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  • What are Basel III compliant Bonds?

    The country’s largest lender State Bank of India has raised Rs 7,000 crore by issuing Basel III compliant bonds.

    Try this PYQ:

    Q.‘Basel III Accord’ or simply ‘Basel III’, often seen in the news, seeks to:

    (a) Develop national strategies for the conservation and sustainable use of biological diversity

    (b) Improve the banking sector’s ability to deal with financial and economic stress and improve risk management

    (c) Reduce greenhouse gas emissions but places a heavier burden on developed countries

    (d) Transfer technology from developed countries to poor countries to enable them to replace the use of chlorofluorocarbons in refrigeration with harmless chemicals

    What are Basel III compliant Bonds?

    • The bonds qualify as tier II capital of the bank, and has a face value of Rs 10 lakh each, bearing a coupon rate of 6.24 per cent per annum payable annually for a tenor of 10 years.
    • There is a call option after 5 years and on anniversary thereafter.
    • Call option means the issuer of the bonds can call back the bonds before the maturity date by paying back the principal amount to investors.

    Back2Basics: What are Basel Norms?

    • Basel is a city in Switzerland. It is the headquarters of the Bureau of International Settlement (BIS), which fosters co-operation among central banks with a common goal of financial stability and common standards of banking regulations.
    • Basel guidelines refer to broad supervisory standards formulated by this group of central banks – called the Basel Committee on Banking Supervision (BCBS).
    • The set of the agreement by the BCBS, which mainly focuses on risks to banks and the financial system is called Basel accord.
    • The purpose of the accord is to ensure that financial institutions have enough capital on account to meet obligations and absorb unexpected losses.
    • India has accepted Basel accords for the banking system.

    Basel I

    • In 1988, BCBS introduced a capital measurement system called Basel capital accord, also called as Basel 1.
    • It focused almost entirely on credit risk. It defined capital and structure of risk weights for banks.
    • The minimum capital requirement was fixed at 8% of risk-weighted assets (RWA).
    • RWA means assets with different risk profiles.
    • For example, an asset-backed by collateral would carry lesser risks as compared to personal loans, which have no collateral. India adopted Basel 1 guidelines in 1999.

    Basel II

    • In June ’04, Basel II guidelines were published by BCBS, which were considered to be the refined and reformed versions of Basel I accord.
    • The guidelines were based on three parameters, which the committee calls it as pillars:
    • Capital Adequacy Requirements: Banks should maintain a minimum capital adequacy requirement of 8% of risk assets.
    • Supervisory Review: According to this, banks were needed to develop and use better risk management techniques in monitoring and managing all the three types of risks that a bank faces, viz. credit, market and operational risks.
    • Market Discipline: This needs increased disclosure requirements. Banks need to mandatorily disclose their CAR, risk exposure, etc to the central bank. Basel II norms in India and overseas are yet to be fully implemented.

    Basel III

    • In 2010, Basel III guidelines were released. These guidelines were introduced in response to the financial crisis of 2008.
    • A need was felt to further strengthen the system as banks in the developed economies were under-capitalized, over-leveraged and had a greater reliance on short-term funding.
    • Also, the quantity and quality of capital under Basel II were deemed insufficient to contain any further risk.
    • Basel III norms aim at making most banking activities such as their trading book activities more capital-intensive.
    • The guidelines aim to promote a more resilient banking system by focusing on four vital banking parameters viz. capital, leverage, funding and liquidity.

  • [pib] E-Gram Swaraj Portal

    A unified tool e-Gram SWARAJ portal has been developed by the Ministry of Panchayati Raj for effective monitoring and evaluation of works taken up in the Gram Panchayats.

    e-Gram SWARAJ

    • It unifies the planning, accounting and monitoring functions of Gram Panchayats.
    • Its combination with the Area Profiler application, Local Government Directory (LGD) and the Public Financial Management System (PFMS) renders easier reporting and tracking of Gram Panchayat’s activities.
    • It provides a single-window for capturing Panchayat information with the complete Profile of the Panchayat, details of Panchayat finances, asset details, activities taken up through Gram Panchayat Development Plan (GPDP) etc.

  • Labour law Reforms

    This session of Lok Sabha has passed 3 Historic and path-breaking Labour Codes.

    UPSC may ask the major laws subsumed under these Labour Codes.

    What are the 3 bills?

    The 3 bills which were passed are

    1. Industrial Relations Code, 2020
    2. Code on Occupational Safety, Health & Working Conditions Code, 2020 &
    3. Social Security Code, 2020

    All the labour laws (29 in number) being amalgamated into 4 labour codes are :

    Name of the Code 

    Amalgamated laws
    Wage Code

     

    		 4 laws –

    1. The Payment of Wages Act, 1936
    2. The Minimum Wages Act, 1948
    3. The Payment of Bonus Act, 1965
    4. The Equal Remuneration Act, 1976
    IR Code

     

    		 3 laws –

    1. The Trade Unions Act, 1926
    2. The Industrial Employment (Standing orders) Act, 1946
    3. The Industrial Disputes Act, 1947
    OSH Code

     

    		 13 laws –

    1. The Factories Act, 1948
    2. The Plantations Labour Act, 1951
    3. The Mines Act, 1952
    4. The Working Journalists and other Newspaper Employees (Conditions of Service) and Miscellaneous Provisions Act, 1955
    5. The Working Journalists (Fixation of Rates of Wages) Act, 1958
    6. The Motor Transport Workers Act, 1961
    7. The Beedi and Cigar Workers (Conditions of Employment) Act, 1966
    8. The Contract Labour (Regulation and Abolition) Act, 1970
    9. The Sales Promotion Employees (Conditions of Service) Act, 1976
    10. The Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979
    11. The Cine-Workers and Cinema Theatre Workers (Regulation of Employment) Act, 1981
    12. The Dock Workers (Safety, Health and Welfare) Act, 1986
    13. The Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996
    Social Security Code

     

    		 9 laws –

    1. The Employees’ Compensation Act, 1923
    2. The Employees’ State Insurance Act, 1948
    3. The Employees Provident Fund and Miscellaneous Provisions Act, 1952
    4. The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959
    5. The Maternity Benefit Act, 1961
    6. The Payment of Gratuity Act, 1972
    7. The Cine Workers Welfare Fund Act, 1981
    8. The Building and Other Construction Workers Welfare Cess Act, 1996
    9. The Unorganised Workers’ Social Security Act, 2008

     

    Here are the key features of these bills:

     (A) Social Security Code, 2020

    • The facility of ESIC would now be provided in all 740 districts. At present, this facility is being given in 566 districts only.
    • EPFO’s coverage would be applicable on all establishments having 20 workers. At present, it was applicable only on establishments included in the Schedule.
    • Provision has been made to formulate various schemes for providing comprehensive social security to workers in the unorganised sector.
    • A “Social Security Fund” will be created on the financial side in order to implement these schemes.
    • Work to bring newer forms of employment created with the changing technology like “platform worker or gig worker” into the ambit of social security has been done in the Social Security Code.
    • Provision for Gratuity has been made for Fixed Term Employee and there would not be any condition for minimum service period for this.
    • With the aim of making a national database for unorganised sector workers, registration of all these workers would be done on an online portal and this registration would be done on the basis of Self Certification through a simple procedure.

     (B) Occupational Safety, Health & Working Conditions Code, 2020

    • Free health checkup once a year by the employer for workers which are more than a certain age.
    • A legal right for getting Appointment Letter given to workers for the first time.
    • Cine Workers have been designated as Audio Visual Worker so that more and more workers get covered under the OSH code. Earlier, this security was being given to artists working in films only.

    (C)  Industrial Relations Code, 2020

    Efforts made by the Government for quickly resolving disputes of the workers include:

    • Compulsory facility for Helpline for redressal of problems of migrant workers.
    • Making a national database of migrant workers.
    • Provision for the accumulation of one day leave for every 20 days worked when work has been done for 180 days instead of 240 days.
    • Equality for women in every sphere: Women have to be permitted to work in every sector at night, but it has to be ensured that provision for their security is made by the employer and consent of women is taken before they work at night.
    • In the event of the death of a worker or injury to a worker due to an accident at his workplace, atleast 50 % share of the penalty would be given. This amount would be in addition to Employees Compensation.
    • Provision of “Social Security Fund” for 40 Crore unorganized workers alongwith GIG and platform workers and will help Universal Social Security coverage
    • Occupational Safety & Health Code to also can now over cover workers from IT and Service Sector.
    • 14 days notice for Strike so that in this period amicable solution comes out.

  • Hate speech in India

    Context

    • Sudarshan TV case will have several implication for the regulation of free speech.
    • In principle, Indian law allows prior restraint on broadcasting. This prior restraint should be used sparingly and must meet a high constitutional bar.
    • Indian law also allows regulation for hate speech.

    Maintaining the equilibrium

    • The government feared that if it did not have the power to regulate speech, it will threaten the stability of society.
    • The hate and violence got the state to betray its own liberal commitments
    • Liberals never acquired the confidence of people to let go of  state regulation in the name of defending the republic.
    • The spread of hate speech and its political consequences are now infinitely greater.
    • The situation, where communication mediums are used to target communities, are not outside the realm of possibility.
    •  It is for this reason we still have so many restraints on speech.

    Challenges in regulation of speech

    • Almost every regulation of speech, no matter how well intentioned, increases the power of the state.
    • But now, in the current context, empowering the state is a frightening prospect as well.
    • The issue is fundamentally political and we should not pretend that fine legal distinctions will solve the issue.
    • An over-reliance on legal instruments to solve fundamentally social and political problems often backfires.

    3 lessons to learn

    • 1) The more the state regulates, the more it politicises the regulation of speech, and ultimately legitimate dissent will be the victim.
    • 2) There is a whole bunch of laws and regulation already on the books for regulation, these have been ineffective because of institutional dysfunction.
    • 3) Social media operates on a set of monetising incentives. But broadcast media is also based on political economy.
    • The granting of licences has always been a political affair; the pricing structures set by the TRAI have perverse consequences for quality and competition.
    • Our current media landscape is neither a market nor a state. The more the underlying political economy of media is broken, the less likely it is that free speech will stand a chance.

    Way forward

    • Not post facto content regulation, but a market structure that can help provide more checks and balances.
    • Not let bad media drive out good.
    • The Court suo motu setting up a regulatory framework does not inspire confidence. It is not its jurisdiction to begin with.
    •  This is something for Parliament to think about.

    Conclusion

    The government must walk the tight rope of regulation and safeguarding the rights of all.

  • Social media and dilemmas associated with it

    Internet has transformed our life like no other technologies. However, it has created several problems as well. The article analyses such issues.

    Examining the role of social media

    • The first reason for the examination of role is the impending US presidential election.
    • Ghosts of Cambridge Analytica, are returning to haunt us again.
    • The second reason is the COVID pandemic.
    • Social media has emerged as a force for good, with effective communication and lockdown entertainment, but also for evil, being used effectively by anti-vaxxers and the #Unmask movement to proselytize their dangerous agenda.

    Understanding the problems associated with social media

    • The big problem with social networks is their business model.
    • The internet was created as a distributed set of computers communicating with one another, and sharing the load of managing the network.
    • This was Web 1.0, and it worked very well. But it had one big problem—there was no way to make money off it.
    •  The internet got monetized, Web 2.0 was born.
    • Come 2020, search and social media advertising has crossed $200 billion, rocketing past print at $65 billion, and TV at $180 billion.
    • This business model has led to a “winner-takes-all” industry structure, creating natural monopolies and centralizing the once-decentralized internet.
    • The emergence of Web 3.0, a revolution that promises to return the internet to users.

    Way forward

    • One principle of the new model is to allow users explicit control of their data, an initiative aided by Europe-like data protection regulation.
    • Another is to grant creators of content—artists, musicians, photographers, —a portion of revenues, instead of platforms taking it all (or most).
    • The technologies that Web 3.0 leverages are newer ones, like blockchains, which are inherently decentralized.
    • They have technology protection against the accumulation of power and data in the hands of a few.
    • Digital currencies enabled by these technologies offer a business model of users paying for services and content with micro-transactions, as an alternative to advertiser-pays.

    Conclusion

    The path to success for these new kinds of democratic networks will be arduous. But a revolution has begun, and it is our revulsion of current models that could relieve us of our social dilemmas.

  • Explained: Solar Cycle 25

    NASA and the National Oceanic and Atmospheric Administration (NOAA) has announced the commencement of solar cycle 25.

    Try this PYQ:

    Q. Which one of the following reflects back more sunlight as compared to the other three?

    (a) Sand desert

    (b) Paddy cropland

    (c) Land covered with fresh snow

    (d) Prairie land

    What is the Solar Cycle?

    • Like seasons on Earth, the Sun follows a cycle of 11 years, during which solar activities fluctuate between solar minima and maxima.
    • Depending on the number of sunspots detected on the Sun, scientists term it is as solar maxima (highest number of sunspots) or solar minima (lowest number of sunspots).
    • Sunspots are small and dark, yet cooler areas formed on the solar surface, where there are strong magnetic forces.
    • They start appearing at Sun’s higher latitudes and later shift towards the equator as a cycle progresses.
    • In short, when the Sun is active, there are more sunspots in comparison to fewer sunspots during the lesser active phase.
    • Maxima or minima is not a specific time in the 11-year cycle but is a period that can last for a few years.

    How are solar cycles determined?

    • One of the important elements researchers look out for on the Sun’s surface is the number of sunspots.
    • A new cycle commences when the Sun has reached its lowest possible minima phase.
    • Every time the cycle changes, the Sun’s magnetic poles reverse.

    Monitoring solar cycles

    • Since the Sun is a highly variable star, data of sunspot formation and its progress need close monitoring.
    • Data of six to eight months are required to confirm whether the star has undergone a minima phase.
    • Traditionally, telescopes were used to record sunspots and recorded data since 1755 is available.
    • With the advance in technology in recent decades, satellites are also used to make real-time sunspot observations.
    • On this basis, scientists announced the completion of solar cycle 24, which lasted between December 2008 and December 2019.
    • With the Sun’s activities having reached its lowest minima between the two cycles, the new solar cycle 25 has now commenced.

    How has the transition between solar cycles 24 and 25 been?

    • The Sun’s activities were notably lesser during 2019 and early 2020. There were no sunspots for 281 days in 2019 and 181 days in 2020.
    • Since December 2019, the solar activities have slowly picked up, corroborating the beginning of the news cycle.
    • The panel termed solar cycle 25 to be a weak one, with the intensity similar to that of Solar cycle 24.

    What solar activities affect us on Earth?

    • Solar activities include solar flares, solar energetic particles, high-speed solar wind and Coronal Mass Ejections (CME).
    • These influence the space weather which originates from the Sun.
    • Solar storms or flares can typically affect space-dependent operations like GPS, radio and satellite communications, besides hampering flight operations, power grids and space exploration programmes.
    • CMEs pose danger to space weather. Ejections travelling at a speed of 500km/second are common during solar peaks and create disturbances in Earth’s magnetosphere, the protective shield surrounding the planet.
    • At the time of spacewalks, astronauts face a great health risk posed by exposure to solar radiation outside Earth’s protective atmosphere.

     

  • What is Queen’s Counsel?

    India has suggested Pakistan appointing a Queen’s Counsel for the Kulbhushan Jadhav case to ensure a free and fair trial.

    Queen’s Counsel

    • In the UK and in some Commonwealth countries, a Queen’s Counsel during the reign of a queen is a lawyer who is appointed by the monarch of the country to be one of ’Her Majesty’s Counsel learned in the law’.
    • The position originated in England.
    • Some Commonwealth countries have either abolished the position, or re-named it so as to remove monarchical connotations, for example, ’Senior Counsel’ or ’Senior Advocate’.
    • Queen’s Counsel is an office, conferred by the Crown that is recognised by courts.
    • Senior Advocate Harish Salve earlier this year has been appointed as Queen’s Counsel (QC) for the courts of England and Wales.

  • Global Smart City Index, 2020

    Four Indian cities -New Delhi, Mumbai, Hyderabad, and Bengaluru – witnessed a significant drop in their rankings in the global listing of smart cities that was topped by Singapore.

    Try this PYQ:

    Q.Which one of the following is not a sub-index of the World Bank’s ‘Ease of Doing Business Index’?

    (a) Maintenance of law and order

    (b) Paying taxes

    (c) Registering property

    (d) Dealing with construction permits

    Global Smart City Index

    • The Institute for Management Development, in collaboration with Singapore University for Technology and Design, has released the 2020 Smart City Index.
    • Its key findings rest on how technology is playing a role in the Covid-19 era.
    • The 2020 Index was topped by Singapore, followed by Helsinki and Zurich in the second and the third place respectively.
    • Others in the top 10 list include Auckland (4th), Oslo (5th), Copenhagen (6th), Geneva (7th), Taipei City (8th), Amsterdam (9th) and New York at the 10th place.

    India’s performances

    • In the 2020 Smart City Index, Hyderabad was placed at the 85th position (down from 67 in 2019), New Delhi at 86th rank (down from 68 in 2019), Mumbai was at 93rd place (in 2019 it was at 78) and Bengaluru at 95th (79 in 2019).
    • This drop can be attributed to the detrimental effect that the pandemic has had where the technological advancement was not up to date.
    • From 15 indicators that the respondents perceive as the priority areas for their city, all four cities highlighted air pollution as one of the key areas that they felt their city needed to prioritise on.
    • For cities like Bangalore and Mumbai, this was closely followed by road congestion while for Delhi and Hyderabad it was basic amenities, the report said.

  • India joins Djibouti Code of Conduct

    India has joined the Djibouti Code of Conduct/ Jeddah Amendment (DCOC/JA) as Observer, following the high-level virtual meeting.

    Try this MCQ:

    Q.The Djibouti Code of Conduct is related to:

    (a) International trade in precious stones (b) Maritime Security (c) Data sharing on Terrorism related activities (d) Data Localization

    Djibouti Code of Conduct

    • DCOC/JA is a grouping on maritime matters comprising 18 member states adjoining the Red Sea, Gulf of Aden, the East coast of Africa and Island countries in the IOR.
    • The DCOC, established in January 2009, is aimed at the repression of piracy and armed robbery against ships in the Western Indian Ocean Region, the Gulf of Aden and the Red Sea.

    Provisions of the code

    • The Code provides a framework for capacity building in the Gulf of Aden and Western Indian Ocean to combat the threat of piracy.
    • It is a partnership of the willing and continues to both deliver against its aims as well as attract increasing membership.
    • The Code was signed on January 29 by the representatives of Djibouti, Ethiopia, Kenya, Madagascar, Maldives, Seychelles, Somalia, the United Republic of Tanzania and Yemen.
    • Since the meeting, further countries have signed bringing the total to 18 countries from the 21 eligible.

    Significance for India

    • India joins Japan, Norway, the UK and the US as Observers to the DCOC/JA.
    • As an Observer at the DCOC/JA, India looks forward to working together with DCOC/JA member states towards coordinating and contributing to enhanced maritime security in the Indian Ocean Region.
    • Delhi has been steadily increasing its strategic footprints in Western and Eastern Indian Ocean besides Eastern African coastal states.

  • What are Supplementary Grants?

    Finance Minister has tabled the first batch of Supplementary Demands for Grants for this financial year in the Lok Sabha.

    Supplementary Demand for Grants

    • Article 115 of the constitution provides for Supplementary, additional or excess grants. (Note: Article 116 provides for Votes on account, votes of credit and exceptional grants.)
    • They are additional grants which are required to meet the expenditure of the government
    • Their demand is presented when the authorized amounts are insufficient and need for additional expenditure has arisen.

    Why need supplementary grants?

    • When actual expenditure incurred exceeds the approved grants of the Parliament, the Ministry of Finance and Ministry of Railways presents a Demand for Excess Grant.
    • It is needed for government expenditure over and above the amount for which Parliamentary approval was already obtained during the Budget session.
    • When grants, authorised by the Parliament, fall short of the required expenditure, an estimate is presented before the Parliament for Supplementary or Additional grants.
    • These grants are presented and passed by the Parliament before the end of the financial year.

    Who notices such grants?

    • The Comptroller and Auditor General of India bring such excesses to the notice of the Parliament.
    • The Public Accounts Committee examines these excesses and gives recommendations to the Parliament.

    What are other grants?

    • Excess Grant: It is the grant in excess of the approved grants for meeting the requisite expenses of the government.
    • Additional Grant: It is granted when a need has arisen during the current financial year for supplementary or additional expenditure upon some new service not contemplated in the Budget for that year.
    • Token Grant: When funds to meet proposed expenditure on a new service can be made available by re-appropriation, demand for the grant of a token sum may be submitted to the vote of the House and, if the House assents to the demand, funds may be so made available.