Note4Students
From UPSC perspective, the following things are important :
Prelims level: A-76 Iceberg
Mains level: Impact of climate changes on Cryosphere
A huge ice block has broken off from western Antarctica into the Weddell Sea, becoming the largest iceberg in the world and earning the name A-76.
Answer this PYQ in the comment box:
Q.On the planet earth, most of the freshwater exists as ice caps and glaciers. Out of the remaining freshwater, the largest proportion:
(a) is found in the atmosphere as moisture and clouds
(b) is found in freshwater lakes and rivers
(c) exists as groundwater
(d) exists as soil moisture
A-76 Iceberg
- A-76 is the latest in a series of large ice blocks to dislodge in a region acutely vulnerable to climate change, although scientists said in this case it appeared to be part of a natural polar cycle.
- The iceberg, measuring around 170 km long and 25 km wide, with an area of 4,320 sq km is now floating in the Weddell Sea.
- Slightly larger than the Spanish island of Majorca, A-76 had been monitored by scientists since it began to separate from the Ronne Ice Shelf.
- It joins the previous world’s largest title holder A-23A — approximately 3,880 sq. km. in size — which has remained in the same area since 1986.
- A-76 was originally spotted by the British Antarctic Survey and the calving — the term used when an iceberg breaks off — was confirmed using images from the Copernicus satellite.
Note: An iceberg is a large piece of freshwater ice that has broken off a glacier or an ice shelf and is floating freely in open water.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Map marking of Paracel Islands
Mains level: South China Sea Row
A United States warship sailed through the Paracel Islands in the disputed South China Sea.
Paracel Islands
- The Paracel Islands, also known as the Xisha Islands are a disputed archipelago in the South China Sea.
- The archipelago includes about 130 small coral islands and reefs, most grouped into the northeast Amphitrite Group or the western Crescent Group.
- They are distributed over a maritime area of around 15,000 square kilometers with a land area of approximately 7.75 square kilometers.
- The archipelago includes Dragon Hole, the deepest underwater sinkhole in the world.
- It is surrounded by productive fishing grounds and a seabed with potential, but as yet unexplored, oil and gas reserves.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Magnetosphere
Mains level: Not Much
Indian Scientists have developed a theory that helps understand the complicated nature of Sun-Earth interaction’s happening in the magnetosphere
Magnetospheric Multiscale (MMS) Mission
- The Magnetospheric Multiscale (MMS) Mission is a NASA robotic space mission to study the Earth’s magnetosphere, using four identical spacecraft flying in a tetrahedral formation.
- The mission is designed to gather information about the microphysics of magnetic reconnection, energetic particle acceleration, and turbulence—processes that occur in many astrophysical plasma.
- Indian researchers have developed a theory that solves every bit of uncertainty regarding the conflict between the observations from MMS Mission.
Answer this PYQ in the comment box:
Q.Consider the following statements:
- The Earth’s magnetic field has reversed every few hundred thousand years.
- When the Earth was created more than 4000 million years ago, there was 54% oxygen and no carbon dioxide.
- When living organisms originated, they modified the early atmosphere of the Earth.
Which of the statements given above is/ are correct? (CSP 2018)
(a) 1 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
What is the Magnetosphere?
- The magnetosphere is the region of space surrounding Earth where the dominant magnetic field is the magnetic field of Earth, rather than the magnetic field of interplanetary space.
- It is formed by the interaction of the solar wind with Earth’s magnetic field.
Findings of the Indian Researchers
- The MMS spacecraft observed negative monopolar potential (electric field potentials which can be visualized in the form of single-humped pulse-type structures).
- The scientific community suddenly recognized its importance, and publications were presented.
- However, none of the available theories could explain the characteristics of these structures due to the exotic background conditions.
- Indian theory provides a better understanding of their characteristics and sheds light on the generation of these structures.
- This has lead to the unraveling of nature’s greatest mystery that causes phenomena -plasma transport and heating of plasma- the fourth state of matter after solid, liquid, and gas.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- Issues with the bureaucracy
The second wave of Covid has exposed the inherent weakness of the bureaucracy in India. The article highlights the necessity for reforms in the way bureaucracy functions in India.
Features of traditional bureaucracy
- Preference to generalist: Weberian bureaucracy still prefers a generalist over a specialist.
- Preference to leadership of position: The leadership of position is preferred over leadership of function in the traditional bureaucracy.
- The leadership of function is when a person has expert knowledge of a particular responsibility in a particular situation.
- The role of the leader is to explain the situation instead of issuing orders.
- Every official involved in a particular role responds to the situation rather than relying on some dictation from someone occupying a particular position.
- Lack of innovation: The rigid adherence to rules has resulted in the rejection of innovation.
Covid exposed limits of traditional bureaucracy
- A generalist officer IAS and State civil service officials are deemed an expert and as a result, superior in traditional bureaucracy.
- Specialists in every government department have to remain subordinate to the generalist officers.
- The COVID-19 pandemic has exposed the weakness of this system.
- Healthcare professionals who are specialists have been made to work under generalist officers and the policy options have been left to the generalists when they should be in the hands of the specialists.
- The justification is that the generalist provides a broader perspective compared to the specialist.
Is privatisation and private sector managerial techniques an answer?
- The reform often suggested in India is new public management.
- This as a reform movement promotes privatisation and managerial techniques of the private sector as an effective tool to seek improvements in public service delivery and governance.
- But this isn’t a viable solution in India where there is social inequality and regional variations in development.
- It renders the state a bystander among the multiple market players with a lack of accountability.
- Further, COVID-19 has shown that the private sector has also failed in public service delivery.
Way forward: Collaborative governance
- The most appropriate administrative reform is the model of new public governance.
- Work together: In collaborative governance, the public sector, private players and civil society, especially public service organisations (NGOs), work together for effective public service delivery.
- As part of new public governance, a network of social actors and private players would take responsibility in various aspects of governance with public bureaucracy steering the ship rather than rowing it.
- As part of new public governance, the role of civil society has to be institutionalised.
- It needs a change in the behaviour of bureaucracy.
- Openness to reforms: It needs flexibility in the hierarchy, a relook at the generalist versus specialist debate, and an openness to reforms such as lateral entry and collaboration with a network of social actors.
- All major revolutions with huge implications on public service delivery have come through the collaboration of public bureaucracy with so-called outsiders.
- These include the Green Revolution (M.S. Swaminathan), the White Revolution (Verghese Kurien), Aadhaar-enabled services (Nandan Nilekani) and the IT revolution (Sam Pitroda).
Consider the question “What are the weaknesses of bureaucracy in India? Suggest the measures to improve the quality of public service delivery in India.”
Conclusion
New public governance is the future of governance, especially public service delivery.
Back2Basics: The Weberian Model of bureaucracy
- The classic model of bureaucracy is typically called the ideal Weberian model, and it was developed by Max Weber, an early German sociologist.
- Weber argued that the increasing complexity of life would simultaneously increase the demands of citizens for government services.
- Therefore, the ideal type of bureaucracy, the Weberian model, was one in which agencies are apolitical, hierarchically organized, and governed by formal procedures.
- Furthermore, specialized bureaucrats would be better able to solve problems through logical reasoning.
- Such efforts would eliminate entrenched patronage, stop problematic decision-making by those in charge,, impose order and efficiency, create a clear understanding of the service provided, reduce arbitrariness, ensure accountability, and limit discretion.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- Poor public health infrastructure in India and its consequences
The poor public health infrastructure in India hits the poor hard. The article examines the factors responsible for poor public health infrastructure and suggests the measures to deal with it.
Poor state of health infrastructure
- World Bank data reveal the poor state of India’s health infrastructure.
- It reveals that India had 85.7 physicians per 1,00,000 people in 2017.
- In contrast, it is 98 in Pakistan, 58 in Bangladesh, 100 in Sri Lanka and 241 in Japan.
- India had 53 beds per 1,00,000 people.
- It is 63 in Pakistan, 79.5 in Bangladesh, 415 in Sri Lanka and 1,298 in Japan.
- India had172.7 nurses and midwives per 1,00,000 people in contrast to 220 in Sri Lanka, 40 in Bangladesh, 70 in Pakistan, and 1,220 in Japan.
What are the factors responsible for poor health infrastructure?
- Stagnant expenditure: Analysis by the Centre for Economic Data and Analysis (CEDA), Ashoka University, shows that health expenditure has been stagnant for years.
- Lack of expertise with states: Despite health being a state subject, the main bodies with technical expertise are under central control.
- The States lack corresponding expert bodies such as the National Centre for Disease Control or the Indian Council of Medical Research.
- Inter-State variation: States also differ a great deal in terms of the fiscal space to deal with the novel coronavirus pandemic because of the wide variation in per capita health expenditure.
- Kerala and Delhi have been close to top in years from 2011 to 2019-20.
- Bihar, Jharkhand and Uttar Pradesh, States that have been consistently towards the bottom of the ranking in the same years.
Out-of-pocket expenditure and its impact on the poor
- Due to low levels of public health provision, the World Health Organization estimates that 62% of the total health expenditure in India is OOP, among the highest in the world.
- Some of the poorest States, Uttar Pradesh, Bihar, Madhya Pradesh, Jharkhand and Odisha, have a high ratio of OOP expenditures in total health expenditure.
- Impact on the poor: High ratio of OOP means that the poor in the poorest States, the most vulnerable sections, are the worst victims of a health emergency.
Way forward
1) Coordinated national plan
- The inter-State variation in health expenditure highlights the need for a coordinated national plan at the central level to fight the pandemic.
- The Centre already tightly controls major decisions, including additional resources raised specifically for pandemic relief, e.g. the PM CARES Fund.
- The need for a coordinated strategy on essential supplies of oxygen and vaccines is acute.
- The Centre can bargain for a good price from vaccine manufacturers in its capacity as a single large buyer like the European Union did for its member states.
- Centre will also benefit from the economies of scale in transportation of vaccines into the country.
- Once the vaccines arrive in India, these could be distributed across States equitably in a needs-based and transparent manner.
- Another benefit of central coordination is that distribution of constrained resources like medical supplies, financial resources can internalise the existing disparities in health infrastructure across States.
2) Form Pandemic Preparedness Unit
- There is a need for the creation of a “Pandemic Preparedness Unit” (PPU) by the central government.
- PPU would streamline disease surveillance and reporting systems; coordinate public health management and policy responses across all levels of government.
- It will also formulate policies to mitigate economic and social costs, and communicate effectively about the health crisis.
Consider the question “India has among the highest out-of-pocket expenditure in the world, which is the result of poor public health infrastructure. Examine the factors responsible for poor public health infrastructure and suggest the ways to deal with it.”
Conclusion
As and when we emerge on the other side of the pandemic, bolstering public health-care systems has to be the topmost priority for all governments: the Centre as well as States.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: CAPF
Mains level: Paper 2- Issues with MHA's decision to deploy CAPF for the security of MLAs
The article deals with the issue of the Home Ministry’s decision to provide security to BJP MLAs in West Bengal.
Context
Recently, the Union Ministry of Home Affairs (MHA) decided to provide security cover to 77 MLAs of the Bharatiya Janata Party (BJP) who were elected earlier this month after the West Bengal Assembly poll.
Issues with the decision
1) Threat perception discussed for a group and not one by one person
- Decisions to provide security to persons under threat is taken by a committee in the MHA.
- The committee comprises officials from the MHA, the Intelligence Bureau, Delhi Police and senior officials of the Central Armed Police Forces.
- In the meetings of the committee, the threat perception of each of the person to be secured is discussed one by one and not collectively for any group as such.
- However, in the decision to deploy CAPF personnel for the 77 MLAs, threat perception for each of the persons was not discussed.
2) Law and order is a state subject
- Law and order being a State subject, West Bengal is duty-bound to protect every citizen of the State, more so the MLAs.
- By deploying central forces, the Centre has sent a clear signal that it does not rely upon the State government to provide fool-proof security to the BJP MLAs.
- This is not a good sign for Centre-State relations.
- The Central government’s distrust of officers who are considered close to a State’s ruling dispensation does not bode well for police officers across the country.
3) Burdening the security forces
- The number of protected persons has increased in recent years.
- In 2019, as many as 66,043 police and CAPF personnel were deployed to protect 19,467 persons against the sanctioned strength of 43,556 personnel, as per the Data on Police Organisations.
- Constant deployment of CAPF personnel on protection duties impacts their training schedule.
Curbing the tendency to have security as status symbol
- To curb the tendency of demanding security personnel around themselves, leaders and prominent persons should be asked to bear the expenditure.
- Similarly, Members of Parliament and leaders with criminal records should be charged a fee for the security personnel deployed to protect them.
Conclusion
The Centre’s decision to provide security to the MLAs would set a wrong precedent and does not bode well for federalism.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Sites mentioned in the news
Mains level: Not Much
Six sites have been added to India’s tentative list of UNESCO world heritage sites.
Which are the 6 sites?
- Ganga ghats in Varanasi
- Temples of Kancheepuram in Tamil Nadu
- Satpura Tiger Reserve in Madhya Pradesh
- Maratha military architecture in Maharashtra
- Hire Bengal megalithic site in Karnataka and
- Bhedaghat-Lametaghat of Narmada Valley in Madhya Pradesh
[1] Ghats of Varanasi
- The Ganges riverfront of Varanasi, Uttar Pradesh, has been vying for the UNESCO tag for several years now.
- The Ganga river with its riverfront ghats also fulfil the criteria of Cultural Landscapes as designated in Article 1 of the Convention and specifically that of a cultural landscape/
- It retains an active social role in contemporary society closely associated with the traditional way of life, and in which the evolutionary process is still in progress.
[2] Temples of Kanchipuram
- Synonymous with spirituality, serenity, and silk, the temple town of Kanchipuram in Tamil Nadu, is dotted with ancient temples that are architectural marvels and a visual treat, states incredibleindia.org.
- Situated on the banks of River Vegavathi, this historical city once had 1,000 temples, of which only 126 (108 Shaiva and 18 Vaishnava) now remain.
- Its rich legacy has been the endowment of the Pallava dynasty, which made the region it’s capital between the 6th and 7th centuries and lavished upon its architectural gems that are a fine example of Dravidian styles.
[3] Satpura Tiger Reserve
- Located in Madhya Pradesh, the Satpura National Park is home to 26 species of the Himalayan region including reptiles, and 42 species of Nilgiri areas.
- It is the largest tiger-occupied forest and also has the largest tiger population.
- The website also states the place has more than 50 rock shelters with paintings that are 1500 to 10,000 years old.
[4] Maratha Military Architecture in Maharashtra
- There are 12 forts in Maharashtra dating back to the era of the 17th-century Maratha king Chhatrapati Shivaji.
- They are namely Shivneri (the birthplace of Shivaji); Raigad (the capital fort rebuilt for the coronation of the Maratha king), Torna (the first fort of the Maratha empire), Rajgad, Salher-Mulher, Panhala, Pratapgad, Lohagad, Sindhudurg, Padmadurga (Kasa), Vijaydurg and Kolaba.
- This highlight how the formation of Military Landscape in the form of hill and sea forts as a response to hilly terrain in the area is of outstanding universal value.
[5] Megalithic site of Hire Benkal
- The 2,800-years-old megalithic site of Hire Benkal in Karnataka is one of the largest prehistoric megalithic settlements where some funerary monuments are still intact.
- The granite structures are burial monuments that may also have served many ritual purposes.
- Due to the extremely valuable collection of Neolithic monuments, the site was proposed for recognition.
[6] Bhedaghat-Lametaghat in Narmada Valley- Jabalpur
- Bhedaghat, often referred to as the Grand Canyon of India, is a town in the Jabalpur district, around 25 km from Jabalpur.
- It is known for its marble rocks and their various morphological forms on either side of the Narmada River which flows through the gorge states whcunesco.org.
- It has also been observed that the magical marble mountains assume different colours and even shapes of animals and other living forms as one moves through them.
- Several dinosaur fossils have been found in the Narmada valley, particularly in Bhedaghat-Lametghat area of Jabalpur. In 1828, the first Dinosaur fossil was collected from Lameta Bed by William Sleeman.
- River Narmada narrows down on its way through marble rocks and plunges in a waterfall giving out the appearance of a smoke cascade.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Harmonized Master list
Mains level: Infrastructure sector
The Finance Ministry has granted ‘Infrastructure’ status for exhibition and convention centres, a move that is expected to ease bank financing for such projects.
Exhibition-cum-Convention Centre
- ‘Exhibition-cum-Convention Centre is included in the Harmonized Master List of Infrastructure sub-sectors by insertion of a new item in the category of Social and Commercial Infrastructure.
- The benefits available as ‘infrastructure’ projects would only be available for projects with a minimum built-up floor area of 1,00,000 square metres of exclusive exhibition space or convention space or both combined.
- This includes primary facilities such as exhibition centres, convention halls, auditoriums, plenary halls, business centres, meeting halls etc.
- As of now, the major projects underway in the sector are backed by the government – the International Exhibition-cum-Convention Centres at Dwarka as well as Pragati Maidan in the capital.
What is the Master List?
- The Harmonized Master list approved by the cabinet committee on infrastructure has five main sectors and 29 infra subsectors.
- The five sectors include transport, energy, water sanitation, communication and social and commercial infrastructure.
- The infra tag allows certain benefits including access to easier borrowings overseas, the ability to raise funds through tax-free bonds, tax concessions, and access to dedicated lenders such as IIFCL, and the debt funds.
- Last August, the government had added affordable rental housing projects to the list of sectors recognised as infrastructure.
Benefits of the move
- The infrastructure tag no longer involves significant tax breaks but would help such projects get easier financing from banks, said experts.
- India doesn’t have large convention centres or single halls with capacities to hold 7,000 to 10,000 people, unlike countries like Thailand that is a major global MICE-destination.
- Becoming a MICE (Meetings, Incentives, Conferences and Exhibitions) destination can generate significant revenue with several global companies active in India but it will take time to become a preferred destination.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Nord Stream 2 Pipeline
Mains level: Not Much
The US government has decided to waive sanctions on the company behind Russia’s Nord Stream 2 pipeline to Europe.
Nord Stream 2 Pipeline
- It is a system of offshore natural gas pipelines running under the Baltic Sea from Russia to Germany.
- It includes two active pipelines running from Vyborg to Lubmin near Greifswald forming the original Nord Stream, and two further pipelines under construction running from Ust-Luga to Lubmin termed Nord Stream 2.
- In Lubmin the lines connect to the OPAL line to Olbernhau on the Czech border and to the NEL line to Rehden near Bremen.
- The first line Nord Stream-1 was laid and inaugurated in 2011 and the second line in 2012.
- At 1,222 km in length, Nord Stream is the longest sub-sea pipeline in the world, surpassing the Langeled pipeline.
US sanctions
- Nord Stream projects have been opposed by the United States as well as by several Central and Eastern European countries because of concerns that the pipelines would increase Russia’s influence in the region.
- The US resistance to Nord Stream 2 is also influenced by the country’s increased production of natural gas, which gives the US economic incentive to resist the Russian supply of gas to the EU, in favour of US shale gas.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Medicine from the Sky Project
Mains level: Innovation in healthcare services
The Telangana government has selected 16 primary healthcare centres (PHCs) spread around Vikarabad area hospital for pilot testing the ambitious ‘Medicine from the sky’, the first-of-its-kind project involving delivery of medicines through multiple drones.
Medicine from the Sky Project
- A consortium of seven operators headed by Blue Dart Med-Express had been selected for the project to be launched in the VLOS range of 500 metres initially and will be scaled up gradually to a 9 km range.
- The selected PHCs are both within the Visual Line of Sight (VLOS) and Beyond Visual Line of Sight (BVLOS) range.
- The project would be launched in three waves starting with a pilot followed by mapping the route network for the operation of drones for delivering vaccine/medicine in the desired community health centres and PHCs.
- The project is being launched following the approval granted by the Civil Aviation Ministry to the request made by the State to grant conditional exemption from the Unmanned Aircraft System Rules 2021.
Benefits of the project
- The project is aimed at assessing alternative logistics route in providing safe, accurate and reliable pickup and delivery of health care items like medicines, vaccines, units of blood and other lifesaving equipment from the distribution centre to a specific location and back.
- The model, once successful, would enable deliveries from district medical stores and blood banks to PHCs, CHCs and further from PHCs/CHCs to central diagnostic laboratories.
Back2Basics: What is VLOS (Visual Line of Sight)?
- Visual Line of Sight (‘VLOS’) operations are a type of operation in which the remote pilot maintains continuous, unaided visual contact with the unmanned aircraft. In its simplest term, the aircraft must always be visible to the pilot.
- This allows the remote pilot to control the flight path of the unmanned aircraft in relation to other aircraft, people, and obstacles for the purpose of avoiding collisions.
- Extended Visual Line of Sight operations (‘EVLOS’) allows flight Beyond Visual Line of Sight of the Remote Pilot by using ‘trained observers’.
- Trained observers are used to comply with the separation and collision avoidance responsibilities of the operator.
- ‘Beyond Visual Line of Sight’ operations is where the flying of a drone is without a pilot maintaining a visual line of sight on the aircraft at all times.
- Instead, the pilot operates the UAV using Remote Pilot Station (RPS) / Ground Control Station (GCS) instruments.
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From UPSC perspective, the following things are important :
Prelims level: Fertilizer subsidies in India
Mains level: Not Much
A historic decision was taken to increase the subsidy for DAP fertiliser from Rs. 500 per bag to Rs. 1200 per bag, which is an increase of 140%.
Hike in subsidies
- It was discussed that the price of fertilizers is undergoing an increase due to the rising prices of phosphoric acid, ammonia etc internationally.
- Despite the rise in international market prices of DAP, it has been decided to continue selling it at the older price of Rs.1200 and the central government has decided to bear all the burden of price hike.
- The amount of subsidy per bag has never been increased so much at once.
Fertilizer Subsidy in India
- Subsidy as a concept originated during the Green Revolution of the 1970s-80s.
- Fertiliser subsidy is purchasing by the farmer at a price below MRP (Maximum Retail Price), that is, below the usual demand-and-supply-rate, or regular production and import cost.
- Fertiliser subsidy ultimately goes to the fertiliser company, even though it is the farmer that benefits.
- Before 2018, companies were reimbursed after the material was dispatched and received by the district railhead or designated godown.
- 2018 saw the beginning of DBT (Direct Benefit Transfer), which would transfer money directly to the retailer’s account.
- However, the companies will be paid only after the actual sale to the farmer.
Put answers in the comment box for this PYQ:
Q.What are the advantages of fertigation in agriculture? (CSP 2020)
1.Controlling the alkalinity of irrigation water is possible.
2. Efficient application of Rock Phosphate and all other phosphatic fertilizers is possible.
3. Increased availability of nutrients to plants is possible.
4. Reduction in the leaching of chemical nutrients is possible.
Select the correct answer using the code given below:
(a) 1, 2 and 3 only
(b) 1,2 and 4 only
(c) 1,3 and 4 only
(d) 2, 3 and 4 only
How is the subsidy paid and who gets it?
- The subsidy goes to fertiliser companies, although its ultimate beneficiary is the farmer who pays MRPs less than the market-determined rates.
- Companies, until recently, were paid after their bagged material had been dispatched and received at a district’s railhead point or approved godown.
- From March 2018, a new so-called direct benefit transfer (DBT) system was introduced, wherein subsidy payment to the companies would happen only after actual sales to farmers by retailers.
- With the DBT system, each retailer — there is over 2.3 lakh of them across India — now has a point-of-sale (PoS) machine linked to the Department of Fertilizers’ e-Urvarak DBT portal.
How does this system work?
- A popular example of how this system works is that of the neem coated urea fertiliser.
- Its MRP (Maximum Retail Price) is fixed by the government at Rs. 5922.22 per tonne.
- The average cost of domestic production is at Rs 17,000 per tonne. The difference is footed by the centre in the form of subsidy.
- This fertiliser has high Nitrogen content and is cheaper than usual fertilizers.
- While this may be perceived as a good thing, excess of Nitrogen can disrupt the NPK (Nitrogen, Phosphorus and Potassium) balance in the soil.
What about non-urea fertilizers?
- The non-urea fertiliser is decontrolled or fixed by the companies.
- However, the government pays a flat per tonne subsidy to maintain the nutrition content of the soil, and ensure other fertilizers are economical to use.
- The non- urea fertilizers are further divided into two parts, DAP (Diammonium Phosphate) and MOP (Muriate of Phosphate).
Issues with such subsidies
- A flawed subsidy policy is harmful not just for the farmer, but to the environment as well.
- Indian soil has low Nitrogen use efficiency, which is the main constituent of Urea. Consequently, excess usage contaminates groundwater.
- The bulk of urea applied to the soil is lost as NH3 (Ammonia) and Nitrogen Oxides. The WHO has prescribed limits been breached by Punjab, Haryana and Rajasthan.
- For human beings, “blue baby syndrome” is a common side ailment caused by Nitrate contaminated water.
- This hampers the ability of the body to carry Nitrogen, with a high probability of death.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: GI tags in news
Mains level: Not Much
In a major boost to exports of Geographical Indication (GI) certified products, a consignment of Dahanu Gholvad Sapota from the Palghar district of Maharashtra was shipped to the United Kingdom.
Gholvad Sapota
- GI certification of Ghovad Sapota is held by Maharashtra Rajya Chikoo Utpadak Sangh and the fruit is known for its sweet and unique taste.
- It is believed that the unique taste is derived from the calcium-rich soil of Gholvad village.
- Currently, in the Palgahr district, around 5000 hectares of land is under sapota or plantation.
- Sapota is grown in many states- Karnataka, Gujarat, Maharashtra, Tamil Nadu, West Bengal and Andhra Pradesh.
- Karnataka is known to be the highest grower of the fruit, followed by Maharashtra.
Do you know?
Earlier this month, a consignment of 2.5 Metric Tonne of GI certified Banganapalli & Survarnarekha mangoes sourced from farmers in Krishna & Chittor districts of Andhra Pradesh was exported to South Korea.
Back2Basics: Geographical Indication (GI)
- The World Intellectual Property Organisation defines a GI as “a sign used on products that have a specific geographical origin and possess qualities or a reputation that are due to that origin”.
- GIs are typically used for agricultural products, foodstuffs, handicrafts, industrial products, wines and spirit drinks.
- Internationally, GIs are covered as an element of intellectual property rights under the Paris Convention for the Protection of Industrial Property.
- They have also covered under the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement.
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From UPSC perspective, the following things are important :
Prelims level: Provision in Social Security Code 2020
Mains level: Paper 2- Issues with the Social Security Code 2020
Provisions in Social Security Code 2020
- India’s Parliament in September 2020 passed a Social Security Code (SS Code 2020).
- The SS Code 2020 merges existing social security laws and attempts to include informal workers within the ambit of social security administration.
- The SS Code 2020 amalgamates and rationalises the provisions of eight existing central labour laws.
- Of these acts, employees provident fund, employees state insurance (ESI), maternity benefit, gratuity are entirely for organised sector workers.
- Employee threshold removed: For employees’ state insurance, the existing employee threshold has been withdrawn.
- Now the central government can extend ESI benefits to any organisation irrespective of the number of workers employed.
Key benefits not available to informal workers in Social Security Code 2020
- Maternity benefit: Under the SS Code, the provision of maternity benefit has not been made universal.
- Maternity benefit is presently applicable for establishments employing 10 workers or more.
- The definition of ‘Establishment’ in the proposed code did not include the unorganised sector.
- Hence, women engaged in the unorganised sector would remain outside the purview of maternity benefit.
- Employees Provident Fund: The SS Code maintains that the Employees’ Provident Fund Scheme will remain applicable, as before, to every establishment in which 20 or more employees are employed.
- Thus, for informal sector workers, access to employees’ provident fund remains unfulfilled too in the new code.
- Payment of gratuity: Gratuity shall be payable to eligible employees by every shop or establishment in which 10 or more employees are employed, or were employed, on any day of the preceding 12 months.
- But although payment of gratuity was expanded in the new Code, it still remains inaccessible for a vast majority of informal workers.
Challenges faced by informal workers in availing social security
- Registration barrier: To avail social security, an informal worker must register herself on the specified online portal to be developed by the central government.
- Absence of definition: The absence of definite and unambiguous provisions in the present code would further complicate achievement of universal registration.
- Lack of awareness: Experience shows that there is an awful lack of awareness among informal workers regarding social security schemes.
- Lack of digital literacy: Online registration places a further challenge as most informal workers lack digital literacy and connectivity.
- Lack of documents: Informal workers also find it difficult to furnish all documentary papers required as part of the registration process.
- Furnishing proof of livelihood and income details in the absence of tangible employer-employee relations is very difficult.
- Such requirements deter informal workers from completing the registration and they continue to remain outside the social security ambit.
Way forward
The provision of social security could be used to formalise the workforce to a certain extent. Employers could have been made to own up to the responsibility of providing social security to their workers.
1) Inter-State cooperation
- As unorganised workers are spread across the length and breadth of India, inter-State arrangement and cooperation becomes imperative.
- The central government should conceptualise a basic structure, which if successful, should be adopted by States after necessary customisation.
2) Universal coverage
- The unorganised workforce is all encompassing, minus the minuscule regular workers of organised sectors.
- This identity should be primal and all unorganised workers should have basic social security coverage, irrespective of labour market classifications.
- The code fails to undertake such inclusion in a meaningful way.
Conclusion
The Social Security Code fails to provide adequate protection to informal workers, who constitute 91% of the workforce. The pandemic and misery brought by it on these informal workers highligths the need for universal social security.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Article 342A
Mains level: Paper 2- Interpretation of 102nd Amendment and issues created by it
The article highlights the issues with the Supreme Court judgement in the Maratha reservation case.
Three findings from Maratha reservation judgement
- Recently, the Supreme Court of India declared as unconstitutional a Maharashtra law which provided for reservation to the Maratha community.
- Three primary findings emanated from the judgement-
- 1) Maratha not backward class: The Court held that the Maratha community did not constitute a socially and educationally backward class.
- 2) Breach of 50% limit: The bench said that the law was in breach of a rule previously set by the Court disallowing reservations made in excess of 50% of the total available positions.
- 3) Power of the States: The Court held that State governments had no independent power to declare a group as a backward class.
Issues with the judgement
The latter two findings run against the values of equality and federalism, which the Court has long regarded as integral to India’s democracy.
1) 50% limit does not stem from the Constitution
- Articles 16(4) and 15(4) which confer power on the government to make reservations do not contains 50% limitation.
- Reservation as an exception: Originally, however, these clauses were seen by the Supreme Court as exceptions to a broad rule of formal equality envisioned by the Constitution.
- To that end, the Court held that to allow reservation in excess of 50% would lead to an exception overriding a rule.
- Reservation as basic guarantee: Countering the reservations as an exception position, a seven-judge Bench, in State of Kerala vs N.M. Thomas (1975), held that a programme of reservation was inherent in the Constitution’s basic guarantee of equal treatment.
- This judgment held that affirmative action by the state was compelled by an objective of attaining substantive equality.
- With this judgement the rule requiring that reservations stay under 50% ought to have been deemed incongruous.
- But when the Court sat as a nine-judge Bench in Indra Sawhney vs Union of India (1992) it sustained the 50% limit.
- The majority on the Bench ruled, on the one hand, that N.M. Thomas was correct in seeing reservations as embedded in a constitutional vision of substantive equality.
- On the other hand, the bench accepted that reservation made in excess of 50%, barring exceptional circumstances, was harmful to that very vision.
2) Interpretation of 102nd Amendment curtails the powers of the State governments to declare groups as backward
- After Indra Sawhney judgement, the determination of backward classes was made by the National Commission for the Backward Classes, at the level of the Centre, and by regional commissions at the level of the State governments.
- This division in power, gave States autonomy to classify groups as backward.
- In contrast, the power to prepare lists of Scheduled Castes and Scheduled Tribes, vested solely with the Union government.
- The 102nd Amendment (2018), introduced Article 342A.
- Article 342A stipulated that the President of India may, after consultation with the State government, notify groups of persons within such a State who are deemed to be socially and educationally backward.
- Any such “Central List”, the clause clarified, could only be altered by Parliament.
- Article 366(26C) was also added, and “socially and educationally backward classes” was defined as “such backward classes as are so deemed under Article 342A for the purposes of this Constitution”.
- In interpreting these changes, a majority in the Maratha reservation judgement concluded that the power for determination of other backward classes rests solely with the Centre.
How this interpretation goes against the federalism
- This interpretation of 102nd Amendment altogether dispossess States from exercising a time-honoured authority.
- But yet the amendment, in the Court’s belief, did not violate the Constitution’s basic structure.
- This was because, according to the majority, the alterations neither took away “the very essence of federalism” nor denuded the States of their effective power to legislate.
- But divesting states of power this critical, to classify groups as backward, entitling many communities to protection under Articles 15(4) and 16(4) is offensive to the “essence” of federalism.
- The changes, as interpreted by the Court, directly impede the ability of States to secure just social order.
Consider the question “What are the implications for the States of the interpretation of the 102nd Amendment by the Supreme Court in the Maratha reservation case?”
Conclusion
It is imperative that Parliament amend the Constitution and grants to States an express power to determine backwardness. Any other result will offend the delicate balance at the heart of Indian federalism.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- India-US relations
The artcle highlights the role played by the progressive section in the US politics in influencing U.S. governments decision on TRIPS waiver and providing aid to India. Incidentally, these progressives include names such as Pramila Jayapal whose comment on human rights violations in Jammu and Kashmir had annoyed India.
What led to change in U.S.’s approach on aid
- There was a shift in the U.S.’s approach on providing COVID-19-related aid to India as well as on the Trade-Related Aspects of Intellectual Property Rights (TRIPS) waiver on COVID-19 vaccines.
- It is tempting to surmise the shift as being driven by the Comprehensive Global Strategic Partnership with New Delhi.
- But it is more than just that.
- The development was a result of the determined push by some sections of the political and business class, civil society, and Indian Americans.
- Besides them, the progressives in the Democratic Party made a big difference.
Role of the progressives
- Days ahead of the May 5 decision of the Biden administration on the TRIPS waiver, 110 members of the U.S. Congress wrote to President Biden urging him to support the waiver.
- Thus, the Biden administration’s decision on the waiver and the vaccines, characterised as courageous by many, was a result of the push by the progressives.
- Joining in this effort, the co-chair of the Congressional India Caucus, and over 50 colleagues wrote last week to President Biden seeking supply of specific items.
- The overall approach is to work with India in its battle against the second wave and prepare for subsequent ones.
Conclusion
It is evident that the progressives have a grip on policymaking. India will have to remain engaged with this section instead of offering a cold shoulder as it did in the recent past. As the adage goes, all politics is local.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not Much
Mains level: India's position on Israel-Palestine conflict
Recently India’s permanent representative to the UN made a carefully crafted statement at the UN Security Council “open debate” on the escalating Israel-Palestine violence.
Must read:
[Burning Issue] West Asia Peace Plan
The story so far
- The violence started on 6 May, when Palestinian protests began in Jerusalem over an anticipated decision of the Supreme Court of Israel on the eviction of six Palestinian families a neighbourhood of occupied East Jerusalem.
- Israel’s operation “Guardian of the Walls” began with attacks on Hamas (a fundamentalist Palestinian group) tunnels close to the border fence with Israel.
- India has adopted a balanced approach to the current Israeli-Palestine conflict that has pushed the volatile region into yet another cycle of violence.
India’s long-standing position
- India has since long been maintaining that the Israel-Palestine conflict should be resolved through negotiation resulting in sovereign, independent, viable and united State of Palestine, with East Jerusalem as its capital.
- India has urged both countries to “engage with each other, including on the recent proposals put forward by the United States, and find an acceptable two-state solution for peaceful coexistence”.
The dilemma
- India seems to strive to maintain a balance between India’s historic ties with Palestine and its blossoming relations with Israel.
- The request that both sides refrain from “attempts to unilaterally change the existing status quo including in East Jerusalem and its neighbourhoods” seems to be a message to Israel about its settler policy.
- The statement was also emphatic that “the historic status quo at the holy places of Jerusalem including the Haraml al-Sharif/Temple Mount must be respected”.
Ties with spikes
- India’s policy on the longest-running conflict in the world has gone from being unequivocally pro-Palestine for the first four decades, to a tense balancing act with its three-decade-old friendly ties with Israel.
- In recent years, India’s position has also been perceived as pro-Israel.
From Nehru to Rao
- The balancing began with India’s decision to normalize ties with Israel in 1992, which came against the backdrop of the break-up of the Soviet Union.
- There were massive shifts in the geopolitics of West Asia on account of the first Gulf War in 1990.
- That year, the Palestinian Liberation Organisation (PLO) lost much of its clout in the Arab world by siding with Iraq and Saddam Hussein in the occupation of Kuwait.
- The opening of an Indian embassy in Tel Aviv in January 1992 marked an end to four decades of giving Israel the cold shoulder, as India’s recognition of Israel in 1950 had been minus full diplomatic ties.
- PM Nehru’s reasoning for the decision to recognise Israel was that it was “an established fact”, and that not doing so would create bitterness between two UN members.
Why did India then support Palestine?
- In 1948, India was the only non-Arab-state among 13 countries that voted against the UN partition plan of Palestine in the General Assembly that led to the creation of Israel.
- Scholars ascribe various reasons for this India’s own Partition along religious lines; as a new nation that had just thrown off its colonial yoke; solidarity with the Palestinian people who would be dispossessed; and to ward off Pakistan’s plan to isolate India over Kashmir.
- Later, India’s energy dependence on the Arab countries also became a factor, as did the sentiments of India’s own Muslim citizens.
India and Palestine
- The relationship with Palestine was almost an article of faith in Indian foreign policy for over four decades.
- At the 53rd UN session, India co-sponsored the draft resolution on the right of the Palestinians to self-determination.
- In the 1967 and 1973 wars, India lashed out at Israel as the aggressor.
- In the 1970s, India rallied behind the PLO and its leader as the sole and legitimate representative of the Palestinian people.
- In 1975, India became the first non-Arab country to recognise the PLO as the sole representative of the Palestinian people and invited it to open an office in Delhi.
- In 1988, when the PLO declared an independent state of Palestine with its capital in East Jerusalem, India granted recognition immediately.
Continuity for the cause
- India voted in favour of the UN General Assembly resolution in October 2003 against Israel’s construction of a separation wall.
- It voted for Palestine to become a full member of UNESCO in 2011, and a year later, co-sponsored the UNGA resolution that enabled Palestine to become a “non-member” observer state at the UN without voting rights.
- India also supported the installation of the Palestinian flag on the UN premises in September 2015.
Changes after 2014
- For two-and-a-half decades from 1992, the India-Israel relationship continued to grow, mostly through defence deals, and in sectors such as science and technology and agriculture.
- But India never acknowledged the relationship fully.
- There were few high-profile visits, and they all took place when the PM Vajpayee was in office.
- Israel was perceived as an ideal of a “strong state” that deals “firmly” with “terrorists”.
- It was during NDA-2 that the government under PM Modi decided to take full ownership of the relationship with Israel.
Balancing act
- Meanwhile, India continues to improve ties with Arab countries, especially Saudi Arabia and the UAE and feels vindicated by the decision of some Arab states to improve ties with Israel.
- For instance, even as it abstained at UNESCO in December 2017, India voted in favour of a resolution in the UNGA opposing Trump’s recognition of Jerusalem as the Israeli capital.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Creation of an administrative district
Mains level: Not Much
Punjab CM has recently declared Malerkotla the 23rd district of the State.
How are new districts carved?
- The power to create new districts or alter or abolish existing districts rests with the State governments.
- This can either be done through an executive order or by passing a law in the State Assembly.
- Many States prefer the executive route by simply issuing a notification in the official gazette.
How does it help?
- States argue that smaller districts lead to better administration and governance.
- For example, in 2016, the Assam government issued a notification to upgrade the Majuli sub-division to the Majuli district for “administrative expediency”.
Are there are any exceptions?
- The State government has been vested with unfettered powers under Section 5 of the Punjab Land Revenue Act, 1887 to create new districts.
- This power is generally held temporarily in abeyance only during active census operations or during the delimitation exercise of Lok Sabha/Vidhan Sabha constituencies.
Answer this PYQ in the comment box:
Q. The Constitution (Seventy-Third Amendment) Act, 1992, which aims at promoting the Panchayati Raj Institutions in the country, provides for which of the following?
- Constitution of District Planning Committees.
- State Election Commissions to conduct all panchayat elections.
- Establishment of State Finance Commissions.
Select the correct answer using the codes given below:
(a) Only 1
(b) 1 and 2 only
(c) 2 and 3 only
(d) 1, 2 and 3
Does the Central government have a role to play here?
- The Centre has no role to play in the alteration of districts or creation of new ones. States are free to decide.
- The Home Ministry comes into the picture when a State wants to change the name of a district or a railway station.
- The State government’s request is sent to other departments and agencies such as the Ministry of Earth Sciences, Intelligence Bureau, Department of Posts, Geographical Survey of India Sciences and the Railway Ministry seeking clearance.
- A no-objection certificate may be issued after examining their replies.
What has been the trend?
- According to the 2011 Census, there were 593 districts in the country.
- The Census results showed that between 2001-2011, as many as 46 districts were created by States.
- Though the 2021 Census is yet to happen, Know India, a website run by the Government of India, says currently there are 718 districts in the country.
- The surge in number is also due to the bifurcation of Andhra Pradesh into A.P and Telangana in 2014. Telangana at present has 33 districts and A.P has 13 districts.
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From UPSC perspective, the following things are important :
Prelims level: Legislative council
Mains level: Need for creation of LCs
The West Bengal government will set up a Legislative Council (Vidhan Parishad), as per a decision taken up at the Cabinet meeting chaired by its Chief Minister.
What is a State Legislative Council?
- The SLC is the upper house in those states of India that have a bicameral state legislature; the lower house being the State Legislative Assembly.
- As of Jan 2020, 6 out of 28 states have a State Legislative Council. These are Andhra Pradesh, Karnataka, Telangana, Maharashtra, Bihar, and Uttar Pradesh The latest state to have a council is Telangana.
Creation and abolition
- According to Article 169, the Parliament can create or abolish the SLC of a state if that state’s legislature passes a resolution for that with a special majority.
- The existence of an SLC has proven politically controversial.
- A number of states that have had their LCs abolished have subsequently requested its re-establishment; conversely, proposals for the re-establishment of the LC for a state have also met with opposition.
Its composition
- The size of the SLC cannot be more than one-third of the membership of the State Legislative Assembly.
- However, its size cannot be less than 40 members.
- These members elect the Chairman and Deputy Chairman from the Council.
MLCs are chosen in the following manner:
- One third are elected by the members of local bodies such as municipalities, Gram panchayats, Panchayat samitis and district councils.
- One third are elected by the members of Legislative Assembly of the State from among the persons who are not members of the State Legislative Assembly.
- One sixth are nominated by the Governor from persons having knowledge or practical experience in fields such as literature, science, arts, the co-operative movement and social services.
- One twelfth are elected by persons who are graduates of three years’ standing residing in that state.
- One twelfth are elected by teachers who had spent at least three years in teaching in educational institutions within the state not lower than secondary schools, including colleges and universities.
Answer this PYQ in the comment box:
Q.Consider the following statements:
- The Legislative Council of a State in India can be larger in size than half of the Legislative Assembly of that particular State.
- The Governor of a State nominates the Chairman of Legislative Council of that particular State.
Which of the statements given above is/are correct?
(a) Only 1
(b) Only 2
(c) Both 1 and 2
(d) Neither 1 nor 2
Powers and functions
- The Constitution of India gives limited power to the State Legislative Council.
- The State Legislative Council can neither form nor dissolve a state government.
- The State Legislative Council also have no role in the passing of money bills.
- But some of the powers it has is that the Chairman and Deputy Chairman of the State Legislative Council enjoy the same status as Cabinet Ministers in the state.
Issues with LC
- It was argued that a second House can help check hasty actions by the directly elected House, and also enable non-elected persons to contribute to the legislative process.
- However, it was also felt that some of the poorer states could ill afford the extravagance of two Houses.
- It has been pointed out that the Councils can be used to delay important legislation and to park leaders who have not been able to win an election.
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From UPSC perspective, the following things are important :
Prelims level: ECI
Mains level: Various constitutional bodies
A petition was filed in the Supreme Court seeking the constitution of an independent collegium to appoint members of the Election Commission.
Election Commission of India (ECI)
- The ECI is a constitutional body responsible for administering elections in India according to the rules and regulations mentioned in the Constitution of India.
- It was established on January 25, 1950.
- The major aim of the election commission of India is to define and control the process for elections conducted at various levels, Parliament, State Legislatures, and the offices of the President and Vice President of India.
- It can be said that the Election Commission of India ensures the smooth and successful operation of the democracy.
Functions
According to Article 324 of the Indian Constitution:
- the ECI has superintendence, direction, and control of the entire process for conduct of elections to Parliament and Legislature (state legislative assembly & state legislative council) of every State and to
- the offices of President and Vice-President of India
Answer this PYQ in the comment box:
Q.Consider the following statements:
- The Election Commission of India is a five-member body.
- Union Ministry of Home Affairs decides the election schedule for the conduct of both general elections and bye-elections.
- Election Commission resolves the disputes relating to splits/mergers of recognized political parties.
Which of the statements given above is/are correct? (CSP 2017)
(a) 1 and 2 only
(b) 2 only
(c) 2 and 3 only
(d) 3 only
Its composition
- Initially, the commission had only a Chief Election Commissioner. Presently, it consists of a Chief Election Commissioner and two Election Commissioners.
- For the first time, two additional Commissioners were appointed on 16th October 1989 but they had a very short term till 1st January 1990.
- Afterwards, on 1st October 1993, two additional Election Commissioners were appointed.
- The concept of a multi-member Commission has been in operation since then, with decision-making power by majority vote.
Appointment & Tenure of Commissioners
- The President has the power to select Chief Election Commissioner and Election Commissioners.
- They have a tenure of six years, or up to the age of 65 years, whichever is earlier.
- They have the same status and receive pay and perks as available to Judges of the Supreme Court of India.
- The CEC can be removed from office only through accusation by Parliament.
- The election commissioner or a regional commissioner shall not be removed from office except on the recommendation of the CEC.
Why such demand for independent collegium?
- The plea filed has said that the practice of government making the appointments is a violation of the Basic Structure of the Constitution and creates a dent in free and fair elections in a democracy.
- The petition said the recommendation to have a neutral collegium to fill up vacancies in the Election Commission has been given by several expert committees, commissions from 1975.
- The recommendation was also part of the Law Commission in its 255th report in March 2015.
Basis for such demand
- The EC is not only responsible for conducting free and fair elections, but it also renders a quasi-judicial function between the various political parties including the ruling government and other parties.
- In such circumstances, the Executive cannot be the sole participant in the appointment of members of the Election Commission as it gives unfettered discretion to the ruling party.
- Therefore it could appoint someone whose loyalty is ensured and thereby renders the selection process vulnerable to manipulation.
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From UPSC perspective, the following things are important :
Prelims level: Gold Exchange
Mains level: Gold Exchange and its trading
The Securities & Exchange Board of India (SEBI) has floated a consultation paper on the proposed framework for Gold Exchange in India.
Why such a move?
- According to SEBI, the proposed exchange would bring in more transparency in the gold trading market in terms of spot price discovery, quality of the gold and enable greater integration with the financial markets.
What is a Gold Exchange?
- As the name suggests, this would offer trading facilities in the precious metal.
- Entities like retail investors, banks, foreign portfolio investors (FPIs), jewellers and bullion dealers among others would be allowed to trade on the exchange.
- While there are existing commodity exchanges that offer trading in gold contracts, those are derivative instruments while the proposed gold exchange would allow trading akin to the spot market.
- This move assumes significance as India is the second-largest consumer of gold – after China – with an annual demand of around 800-900 tonnes.
Answer this PYQ:
Q.What is/are the purpose/purposes of the Government’s ‘Sovereign Gold Bond Scheme’ and ‘Gold Monetization Scheme’?
- To bring the idle gold lying with India households into the economy
- To promote FDI in the gold and jewellery sector
- To reduce India’s dependence on gold imports
Select the correct answer using the code given below
(a) 1 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
What are the ways in which one can invest in gold now?
- For those wanting to buy physical gold, a visit to the neighbourhood jeweller would suffice.
- Meanwhile, there are online platforms such as Paytm, Kuvera and Indiagold among others that allow an individual to buy gold in digital form.
- The advantage of buying gold in digital form is that one can put in a very small amount as well with some platforms allowing a minimum investment of just Rs 100.
- Digital gold products have become quite popular among millennials. Then there are sovereign gold bonds issued by the government.
- One can even look at Gold ETFs or gold funds by mutual funds.
- Even gold derivative contracts traded on the exchanges have the option of physical settlement, which means investors can get physical delivery of gold.
How can one trade on a gold exchange?
- The SEBI has proposed an instrument called ‘Electronic Gold Receipt’, or EGR.
- The gold exchange, along with intermediaries like the vault manager and the clearing corporation, would facilitate the creation of EGR and its trading.
- So, participants can convert their physical gold into EGR, which can then be bought or sold on the exchange like any normal equity share of a listed company.
- The EGR can even be converted back into physical gold. As part of the draft regulations, SEBI has proposed three denominations of EGR – one kilogram, 100 grams and 50 grams.
- It has, however, added that EGRs of five grams or 10 grams can also be allowed for trading to increase the liquidity of the market and attract more participants.
How can one convert physical gold into EGRs?
- An entity that intends to convert physical gold into EGR will have to go to a ‘Vault Manager’.
- According to the proposed framework, any entity registered in India and with a net worth of at least Rs 50 crore can apply to become a vault manager.
- After the receipt of the gold, the vault manager would create an EGR for which the depository will assign an International Securities Identification Number, or ISIN, which is a unique code to identify the specific security.
- Once the ISIN is issued, the EGR can be traded on the gold exchange just like any other tradable security.
Can EGRs be again converted into physical gold?
- To convert an EGR into physical gold, the owner of the EGR will have to surrender the EGR to the vault manager who will deliver the gold and extinguish the electronic receipt.
- Considering the logistics and delivery challenges, it has been proposed that conversion of an EGR into physical gold should be allowed only if a minimum of 50 grams of gold has been accumulated in electronic form.
Issues with gold exchange
- Since the EGRs would be traded on an exchange, Securities Transaction Tax (STT) would be levied. Also, GST would be applicable when EGRs are converted into physical gold for withdrawal.
- If in case the buyer and seller are from different states then levying state GST could be cumbersome. SEBI is mulling if only IGST or Integrated Goods and Services Tax can be levied to resolve this issue.
- As far as transactions are concerned, SEBI working groups have suggested that an entire transaction be divided into three tranches.
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