Note4Students
From UPSC perspective, the following things are important :
Prelims level: Net Zero Producers' Forum
Mains level: Paper 3- Net Zero Producers' Forum
About the Net Zero Producers’ forum
- Five of the world’s major oil and gas producers are working together to ‘develop pragmatic net-zero emission strategies’.
- Qatar, the US, Saudi Arabia, Canada and Norway, collectively responsible for 40% of global oil and gas production, will come together to form a cooperative forum that will develop pragmatic net zero-emission strategies.
- Energy producers are faced with unique responsibilities to furnish the world with energy but the climate crisis requires serious leadership and a strong alliance to deliver a path to net-zero.
Strategies and technologies
- The Net Zero Producers’ Forum will consider strategies and technologies which include methane abatement, circular carbon economy approach, development and deployment of clean energy and carbon capture and storage technologies, diversification from reliance on hydrocarbon revenues etc.
Source:
https://www.energy.gov/articles/joint-statement-establishing-net-zero-producers-forum-between-energy-ministries-canada
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Himalayan Frontal Thrust
Mains level: Paper 1- Major seismic hazards along Assam faultline
Location of epicentre
- An earthquake of magnitude 6.4 on the Richter scale hit Assam around 8 am on Wednesday.
- The primary earthquake had its epicentre at latitude 26.690 N and longitude 92.360 E, about 80 km northeast of Guwahati, and a focal depth of 17 km, the National Centre for Seismology (NCS) said.
The faultline
- The preliminary analysis shows that the events are located near to Kopili Fault closer to Himalayan Frontal Thrust (HFT).
- The Kopili Fault is a 300-km northwest-southeast trending fault from the Bhutan Himalaya to the Burmese arc.
- The fault is a fracture along which the blocks of crust on either side have moved relative to one another parallel to the fracture.
- The area is seismically very active falling in the highest Seismic Hazard zone V associated with collisional tectonics where Indian plate sub-ducts beneath the Eurasian Plate the NCS report said.
- HFT, also known as the Main Frontal Thrust (MFT), is a geological fault along the boundary of the Indian and Eurasian tectonic plates.
Need for earthquake preparedness
- The Northeast is located in the highest seismological zone, so we must have constant earthquake preparedness at all levels.
- Continuous tectonic stress keeps building up particularly along the faultlines.
- Today’s earthquake was an instance of accumulated stress release — probably, stress was constrained for a fairly long time at this epicentre, and hence the release was of relatively higher intensity.
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From UPSC perspective, the following things are important :
Prelims level: Welfare state
Mains level: Paper 2- Universal social protection scheme
The article highlights the need for universal social protection scheme in India and suggests a way to achieve it.
Need for universal social security
- The pandemic has revealed that leveraging our existing schemes and providing universal social security is of utmost importance.
- This will help absorb the impact of external shocks on our vulnerable populations.
- The country has over 500 direct benefit transfer schemes for which various Central, State, and Line departments are responsible.
- However, these schemes have not reached those in need.
Lessons from Poor Law System in Ireland
- An example of a universal social protection scheme is the Poor Law System in Ireland.
- In the 19th century, to deal with poverty and famine, Ireland introduced the Poor Law System to provide relief that was financed by local property taxes.
- These laws were notable for not only providing timely assistance but maintaining the dignity and respectability of the poor while doing so.
- They were not designed as hand-outs but as necessary responses to a time of economic crisis.
- Today, the social welfare system in Ireland has evolved into a four-fold apparatus that promises social insurance, social assistance, universal schemes, and extra benefits/supplements.
Issues with the existing social protection schemes in Inda
- Existing schemes in India cover a wide variety of social protections.
- However, they are fractionalised across various departments and sub-schemes.
- This causes problems beginning with data collection to last-mile delivery.
How universal system would help
- Having a universal system would improve the ease of application by consolidating the data of all eligible beneficiaries under one database.
- It can also reduce exclusion errors.
- The Pradhan Mantri Garib Kalyan Yojana (PMGKY) is one scheme that can be strengthened into universal social security.
- It already consolidates the public distribution system (PDS), the provision of gas cylinders, and wages for the MGNREGS.
- Generally, social assistance schemes are provided on the basis of an assessment of needs.
- Having a universal scheme would take away this access/exclusion barrier.
- For example, PDS can be linked to a universal identification card such as the Aadhaar or voter card, in the absence of a ration card.
- This would allow anyone who is in need of foodgrains to access these schemes.
- It would be especially useful for migrant populations.
- Making other schemes/welfare provisions like education, maternity benefits, disability benefits etc. also universal would ensure a better standard of living for the people.
- To ensure some of these issues are addressed, we need to map the State and Central schemes in a consolidated manner.
- This is to avoid duplication, inclusion and exclusion errors in welfare delivery.
- The implementation of any of these ideas is only possible through a focus on data digitisation, data-driven decision-making and collaboration across government departments.
Consider the question “What are the issues with existing social security schemes in India? What would be the benefits of replacing all these social security schemes with universal social security scheme?”
Conclusion
India is one of the largest welfare states in the world and yet, with COVID-19 striking in 2020, the state failed to provide for its most vulnerable citizens. This underlines the need for a universal social protection scheme in India.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: SCRI
Mains level: Paper 2- Making the supply chains resilient
Tackling the supply chain disruption through SCRI
- The Supply Chain Resilience Initiative (SCRI) was formally launched on Tuesday by the Trade Ministers of India, Japan and Australia.
- The three sides agreed that the pandemic revealed supply chain vulnerabilities globally and in the region and noted the importance of risk management and continuity plans in order to avoid supply chain disruptions.
- Some of the joint measures they are considering include supporting the enhanced utilisation of digital technology and trade and investment diversification, which is seen as being aimed at reducing their reliance on China.
How China reacted
- China’s Foreign Ministry on Wednesday described the move as ‘unrealistic’.
- The formation and development of global industrial and supply chains are determined by market forces and companies choices, it said.
- It also said that the artificial industrial ‘transfer’ is an unrealistic approach that goes against the economic laws and can neither solve domestic problems nor do anything good to the stability of the global industrial and supply chains, or to the stable recovery of the world economy.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- What makes vehicle policy unattractive
Why the Vehicle Scrappage Policy is unattractive
- The policy proposes to de-register vehicles that fail fitness tests or are unable to renew registrations after 15-20 years of use.
- Limited incentives and poor cost economics for trucks in the Vehicle Scrappage Policy, coupled with lack of addressable volumes for other segments is unlikely to drive freight transporters to replace their old vehicles with new ones, said a Crisil report.
- Though the scrappage volume of buses, PVs and two-wheelers is expected to be limited as well, the policy’s impact on new commercial vehicle (CV) sales could be sizeable, based on addressable volume, ratings agency Crisil Research said in its report.
- The potential benefit from scrapping a 15-year-old, entry-level small car will be ₹70,000, whereas its resale value is around ₹95,000. That makes scrapping unattractive, Crisil said in the report.
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From UPSC perspective, the following things are important :
Prelims level: Factors responsible for anti-microbial resistance
Mains level: Paper 2-Threats posed by anti-microbial resistance
The article highlights the challenges posed by anti-microbial resistance (AMR) and suggests ways to deal with it.
Understanding the severity of challenges posed by AMR
- Antimicrobial resistance (AMR) is the phenomenon by which bacteria and fungi evolve and become resistant to presently available medical treatment.
- AMR represents an existential threat to modern medicine.
- Without functional antimicrobials to treat bacterial and fungal infections, even the most common surgical procedures, as well as cancer chemotherapy, will become fraught with risk from untreatable infections.
- Neonatal and maternal mortality will increase.
How AMR will affect low and middle-income countries
- All these effects will be felt globally, but the scenario in the low- and middle-income countries (LMICs) of Asia and Africa is even more serious.
- LMICs have significantly driven down mortality using cheap and easily available antimicrobials.
- In the absence of new therapies, health systems in these countries are at severe risk of being overrun by untreatable infectious diseases.
Factors contributing to AMR
- Drug resistance in microbes emerges for several reasons.
- These include the misuse of antimicrobials in medicine, inappropriate use in agriculture, and contamination around pharmaceutical manufacturing sites where untreated waste releases large amounts of active antimicrobials into the environment.
Stagnant antibiotics discovery
- The Challenge of AMR is compounded by fact that no new classes of antibiotics have made it to the market in the last three decades.
- This has happened on account of inadequate incentives for their development and production.
- A recent report from the non-profit PEW Trusts found that over 95% of antibiotics in development today are from small companies, 75% of which have no products currently in the market.
- Major pharmaceutical companies have largely abandoned innovation in this space.
Measures to deal with the challenge of AMR
- In addition to developing new antimicrobials, infection-control measures can reduce antibiotic use.
- A mix of incentives and sanctions would encourage appropriate clinical use.
- To track the spread of resistance in microbes, surveillance measures to identify these organisms need to expand beyond hospitals and encompass livestock, wastewater and farm run-offs.
- Finally, since microbes will inevitably continue to evolve and become resistant even to new antimicrobials, we need sustained investments and global coordination to detect and combat new resistant strains on an ongoing basis.
Way forward
- A multi-sectoral $1 billion AMR Action Fund was launched in 2020 to support the development of new antibiotics.
- The U.K. is trialling a subscription-based model for paying for new antimicrobials towards ensuring their commercial viability.
- Other initiatives focused on the appropriate use of antibiotics include Peru’s efforts on patient education to reduce unnecessary antibiotic prescriptions.
- Australian regulatory reforms to influence prescriber behaviour, and initiatives to increase the use of point-of-care diagnostics, such as the EU-supported VALUE-Dx programme.
- Denmark’s reforms to prevent the use of antibiotics in livestock have led to a significant reduction in the prevalence of resistant microbes in animals and improved the efficiency of farming.
- Finally, given the critical role of manufacturing and environmental contamination in spreading AMR there is a need to curb the amount of active antibiotics released in pharmaceutical waste.
- Regulating clinician prescription of antimicrobials alone would do little in settings where patient demand is high and antimicrobials are freely available over-the-counter in practice, as is the case in many LMICs.
- Efforts to control prescription through provider incentives should be accompanied by efforts to educate consumers to reduce inappropriate demand, issue standard treatment guidelines.
- Solutions in clinical medicine must be integrated with improved surveillance of AMR in agriculture, animal health and the environment.
- AMR must no longer be the remit solely of the health sector, but needs engagement from a wide range of stakeholders, representing agriculture, trade and the environment with solutions that balance their often-competing interests.
- International alignment and coordination are paramount in both policymaking and its implementation.
Consider the question “Anti-microbial resistance (AMR) represents an existential threat to modern medicine. What are the factors contributing to AMR? Suggest the measures to deal with it.”
Conclusion
With viral diseases such as COVID-19, outbreaks and pandemics may be harder to predict; however, given what we know about the “silent pandemic” that is AMR, there is no excuse for delaying action.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Article 239AA
Mains level: Paper 2- GNCT of Delhi Amendment Act notified by the Centre
GNCT Act comes into effect
- The Ministry of Home Affairs (MHA) issued a gazette notification stating that the provisions of the Government of National Capital Territory (GNCT) of Delhi (Amendment) Act, 2021, would be deemed to have come into effect from April 27.
- The Act defines the responsibilities of the elected government and the L-G along with the “constitutional scheme of governance of the NCT” interpreted by the Supreme Court in recent judgements regarding the division of powers between the two entities.
What the Amendment seeks to achieve
- The Act will clarify the expression Government and address ambiguities in legislative provisions.
- It will also seek to ensure that the L-G is “necessarily granted an opportunity” to exercise powers entrusted to him under proviso to clause (4) of Article 239AA of the Constitution.
- Clause (4) of Article 239AA provides for a Council of Ministers headed by a Chief Minister for the NCT to “aid and advise the Lieutenant Governor” in the exercise of his functions for matters in which the Legislative Assembly has the power to make laws.
- Now Act will also provide for rules made by the Legislative Assembly of Delhi to be “consistent with the rules of the House of the People” or the Lok Sabha.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Slowing innovation in clean energy
Major findings of the report
- It is a joint report titled “Patents and the energy transition” released by the European Patent Office and the International Energy Agency.
- The average annual growth rate of patents for low carbon emissions technologies has fallen to 3.3 percent since 2017, the rate was 12.5 percent in the period 2000-2013.
- The report found that around 35 percent of the cumulative CO2 emissions reductions needed to shift to a sustainable path to reach net-zero emissions by 2070 are still currently at the prototype or demonstration phase.
- The report found that energy efficiency and fuel-switching technologies remained at the top of patent activities, accounting for about 60 percent of the total.
Shifting trend withing renewable
- Patent activity in renewable energy technologies such as wind and solar has been in decline for nearly a decade however, and represented just 17 percent of the total in 2019, report found.
- The key driver of patent growth since 2017 has been innovation in cross-cutting technologies such as batteries, hydrogen and smart grids, along with carbon-capture, utilisation and storage.
Source:
https://energy.economictimes.indiatimes.com/news/renewable/clean-energy-innovation-slowing-report-warns/82270391
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Patent Law, TRIPS
Mains level: Paper 3- Impact of IPR on right to access healthcare
Request for waiver
- Last year, India and South Africa requested WTO for a temporary suspension of rules under the 1995 Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).
- A waiver was sought to the extent that the protections offered by TRIPS impinged on the containment and treatment of COVID-19.
- The request for a waiver has, since, found support from more than 100 nations.
- But a small group of states — the U.S., the European Union, the U.K. and Canada among them — continues to block the move.
- These countries have already secured the majority of available vaccines.
- But for the rest of the world mass immunisation is a distant dream.
Grounds on which patent laws are justified
- Patent laws are usually justified on three distinct grounds:
- On the idea that people have something of a natural and moral right to claim control over their inventions.
- On the utilitarian premise that exclusive licenses promote invention and therefore benefit society as a whole.
- On the belief that individuals must be allowed to benefit from the fruits of their labour and merit.
- These justifications have long been a matter of contest, especially in the application of claims of monopoly over pharmaceutical drugs and technologies.
Patent laws in India
- In 1959, a committee chaired by Justice N. Rajagopala Ayyangar objected to monopolies on pharmaceutical drugs through colonial-era patent law.
- The committee found that foreign corporations used patents to suppress competition from Indian entities, and thus, medicines were priced at exorbitant rates.
- The committee suggested, and Parliament put this into law through the Patents Act, 1970, that monopolies over pharmaceutical drugs be altogether removed, with protections offered only over claims to processes.
- This change in rule allowed generic manufacturers in India to grow.
How TRIPS goes against the interest of developing countries
- WTO has into its constitution a binding set of rules governing intellectual property.
- Countries that fail to subscribe to the common laws prescribed by the WTO would be barred from entry into the global trading circuit.
- It was believed that a threat of sanctions, to be enforced through a dispute resolution mechanism, would dissuade states from reneging on their promises.
- With the advent in 1995 of the TRIPS agreement, this belief proved true.
- The faults in this new world order became apparent when drugs that reduced AIDS deaths in developed nations were placed out of reach for the rest of the world.
- It was only when Indian companies began to manufacture generic versions of these medicines as TRIPS hadn’t yet kicked in against India, that the prices came down.
Argument in support of the patent regime
- Two common arguments are made in response to objections against the prevailing patent regime.
- One, that unless corporations are rewarded for their inventions, they would be unable to recoup amounts invested by them in research and development.
- Two, without the right to monopolise production there will be no incentive to innovate.
Issues with the argument in support of patent regime
- Big pharma has never been forthright about the quantum of monies funnelled by it into research and development.
- Moderna vaccine in the U.S. emanated out of basic research conducted by the National Institutes of Health, a federal government agency, and other publicly funded universities and organisations.
- Similarly, public money accounted for more than 97% of the funding towards the development of the Oxford/AstraZeneca vaccine.
- Therefore, the claim that the removal of patents would somehow invade on a company’s ability to recoup costs is simply untrue.
- The second objection — the idea that patents are the only means available to promote innovation — has become something of a dogma.
- The economist Joseph Stiglitz is one of many who has proposed a prize fund for medical research in place of patents.
Consider the question “What are the issues with the patent regime under the TRIPS in the field of medicine?”
Conclusion
We cannot continue to persist with rules granting monopolies which place the right to access basic healthcare in a position of constant peril. In its present form, the TRIPS regime represents nothing but a new form of “feudal calculus”.
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From UPSC perspective, the following things are important :
Prelims level: RT-PCR Test
Mains level: Paper 2- Ct value in RT-PCR test
Recently, the Maharashtra government sought clarity from the Indian Council of Medical Research (ICMR) on the threshold Ct value to treat a person Covid-negative.
What is Ct value
- Short for cycle threshold, Ct is a value that emerges during RT-PCR tests.
- In an RT-PCR test, RNA is extracted from the swab collected from the patient.
- It is then converted into DNA, which is then amplified.
- Amplification refers to the process of creating multiple copies of the genetic material — in this case, DNA.
- Amplification takes place through a series of cycles — one copy becomes two, two becomes four, and so on.
- Put simply, the Ct value refers to the number of cycles after which the virus can be detected.
- The lower the Ct value, the higher the viral load — because the virus has been spotted after fewer cycles.
Why Ct value is important
- According to the ICMR, a patient is considered Covid-positive if the Ct value is below 35.
- If the benchmark were to be lowered to 24 — the value mentioned in Maharashtra’s letter — it would mean that Ct values in the range 25-34 would not be considered positive.
- A benchmark of 35, therefore, means that more patients would be considered positive than we would get if the benchmark were 24.
- The ICMR has said lowering Ct threshold parameter may lead to missing several infectious persons.
Does Ct score indicate the severity of disease
- A small study published in the Indian Journal of Medical Microbiology in January this year found that there was no correlation between Ct values and severity of disease or mortality in patients with Covid-19 disease.
- It found that the time since the onset of symptoms has a stronger relationship with Ct values as compared to the severity of the disease.
- The Ct value tells us about the viral load in the throat and not in the lungs.
- The Ct value does not correlate with severity – only with infectivity.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Women Judges in the SC
Mains level: Paper 2- Issue of women representation in the judiciary in Inda
The article highlights the issue of women representation and its implications for the role of the judiciary.
Improving representation of women
- Presently, the Supreme Court is left with only one woman judge, who is also going to retire next year, after which, the SC will be left without a woman judge.
- The collegium failed to take timely steps to elevate more women judges in the SC.
- In the 71 years of history of the SC, there have been only eight women judges — the first was Justice Fathima Beevi, who was elevated to the bench after a long gap of 39 years from the date of establishment of the SC.
- In the submissions filed by the AG on the issue states that improving the representation of women in the judiciary could go a long way towards attaining a more balanced and empathetic approach in cases involving sexual violence.
- The AG also brought up the fact that there has never been a woman Chief Justice of India (CJI).
Women representation in developed countries
- The situation is not any different in developed countries such as the US, UK, Ireland, France and China.
- According to the data collected by Smashboard, a New Delhi and Paris-based NGO, not only has no woman ever been appointed as the CJI, the representation of women across different courts and judicial bodies is also abysmally low.
Way forward
- In the last few meetings of the collegium, there has been some talk of promoting women to the apex court.
- In this regard, if Justice B V Nagaratha of the Karnataka High Court is elevated to the Supreme Court, she could become the first woman CJI in February 2027.
- But her elevation will lead to the supersession of 32 senior judges.
- Supersession itself is perceived as a threat to an independent judiciary
- Seniority combined with merit is the sacrosanct criteria for promotion in the judiciary.
- New CJI should secure the trust of members of his collegium to fill the backlog of 411 vacancies across high courts and six vacancies in the SC.
Consider the question “What are the various structural issues faced by the judiciary in India? Suggest the measures to deal with them.”
Conclusion
A greater number of women in the Supreme Court would eventually lead to a woman CJI. This would be a gratifying change, which may mark the beginning of a new era of judicial appointments.
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From UPSC perspective, the following things are important :
Prelims level: ARCs
Mains level: Paper 3- RBI report on ARCs
Key takeaways from the RBI report
- The RBI report states that notwithstanding the rise in the number of Asset Reconstruction Companys (ARCs), the growth in their assets under management (AUM) has been largely trendless except for a major spurt in FY14.
- The growth of the ARC industry has not been consistent over time and not always been synchronous with the trends in non-performing assets (NPAs) of banks and non-banking financial companies (NBFCs).
- During 2019-20, asset sales by banks to ARCs declined, which could probably be due to banks opting for other resolution channels such as IBC and SARFAESI.
- The acquisition cost of ARCs as a proportion to the book value of assets declined, suggesting lower realisable value of the assets.
Overview of ARCs in India
- The ARC industry began with the establishment of the Asset Reconstruction Company India Ltd (ARCIL) in 2003.
- Of the total AUM, about 62 per cent and 76 per cent was held by the top-three and top-five ARCs in March 2020, respectively.
- After remaining subdued in the initial years of their inception, a jump was seen in the number of ARCs in 2008, and then in 2016.
- Although the number of ARCs has risen over time, their business has remained highly concentrated.
Role of the government
- Indian ARCs have been private sector entities registered with the Reserve Bank.
- Public sector AMCs in other countries have often enjoyed easy access to government funding or government-backed.
- By contrast, capital constraints have often been highlighted as an area of concern for ARCs in India.
Scope for new ARC supported by the government
- The ARC proposed in the Budget will be set up by state-owned and private sector banks, and there will be no equity contribution from the Centre.
- The RBI report supported the government’s proposal for a new ARC, saying that “such an entity will strengthen the asset resolution mechanism further.”
- Introduction of a new asset reconstruction company for addressing the NPAs of public sector banks may also shape the operations of the existing ARCs, it added.
- The ARC, which will have an Asset Management Company (AMC) to manage and sell bad assets, will look to resolve stressed assets of Rs 2-2.5 lakh crore that remain unresolved in around 70 large accounts.
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From UPSC perspective, the following things are important :
Prelims level: Disaster Management Act
Mains level: Paper 2- Powers of Election Commission
What prompted ECI to give clarification
- In its oral observations, the Madras High Court blamed the ECI for the second wave of COVID-19 in Tamil Nadu and Puducherry.
- The Madras High Court said the ECI was unable to ensure political parties followed the rules while campaigning for the Assembly elections.
What the ECI said
- The ECI said that the enforcement under the 2005 Act has to be ensured by the SDMA [State Disaster Management Authority] concerned and notified authorities under the Act.
- The Commission has always emphasised that the State authorities shall ensure COVID-19 compliance in the matter of public gatherings, etc. for campaign purposes.
- At no occasion, the Commission takes over the task of SDMA for enforcement of COVID-19 instructions.
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From UPSC perspective, the following things are important :
Prelims level: Strait of Hormuz
Mains level: Paper 2- Iran-US nuclear deal
What happened
- An American warship fired warning shots when vessels of Iran’s paramilitary Revolutionary Guard came too close to a patrol in the Persian Gulf.
- Footage released on April 27 by the Navy showed a ship commanded by the Guard cut in front of the USCGC Monomoy.
- The incidents at sea almost always involve the Revolutionary Guard, which reports only to Supreme Leader Ayatollah Ali Khamenei.
Context of the nuclear deal
- Some analysts believe the incidents are meant in part to squeeze President Hassan Rouhani’s administration after the 2015 nuclear deal.
- The incident comes as Iran negotiates with world powers in Vienna over Tehran and Washington returning to the 2015 nuclear deal.
- It also follows a series of incidents across the Mideast attributed to a shadow war between Iran and Israel, which includes attacks on regional shipping and sabotage at Iran’s Natanz nuclear facility.
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From UPSC perspective, the following things are important :
Prelims level: SEBI
Mains level: Paper 3- Regulation of credit rating agencies
New framework for debt instrument
- The new framework requires that a rating will be considered provisional in cases where certain compliances that are crucial to the assignment of credit rating are yet to be complied with at the time of rating.
- Under the new framework, all provisional ratings (‘long term’ or ‘short term’) for debt instruments need to be prefixed as ‘provisional’ before the rating symbol.
- In no case shall a rating, including provisional rating, be assigned by a credit rating agency for an issuer or client evaluating strategic decisions such as funding mix for a project, acquisition, debt restructuring, scenario-analysis in loan refinancing,” SEBI said.
- On validity period, SEBI said provisional rating will be converted into a final rating within 90 days from the date of issuance of the instrument.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Bank governance
What the guidelines say
- The Reserve Bank of India recently issued certain instructions on the governance for banks.
- As per the instructions from the central bank, the post of Managing Director (MD) and Chief Economic Officer (CEO) MD or Whole Time Director (WTD) cannot be held by the same incumbent for more than 15 years.
- The individual will be eligible for re-appointment as MD&CEO or WTD in the same bank after a minimum gap of three years, subject to meeting other conditions.
- The upper age limit for MD & CEO and WTDs in private banks would continue to be 70 years.
- MD&CEO or WTD who is also a promoter/ major shareholder, cannot hold these posts for more than 12 years except in extraordinary circumstances.
- Banks are permitted to comply with these instructions latest by October 01, 2021.
Applicability
- These guidelines are applicable for banks, including private banks, Small Finance Banks (SFBs), Wholly Owned Subsidiaries of Foreign Banks.
- However, it added that this circular is not applicable to foreign banks operating as branches in India.
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From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- Issues with vaccination strategy
The article highlights the issues with the new vaccine strategy adopted by the government.
Revamped vaccine strategy
- With the second Covid-19 wave reaching catastrophic proportions, the Government of India has acted by unveiling a completely revamped vaccine strategy.
- Two key elements are the hallmark of this new strategy, which will be implemented from May 1.
- First, the vaccination drive has now been extended to the entire adult population, namely, to those above 18 years.
- Second, vaccine manufacturers have been given the freedom to sell 50% of their vaccine production to State governments and private hospitals.
- A third element of the vaccine strategy, which was not announced formally, is a grant of ₹45 billion to the two vaccine manufacturers, the Serum Institute of India (SII) and Bharat Biotech, to boost their capacities.
Issues with the new vaccine strategy
1) Control over the market for vaccine
- The central government has given up its control over the market for vaccines, a key feature of the vaccine roll-out plans thus far.
- This issue assumes further significance since the Government of India is well aware about the significance of vaccinating every citizen in the country; “none of us will be safe until everyone is safe”.
- It is, therefore, vitally important that public health authorities in the country take an objective view of the realities of the country before adopting strategies for vaccine availability.
2) Vaccine export
- The phased roll-out of the government’s ambitious vaccination drive, beginning with health-care and frontline workers in January was in sync with the availability of vaccines in the country.
- But, given that India too saw a degree of “vaccine-scepticism”, the Government of India found itself in a situation where it could promise exports of vaccines to 95 countries, mostly in Africa and Asia.
- As of April 26, these countries have received more than 66.4 million doses of vaccines from India.
- Until now, nearly 142 million vaccine doses have been administered in the country, the third highest in the world.
- However, in terms of population share, less than 2% has received both vaccine doses, while less than 9% has received one dose.
- But there is one worrying facet, which is that a demand-supply mismatch has begun to appear as the coverage of the vaccine-eligible population expanded.
- The largest supplier, SII, gave two explanations for its inability to meet its commitments.
- The first was that the United States Government had restricted exports of vaccine culture and other essential materials.
- Second, the company complained that it lacked the financial capacity to expand its production, requesting a grant of ₹30 billion from the government.
3) Onus on the States
- Central government have allowed vaccine producers to sell 50% of their production directly to State governments and private hospitals.
- The central government would continue to support vaccination for people above 45 years, and health-care workers and frontline workers.
- The new strategy shifts the onus onto the State governments, which have to take decisions regarding free vaccination for people above 18 years.
- The government has not fixed the vaccine prices and has allowed the producers to pre-declare the prices they would charge from the State governments and private hospitals, a sharp departure from the extant strategy.
- New policy fragments the market into three layers namely, central government procurement, State government procurement and the private hospitals.
- This layering of the market would allow the producers to charge high prices from the State governments and private hospitals.
- The new strategy would shift the burden of vaccination of the young population, namely, those between 18-44 years, entirely on the State governments.
- This implies that the vaccination of a significant section of the population depends on the financial health of each State government, resulting in inequitable access to vaccines across States.
4) Public money given for expanding production capacity
- In view of the advance of ₹45 billion made by the Government of India to the two vaccine producers in India for expanding their production capacities decision to deregulate the vaccine market raises serious questions.
- This question is more pertinent in India, where access to affordable vaccines is critical for ensuring “vaccination for all”.
Way forward
- Rather than allowing duopoly in the vaccine market, the government should have ensured a competitive market for vaccines.
- One positive step that the government has taken in this direction is to increase production of Bharat Biotech’s vaccine through the involvement of three public sector undertakings, including Haffkine Institute.
- There is a need for more open licensing of this vaccine to scale up production.
Conclusion
There can be no alternative to vaccination for all if we want to overcome the Covid and to ensure that government needs to rethink its new strategy.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: BEPS
Mains level: Paper 3- Global minimum tax
The article highlights the issue of race among countries to offer low corporate taxes to attract global financial capital and its implications.
What factors contributed to low corporate tax
- When the Soviet Bloc collapsed in 1990, nations in east Europe were badly hit and needed capital infusion to overcome their economic woes.
- To attract global capital, they cut their tax rates sharply. This resulted in a ‘race to the bottom’.
- Global financial capital which is highly mobile has effectively used tax havens and shell companies to shift profits and capital across the globe.
- This mobility has enabled it to extract concessions from countries by making them compete with each other to match the concessions given by another — that is the ‘race to the bottom’.
- Nations in Europe were forced to cut their tax rates one after the other to not only attract capital but also to prevent capital from leaving their shores.
- Also, any country facing economic adversity can cut its tax rates to attract capital and force others to follow suit.
- India has also cut its tax rates since the 1990s.
- Most recently in 2019 the corporation tax rate was cut drastically to match those prevailing in Southeast Asia.
Implications of lower corporate tax rate
1) Shortage of resources
- The race to the bottom had global implications.
- Nations became short of resources and cut back expenditures on public services and encouraged privatisation.
- The developing countries followed suit even though private markets do not cater to the poor.
- Thus, disparities increased within nations.
2) Base Erosion and Profit Shifting
- The world experienced Base Erosion Profit Shifting (BEPS).
- Namely, companies shifted their profits to low tax jurisdictions, especially, the tax havens.
- For instance, many of the most profitable companies like Google and Facebook are accused of shifting their profits to Ireland and other tax havens and paying little tax.
- EU has levied fines on Google and Apple for such practices.
- Since all the OECD countries have suffered due to cuts in tax rates and BEPS, initiatives have been taken to check these practices.
- But they will not succeed unless there is agreement among all the countries.
3) Regressive tax structure
- Another implication of the reductions in direct tax rates has been that governments have increasingly depended on the regressive indirect taxes for revenue generation.
- Value-Added Tax and Goods and Services Tax have been increasingly used to get more revenues.
- This impacts the less well-off proportionately more and is inflationary.
- Direct taxes tend to lower the post-tax income inequality.
- The rising inequalities result in shortage of demand in the economy and to its slowing down which then requires more investment and that calls for more concessions to capital.
Call for Global minimum tax rate
- It is against this backdrop that United States Secretary of the Treasury Janet L. Yellen’s has proposed a global minimum tax rate.
- But, without global coordination, corporation tax rates cannot be raised.
- The U.S. is crucial to this coordination.
- There will also have to be cooperation among countries to tackle the lure of the tax havens by enacting suitable global policies.
Consider the question “What factors contributed to the race to bottom on the corporate taxes among the countries? What are its implications? Will the global minimum tax rate be able to deal with it?”
Conclusion
The impact of all this will be far-reaching impacting inequalities, provision of public services and reduction of flight of capital from developing countries such as India and that will impact poverty.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- India as third highest military spender
What the SIPRI database says
- India was the third largest military spender in the world in 2020, behind only the US and China.
- The US accounted for 39 per cent of the money spent on military globally, China accounted for 13 per cent, and India accounted for 3.7 per cent of the globe’s share.
- The US spent a total of $778 billion in 2020, China spent $252 billion and India’s military expenditure was $72.9 billion.
- The United States’ military spending was 3.7 per cent of its GDP while the corresponding numbers for China and India were 1.7 per cent and 2.9 per cent respectively.
- The other top spenders included Russia with $61.7 billion, the UK at $59.2 billion, Saudi Arabia at $57.5 billion, followed by Germany and France at just under $53 billion each.
Increase in spending in the year of pandemic
- SIPRI said that the total “global military expenditure rose to $1981 billion last year, an increase of 2.6 per cent in real terms from 2019.
- 2.6 per cent increase in world military spending came in a year” when the global GDP shrank by 4.4 per cent largely due to the economic impacts of the Covid-19 pandemic.
- Military spending as a share of GDP—the military burden—reached a global average of 2.4 per cent in 2020, which is the biggest year-on-year rise in the military burden since the global financial and economic crisis in 2009.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Herd immunity
Mains level: Paper 2- Herd immunity and issues related to it
What is herd immunity
- The herd immunity concept is based on lowering the number of susceptible individuals.
- If sufficient individuals in the population are immune either through vaccination or a prior exposure, then the number of susceptible individuals drops.
- For example, if the immune population is 70%, then the susceptible population is 30%.
Does herd immunity really protect from subsequent waves?
- The number of daily cases depends on three factors: The number of infectious people in the population, the number of susceptible individuals, and the rate of transmission of the virus.
- The rate of transmission is dependent on the nature of the virus and the extent of contact between individuals.
- So, if the rate of transmission increases due to change in social behaviour and increased contact then even with a large percentage of the immune population, a significant number of daily cases can result.
- The “herd immunity” number is not a static number but it changes depending on the rate of transmission of the virus and the extent of virus present.
Estimating exposures in metro cities
- Serosurveys indicated that Covid had touched 56% of population in Delhi by January; 75% in some slums Mumbai in November, and about 30% in Bengaluru in November.
- The population touched by Covid can also be estimated by the Infection Fatality Rate (IFR).
- This is the total number of deaths divided by the total people infected. In India, the estimate is 0.08%.
- So this number can be used to back-calculate the number of infections based on the number of deaths in the different cities.
- The table given below shows the number of people exposed to Covid in some metros until January 31 using the method above.
What are the reasons behind the recent surge
- The reasons behind the recent surge are not fully understood.
- The one factor that is not in doubt, however, is that interaction and contact with the population has increased since February.
- Such increased contact increased the virus in circulation and led to increased cases in the susceptible population.
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