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GS Paper: GS3

  • Hydrogen Line: A Unique Signal

    Why in the News?

    The hydrogen line stands as a pivotal tool in contemporary astronomy, serving various purposes from studying distant stars to questing for extraterrestrial intelligence, should it exist.

    What is a Hydrogen Line?

    • The hydrogen line is a special type of light that hydrogen atoms emit.
    • It happens when an electron, a tiny particle that orbits the nucleus of the hydrogen atom, jumps from a higher energy level to a lower one.
    • This jump releases energy in the form of light, specifically with a wavelength of about 21 centimetres. This wavelength is what scientists call the hydrogen line.

    Why is it Important?

    • Hydrogen is everywhere in the universe. It’s the simplest and most abundant element, making up about 75% of the universe’s elemental mass.
      • So, studying the hydrogen line allows us to understand a lot about the composition and distribution of matter in the universe.
    • By observing the hydrogen line’s emission from different regions of space, astronomers can create maps showing where hydrogen gas is located.
    • Secrets about the early Universe: The hydrogen line also holds secrets about the early universe. Shortly after the Big Bang, the universe was filled with hydrogen gas.
      • By studying the hydrogen line from distant parts of the universe, astronomers can learn about its conditions and evolution billions of years ago.

    How Do We Interpret Hydrogen Line?

    • Radio telescope data enables mapping of hydrogen distribution, revealing locations of hydrogen clouds crucial for understanding galaxy and galaxy cluster formation and evolution.
    • Observing hydrogen line emission from different galaxy parts enables studying internal structures and dynamics, like rotation curves, offering insights into mass distribution within galaxies.
    • Observing hydrogen lines from distant galaxies unveils early universe conditions, aiding in understanding cosmic evolution’s initial stages.

    What’s Next?

    • New Discoveries: Scientists are continually developing new technologies and techniques to improve the sensitivity and resolution of radio telescopes.
      • This enables them to detect fainter signals and uncover new insights into the universe’s hydrogen content.
    • Exploring Dark Matter: The hydrogen line observations could also contribute to understanding dark matter, an invisible substance that makes up about 27% of the universe’s total mass-energy content.
      • By studying the hydrogen distribution in relation to the gravitational effects observed in galaxies, scientists hope to shed light on the nature of dark matter.

    PYQ:

    [2012] A team of scientists at Brookhaven National Laboratory including those from India created the heaviest anti-matter (anti-helium nucleus). What is/are the implication/implications of the creation of anti-matter?

    1. It will make mineral prospecting and oil exploration easier and cheaper.
    2. It will help prove the possibility of the existence of stars and galaxies made of anti-matter.
    3. It will help us understand the evolution of the universe.

    Select the correct answer using the codes given below:

    (a) 1 only

    (b) 2 and 3 only

    (c) 3 only

    (d) 1, 2 and 3

  • [pib] Green Ammonia Production under SIGHT Program

    Why in the News?

    • Solar Energy Corporation of India (SECI) has initiated the bidding process for a total capacity of 5.39 lakh Metric Tonnes (MT) per annum of Green Ammonia production.
      • The initiative falls under Mode 2A of the Strategic Interventions for Green Hydrogen Transition (SIGHT) Programme, part of the National Green Hydrogen Mission led by the Ministry of New & Renewable Energy (MNRE).

    What is Green Ammonia?

    • Green ammonia, also known as renewable ammonia, is a form of ammonia produced using renewable energy sources, which is proposed as a sustainable, emission-free alternative with a multitude of applications in industry and other sectors.
    • It is produced by combining nitrogen with hydrogen, which is generated through water electrolysis using renewable energy, and then reacting the hydrogen and nitrogen at high temperatures and pressures to form ammonia.

    About the National Green Hydrogen Mission

    • The National Green Hydrogen Mission was launched in January 2023.
      • Objective: To make India a ‘global hub’ for using, producing and exporting green hydrogen.
    • Earlier, the National Hydrogen Mission was launched on August 15, 2021, with a view to cutting down carbon emissions and increasing the use of renewable sources of energy.
    • The Ministry of New and Renewable Energy (MNRE) formulates the scheme guidelines for the implementation of these missions.

    Key features of the NGHM

    • Power capacity: The mission seeks to promote the development of a green hydrogen production capacity of at least 5 MMT per annum with an associated renewable energy capacity addition of about 125 GW in the country by 2030.
    • Job creation: It envisages an investment of over ₹8 lakh crore and creation of over 6 lakh jobs by 2030.
    • Reducing energy import bill: It will also result in a cumulative reduction in fossil fuel imports of over ₹1 lakh crore and abatement of nearly 50 MMT of annual greenhouse gas emissions by 2030.
    • Export promotion: The mission will facilitate demand creation, production, utilisation and export of green hydrogen.
    • Incentivization: Under the Strategic Interventions for Green Hydrogen Transition Programme (SIGHT), distinct financial incentive mechanisms are provided.
    • Green Hydrogen Hubs: Regions capable of supporting large-scale production and/or utilisation of hydrogen will be identified and developed as Green Hydrogen Hubs.

    What is the SIGHT Program?

    • In the initial stage, two distinct financial incentive mechanisms proposed with an outlay of ₹ 17,490 crore up to 2029-30:
    1. Incentive for manufacturing of electrolysers
    2. Incentive for production of green hydrogen.
    • Depending upon the markets and technology development, specific incentive schemes and programmes will continue to evolve as the Mission progresses.

    PYQ:

    [2019] Consider the following statements:

    1. Agricultural soils release nitrogen oxides into the environment.
    2. Cattle release ammonia into the environment.
    3. Poultry industry releases reactive nitrogen compounds into environment.

    Which of the statements given above is/are correct?

    (a) 1 and 3 only

    (b) 2 and 3 only

    (c) 2 only

    (d) 1, 2 and 3

  • Remoulding the Global Plastics Treaty

    Why in the news?

    As discussions for an international legally binding treaty on plastic pollution continue, it is essential to consider how it can support a fair transition for informal waste collectors and recyclers.

    Observations by the OECD Global Plastic Outlook

    • In 2019, global plastic waste production was 353 million tonnes, more than double the amount in 2000. This number is expected to triple by 2060. Only 9% of plastic waste was recycled in 2019.
    • 50% of plastic waste was sent to landfills, 19% incinerated, and 22% disposed of in uncontrolled sites or dumps.

    Challenges due to Plastic Pollution:

    • Soil Pollution: Plastic waste can contaminate soil, reducing its fertility and affecting plant growth.
    • Marine Pollution: Plastic waste in oceans can harm marine life, alter habitats, and disrupt natural processes, making ecosystems less resilient to climate change.
    • Water Pollution: Plastic waste can contaminate groundwater and waterways, affecting human consumption and aquatic life.
    • Health Risks: 
      • Microplastics: Plastic waste can break down into microplastics, which can be ingested by humans and animals, potentially causing health problems.
      • Toxic Chemicals: Plastic products can leach toxic chemicals, such as phthalates and BPA, into food and water, posing health risks

    Significance of Recognizing the Issue

    • Crucial role of recycling workers: Informal recycling workers recycled 85% of the 9% recycled plastic, playing a crucial role in global waste management.
    • Economic and Environmental Contribution: These workers alleviate municipal budgets, promote circular waste management solutions, and help mitigate greenhouse gas emissions. Their efforts significantly reduce plastic in landfills and prevent plastic leakage into the environment.
      • Despite their contributions, informal recycling workers are often overlooked and remain vulnerable. They face risks such as privatization of waste management, waste-to-energy projects, and exclusion from public policy interventions in plastic waste management.

    Global Plastic Treaty Needs Just Transition

    • Need for Intergovernmental Negotiating Committee (INC): Established in 2021, the INC aims to create a legally binding agreement to reduce plastic pollution. The INC has held several meetings, with the final one scheduled in South Korea.
    • Promoting Informal Workers Participation: The International Alliance of Waste Pickers (IAWP) emphasizes the need to support and integrate informal waste pickers into the treaty discussions. Their historical contributions should be acknowledged, their rights protected, and their perspectives included in policy implementation.
    • Building Clarity: There is no universally agreed-upon terminology for a just transition or a formal definition of the informal waste sector. Clarifying these definitions is essential.

    India’s Voice is Important

    • India promotes repair, reuse, refill, and recycling without eliminating the use of plastics. This approach emphasizes country-specific circumstances and capacities.
    • India’s informal waste pickers are indispensable and remain central to the discussion on plastic waste management.
    • Rethinking EPR norms is crucial to integrating the informal worker cohort into the new legal framework.
    • As a key representative from the Global South, India’s perspectives and approaches are vital in shaping the Global Plastics Treaty.

    Conclusion: By incorporating the perspectives of informal waste workers and ensuring their livelihoods are protected, the Global Plastics Treaty can embody social justice and equity principles, contributing to a sustainable future while leaving no one behind.

    Mains PYQ:

    Q What are the impediments in disposing of the huge quantities of discarded solid wastes which are continuously being generated? How do we remove safely the toxic wastes that have been accumulating in our habitable environment?  (UPSC IAS/2018)

  • Why has RBI policy panel kept repo rate unchanged, hiked GDP growth projection?

    Why in the news?

    The RBI’s Monetary Policy Committee kept the repo rate at 6.5% for the eighth consecutive time, due to persistent high retail inflation from sticky food prices.

    Monetary Policy Committee (MPC) 

    • The Monetary Policy Committee (MPC) of India is responsible for setting the benchmark interest rate in the country.
    • The committee consists of six members: the Governor of the Reserve Bank of India (RBI), the Deputy Governor in charge of monetary policy, an Executive Director of the RBI, and three external members nominated by the government.
    • The MPC meets at least four times a year and publishes its decisions after each meeting. The committee’s primary objective is to maintain price stability while considering the goal of economic growth.

    Why did the RBI keep the Rates Unchanged?

    • Inflation Concerns: The Monetary Policy Committee (MPC) kept the repo rate unchanged at 6.5% due to persistent high inflation, with April 2024 retail inflation at 4.83%.
    • Caution on Food Inflation: The policy stance remains cautious due to the risk of rising food inflation from heatwave conditions, which may impact the final journey of disinflation.
    • Flexible Inflation Targeting: Under the regime, the RBI aims to keep inflation within the 2-6% range and achieve a 4% target on a durable basis.
    • Supply Side Disruptions: Persistent supply shocks in cereals, pulses, spices, and vegetables contributed to elevated food inflation, impacting overall inflation management.

    What happens to Lending Rates if the Repo Rate is left steady?

    Lending Rate:

    The lending rate, also known as the bank rate, is the rate at which commercial banks borrow money from the central bank without securities. It is typically higher than the repo rate and is used for longer-term lending. The lending rate is used to assess the long-term monetary goals of a bank and is often used to manage liquidity in the system

    Repo Rate 

    The repo rate, on the other hand, is the rate at which the central bank lends money to commercial banks against government securities as collateral. It is used for short-term lending and is typically lower than the lending rate
    • Relief for Borrowers: With the repo rate steady at 6.5%, external benchmark lending rates (EBLR) linked to the repo rate will not increase, keeping equated monthly installments (EMIs) on home and personal loans unchanged.
    • Potential MCLR Increase: Lenders might raise interest rates on loans linked to the marginal cost of fund-based lending rate (MCLR), as the full transmission of the 250 basis points hike in the repo rate from May 2022 to February 2023 has not yet occurred.

    Why Has MPC Hiked GDP Growth?

    • Improving Demand: The MPC raised the GDP growth forecast for FY25 to 7.2% from 7% due to strengthening rural and urban demand conditions buoyed by favourable monsoon forecasts.
    • Robust Economic Activity: Indicators such as healthy growth in the eight core industries, strong Purchasing Managers Index (PMI) in manufacturing and services, and overall resilient domestic economic activity support the upgraded growth projection.
    • Sectoral Strength: The manufacturing and services sectors continued to exhibit robust performance, with the PMI for services standing at 60.2 in May 2024, indicating strong expansion.

    Conclusion: The RBI’s cautious approach to keeping rates steady while boosting GDP growth projections aims to balance economic growth and inflation control, with a focus on addressing persistent food inflation.

    Mains PYQ:

    Q  Do you agree with the view that steady GDP growth and low inflation have left the Indian economy in good shape? Give reasons in support of your arguments. (UPSC IAS/2019)

  • In news: Volkhov River

    Why in the News?

    Four medical students from India studying in a university in Russia drowned in Volkhov River near St. Petersburg.

    About Volkhov River

    • The Volkhov River is a significant waterway in northwestern Russia.
    • It is located in the Leningrad Oblast and Novgorod Oblast of Russia, in the northwestern part of the country.
    • It stretches approximately 224 kilometers (139 miles) from Lake Ilmen to Lake Ladoga.
    • Origin: It flows out of Lake Ilmen north into Lake Ladoga, the largest lake in Europe.
    • Tributaries: The Msta River is the largest tributary of the Volkhov.
    • Major Cities: Several cities and settlements are situated along the banks of the Volkhov River, including Novgorod, Veliky Novgorod, and Volkhov.

    PYQ:

    [2020] Consider the following pairs:

    River – Flows into

    1. Mekong – Andaman sea
    2. Thames – Irish Sea
    3. Volga – Caspian Sea
    4. Zambezi – Indian Ocean

    Which of the pairs above is/are correctly matched?

    (a) Only 1

    (b) Only 2

    (c) 3 Only

    (d) None of the above/More than one of the above.

  • Regulator SEBI expands promoter definition for IPO-bound companies    

    Why in the news?

    • SEBI expands promoter definition for IPO-bound companies, including founders holding 10% or more, and their immediate relatives.
      • According to current SEBI regulations, a promoter is someone who controls the affairs of the company or can appoint the majority of directors or is named as such in an offer document.

    What is an IPO?

    • An IPO is an initial public offering, in which shares of a private company are made available to the public for the first time.
    • An IPO allows a company to raise equity capital from public investors.
    • The Dutch are credited with conducting the first modern IPO by offering shares of the Dutch East India Company to the general public.

    What Norms Say

    • Expanded Definition of Promoter: The definition of a promoter has been expanded for companies preparing for an IPO. A promoter is someone who controls the company’s affairs, can appoint the majority of directors, or is named as such in an offer document.
    • Previous Criteria: Founders holding 25% were previously deemed promoters due to their negative control and power to block special resolutions.
    • New Criteria: Founders holding 10% or more must classify themselves as promoters if they are key managerial personnel (KMP) or directors in the company. Immediate relatives on the company board or KMP will also be classified as promoters, even if they hold just 1%.

    About Declassification and 31A of LODR (Listing Obligations and Disclosure Requirements) Regulations

    • Declassification Difficulty: The current regulations do not provide an easy path for declassifying a promoter as a public shareholder.
    • Rule 31A of LODR Regulations: To be declassified, a person must not hold more than 10% in the listed company along with their relatives.
    • Restrictive Nature: This restrictive rule makes declassification almost impossible for immediate relatives who are classified as promoters by virtue of their relationship, especially problematic for married daughters with no active role in the company.

    Issue Over Subjective Definition

    • Subjective Nature of Promoter Definition: The definition of a promoter has been historically subjective, leading to varying interpretations and legal disputes.
    • Court Rulings: There have been several court rulings addressing the subjective nature of who qualifies as a promoter, highlighting inconsistencies and complexities.
    • Complex Criteria: Accounting standards and regulatory criteria for determining control and influence in a company are often complicated and can be interpreted in multiple ways.
    • Need for Objectivity: Experts argue for a more objective test to ascertain control and promoter status, which would provide clearer guidelines and reduce disputes.
    • Example: Vinod Kothari, Director at Vinod Kothari Consultants, points out that moving towards an objective test is a positive step, given the current complexities in determining control.

    Way forward: 

    • Standardised Guidelines: Develop clear and standardised guidelines for identifying promoters, reducing subjectivity and ensuring consistency.
    • Detailed Disclosures: Mandate detailed disclosures from companies about their promoters, including shareholding patterns, roles, and influence in decision-making.

    Mains PYQ:

    Q In the light of Satyam Scandal (2009), discuss the changes brought in corporate governance to ensure transparency and accountability. (UPSC IAS/2015)

  • Will understanding Cancer become a data problem? 

    Why in the news?

    WHO reports 33,000 new brain cancer cases yearly in India, highlighting widespread suffering.

    What is brain cancer?

    • Brain cancer, also known as primary brain cancer, is an overgrowth of cells in the brain that form masses called brain tumours.
    • It is different from secondary brain cancer, which occurs when cancer that began in another part of the body spreads to the brain

    The World Health Organization (WHO) Report:

    • Incidence of Brain Cancer: WHO reports approximately 33,000 new incidences of brain cancer annually in India.
    • Global Cancer Observatory 2020: Brain cancer ranks as the 19th most common type of cancer worldwide.

    Use of Data Analytical Tools in Diagnosis:

    • Potential of Data Analytics: Utilization of data analytical tools like Next-Generation Sequencing (NGS) can simplify the diagnosis process.
    • Advantages: Data analysis can provide real-time results with precision, reducing the need for invasive procedures like surgeries.
    • Liquid Biopsy: The introduction of techniques like liquid biopsy offers a less invasive alternative to surgery, enhancing patient comfort.

    Impact on Risks, Discomfort, and Pain:

    • Reduction of Risks: Adoption of data analytics in diagnosis can lower the risks associated with invasive procedures, ranging from short-term paralysis to death.
    • Enhanced Patient Experience: By offering less invasive alternatives, such as liquid biopsy, patients and their families can experience reduced discomfort and pain during the diagnostic process.
    • Improved Precision: Data analytics enable clinicians to detect genetic patterns indicative of cancer cells, facilitating early detection and treatment planning, ultimately leading to better outcomes for patients.

    Way forward:

    • Emphasize the transformative potential of data analytics in oncology research, particularly in simplifying diagnosis and reducing risks and discomfort for patients.
    • Highlight the importance of leveraging innovative technologies like NGS to unlock new possibilities in cancer research and treatment.

    Mains PYQ:

    Q What are the research and developmental achievements in applied biotechnology? How will these achievements help to uplift the poorer sections of the society? (UPSC IAS/2021)

  • First Human Case of Avian H5N2 Infection

    Why in the News?

    • The World Health Organization (WHO) has confirmed the death of a Mexican resident due to bird flu, marking the first confirmed case of human infection with the H5N2 variant.
      • This H5N2 strain is different from another bird flu variety-H5N1 which infected people in America recently.

    What is Avian Influenza A (H5N2)?

    • Avian Influenza A (H5N2) is a subtype of the influenza A virus that primarily circulates among birds but can infect humans under certain circumstances.
    • Human infections typically result from direct contact with infected birds or contaminated environments, showcasing the zoonotic nature of the virus.

    Symptoms of H5N2

    • Infection of H5N2 may cause mild to severe upper respiratory tract infections and can be fatal.
    • Conjunctivitis, gastrointestinal symptoms, encephalitis and encephalopathy have also been reported.

    Diagnostic and Treatment Protocols

    • Laboratory Diagnosis: The identification of avian influenza in humans necessitates laboratory testing to confirm the presence of the virus.
    • WHO Guidance: The World Health Organization periodically updates technical protocols, such as RT-PCR methods, to enhance the detection of zoonotic influenza.
    • Treatment Strategies: Antiviral medications, notably neuraminidase inhibitors like oseltamivir and zanamivir, demonstrate efficacy in reducing viral replication duration and improving survival prospects for afflicted individuals.

    Influenza A Viruses

    • The alphanumeric codes of H and N are used to subdivide the viruses according to what kinds of proteins are on the surface of the virus based on 2 types:
    1. Hemagglutinin (HA) 
    2. Neuraminidase (NA)
    • There are 18 known HA subtypes and 11 known NA subtypes.
    • In birds, 16 HA and 9 NA subtypes have been identified. (Two additional subtypes, H17N10 and H18N11, have been identified in bats.)
    • Many different combinations of HA and NA proteins are possible.
    • For example, an “A(H7N2) virus” designates an influenza A virus subtype that has an HA 7 protein and an NA 2 protein.
    • Similarly, an “A(H5N1)” virus has an HA 5 protein and an NA 1 protein.

     

    PYQ:

    [2015] H1N1 virus is sometimes mentioned in the news concerning which one of the following diseases?

    (a) AIDS

    (b) Bird flu

    (c) Dengue

    (d) Swine flu

  • Two bird sanctuaries of Bihar added to Ramsar List

    Why in the News?

    Two wetlands in Bihar, Nagi and Nakti bird sanctuaries, have been added to the global list of wetlands of international importance under the “Ramsar Convention”, bringing India’s total Ramsar sites to 82.

    Do you know?

    • Currently, the highest number of such sites is in the UK (175) followed by Mexico (144).
    • The number of Indian sites on the list has increased from 26 to 82 in the last ten years, of which 40 have been added in the last three years.

    About Nagi-Nakti Wetland

    • These wetlands, situated in Bihar’s Jamui district within the Jhajha forest range, are man-made reservoirs nestled amid dry deciduous forests and hills.
    • Both sanctuaries were developed as man-made reservoirs, primarily for irrigation purposes, through the construction of dams.
    • These wetlands host a diverse range of flora and fauna, including over 150 species of birds, mammals, fish, aquatic plants, reptiles, and amphibians.

    Nakti Bird Sanctuary:

    • It was developed primarily for irrigation through the construction of the Nakti dam.
    • In 1984, the wetland was designated as a bird sanctuary, highlighting its importance as a wintering habitat for several migratory species, with over 20,000 birds congregating during winter months.
    • This includes one of the largest congregations of red-crested pochard in the Indo-Gangetic plain.

    Nagi Bird Sanctuary:

    • It was, on the other hand, created by the damming of the Nagi River, which enabled the gradual formation of water bodies with clear water and aquatic vegetation.
    • Overall, the wetland and its fringes provide habitat for over 75 bird species, 33 fish, and 12 aquatic plants.
    • Notably, the site hosts one of the largest congregations of bar-headed geese in the Indo-Gangetic plain.

    Ecological Significance

    • Migratory Bird Haven: The sanctuaries serve as critical wintering habitats for numerous migratory bird species, attracting over 20,000 birds during the winter months.
    • Species Diversity: Nagi and Nakti sanctuaries support a rich biodiversity, including over 75 bird species, 33 fish species, and 12 aquatic plant species.
    • Bar-headed Geese Congregation: Notably, the wetlands host one of the largest gatherings of bar-headed geese on the Indo-Gangetic plain, highlighting their importance as migratory bird habitats.

    Back2Basics: Ramsar Convention

    Explanation
    Purpose International treaty aimed at conserving and promoting the sustainable use of wetlands.
    Establishment Established on February 2, 1971, in Ramsar, Iran.
    Key Components
    • Identifying and designating wetlands of international importance.
    • Ensuring their effective management.
    • Promoting international cooperation for wetland conservation and sustainable use.
    9 Criteria for Sites Declaration
    1. A site should contain representative, rare, or unique wetland types.
    2. It should support vulnerable, endangered, or endemic species.
    3. It should be a habitat for waterfowl.
    4. It should have significant ecological, botanical, zoological, limnological, or hydrological features.
    5. It should support scientific research and biodiversity conservation.
    6. It should provide essential services such as flood control, water purification, and groundwater recharge.
    7. It should have cultural, recreational, or spiritual value for local communities.
    8. It should support sustainable livelihoods for human communities.
    9. It should be at risk or face human-induced threats that require international cooperation for conservation.
    Participating Countries 171 contracting parties (countries) as of September 2021.
    India and Ramsar Convention  The first Ramsar Site in India, the Chilika Lake in Odisha, was designated in 1981.
    Ramsar Secretariat The convention is administered by the Ramsar Secretariat, based in Gland, Switzerland.
    World Wetlands Day
    • February 2nd of each year.
    • To raise awareness about the importance of wetlands and commemorate the adoption of the Ramsar Convention.
    Montreux Record Register of wetland sites on the List of Wetlands of International Importance under the Ramsar Convention that require special attention.

     

    PYQ:

    [2014] If a wetland of international importance is brought under the ‘Montreux Record’, what does it imply?

    (a) Changes in ecological character have occurred, are occurring or are likely to occur in the wetland as a result of human interference.

    (b) The country in which the wetland is located should enact a law to prohibit any human activity within five kilometres of the edge of the wetland

    (c) The survival of the wetland depends on the cultural practices and traditions of certain communities living in its vicinity and therefore the cultural diversity therein should not be destroyed

    (d) It is given the status of ‘World Heritage Site’

    [2019] Consider the following statements:

    1. Under Ramsar Convention, it is mandatory on the part of the Government of India to protect and conserve all the wetlands in the territory of India.
    2. The Wetlands (Conservation and Management) Rules, 2010 were framed by the Government of India based on the recommendations of the Ramsar Convention.
    3. The Wetlands (Conservation and Management) Rules, 2010 also encompass the drainage area or catchment regions of the wetlands as determined by the authority.

    Which of the statements given above is/are correct?

    (a) 1 and 2 only

    (b) 2 and 3 only

    (c) 3 only

    (d) 1, 3 and 3

  • SEBI forms panel for reviewing economic structure of clearing corporations  

    Why in the news?

    SEBI forms a committee to review clearing corporations’ ownership and economic structure, aiming to enhance resilience, independence, and neutrality as risk managers.

    About the Securities and Exchange Board of India (SEBI):

    • SEBI is the capital markets regulator in India responsible for regulating the securities market and protecting the interests of investors.
    • It was established in 1988 and given statutory powers in 1992 under the SEBI Act.
    • SEBI’s functions include regulating stock exchanges, registering and regulating brokers and other intermediaries, and promoting fair and transparent securities markets.

    What is a Clearing Corporation? 

    • A clearing corporation is a central counterparty (CCP) that provides clearing and settlement services for trades executed on various exchanges.
    • It acts as an intermediary between buyers and sellers, guaranteeing the completion of transactions and managing counterparty risk.
    • Clearing corporations ensure the smooth functioning of financial markets by facilitating the timely settlement of trades and reducing systemic risk.

    About Usha Thorat Committee on Reviewing the Ownership and Economic Structure of Clearing Corporations:

    • SEBI has formed a committee chaired by Usha Thorat, former Deputy Governor of the Reserve Bank of India (RBI), to review the ownership and economic structure of clearing corporations.
    • The committee’s mandate includes examining the ownership structure and finances of clearing corporations to ensure their resilience, independence, and neutrality as risk managers.
    • It will assess the feasibility of broadening the list of eligible investors allowed to hold stakes in clearing corporations and suggest categories of investors who can acquire such stakes.
    • The committee will also explore alternative ownership structures and shareholding patterns suited to an interoperable environment, where clearing corporations provide services across multiple exchanges.
    • It aims to propose alternatives that address the periodic capital needs of clearing corporations and ensure sufficient capital and liquidity during market-wide systemic stress.
    • The current ownership structure of clearing corporations is dominated by the parent exchange, which exposes them to the expectations of shareholders of the parent exchange.

    Conclusion: The Usha Thorat Committee aims to enhance the resilience and independence of clearing corporations by exploring alternative ownership structures and suggesting measures to ensure adequate capital and liquidity.

    Mains PYQ: 

    Q The product diversification of financial institutions and insurance companies, resulting in overlapping of products and services strengthens the case for the merger of the two regulatory agencies, namely SEBI and IRDA. Justify.(UPSC IAS/2013)