Note4Students
From UPSC perspective, the following things are important :
Prelims level: SCO
Mains level: Paper 3- Changing context of India's strategic autonomy
India is a member of both the Quad and the BRICS. Is not it the contradiction? The article answers this question and maps the transformation of India’s relation with the U.S. over the years.
Is India’s participation in BRICS and Quad contradictory?
- Global Times, the Chinese newspaper last week speculating on the implications of the historic Quad summit for the BRICS.
- In calling the Quad a “negative asset” for the BRICS the Global Times was highlighting what it sees as a contradiction in India’s participation in both the forums.
- The paper argues that India has worsened “India-China and India-Russia relations” and halted progress “in the development of BRICS and SCO”.
- Global Times warns that if India continues to get closer to Washington, India “will eventually lose its strategic autonomy”.
Understanding India’s strategic autonomy
- “Strategic autonomy” is the framework that guided Delhi’s international relations since the Cold War.
- In the early 1990s, strategic autonomy was about creating space for India against the overweening American power.
- Why the space was needed? It was mainly because of the U.S. stance on two important aspects: Kashmir issue and nuclear program.
- President Bill Clinton had questioned the legitimacy of Jammu and Kashmir’s accession to India and declared the US’s intent to resolve Delhi’s Kashmir dispute with Pakistan.
- Washington insisted that rolling back India’s nuclear and missile programmes was a major objective of US foreign policy.
- All that changed over the last three decades.
8 elements of transformation of India’s relations with the U.S and China
- A rising China has emerged as the biggest challenge to India and the US is increasingly an important part of the answer.
- A few elements stand out.
- First, China has become more assertive on the contested boundary, therefore, the support from the US and its Asian allies has been valuable.
- Second, on the Kashmir question, China raises the issue at the UNSC while the US is helping India to block China’s moves.
- Third, on cross-border terrorism, the US puts pressure on Pakistan and China protects Rawalpindi.
- Fourth, the US has facilitated India’s integration with the global nuclear order while Beijing blocks Delhi’s membership of the Nuclear Suppliers Group.
- Fifth, the US backs India’s permanent membership of the UNSC, China does not.
- Sixth, India now sees the trade with China hollowing out India’s manufacturing capability.
- Its objective on diversifying its economy away from China is shared by the US and the Quad partners.
- Seventh, India opposes China’s Belt and Road Initiative as a project that undermines India’s territorial sovereignty and regional primacy.
- India is working with Quad partners to offer alternatives to the BRI.
- Finally, India sees China’s rising military profile in the subcontinent and the Indian Ocean as a problem and is working with Washington to redress the unfolding imbalance in India’s neighbourhood.
India’s approach to BRICS and SCO
- The BRICS was part of India’s strategy in the unipolar moment that dawned at the end of the Cold War.
- India’s current enthusiasm for the Quad is about limiting the dangers of a unipolar Asia dominated by China.
- But India will continue to attach some value — diplomatic if not strategic — to a forum like the BRICS.
- After all, the BRICS forum provides a useful channel of communication between Delhi and Beijing at a very difficult moment in the evolution of their bilateral relations.
- The BRICS is also about India’s enduring partnerships with Russia, Brazil, and South Africa.
- India also values its ties with the Central Asian states in the SCO.
- The BRICS could certainly become a productive forum someday — when Delhi and Beijing mitigate their multiple contentions.
Consider the question “A rising China has emerged as the biggest challenge to India and the US is increasingly an important part of the answer. Examine the elements that support this underlying transformation of India’s relationship with the two countries.”
Conclusion
No amount of words in a BRICS declaration can hide the sharpening contradictions between India and China today. The absence of joint statements did not mask the growing strategic congruence among the Quad nations in recent years.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: AMFFRI
Mains level: Paper 3- Diversified strategies for agriculture growth
The article deals with the issue discussed in the recently published book ‘Revitalising Indian Agriculture and Boosting Farmer Incomes’. It suggests strategies for six Indian states and underlies the importance of the diversified approach to different states.
Why agriculture is central to Indian economy
- Agriculture engages close to 42 per cent of the country’s workforce.
- With its close interlinkage with poverty, it is best positioned to alleviate problems of malnutrition and hunger.
- In addition, agriculture supplies inputs for other industries.
- It is critical for triggering a multiplier effect in the economy, where a financially empowered farming community triggers a demand-led growth, particularly for manufactured products and services.
- There is no doubt that the sector needs to grow not just for those employed in it but also for the economy as a whole.
Growth strategy needs to take into account diversity across the states
- The growth process of agriculture should not just more efficient, and inclusive of India’s small and marginal but is also sustainable — both financially and environmentally.
- But then comes the question of the diversity in Indian states, where they differ as much on factors of production like land and water as they do on access to market opportunities.
- They even differ in their vulnerabilities to climate and weather changes.
- This begs the question, should the roadmap not be customised to the needs, vulnerabilities, and resource-base of each state?
Strategies for six states
- The recently published book “Revitalising Indian Agriculture and Boosting Farmer Incomes” proposes strategies for six Indian states: Punjab, Madhya Pradesh, Gujarat, Uttar Pradesh, Bihar and Odisha.
- In the six states, three factors explained most of the agrarian growth.
- One, access to infrastructure — mainly irrigation and roads.
- Two, diversification to high value agricultural products like fruits, vegetables, and allied activities like dairy and poultry.
- Three, price incentives or favourable terms of trade.
- Bringing markets closer to farmers and increasing the efficiency of the value-chains emerged as an important factor that explained agricultural growth in Gujarat, Madhya Pradesh, Odisha, and Bihar.
- By ensuring timely access to sufficient irrigation, states like Gujarat and Punjab could explain their high performances.
- Role of uninterrupted quality power too emerged important in this.
- Diversification of the agricultural basket of a state was found to strengthen a state’s agri-performance.
Relation between growth rate and policy reforms
- The requirement to undertake policy reforms, mainly related to marketing, emerged as a key driver and predictor of growth.
- The NITI Aayog’s Agricultural Markets and Farmer Friendly Reforms Index — AMFFRI evaluates Indian states on the extent to which each of them undertook required agri-reforms.
- A low AMFFRI rank implies the state is undertaking desired reforms.
- It was found that states that undertook reforms, and were thus ranked low on AMFFRI, witnessed a relatively faster agri-GDP growth rate.
- States which did not undertake required reforms, and thus were ranked high on the AMFFRI witnessed relatively lower agri-GDP growth rates.
- There were some exceptions: Karnataka, Haryana and Maharashtra.
- These states undertook reforms, and thus had low AMFFRI ranks, but they witnessed a low agri-GDP growth rate.
- This is likely to be attributed to the delayed effect of reforms on the agri-performance.
Way forward
- As a part of the roadmap, the book makes a case for states to move beyond production-centric approach to a value-chain approach with FPOs at its centre.
- It highlights importance and requirement of growing public investments in basic infrastructure.
- And finally, in the longer run, rationalising subsidies via direct income transfer is suggested.
Consider the question “Despite its comparatively lower contribution to the GDP, agriculture plays a central role in the Indian economy. What are the factors that make agriculture central to the economy? Suggest the pathway to fuel the growth of the sector.”
Conclusion
If the government follows this path of investing in infrastructure, ensuring a more diversified agriculture and linking small-holder FPOs with markets, it will pay rich dividends not only to the farming community but also the entire economy.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: CERT-In
Mains level: Paper 3- Identifying the cyber threat
The article highlights the threat of a cyber attack on India’s critical infrastructure and suggests the need to take preventive measures.
Targetting the infrastructure
- The U.S.-based cyber security firm, Recorded Future revealed that the past blackout in Mumbai was linked to the cyber attack from China.
- Recorded Future had also found an increase in malware attacks targeting the Indian government, defence organisations and the public sector.
- Also that, coinciding with Chinese incursions in Eastern Ladakh, certain Indian power facilities had been targets of a cyber attack.
- This indicates that India’s key infrastructure facilities, such as the power sector, are now in the crosshairs of a hostile China.
- Indian government agencies, such as the National Critical Information Infrastructure Protection Centre (NCIIPC) and the Indian Computer Emergency Response Team (CERT-In) needs to be on its guard.
Exploiting vulnerabilities
- China’s cyber offensive is directed against many advanced nations as well.
- In attempting this, what China is doing is essentially exploiting to perfection the many vulnerabilities that software companies (essentially those in the West), have deliberately left open (for offensive purposes at an opportune time).
- Exploiting this loophole, and also turning matters on its head, it is companies in the western world that are now at the receiving end of such antics.
- Chinese cyber espionage sets no limitations on targets.
- Towards the end of 2020, and as the world prepared for large-scale deployment of COVID-19 vaccines, their attention was directed to vaccine distribution supply chains around the world.
Way forward
- Nations should beware and be warned about how cyber attacks can bring a nation to its knees.
- This was well demonstrated way back in 2016 through a major attack on Ukraine’s power grid.
- The Ukraine example should be a wake-up call for India and the world, as in the intervening five years, the sophistication of cyber attacks and the kind of malware available have become more advanced.
- India, could well be blindsided by Chinese cyber attacks on critical infrastructure if the latter sets out to do so, unless prophylactic measures are taken in time.
Consider the question “Examine the threat posed by cyber attack on the critical information infrastructure? Suggest the ways to deal with it.”
Conclusion
Cyber’ could well be one of China’s main threat vectors employed against countries that do not fall in line with China’s world view. Drawing up a comprehensive cyber strategy, one that fully acknowledges the extent of the cyber threat from China, has thus become an imperative and immediate necessity.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: PCA
Mains level: Cairn Issue
In December 2020, a three-member tribunal at the Permanent Court of Arbitration in the Netherlands ruled against India in its long-running tax dispute with the U.K.-based oil and gas company Cairn Energy.
PCA Ruling against India
- The tribunal ordered India to pay about $1.4 billion to the company.
- Following this, Cairn Energy has successfully moved courts in five countries, including the US and the UK to recognise its claim as per the arbitration award.
- The Netherlands, France, and Canada are the other three countries.
- Such recognition by courts opens the door for Cairn Energy to seize assets of the Indian government in these jurisdictions by way of enforcing its claim, in case the latter doesn’t pay its dues.
What is the dispute about?
- The dispute started in early 2014 when Indian tax authorities started questioning Cairn Energy requesting information on the group’s reorganization in the financial year 2006-07.
Issue over the tax due
- This escalated, and by 2015, the authorities had sent the company a draft assessment order, assessing in the process that there was a principal tax amount of $1.6 billion that was due.
- The year in reference, 2006-07, was one in which big corporate changes and developments took place in Cairn Energy.
Basis of the tax demand: Sale of Shares
- It was the year in which it not only undertook a corporate reorganization but also floated an Indian subsidiary, Cairn India, which in early 2007 got listed on the Indian Stock Market.
- Through the corporate reorganization process, Cairn Energy had transferred all of its India assets, which were until then held by nine subsidiaries in various countries, to the newly-formed Cairn India.
- But the tax authorities claimed that in the process of this reorganization, Cairn Energy had made capital gains worth ₹24,500 crores.
- This, the department asserted, was the basis of the tax demand.
Is this case similar to Vodafone’s battle with the government?
- The Vodafone case in 2007 was triggered by Hong Kong’s Hutchinson Telecommunications’ sale of its stake in India’s Hutchinson Essar to Vodafone based out of the Netherlands.
- The Hong Kong firm made a capital gain on this, which the Indian tax authorities deemed fit to tax.
- They held that Vodafone should have withheld the tax, and therefore imposed liability on it.
- The Supreme Court quashed the taxman’s demand that the sale of shares, in this case, would amount to transfer of a capital asset within the meaning of Section 2(14) of the Indian Income Tax Act”.
What governs the Sale of Shares?
- In the Union Budget of 2012, the Income Tax Act, 1961 was amended to make sure that even if a transfer of shares takes place outside India, such a transfer can be taxed.
- This was done when the value of those shares is based on assets in India. And this was applied retrospectively.
Cairn won over Retrospection
- The action against Cairn Energy was based on this move.
- India lost its arbitration case against Vodafone as well, with the government being asked to fork out around ₹80 crores.
What happened after the tax claims in the Cairn Energy dispute?
- After receiving a draft assessment order from the tax authorities, Cairn UK Holdings Ltd. appealed before the Income Tax Appellate Tribunal.
- The tribunal, while providing the company relief from back-dated interest demands, however, upheld the main tax demand.
- The company had initiated proceedings of arbitration under the U.K.-India bilateral investment treaty.
- But during this time, the government sold Cairn’s almost 5% holding and seized dividends totalling ₹1,140 crore due to it from those shareholdings and set off a ₹1,590-crore tax refund against the demand.
What was the main argument of Cairn Energy during the arbitration?
- The claimants, Cairn Energy and Cairn UK Holdings argued that till the amendment was made to tax retrospectively in 2012, there was no tax on indirect transfers.
- Indirect transfers here meant transfer by a non-resident of shares in non-Indian companies which indirectly held assets in India.
- The application of the 2012 amendments, they alleged, constituted “manifest breaches” of the U.K.-India bilateral investment treaty.
What was India’s defence during the arbitration?
- India’s counter to the main charge of Cairn Energy was that its 2006 transactions were taxable irrespective of the 2012 amendments.
- It argued that “Indian law has long permitted taxation where a transaction has a strong economic nexus with India”.
- It said even if it is retrospective, it is “valid and binding applying the longstanding constitutional, legislative and legal framework in which the claimants have invested”.
What did the arbitration tribunal rule?
- The tribunal said the tax demand violated the U.K.-India bilateral investment treaty.
- The tribunal said India “failed to accord Cairn Energy’s investments fair and equitable treatment” under the bilateral protection pact it had with the United Kingdom.
- It also ordered India to compensate Cairn Energy and its subsidiary for “the total harm suffered” as a result of the breaches of the treaty.
India’s way ahead
- It has been reported in the media that India will appeal against the tribunal’s decision.
- If enforcement proceedings are initiated, India is confident of addressing them and will strongly defend its interests.
Back2Basics: Permanent Court of Arbitration (PCA)
- It is an intergovernmental organization located in The Hague, Netherlands.
- It is not a court in the traditional sense but provides services of arbitral tribunal to resolve disputes that arise out of international agreements between member states, international organizations or private parties.
- The cases span a range of legal issues involving territorial and maritime boundaries, sovereignty, human rights, international investment, and international and regional trade.
- The PCA is constituted through two separate multilateral conventions with a combined membership of 122 states.
- The organization is not a United Nations agency, but the PCA is an official United Nations Observer.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- Nativism in jobs in the state
The article examines the factors contributing to the States pursuing domicile based employment policies.
What is driving states to provide reservation to locals in private jobs
- The Haryana government has recently passed legislation that mandates companies in Haryana to provide jobs to local Haryanvis first.
- The unemployment rate in Haryana is the highest of all States in India, as per data from the Centre for Monitoring Indian Economy, or CMIE.
- The cabinet of the government of Jharkhand approved similar legislation to reserve jobs for Jharkhand residents.
- The Dravida Munnetra Kazhagam (DMK) in Tamil Nadu announced a similar proposal in its manifesto for the upcoming Assembly elections.
- Such moves have attracted criticism from economists and commentators
- Creating more jobs, not on reserving the few available ones’ is the popular refrain.
- Creation of new jobs is not entirely in the control of State governments. It is a complex interplay of multitude of factors.
Factors playing role in job creation
- Job creation is obviously an outcome of the performance of the larger economy.
- Chief Minister of a State in India has limited control over the management of the larger economy and thereby, attract new investors and businesses who can create jobs.
- Businesses need abundant high quality skilled and unskilled labour, land at affordable prices, uninterrupted supply of electricity, water and other such ‘ease of business’ facilities for its expansion.
- State governments in India can theoretically compete with each on these parameters.
- Further, any tax advantages that a particular State can provide vis-à-vis others will increase its attractiveness.
- But, realistically in India, in very few of these parameters can a poorer State compete against a richer State.
Issues faced by the States
- The availability of skilled local labour is a function of many decades of social progress of the State and cannot be retooled immediately.
- After the introduction of the Goods and Services Tax (GST), State governments in India have lost their fiscal autonomy and have no powers to provide any tax concessions to businesses.
- Beyond all these, the most critical factor in the choice of a location for a large business is what economists term as the ‘agglomeration effect’
- Agglomeration effect is the ecosystem of supply chain, talent, good living conditions and so on attracting the other businesses.
- So, a State with an already well-established network of suppliers, people, schools, etc. are at a greater advantage to attract even more businesses.
- It is due to this agglomeration effect that the three richest large States (Maharashtra, Tamil Nadu and Karnataka) are three times richer than the three poorest large States (Bihar, Uttar Pradesh and Madhya Pradesh), in per-capita income, compared to 1.4 times in 1970.
- In the absence of a level playing field and with no fiscal autonomy, it is enormously difficult for developing States in India to attract new investments and create new jobs.
Consider the question “Examine the factors contributing to the nativist tendencies in the employment within the States. Suggest the measures to deal with the issue.”
Conclusion
Until the economic playing fields for the various States are levelled and much greater fiscal freedom provided to the States, “don’t protect but create jobs” will only remain a topic of a hollow lecture and moral sermons.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not Much
Mains level: E-commerce regulation in India
The Department for Promotion of Industry and Internal Trade (DPIIT) will soon come out with a common acceptable draft e-commerce policy.
Earlier policy
- The previous draft in July last year had proposed a regulator, an e-commerce law, periodic audit of companies that store or mirror Indian users’ data overseas.
- The latest draft calls for streamlining of regulatory processes to ease the burden of compliance for activities related to e-commerce and regulations for data that will provide for sharing mechanism.
What are the provisions of the new law?
Data Usage
- According to a revised draft, the government would lay down principles for the usage of data for industrial development, where such norms do not already exist.
- They aim to put in place safeguards to prevent misuse and access of data by unauthorized persons.
- Such safeguards may include regulating the cross-border flow of data pertaining to Indians and transactions taking place in India and the requirement of adequacy audits to be carried out by Indian firms.
- As per the recent draft policy, violation of safeguards shall be viewed seriously and attract heavy penalties.
Regulation, exports
- Conformity assessment procedures will be put in place to verify that goods and services sold on e-commerce platforms meet required standards and technical regulations.
- The government shall collect information from e-commerce platforms to aid it in making necessary decisions.
- In order to ensure that e-commerce is not used to defraud customers, registration with an authority identified by the Government shall be mandatory.
- The policy shall bring e-commerce exports on par with non-e-commerce exports by enabling online grant of drawbacks, advance authorization and GST refund.
Consumer protection
- As per the draft, e-commerce operators must ensure to bring out clear and transparent policies on discounts, including the basis of discount rates funded by platforms.
- Such a move aims to ensure fair and equal treatment.
- It said consumers have a right to be made aware of all relevant details about the goods and services offered for sale including country of origin, value addition in India etc.
- In case the seller fails to establish the genuineness of his products within a reasonable time frame, the e-commerce platform shall delist the seller.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Rigvedic rivers
Mains level: Not Much
The Centre has reconstituted an advisory committee to chalk out a plan for studying the mythical Sarasvati River for the next two years after the earlier panel’s term ended in 2019.
Do you know?
Rigveda describes India as a land of Sapta Sindhavah.
There is a verse in Nadistuti sukta of Rigveda , hymn of praise of rivers which mentions the following 10 rivers: Ganga, Yamuna, Sarasvati, Sutudri, Parusni, Asikni, Marudvrdha , Vitasta , Arjikiya , Susoma.
The Shutudri was Sutlej, Parushni was Ravi, Asikni was Chenab and Vitasta was Jhelum.
Sarasvati River
- The Sarasvati River is an extinct river mentioned in the Rig Veda and later Vedic and post-Vedic texts.
- As a physical river, it is described as a small river ending in “a terminal lake (Samudra).
- As the goddess Sarasvati, the main referent for the term “Sarasvati” which developed into an independent identity in post-Vedic times, she is described as a powerful river and mighty flood.
- The Sarasvati is also considered by Hindus to exist in a metaphysical form, in which it formed a confluence with the sacred rivers Ganges and Yamuna, at the Triveni Sangam.
Vedic reference of the river
- Rigvedic and later Vedic texts have been used to propose identification with present-day rivers, or ancient riverbeds.
- The Nadistuti hymn in the Rigveda (10.75) mentions the Sarasvati between the Yamuna in the east and the Sutlej in the west.
- Later Vedic texts like the Tandya and Jaiminiya Brahmanas, as well as the Mahabharata, mention that the Sarasvati dried up in a desert.
What led to its extinction?
- Since the late 19th-century, scholars have proposed to identify the Rig Vedic Saraswati river with the Ghaggar-Hakra river system.
- This flows through northwestern India and eastern Pakistan, between the Yamuna and the Sutlej.
- Recent geophysical research suggests that the Ghaggar-Hakra system was glacier-fed until 8,000 years ago, and then became a system of monsoon-fed rivers.
- ISRO has observed that major Indus Valley Civilization sites at Kalibangan (Rajasthan), Banawali and Rakhigarhi (Haryana), Dholavira and Lothal (Gujarat) lay along this course.
- The Indus Valley Civilisation may have declined as a result of climatic change when the monsoons that fed the rivers diminished at around the time civilisation diminished some 4,000 years ago.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: IIP
Mains level: Read the attached story
Last week saw the release of the Index of Industrial Production (IIP), which recorded a contraction of 1.6% in January.
Index of Industrial Production (IIP)
- Index of Industrial Production data or IIP as it is commonly called is an index that tracks manufacturing activity in different sectors of an economy.
- The IIP number measures the industrial production for the period under review, usually a month, as against the reference period.
- IIP is a key economic indicator of the manufacturing sector of the economy.
- There is a lag of six weeks in the publication of the IIP index data after the reference month ends.
- IIP index is currently calculated using 2011-2012 as the base year.
IIP Index Components:
- Mining, manufacturing, and electricity are the three broad sectors in which IIP constituents fall.
- The relative weights of these three sectors are 77.6% (manufacturing), 14.4% (mining) and 8% (electricity).
- Electricity, crude oil, coal, cement, steel, refinery products, natural gas, and fertilizers are the eight core industries that comprise about 40 per cent of the weight of items included in the IIP.
Basket of products
There are 6 sub-categories:
- Primary Goods (consisting of mining, electricity, fuels and fertilisers)
- Capital Goods (e.g. machinery items)
- Intermediate Goods (e.g. yarns, chemicals, semi-finished steel items, etc)
- Infrastructure Goods (e.g. paints, cement, cables, bricks and tiles, rail materials, etc)
- Consumer Durables (e.g. garments, telephones, passenger vehicles, etc)
- Consumer Non-durables (e.g. food items, medicines, toiletries, etc)
Who releases IIP data?
- The IIP data is compiled and published by CSO every month.
- CSO or Central Statistical Organisation operates under the Ministry of Statistics and Programme Implementation (MoSPI).
- The IIP index data, once released, is also available on the PIB website.
Try this PYQ:
Q. In the ‘Index of Eight Core Industries’, which one of the following is given the highest weight?
(a) Coal production
(b) Electricity generation
(c) Fertilizer production
(d) Steel production
Who uses IIP data?
- The factory production data (IIP) is used by various government agencies such as the Ministry of Finance, the Reserve Bank of India (RBI), private firms and analysts, among others for analytical purposes.
- The data is also used to compile the Gross Value Added (GVA) of the manufacturing sector in the Gross Domestic Product (GDP) on a quarterly basis.
IIP base year change:
- The base year was changed to 2011-12 from 2004-05 in the year 2017.
- The earlier base years were 1937, 1946, 1951, 1956, 1960, 1970, 1980-81, 1993-94 and 2004-05.
IIP vs ASI
- While the IIP is a monthly indicator, the Annual Survey of Industries (ASI) is the prime source of long-term industrial statistics.
- The ASI is used to track the health of industrial activity in the economy over a longer period. The index is compiled out of a much larger sample of industries compared to IIP.
- The IIP essentially tracks the change in the volume of production in Indian industries.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: AT1 Bonds
Mains level: Not Much
The decision of the Securities and Exchange Board of India (SEBI) to slap restrictions on mutual fund (MF) investments in additional tier-1 (AT1) bonds has raised a storm in the MF and banking sectors.
What are AT1 Bonds?
- AT1 Bonds stand for additional tier-1 bonds. These are unsecured bonds that have perpetual tenure. In other words, the bonds have no maturity date.
- They have a call option, which can be used by the banks to buy these bonds back from investors.
- These bonds are typically used by banks to bolster their core or tier-1 capital.
- AT1 bonds are subordinate to all other debt and only senior to common equity.
- Mutual funds (MFs) are among the largest investors in perpetual debt instruments and hold over Rs 35,000 crore of the outstanding additional tier-I bond issuances of Rs 90,000 crore.
What action has been taken by the Sebi recently and why?
- In a recent circular, the Sebi told mutual funds to value these perpetual bonds as a 100-year instrument.
- This essentially means MFs have to make the assumption that these bonds would be redeemed in 100 years.
- The regulator also asked MFs to limit the ownership of the bonds to 10 per cent of the assets of a scheme.
- According to the Sebi, these instruments could be riskier than other debt instruments.
Try this PYQ:
Consider the following statements:
- The Reserve Bank of India manages and services the Government of India Securities but not any State Government Securities.
- Treasury bills are issued by the Government of India and there are no treasury bills issued by the State Governments.
- Treasury bills offer are issued at a discount from the par value.
Which of the statements given above is/are correct?
(a) 1 and 2 only
(b) 3 Only
(c) 2 and 3 only
(d) 1, 2 and 3
How MFs will be affected?
- Typically, MFs have treated the date of the call option on AT1 bonds as the maturity date.
- Now, if these bonds are treated as 100-year bonds, it raises the risk in these bonds as they become ultra long-term.
- This could also lead to volatility in the prices of these bonds as the risk increases the yields on these bonds rises.
- Bond yields and bond prices move in opposite directions and therefore, the higher yield will drive down the price of the bond, which in turn will lead to a decrease in the net asset value of MF schemes holding these bonds.
- Moreover, these bonds are not liquid and it will be difficult for MFs to sell these to meet redemption pressure.
What’s the impact on banks?
- AT1 bonds have emerged as the capital instrument of choice for state banks as they strive to shore up capital ratios.
- If there are restrictions on investments by mutual funds in such bonds, banks will find it tough to raise capital at a time when they need funds in the wake of the soaring bad assets.
- A major chunk of AT1 bonds is bought by mutual funds.
Why has the Finance Ministry asked Sebi to review the decision?
- The FM has sought withdrawal of valuation norms for AT1 bonds as it might lead to mutual funds making losses and exiting from these bonds, affecting capital raising plans of PSU banks.
- The government doesn’t want a disruption in the fund mobilization exercise of banks at a time when two PSU banks are on the privatization block.
- Banks are yet to receive the proposed capital injection in FY21 although they will need more capital to face the asset-quality challenges in the foreseeable future.
- Fitch’s own estimate pegs the sector’s capital requirement between $15 billion-58 billion under various stress scenarios for the next two years, of which state banks account for the bulk.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Martian blueberries
Mains level: Mars mission worldwide and their success
In 2004, NASA’s Mars exploration rover ‘Opportunity’ found several small spheres on the planet, informally named Martian blueberries which find a resemblance to the similar formation in India’s Kutch region.
There have been several missions to the red planet this year. Make a note of all of them.
Martian blueberries
- Opportunity’s mini spectrometers studied mineralogy and noted they were made of iron oxide compounds called haematites.
- This caused excitement, as the presence of haematites suggests that there was water present on Mars.
- The widely accepted formation mechanism of hematite concretion [hard solid mass] is precipitation from aqueous fluids.
- Hematite is known to form in oxidizing environments hence it can be inferred that water must have played a crucial role in the formation of grey hematite on Mars.
What makes them so special?
- Indian researchers have been studying hematite concretions in Kutch called the Jhuran formation.
- These formations are 145 and 201 million years old.
- Detailed geochemistry and spectroscopic investigations of the haematite concretions in this area revealed that they resemble the ones on Mars.
- They have similar morphology – spherical, often doublet and triplet – and similar mineralogy – a mixture of haematite and goethite.
- Hence, several types of research have shown that the Kutch area is a potential Martian analogue locality.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Raman Thermometry
Mains level: Discom issues
Researchers at IIT Madras have demonstrated that by using Raman thermometry on fibre optic cables, they can achieve the monitoring of power transmission cables.
What is Raman Thermometry?
- Raman spectroscopy is well known as an analytical method for identifying chemical compounds and characterizing the chemical bonding and solid-state structure of materials.
- Perhaps less well known is the fact that one can use Raman spectroscopy to determine the temperature of the material being analyzed.
For that, we need to get familiarized with Raman Effect
- India’s first and so far only Nobel laureate in physics, C.V. Raman, won the prize for his discovery of the Raman Effect.
- This consisted of experimental observations on the scattering of light.
- In the Raman Effect, when light is scattered off an object, say a molecule, two bands are observed, with a higher and lower frequency than the original light, called the Stokes and anti-Stokes bands, respectively.
- By studying the relative intensity of the two bands, it is possible to estimate the temperature of the object that scattered the light.
- The anti-Stokes component of Raman scattering is strongly dependent on the temperature that the material is subjected to.
Thus, by measuring the intensity of the anti-Stokes scattered light we can estimate the temperature. This is Raman thermometry.
Try this PYQ:
Q.Which Indian astrophysicist and Nobel laureate predicted rapidly rotating stars emit polarized light?
(a) Subrahmanyan Chandrasekhar
(b) CV Raman
(c) Ramanujan
(d) Amartya Sen
What has IITM achieved?
- The temperature measurement was performed in not just one location, but in a distributed manner using an optical fibre.
- To achieve this, a pulse of light was launched into the optical fibre and the backscattered radiation was observed.
- The time of flight of the backscattered radiation provided an estimate of the distance from which the light is backscattered.
- This can go up to tens of kilometres. This technique is married to Raman thermometry to get the results for actual measurements over tens of kilometres.
What makes this experiment special?
- The distribution Sector considered the weakest link in the entire power sector.
- We are much aware of Transmission and Distribution loss that is incurred to our DISCOMS.
- This IITM technology helps analyze transmission efficiencies in a better way.
- The present method devised by the team is both economical and provides real-time information.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Human eye and the applied genetics
Mains level: NA
Researchers from London have found that eye colour in Asians with different shades of brown is genetically similar to eye colour in Europeans ranging from dark brown to light blue.
Human Eye Colour
- Human eye colour ranges from black, brown to blue, green, and even red.
- Eye colour is primarily determined by melanin abundance within the iris pigment epithelium, which is greater in brown than in blue eyes.
- There are two forms of melanin – eumelanin and pheomelanin – and the ratio of the two within the iris as well as light absorption and scattering by extracellular components are additional factors that give irises their colour.
- Absolute melanin quantity and the eumelanin–pheomelanin ratio is higher in brown irises, while blue or green irises have very little of both pigments and relatively more pheomelanin.
Try this PYQ:
Q.Recently, LASIK (Lasser Assisted In Situ Keratomileusis) procedure is being made popular for vision correction. Which one of the following statements in this context is not correct?
(a) LASIK procedure is used to correct refractive errors of the eye
(b) It is a procedure that permanently changes the shapes of the cornea
(c) It reduces a person’s dependence on glasses or contact lenses
(d) It is a procedure that can be done on the person of any age
What has the research found?
- Previously a dozen genes (mainly HERC2 and OCA2) were found to influence eye colour.
- The researchers have now identified 50 new genes for eye colour.
- Genetic analysis of nearly 0.2 million people across Europe and Asia helped the researchers to identify the new genes.
- The findings collectively explain over 53% of eye colour variation using common single-nucleotide polymorphisms.
Outcome of the research
- Overall, the study outcomes demonstrate that the genetic complexity of human eye colour considerably exceeds previous knowledge and expectations.
- These findings will help improve our understanding of eye diseases such as pigmentary glaucoma and ocular albinism where pigment levels play a role.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: FEMA
Mains level: Paper 3- Security imperatives of FDI
Relaxation on Chinese FDI
- Last April, India had subjected all Chinese FDI to mandatory government screening.
- The aim was to curb opportunistic takeovers of Indian companies, a concern fuelled by sharp corrections in equity markets in March 2020.
- Several economies including the US, Australia, Canada and Germany faced similar concerns.
- They blocked specific takeover attempts, using special laws for national security screening of inward FDI.
- In the absence of similar legislation, India did not differentiate between investments which raised genuine national security concerns and those that did not.
- This is a crucial shortcoming.
- With market indices now hovering at their peaks, reportedly India may allow Chinese FDI up to 25 per cent in equity under the automatic route.
Regulation of FDI and issues with it
- India regulates foreign investments primarily through FEMA.
- FEMA clearly provides two specific macro-prudential objectives — facilitating external trade and payments; and promoting orderly development and maintenance of foreign exchange markets in India.
- Accordingly, it empowers the central government and the RBI, acting in consultation with each other, to regulate capital account transactions.
- These regulations determine who can invest through the FDI route, in which sector and how much.
- In practice, however, FEMA regulations have often responded to concerns not strictly related to macro-prudential objectives.
- One such concern has been national security.
Need for the law to scrutinise FDI from national security angle
- Shortcoming of FEMA underscores the need for India to emulates its western peers and enact a statute specifically designed for national security screening of strategic FDI.
- Unlike FEMA, this new statute must explicitly lay down legal principles for determining when a foreign acquisition of an Indian company poses genuine national security threats.
- In this regard, a policy paper published by the Peterson Institute for International Economics three types of legitimate threats from foreign acquisitions.
3 Types of threat from foreign acquisitions
1) Dependency on foreign supplier
- The first threat arises if a foreign acquisition renders India dependent on a foreign-controlled supplier of goods or services crucial to the functioning of the Indian economy.
- For this threat to be credible, it needs to be further established that the industry in which the acquisition is supposed to take place is tightly concentrated, the number of close substitutes limited, and the switching costs are high.
2) Technology transfer
- The second threat emanates from a proposed acquisition transferring a technology or an expertise to a foreign-controlled entity that might be deployed by that entity or a foreign government in a manner harmful to India’s national interests.
- The credibility of this threat again depends on whether the market for such technology or expertise is tightly concentrated or if they are readily available elsewhere.
3) Threat of infiltration, surveillance or sabotage
- The third threat arises if a proposed acquisition allows insertion of some potential capability for infiltration, surveillance or sabotage via human or non-human agents into the provision of goods or services crucial to the functioning of Indian economy.
- This threat is particularly credible when the target company supplies crucial goods or services to the Indian government, its military or even critical infrastructure units and the switching costs are high.
Way forward
- The above stated 3 types of threats could provide conceptual clarity in the new statute could make national security assessments objective, transparent and amenable to the rule of law.
- On procedure, the statute must empower only the finance minister to reject certain strategic foreign acquisitions on national security grounds.
- Both the power and accountability mechanisms should be hardcoded into the statute itself, as is the case in some mature parliamentary democracies.
- For instance, the Australian Foreign Acquisitions and Takeovers Act, 1975 empowers the treasurer to block certain foreign acquisitions on national security grounds.
- Similarly, the Investment Canada Act, 1985 empowers a minister to reject certain foreign acquisitions.
Consider the question “India needs to recognise the national security threat emanating from strategic FDI. This requires identifying threats. In lights of this, examine the types of threats and suggest the ways to deal with it.”
Conclusion
Overall, India’s tryst with Chinese FDI underscores the importance of identifying specific national security threats emanating from strategic FDI and addressing them objectively. This is too sensitive a matter to be left to capital controls under FEMA. A dedicated statute for national security screening of inward FDI would be best suited for handling such issues.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- India's growing security footprints in West Asia
The article examines the factors that are leading to a growing footprint of Asian economies in West Asia.
Growing interest of Asian Economies in West Asia
- This month, a contingent of the Indian Air Force participated in a multi-nation exercise hosted by the United Arab Emirates (UAE) named Desert Flag (March 3-27).
- Other than India and the UAE, Bahrain, France, Saudi Arabia, South Korea and the United States are also participating.
- While joint exercises in West Asia between Arab states and their western counterparts is common, the 2021 edition’s involvement of contingents from India and South Korea.
- This showcases the growing interests of Asian economies.
- As net importers of crude oil, these Asian economies rely heavily on the West Asian states for their supplies,
- And, by association, Asian economies have increased stakes in the safety and security of the region from the perspective of political and economic stability.
- And more importantly, in the protection of vital sea lanes in areas such as the Strait of Hormuz, the Gulf of Aden and the Red Sea stretching out into the Arabian Sea and the wider Indian Ocean.
Declining U.S. influence
- In April 2020, Saudi Arabia was India’s top supplier of oil followed by Iraq.
- For South Korea, in late 2019, it was also Saudi Arabia as the top supplier.
- The participation of both India and South Korea in these exercises in the Persian Gulf is reflective of these trends and growing concerns in Asian capitals over an eroding U.S. security blanket in the region.
Tension in Iran-U.S. relations
- Both India and South Korea have found themselves caught in regional tensions as the pressure on Iran to restart the 2015 nuclear agreement (Joint Comprehensive Plan of Action, or JCPOA) increases.
- Both India and South Korea have faced carbon-copy consequences over the past decade as the West first negotiated with Iran, and later tried to manage the fallout of the JCPOA collapse.
India’s role in protecting it’s energy interests
- The idea of Asian nations having to band together to protect their energy interests in West Asia is not new.
- Former Indian diplomats have even suggested an idea equitable to an ‘importers OPEC’ led by Asian states which today have a much larger stake in West Asia’s oil than the West.
- The Indian Navy has made multiple port calls from the UAE and Kuwait to Iran and Qatar in recent years.
- In 2020, India had also planned its first bilateral naval exercise with Saudi Arabia.
Consider the question “Examine the factors responsible for India’s growing security footprint in West Asia and how India is achieving its objectives?”
Conclusion
Regional states will become more responsible for their own security, and as Asian economies become stronger stakeholders, their geopolitics will become more visible across this geography.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Election Commission
Mains level: Autonomy of the State Election Commission
The Supreme Court gas held that independent persons and not bureaucrats should be appointed State Election Commissioners.
No bureaucrats in SEC
- The judgment came on an appeal against an order of the Bombay High Court which had set aside the election notification issued by the Goa State Election Commission in some municipalities.
- Justice F. Nariman, in a judgment, said giving government employees the additional charge of State Election Commissioners is a “mockery of the Constitution”.
- It said government employees holding the post of State Election Commissioners as additional charge should give up the post.
- The Supreme Court said its direction should be followed strictly.
Why such a move?
- Under the constitutional mandate, it is the duty of the State to not interfere with the functioning of the State Election Commission.
- The independence of Election Commissions cannot be compromised at any cost, the Bench said.
State Election Commission
- Under the 73rd and 74th constitutional amendment acts, State Election Commissions were created for every state to conduct elections to panchayats and municipalities.
- The SECs came into as envisaged in Articles 243K and 243ZA of the Constitution of India.
- The above Articles provide that the superintendence, direction and control of the preparation of electoral rolls for, and the Conduct of all elections to the Panchayats and Municipalities shall vest in the SEC.
- The Constitution itself has facilitated provision for smooth, free and fair, regular elections to the Local bodies and has, therefore, entrusted the SEC with the responsibility for holding such elections.
- In the domain of the elections to the local bodies, the SEC functions independently and has the same powers and duties as that of the Election Commission of India.
Try this PYQ:
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
The Election Commissioner
- The State Election Commissioner is appointed by the Governor.
- It has the status, salary and allowance of a Judge of a High Court and cannot be removed from office except in the like manner and on the like grounds as a Judge of a High Court.
- The Election Commissioner is also the Chairman of the Delimitation Commission.
Its duties
- The first and foremost duty of the SEC is to prepare the elector rolls of Panchayats, Municipalities and Municipal Corporation and conduct their elections.
In addition to the above functions, the State Election Commission has also the following functions:
- Conduct of elections to the offices of the Mayor/Chairman/President/Deputy Mayor/Vice Chairman/Vice President and the no-confidence motion against them.
- Conduct of the Elections to various Standing Committees and their Chairpersons
- Determination of disqualification of elected members/Councilors.
- Determination of disqualification of elected members on the ground of defection.
Back2Basics: Election Commission of India (ECI)
- ECI is an autonomous and permanent constitutional authority responsible for administering election processes in India at the national and state level.
- The body administers elections to the Lok Sabha, Rajya Sabha, State Legislative Assemblies, State Legislative Councils and the offices of the President and Vice President of the country.
- The EC operates under the authority of the Constitution per Article 324 and subsequently enacted the Representation of the People Act.
- The commission has the powers under the Constitution, to act in an appropriate manner when the enacted laws make insufficient provisions to deal with a given situation in the conduct of an election.
- Being a constitutional authority, EC is amongst the few institutions which function with both autonomy and freedom, along with the country’s higher judiciary, the UPSC and the CAG.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not Much
Mains level: Places of Worship Act, 1991
The Supreme Court has asked the Centre to respond to a plea challenging the Places of Worship (Special Provisions) Act, 1991. The court has opened the doors for litigation in various places of worship across the country including Mathura and Varanasi.
Take this ‘wonderful’ question from CS Mains 2019:
Q.What are the challenges to our cultural practices in the name of secularism?
Places of Worship Act, 1991
- It was passed in 1991 by the P V Narasimha Rao-led government.
- The law seeks to maintain the “religious character” of places of worship as it was in 1947 — except in the case of the Ram Janmabhoomi-Babri Masjid dispute, which was already in court.
- The law was brought in at the peak of the Ram Mandir movement, exactly a year before the demolition of the Babri Masjid.
- Introducing the law, then Home Minister S B Chavan said in Parliament that it was adopted to curb communal tension.
What are its provisions?
The objective of the law describes it as an Act to prohibit conversion of any place of worship.
- It aims to provide for the maintenance of the religious character of any place of worship as it existed on the 15th day of August 1947, and for matters connected therewith or incidental thereto”.
- Sections 3 and 4 of the Act declared that the religious character of a place of worship shall continue to be the same as it was on August 15, 1947.
- No person shall convert any place of worship of any religious denomination into one of a different denomination or section.
- Section 4(2) says that all suits, appeals or others regarding converting the character of a place of worship, that was pending on August 15, 1947, will stand abated when the Act commences and no fresh proceedings can be filed.
- However, legal proceedings can be initiated after the commencement of the Act if the change of status took place after the cut-off date of August 15, 1947.
What does it say about Ayodhya, and what else is exempted?
- Act does not to apply to Ram Janma Bhumi Babri Masjid.
Besides the Ayodhya dispute, the Act also exempted:
- any place of worship that is an ancient and historical monument or an archaeological site, or is covered by the Ancient Monuments and Archaeological Sites and Remains Act, 1958;
- a suit that has been finally settled or disposed of;
- any dispute that has been settled by the parties or conversion of any place that took place by acquiescence before the Act commenced.
What has the Supreme Court said about the Act?
- In the 2019 Ayodhya verdict, the Constitution Bench led by former CJI Ranjan Gogoi referred to the law and said it manifests the secular values of the Constitution and strictly prohibits retrogression.
- In providing a guarantee for the preservation of the religious character of places, Parliament determined that independence from colonial rule furnishes a constitutional basis for healing the injustices of the past.
- The law addresses itself to the State as much as to every citizen of the nation. Its norms bind those who govern the affairs of the nation at every level.
- Those norms implement the Fundamental Duties under Article 51A and are hence positive mandates to every citizen as well.
Why is the law under challenge?
- A politician has challenged the law on the ground that violates secularism.
- He has also argued that the cut-off date of August 15, 1947, is “arbitrary, irrational and retrospective” and prohibits Hindus, Jains, Buddhists, and Sikhs from approaching courts to “reclaim” their places of worship.
- Such places, he argued, were “invaded” and “encroached” upon by “fundamentalist barbaric invaders”.
- The right-wing politicians have opposed the law even when it was introduced, arguing that the Centre has no power to legislate on “pilgrimages” or “burial grounds” which is under the state list.
- Another criticism against the law is that the cut-off is the date of Independence, which means that the status quo determined by a colonial power is considered final.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Benzene pollution
Mains level: Not Much
A joint committee appointed by the National Green Tribunal (NGT) to study air pollution in Kerala has pointed out that petrol refuelling stations were a major source of benzene emissions and volatile organic compounds (VOCs).
Why such a move?
- Benzene is a major constituent of evaporative emission due to its high volatility.
Try this PYQ:
Q.Consider the following:
- Carbon monoxide
- Methane
- Ozone
- Sulphur dioxide
Which of the above are released into atmosphere due to the burning of crop/biomass residue?
(a) 1 and 2 only
(b) 2, 3 and 4 only
(c) 1 and 4 only
(d) 1, 2, 3 and 4
What is Benzene?
- Benzene is a chemical that is a colourless or light yellow liquid at room temperature. It has a sweet odour and is highly flammable.
- It evaporates into the air very quickly. Its vapour is heavier than air and may sink into low-lying areas.
- It dissolves only slightly in water and will float on top of the water.
Its formation and uses
Benzene is formed from both natural processes and human activities.
- Natural sources of benzene include volcanoes and forest fires. Benzene is also a natural part of crude oil, gasoline, and cigarette smoke.
- Some industries use benzene to make other chemicals that are used to make plastics, resins, and nylon and synthetic fibres.
- It is also used to make some types of lubricants, rubbers, dyes, detergents, drugs, and pesticides.
Benzene emission
- The major sources of benzene exposure are tobacco smoke, automobile service stations, exhaust from motor vehicles, and industrial emissions.
- Benzene is present in both exhaust and evaporative emissions. Motor vehicles account for approximately 85% of the total benzene emissions.
- However, ingestion and dermal absorption of benzene can also occur through contact with contaminated water.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: 2001 FO32
Mains level: Study of asteroids and meteors
On March 21, the largest asteroid predicted to pass by Earth in 2021 will be at its closest. It is called 2001 FO32.
Try this PYQ:
Q.Which of the following is/are cited by the scientists as evidence/evidence for the continued expansion of the universe?
- Detection of microwaves in space
- Observation of redshirt phenomenon in space
- Movement of asteroids in space
- Occurrence of supernova explosions in space
Codes:
(a) 1 and 2 only
(b) 2 only
(c) 1, 3 and 4
(d) None of the above can be cited as evidence.
2001 FO32
- There is no threat of a collision with our planet now or for centuries to come.
- Scientists know its orbital path around the Sun very accurately since it was discovered 20 years ago and has been tracked ever since.
- It won’t come closer than 2 million km to Earth, but it will present a valuable scientific opportunity for astronomers who can get a good look at a rocky relic that formed at the dawn of our Solar System.
Proximity to Earth
- For comparison, when it is at its closest, the distance of 2 million km is equal to 5¼ times the distance from Earth to the Moon.
- Still, that distance is close in astronomical terms, which is why 2001 FO32 has been designated a “potentially hazardous asteroid”.
- The reason for the asteroid’s unusually speedy close approach is its highly eccentric orbit around the Sun, an orbit that is tilted 39° to Earth’s orbital plane.
- This orbit takes the asteroid closer to the Sun than Mercury, and twice as far from the Sun as Mars.
- Later, the asteroid slows after being flung back out into deep space and swinging back toward the Sun. It completes one orbit every 810 days (about 2¼ years).
Studying the visitor
- This asteroid will provide an opportunity for astronomers to get a more precise understanding of the asteroid’s size and albedo (i.e. how bright, or reflective, its surface is), and a rough idea of its composition.
- When sunlight hits an asteroid’s surface, minerals in the rock absorb some wavelengths while reflecting others.
- By studying the spectrum of light reflecting off the surface, astronomers can measure the chemical “fingerprints” of the minerals on the surface of the asteroid.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Seabuckthorn
Mains level: Not Much
The Himachal Pradesh government has decided to start planting Seabuckthorn in the cold desert areas.
What is Seabuckthorn?
- It’s a shrub that produces an orange-yellow coloured edible berry.
- In India, it is found above the tree line in the Himalayan region, generally in dry areas such as the cold deserts of Ladakh and Spiti.
- In Himachal Pradesh, it is locally called Himalayan chharma and grows in the wild in Lahaul and Spiti and parts of Kinnaur.
- According to the Seabuckthorn Association of India, around 15,000 hectares in Himachal, Ladakh, Uttarakhand, Sikkim and Arunachal Pradesh are covered by this plant.
Try this PYQ from CSP 2019:
Q.Recently, there was a growing awareness in our country about the importance of Himalayan nettle (Girardinia diversifolia) because it is found to be a sustainable source of
(a) anti-malarial drug
(b) biodiesel
(c) pulp for paper industry
(d) textile fibre
Benefits of the Seabuckthorn plant
(1) Medicinal benefits
- As a folk medicine, Seabuckthorn has been widely used for treating stomach, heart and skin problems.
- In the last few decades, scientific research worldwide has backed many of its traditional uses.
- Its fruit and leaves are rich in vitamins, carotenoids and omega fatty acids, among other substances, and it can help troops in acclimatizing to high-altitude.
(2) Ecological benefits
- Besides being an important source of fuelwood and fodder, Seabuckthorn is a soil-binding plant that prevents soil-erosion, checks siltation in rivers and helps preserve floral biodiversity.
- In the Lahaul valley, where willow trees are dying in large numbers due to pest attack, this hardy shrub is a good alternative for protecting the local ecology.
(3) Commercial benefits
- Seabuckthorn also has commercial value, as it is used in making juices, jams, nutritional capsules etc.
- But wild Seabuckthorn cannot sustainably supply raw material to the industry, and the plant needs to be cultivated on a large scale as is being done in China.
What is the latest project?
- The Seabuckthorn association wants the forest departments of various Himalayan states/UTs to plant Seabuckthorn on arid and marginal lands using compensatory afforestation or CAMPA funds.
- Recently, the union ministry of environment, forest and climate change asked these states to submit proposals for taking up such plantations.
- This is in the light of reduced water flow from Himalayan glaciers and their impact on ecology.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: NEF
Mains level: Paper 3- Climate change negotiations
The new U.S. administration has renewed its commitment to climate actions by reconvening the Major Economies Forum. This has several implications for India and the developing countries. The article deals with this issue.
Reconvening MEF and its implications for developing countries
- The election of Joe Biden as U.S. President has catapulted climate change to the top of the global agenda.
- Interestingly, the U.S. is not just striding back to the Obama signature achievement of the Paris Accord with its voluntary commitments but also to the Bush days [which was not necessarily voluntary].
- This change is best evidenced by the presidential call to reconvene the Major Economies Forum (MEF).
- The MEF, which was first convened in March 2009, originated in the Bush-era U.S. efforts to rope in major emitters.
- It was also to push a way forward on climate change without heed to the principle of differentiated responsibilities and recognition of historical responsibilities.
- These two are hallowed principles of the climate discourse given the decades of staying power of greenhouse gases (GHGs) in the atmosphere.
Changing approach implications for India
- All countries have been told to commit to net zero (GHG emissions) by 2050 with credible plans to ensure meeting this domestic target.
- Taking a cue from the new U.S. Administration, the UN Secretary-General has even called on countries to declare national climate emergencies apart from building a coalition for a carbon-neutral world by 2050.
- As of today, countries representing around 65% of global CO2 emissions have already agreed to this.
- These plans and their implementation will, undoubtedly, be subject to international reviews and verification.
- Historical responsibilities and differentiation have no place in this discourse; but neither does the level of development.
- India can easily be in the crosshairs of such a discourse no matter its extraordinarily small carbon footprint in per-capita terms and huge development imperatives.
Possibility of carbon border levies
- Adding to the challenges is the distinct possibility of the EU imposing carbon border levies on those who do not take on high carbon cut-down targets and do so unilaterally if there is no global agreement.
- While as of now the U.S. Administration appears ambivalent on these border levies, the possibility of their coming around cannot be ruled out.
- In such a scenario, World Trade Organization rules that presently exclude the use of tariffs on environmental grounds will certainly get modified.
A fund pay-in idea
- To deal with the issue of climate finance, Raghuram Rajan has recently put forward a proposal for India to consider.
- The proposal calls on countries to pay into a global fund amounts based on their carbon emissions over and above the global per-capita average of five tons.
- This obviously disincentives coal in a big way while incentivising renewables.
- Those above the global average would pay, while those below would receive the monies.
- While this would suggest a certain equity, it may be unacceptable to the developed countries even though Mr. Rajan has gone along with the drumbeat to forget historical responsibility.
- For India, such a proposal may appear attractive as India today has per capita CO2 emission of only 2 tons and is a global record setter in pushing renewables.
- The long-term implications of such a proposal require examination in detail, quite apart from factoring in the twists and turns that negotiations could give to such an idea.
- And then, of course, there are alternatives such as emission trading.
Implications for developing countries
- The proposal of fund pay-in allows practical considerations to trump fairness by not only giving a short shrift to historical responsibility but also denying priority access to the remaining carbon space for developing countries.
- In that sense, it double penalises them while giving developed countries a certain free pass.
- Here it bears noting that more than 75% of the carbon space available to humankind to keep global temperature rises to 1.5° C has already been taken up by the developed world and China.
Consider the question “As the world seeks to tackle the climate change through climate action, delivering climate justice should also be the priority. In light of this, discuss the challenges faced by the developing countries in this regard.”
Conclusion
Climate justice is an imperative for India, which needs to leverage its green and pro-nature commitment to ensure carbon and policy space for its developmental and global aspirations. India’s diplomatic and negotiating efforts must be quickly geared to that end.
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