

ü  On 18th July 18, a series of landslides in two areas of Mumbai claimed at least 32 lives.

ü  On 14th July, five died in HP’s Kangra district after heavy rainfall triggered floods and landslides.

IMPORTANT FACTS RELATED TO LANDSLIDE RISK IN INDIA

• India has mountainous and hilly areas in as many as 16 states and two UTs, located in the Himalayan and sub-Himalayan region and the Western Ghats.
• The area prone to landslides accounts for about 12.6% of the Indian landmass, translating into 4.2 lakh square kilometers in absolute terms.
• This area spans across more than 170 districts.
• India accounts for about 18 percent of the total global fatalities due to landslides in the hills. Uttarakhand, Himachal Pradesh, J&K, and Ladakh record more than 65 percent of the landslides in the country, followed by the Northeast Himalayas and the Western Ghats.

WHY DO THE HIMALAYAS EXPERIENCE MORE LANDSLIDES THAN THE WESTERN GHATS?

• The Himalayas are one of the youngest fold mountains of the world. They are formed by the convergent movement of the Indian plate and Eurasian plate rather they are still rising in height. These tectonic movements cause frequent earthquakes in the region often resulting in landslides. Whereas the Western Ghats lies in the stable Deccan shieldless prone to landslides than the Himalayas.
• The Himalayas are greater in height than the Western Ghats. The slopes are comparatively steeper which increases the chance of landslide. Whereas the Western Ghats is much lesser in height than the Himalayas.
• The perennial rivers in the Himalayas carry a huge amount of silt and debris. The melting of glaciers even increasing the flow of water during summer thus leading to more amount of landslides. But the Western Ghats on the other hand does not face such a situation.

MAJOR LANDSLIDE PRONE AREAS OF INDIA

ANALYSING THE REASONS BEHIND LANDSLIDE

HUMAN INTERVENTION

• Human activity such as the construction of roads, buildings, and railways, mining and quarrying, and hydropower projects damage hilly slopes and impact natural drainage by removing soil and vegetation, loosening soil and gravel, and making the hills more susceptible to landslides.
• India accounted for 28% of construction-triggered landslide events, followed by China (9%), and Pakistan (6%).
• India also accounted for maximum landslides triggered by mining, at 12%, followed by Indonesia (11.7%), and China (10%).
• Bootstrapping an incompatible model of development in the hills, represented by big hydroelectric projects and large-scale construction activity involving the destruction of forests and damming of rivers, is an invitation to disasters like landslides.
• According to the GSI report, infrastructural development for tourism that involved the modification of slopes – construction of new roads and widening of existing ones, building houses, hotels, and homestays – increased the vulnerability of mountains in both the Himalayas and the Western Ghats to the rain and made the landslides and floods that much more devastating. For example, landslides in Kodagu.
• In the Western Ghats, Plantations are also the major reason for landslides. Imported tree species cannot withstand the local weather conditions and get uprooted even in a slight downpour. For example, Nilgiris initially had a lot of native trees and millet species but monoculture transformed the soil. With the use of pesticides, chemical fertilizers, and repeat planting methods, the texture of the soil changed gradually.

UNPLANNED DEVELOPMENT, FLAWED REGULATIONS

• A study analyzing building regulations in eight towns in the Himalayan region found that building bylaws do not make provisions for the particular geo-environmental context of a settlement. The same land use regulations apply regardless of topographical location, slope angle and direction, and the hazard potential of a site.
• The National Landslide Risk Management Strategy published by the NIDM in September 2019 also flagged this anomaly. The regulations are mostly inspired by Delhi Master Plan(s).
• Lack of local land use planning or its updation in the urban local bodies of the Himalayan region and the Western Ghats is resulting in ill-conceived planning, unplanned development, and ultimately slope instability.

EXTREME WEATHER

• Severe, unpredictable weather events such as heavy, intense rainfall due to the climate crisis are adding another layer of complexity to landslide incidents in the country.
• Of the total landslides triggered by rainfall, 16% were reported from India. Of these, 77% occurred during the monsoon.

NDMA’S GUIDELINES FOR LANDSLIDE AND SNOW AVALANCHES DISASTER MANAGEMENT (2009) AND NATIONAL LANDSLIDE RISK

MANAGEMENT STRATEGY (2019)

LANDSLIDE HAZARD, VULNERABILITY, AND RISK ASSESSMENT

• It includes delineating areas susceptible to landslide hazards and the status of landslide hazards in different areas and to assess the resources at risk due to these hazards as per the requirement of communities and for planning and decision-making purposes.
• This also involves site-specific studies of landslides and preparation of landslide inventory.

MULTI-HAZARD CONCEPTUALISATION

• Integrating landslide concerns into multi-hazard disaster management plans at different levels for effective risk assessment, mitigation and response.

LANDSLIDE REMEDIATION PRACTICE

• Encouraging implementation of successful landslide remediation and mitigation technologies, and execution of pacesetter examples in mitigation and remediation strategies to build confidence amongst the affected communities.

RESEARCH AND DEVELOPMENT; MONITORING AND EARLY WARNING

• Research is of critical importance in managing landslides. Developing a predictive understanding of landslide processes and triggering mechanisms; regional real-time landslide warning systems based on threshold values of rainfall; real-time monitoring and establishing early warning systems are some of the important fields of research that need immediate attention.

KNOWLEDGE NETWORK AND MANAGEMENT

• Establishing an effective system for gathering information on landslides, loss assessment resulting from landslides, and the effective dissemination of technical information and maps is an essential component of the disaster management process.

PUBLIC AWARENESS AND EDUCATION

• Effective communication of landslide hazard issues to the affected communities through education, public awareness programmes, posters, audio-visual aids, media campaigns, etc., is required.

EMERGENCY PREPAREDNESS AND RESPONSE

• Development of coordinated landslide rapid response capability involving scientists, engineers, local authorities, the National Disaster Response Force, and paramilitary forces. Rescue, relief, and rehabilitation are covered in this component.

WAY FORWARD: LANDSLIDE-PRONE AREAS NEED TECH SUPPORT

HOW MAPPING LANDSLIDES CAN MINIMISE DAMAGE

• Improvement in early warning systems, monitoring, and susceptibility zoning can reduce the damage caused by landslides.
• The Geological Survey of India (GSI) has done a national landslide susceptibility mapping at 1:50,000 scale for 85% of the entire 420,000 square km landslide-prone area in the country.
• This would not only help avoid many new landslides that are caused heavily by human interventions but also reduce damages to life and property if an incident happens.
• The maps need to be localized to give a more magnified view of the locality to be more useful. This would help to build plans and local construction activities.

PLANNING AHEAD

• Aizawl Municipal Corporation (AMC) has developed a landslide action plan using 1:5,000 scale susceptibility maps and new regulations to guide construction activities.
• It has set up a landslide policy committee involving stakeholders from various departments and researchers to prepare a long-term safety plan.
• After years of facing tragedies, Kerala is also trying to ensure disaster-resilient development in its hilly regions. The ‘Rebuild Kerala’ action plan has given high priority to the preparation of landslide hazard zonation maps in hilly areas at the municipality and panchayat levels.
• NHAI while building roads took remedial measures such as concreting with wire mesh and rock bolting, use of rockfall nets, concrete cladding, and proper diversion of surface runoff through catch drains, chutes and toe drains on berms, etc. It provides stability to the slopes.

MONITORING FOR EARLY WARNING

• Local geographical indicators offer warning signs for landslides.
• New cracks, unusual bulges and depressions in the ground; tilting trees, telecom poles or retaining walls; soil moving away from foundations; and sudden increase in water flow in streams with more mud, or decrease in flow when it is still raining or rainfall has recently stopped, can signal landslides.
• Rainfall is a key indicator. The GSI started an experiment in Landslide Early Warning System (LEWS) in Darjeeling (West Bengal) and the Nilgiris (Tamil Nadu), which could be expanded to other landslide-prone states if it proves successful. The model is based on rainfall threshold, which is the amount of rainfall a slope can hold before a landslide gets triggered, which is estimated using past cumulative rainfall data combined with landslide susceptibility data.
• Some experiments are also going on to monitor landslides through movement sensors and rain gauges. These systems alert the officials and scientists through SMS or emails once a threshold value is reached. Coimbatore-based Amrita Vishwa Vidyapeetham, for instance, has set up real-time landslide monitoring and early warning systems in Munnar (Kerala) and Gangtok (Sikkim).
• The Indian Institute of Technology (IIT), Mandi, has also installed surface-level motion-sensor-based early warning systems in Himachal Pradesh and Uttarakhand. The device collects weather parameters, soil moisture, soil movement, and rainfall intensities. When the device detects a significant displacement of the earth which could result in a landslide, it alerts the officials.

SWISS MODEL

• Prof.Madhav Gadgil who headed the Western Ghats Ecology Expert Panel (WGEEP) suggested ‘Swiss Model’ is the solution to prevent landslides in the Western Ghats

ü  The extensive forest cover of Switzerland has developed only over the last 160 years.

ü  Before that, only about 4% of that country’s lands had retained forest and there were disastrous landslides.

ü  This led to a public awakening and a restoration of the tree cover.

ü  This regeneration was managed by local communities, not by government departments.

ü  Working together, communities of Switzerland, practicing genuine participatory democracy, have revived the country’s ecology.

CONCLUSION: There is a cost to pursuing development goals without paying attention to environmental constraints. Therefore, development goals must be pursued without breaching environmental regulations. Recent devastating landslides signal the dire need for ramping up disaster alert systems while enhancing climate change mitigation efforts.