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GS Paper: GS3

  • Supreme Court orders status quo on Kaleshwaram Project expansion

     

    The Supreme Court has ordered status quo on the Kaleshwaram Lift Irrigation Project (KLIP) after it was told the Telangana government was increasing the capacity of the project without any environmental clearances.

    Kaleshwaram Lift Irrigation Project (KLIP)

    • The KLIP is a multi-purpose irrigation project on the Godavari River in Kaleshwaram, Bhupalpally in Telangana.
    • Currently the world’s largest multi-stage lift irrigation project, its farthest upstream influence is at the confluence of the Pranhita and Godavari rivers.
    • The Pranahita River is itself a confluence of various smaller tributaries including the Wardha, Painganga, and Wainganga rivers which combine to form the seventh-largest drainage basin on the subcontinent.
    • It remains untapped as its course is principally through dense forests and other ecologically sensitive zones such as wildlife sanctuaries.

    Grandeur of the project

    • Till date, the biggest lift schemes in the world were the Colorado lift scheme in America and the Great Manmade River in Egypt.
    • The capacities of these schemes are in horsepower and they took over three decades for completion.
    • Now, the Kaleshwaram lift irrigation project, an Indian lift scheme has become the worlds biggest in terms of capacities.

    Key facts associated

    • Built across Godavari river, KLIP will lift the water to a height of half-a-kilometre.
    • It is designed to irrigate 45 lakh acres for two crops in a year, meet the drinking water requirement of 70 percent of the state and also cater to the needs of the industry.
    • The foundation stone for the Rs 80,500 crore project was laid in 2016 and claimed to be the world’s biggest project of its kind, completed in the shortest time.
    • The government is planning to lift two thousand million cubic (TMC) feet of Godavari water per day from Medigadda barrage.
    • Claimed to be an engineering marvel, the project comprises 1,832 km water supply route, 1,531 km gravity canal, 203 km tunnel routes, 20 lifts, 19 pump houses and 19 reservoirs with a storage capacity of 141 TMCs.
    • It requires nearly 4,992 MW of electricity to pump 2 TMC of water every day in the first phase. The requirement will go up to 7,152 MW for lifting 3 TMC from next year.

    How important is KLIP to Telangana?

    • The project will enable farmers in Telangana to reap multiple crops with a year-round supply of water wherein earlier they were dependent on rains resulting in frequent crop failures.
    • This year, Telangana farmers have already delivered bumper rabi crops of paddy and maize due to better irrigation facilities and an extended monsoon.
    • KLIS covers several districts which used to face rainfall deficit and the groundwater is fluoride-contaminated.
    • Apart from irrigation, a main component of the project is the supply of drinking water to several towns and villages and also to twin cities of Hyderabad and Secunderabad.
    • Mission Bhagiratha, to supply drinking water to every household in villages, draws a large quantity of water from the KLIS and some quantity from projects on River Krishna.
    • There is a burgeoning freshwater fishing industry in the state.

    Issues with the Project

    • The NGT has observed that the Telangana government subsequently changed the design of the project to increase its capacity.
    • By increasing its capacity to pump 3 TMC water from 2 TMC, large tracts of forest land and other land were taken over and massive infrastructure was built causing an adverse impact on the environment.
    • Extraction of more water certainly requires more storage capacity and also affects hydrology and riverine ecology of Godavari River.
    • Such issues have to be examined by the statutory authorities concerned.

    Back2Basics: National Green Tribunal

    • It is a specialized body set up under the National Green Tribunal Act (2010) for effective and expeditious disposal of cases relating to environmental protection and conservation of forests and other natural resources.
    • With the establishment of the NGT, India became the third country in the world to set up a specialized environmental tribunal, only after Australia and New Zealand, and the first developing country to do so.
    • NGT is mandated to make disposal of applications or appeals finally within 6 months of filing of the same.
    • The NGT has five places of sittings, New Delhi is the Principal place of sitting and Bhopal, Pune, Kolkata and Chennai are the other four.

    Structure of NGT

    • The Tribunal comprises of the Chairperson, the Judicial Members and Expert Members. They shall hold office for a term of five years and are not eligible for reappointment.
    • The Chairperson is appointed by the Central Government in consultation with the Chief Justice of India (CJI).
    • A Selection Committee shall be formed by the central government to appoint the Judicial Members and Expert Members.
    • There are to be at least 10 and a maximum 20 full-time judicial members and Expert Members in the tribunal.

     

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  • Celebrating World Tiger Day

    As the world celebrates yet another World Tiger Day July 29, 2022, there is sobering news.

    Why in news?

    • The International Union for the Conservation of Nature (IUCN) recently confirmed that the tiger has gone extinct in Cambodia, Laos and Vietnam.

    Tigers in India

    • India is home to a third of the global tiger population and the country’s success in saving the big cat is crucial to global efforts to protect their numbers.
    • India was the first country in the world to champion the cause of conservation of the tiger and its natural habitats.
    • The aesthetic, ethical and cultural value of tigers have also proved to be critical factors for saving tigers, which has also ensured the success of tiger conservation in India.

    Why is it necessary to conserve Tigers?

    The tiger is a unique animal that plays a pivotal role in the health and diversity of an ecosystem.

    • Predation balance: It is a top predator which is at the apex of the food chain.
    • Regulation of herbivores: It keeps the population of wild ungulates in check, thereby maintaining the balance between prey herbivores and the vegetation upon which they feed.
    • Ecosystem balance: Therefore, the presence of tigers in the forest is an indicator of the well being of the ecosystem.
    • Tourism: Apart from the ecological services provided by the animal, the tiger also offers direct use such as attracting tourists, which provide incomes for local communities.

    Various efforts to save Tigers

    India is home to 70 percent of the global tiger population. Therefore, the country has an important role to play in tiger conservation.

    [1] Project Tiger

    • The Government of India started ‘Project Tiger’ in 1972 with a view to conserving the animal.
    • As part of this project nine core buffer areas for maintaining tiger population were notified. Now, this has >expanded to 48 tiger reserves.

    [2] CITES (Convention on International Trade in Endangered Species of Wild Fauna and Flora)

    • Besides protecting tiger territory, other measures being taken to save the tiger include: curbing wildlife trade through international agreements.
    • CITES is an international agreement between governments aimed at ensuring that international trade in specimens of wild animals and plants, including tigers, does not threaten their survival. India ratified this treaty in 1976.

    [3] Global Tiger Forum and Tiger Range Countries

    • Established in 1994, the Global Tiger Forum is the only inter-governmental body for tiger conservation.
    • Its membership includes seven tiger range countries: Bangladesh, Bhutan, India, Cambodia, Myanmar, Nepal and Vietnam.

    [4] CA|TS

    • 14 tiger reserves have been accredited under CA|TS (Conservation Assured | Tiger Standards) categories.
    • The CA|TS is a set of criteria that examines the management of tiger sites to gauge the success rates of tiger conservation.

    [5] St. Petersburg Declaration

    • This resolution was adopted In November 2010, by the leaders of 13 tiger range countries (TRCs) assembled at an International Tiger Forum in St. Petersburg, Russia
    • It aimed at promoting a global system to protect the natural habitat of tigers and raise awareness among people on white tiger conservation.

    [6] Various NGOs

    • International NGO members consist of World Wildlife Fund, International Fund for Animal Welfare (IFAW), and TRAFFIC.
    • Several national NGOs from India and Nepal are also members.

    Success of these efforts

    The four-year tiger census report, Status of Tigers in India, 2018 shows the number of the big cat has increased across all landscapes.

    The total count has risen to 2,967 from 2,226 in 2014 — an increase of 741 individuals (aged more than one year), or 33%, in four years.

    • At present, India has around 75% of tiger population and its source areas amongst the 13 tiger range countries in the world.
    • 2.24% of country’s geographical area is spread out in 51 tiger reserves in 18 States.

    Various threats to Tigers

    • Despite measures being initiated to protect wild tigers, habitat loss and poaching continue to pose a threat to the animal’s survival.
    • Tiger parts are used in traditional Chinese medicines, tiger skin is used for decorative and medicinal purposes and tiger bones are again used for medicinal purposes for curing body pain, et al.
    • Between 2000 and 2014, TRAFFIC’s research found that parts of a minimum of 1,590 Tigers were seized in Tiger range States, an average of two Tigers per week.

    Other existential threats to tigers

    • Man-Animal conflict: This largely seems a normal phenomenon in India. We broadly remember the case of Tigress Avni which was finally shot dead by the forest officials in Maharashtra.
    • Shrinking habitat: This often leads to territorial conflicts among the Tigers.
    • Issues with Tourism: Excess of tourist activities is problematic for animals. Frequent visits in reserved forests areas disrupt them to move freely for their prey.
    • Climate Change: The effects of climate change and floods are a major problem.  The latest study by WWF shows that Sundarban which is one of the biggest home of tigers in India would sink entirely in 2070.

    Way forward

    • The process of tiger conservation should be more dynamic and compatible with the future possibilities of climatic changes as well.
    • The Forest Department and the Central government can collaborate to protect the natural corridors to ensure the free movement of the tigers for better food resources.
    • Campaigns such as ‘Save the Tiger’ are recommended as effective measures to make people across the country and globe aware of the significance of conserving tiger species.
    • Sensitization of local communities against poaching is also a crucial measure in this regard.
    • We have to make the environment and development co-exist and go hand in hand by planning our future developmental goals in such a manner that our environmental goals are not compromised.

     

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  • INS Vikrant inducted into Indian Navy

    The Indian Navy took delivery of IAC-1 the ‘Vikrant’, the nation’s first indigenously built aircraft carrier from its manufacturer, Cochin Shipyard Ltd.

    Vikrant

    • INS Vikrant also known as Indigenous Aircraft Carrier 1 (IAC-1), is an aircraft carrier constructed by the Cochin Shipyard Limited (CSL) for the Indian Navy.
    • It is the first aircraft carrier to be built in India.
    • It is named ‘Vikrant’ as a tribute to India’s first aircraft carrier, Vikrant (R11).
    • The name Vikrant means “courageous” in Sanskrit.
    • Work on the ship’s design began in 1999, and the keel was laid in February 2009.
    • The carrier was floated out of its dry dock on 29 December 2011 and was launched on 12 August 2013.

    Why is it important for India to have an aircraft carrier?

    • An aircraft carrier is one of the most potent marine assets for any nation, which enhances a Navy’s capability to travel far from its home shores to carry out air domination operations.
    • Many experts consider having an aircraft carrier as essential to be considered a “blue water” navy — that is, a navy that has the capacity to project a nation’s strength and power across the high seas.
    • An aircraft carrier generally leads as the capital ship of a carrier strike/ battle group.
    • As the aircraft carrier is a prized and sometimes vulnerable target, it is usually escorted in the group by destroyers, missile cruisers, frigates, submarines, and supply ships.

    And why is it a big deal that this warship has been Made in India?

    • Only five or six nations currently have the capability of manufacturing an aircraft carrier, and India has joined this prestigious club now.
    • Experts and Navy officials said India has demonstrated the capacity and self-reliance to build what is considered to be one of the most advanced and complex battleships in the world.
    • India’s has had aircraft carriers earlier too — but those were built either by the British or the Russians.
    • The ‘INS Vikramaditya’, which was commissioned in 2013 and which is currently the Navy’s only aircraft carrier, started out as the Soviet-Russian warship ‘Admiral Gorshkov’.
    • India’s two earlier carriers, the ‘INS Vikrant’ and the ‘INS Viraat’, were originally the British-built ‘HMS Hercules’ and ‘HMS Hermes’.
    • These two warships were commissioned into the Navy in 1961 and 1987 respectively.

    Why will this new warship be named ‘INS Vikrant’?

    • IAC-1 — as the carrier is currently codenamed — has been designed by the Indian Navy’s Directorate of Naval Design (DND), and built at Cochin Shipyard Limited (CSL).
    • Once commissioned, it will be called ‘INS Vikrant’, the name that originally belonged to India’s much-loved first aircraft carrier.
    • It was a source of immense national pride over several decades of service before it was decommissioned in 1997.
    • The original ‘Vikrant’, a Majestic-class 19,500-tonne warship, which was acquired from the UK in 1961, played a stellar role in the 1971 War with Pakistan.

    What weapons and equipment will the new ‘Vikrant’ have?

    • The new warship is comparable to India’s existing carrier ‘INS Vikramaditya’, which is a 44,500-tonne vessel and can carry up to 34 aircraft, including both fighter jets and helicopters.
    • The Navy had earlier said that once commissioned, IAC-1 will be “the most potent sea-based asset”, which will operate the Russian-made MiG-29K fighter aircraft and Kamov-31 Air Early Warning Helicopters.
    • The new ‘Vikrant’ will also operate the soon-to-be-inducted MH-60R Seahawk multirole helicopter manufactured by the American aerospace and defence company Lockheed Martin.
    • It will also take onboard the Advanced Light Helicopter (ALH) built by Bengaluru-based Hindustan Aeronautics Ltd.

     

     

  • Tiger conservation

    Context

    India is now reporting increased tiger numbers, and a recent International Union for Conservation of Nature assessment suggests that tiger numbers have increased by 40% since 2005. This is cause for celebration. But is the rise in tiger numbers enough to prevent their extinction?

    Relations between distribution and genetic variation

    • Decades of research in ecology and evolution suggest that numbers are critical to avoid extinction. 
    • Populations that are smaller than 100 breeding individuals have a high probability of extinction.
    • At the same time, for populations to persist, they should be part of larger landscapes with other such populations that are connected.
    • This is because small populations are subject to chance/random events.
    • These chance events may cause them to lose advantageous genetic variants, while other, detrimental genetic variants might increase in frequency.
    • This process is called genetic drift.
    • Individuals in small populations are more likely to be related, leading to inbreeding.
    • This exposes the many slightly disadvantageous genetic variants that are present in all genomes.
    • When expressed together, these detrimental genetic variants cause inbreeding depression, and reduced survival and reproduction of inbred individuals.
    • A closer look at the distribution of tigers across their range shows that most tiger ‘populations’ are smaller than 100.
    • This raises a question why are we not seeing extinctions happening more often? Is this because tiger populations are connected to each other?

    Research findings about movement of tigers

    • One way to answer the question about not so frequent extinction is to use movement data sourced from radio-collared tigers, often difficult to come by for a rare and endangered species.
    • Alternatively, tigers can be genetically sampled using their excreta/scat, hair and other biological samples from different tiger reserves and analysed in a laboratory.
    • Genetic variants in tiger DNA can be identified and analysed and compared across tiger reserves.
    • Genetic variation in landscape with connectivity: Sets of tiger reserves that show shared genetic variation are well connected — the inference is that the intervening landscapes facilitate connectivity or movement.
    • On the flip side, sets of tiger reserves that share less genetic variation must have barriers or landscapes that impede movement and connectivity.
    • Most land-use types were not too bad for tiger connectivity, including agricultural fields.
    • However, the presence of built-up areas and high traffic roads greatly impeded tiger movement.
    • Results showed that extinction could be avoided if corridors were safeguarded.
    • In summary, as long as we manage landscapes outside tiger reserves to allow tiger movement, and protect prey and tigers inside tiger reserves, tigers are sure to survive in landscapes such as central India.

    Genetic changes in isolated tiger population

    • Black tigers were found only in the Similipal tiger reserve in Odisha.
    • Genome sequences of a litter of zoo tigers that included pseudo-melanistic cubs revealed that a single spelling mistake (or mutation) in a specific gene causes these tigers to look this way.
    • Pseudo-melanistic or black tigers found in Odisha has demonstrated the genetic effects of isolation.
    • Results of the research pointed to genetic drift, or random events that have lead to this genetic variant that causes pseudomelanistic coat colour becoming common only in Similipal.
    • On the other side of India, in Rajasthan, genome sequences from wild tigers reveal that individuals in the Ranthambore tiger reserve show inbreeding.
    • In short, we are seeing the genetic effects of isolation and small population size in wild tigers at some locations.

    Way forward

    • Focus on connectivity: While we celebrate the recovery of tiger populations only by looking at numbers, we must not lose sight of other factors that are critical to their continued survival, such as connectivity.
    • Special attention is needed for populations that are becoming isolated and facing the genetic consequences of such isolation.
    • The future of such populations may depend on genetic rescue or even the introduction of novel genetic variants.

    Conclusion

    We are fortunate that novel genome sequencing technology provides an opportunity to understand tigers much better in the context of their conservation. The future of tigers will require a ‘dialogue’ between such data and management strategies in order to ensure their survival. India is lucky to have so many wild tigers and we must work together to save them.

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    Back2Basics: Pseudo-melanism

    • Tigers have a distinctive dark stripe pattern on a light background of white or golden.
    • A rare pattern variant, distinguished by stripes that are broadened and fused together, is also observed in both wild and captive populations.
    • This is known as pseudo-melanism, which is different from true melanism, a condition characterised by unusually high deposition of melanin, a dark pigment.
    • While truly melanistic tigers are yet to be recorded, pseudo-melanistic ones have been camera-trapped repeatedly, and only, in Simlipal, a 2,750-km tiger reserve in Odisha, since 2007

  • What is Household Consumption Expenditure Survey (HCES)?

    The Centre has kicked off the process for conducting the quinquennial Household Consumption Expenditure Survey (HCES) this month.

    What is the Household Consumer Expenditure Survey (CES)?

    • The HCES is traditionally a quinquennial (recurring every five years) survey conducted by the government’s National Sample Survey Office (NSSO).
    • It is designed to collect information on the consumer spending patterns of households across the country, both urban and rural.
    • Typically, the Survey is conducted between July and June and this year’s exercise is expected to be completed by June 2023.

    Why HCES?

    • The HCES is used to arrive at estimates of poverty levels as well as review key economic indicators like Gross Domestic Product (GDP).
    • The results of the survey are also utilised for updating the consumption basket and for base revision of the Consumer Price Index.
    • It helps generate estimates of household Monthly Per Capita Consumer Expenditure (MPCE) as well as the distribution of households and persons over the MPCE classes.
    • It is used to arrive at estimates of poverty levels in different parts of the country and to review economic indicators such as the GDP, since 2011-12.

    Why need this survey?

    • India has not had any official estimates on per capita household spending.
    • It provides separate data sets for rural and urban parts, and also splice spending patterns for each State and Union Territory, as well as different socio-economic groups.

    What about the previous survey?

    • The survey was last held in 2017-2018.
    • The government announced that it had data quality issues.
    • Hence the results were not released.

     

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  • Centre to amend Warehousing Act

    The Union Food and Public Distribution Ministry has suggested major amendments to the Warehousing (Development and Regulation) Act of 2007.

    Warehousing Act, 2007

    • The GOI has introduced a negotiable warehouse receipt system in the country by enacting the Warehousing (Development and Regulation) Act, 2007 (37 of 2007).
    • It has been made effective with effect from the 25th October, 2010.
    • The Negotiable Warehouse Receipt (NWR) system was formally launched on the 26th April, 2011.

    Why was this Act enacted?

    • To make provisions for the development and regulation of warehouses, negotiability of warehouse receipts, establishment of a Warehousing Development and Regulatory Authority (WDRA) and related matters.
    • The Negotiable Warehouse Receipts (NWRs) issued by the warehouses registered under this Act would help the farmers to seek loans from banks against NWRs.
    • It will avoid distress sale of agricultural produce.

    What is the amendment about?

    • The aim is to help farmers get access to the services of quality warehouses.
    • The amendment is:
    1. To make registration of godowns compulsory
    2. To raise the penalty for various offences and
    3. To do away the jail term as a punishment for the offences
    • Central government will have powers to exempt any class of warehouses from registration with the Authority.
    • At present, registration with the Warehousing Development and Regulation Authority (WDRA) is optional.
    • After the proposed amendment, which is yet to be cleared by the cabinet, registration of all third party warehouses throughout the country, will be undertaken in a phased manner.
    • The Act wants to establish a system of negotiable and non-negotiable warehouse receipt (NWR), which is now in electronic form.

    Issues

    • Farmers pressure groups fears that the amendments are for bringing back certain provisions of the repealed Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act through the backdoors.

     

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  • Universal Service Obligation Fund (USOF)

    The Union Cabinet has approved a project for providing 4G mobile services in thousands of villages across the country under the USOF.

    What do you mean by Universal Service?

    • In the modern world, universal service refers to having a phone and affordable phone service in every home.
    • It means, providing telecommunication service with access to a defined minimum service of specified quality to all users everywhere at an affordable price.
    • In 1837, the concept was rolled on by Rowland Hill, a British educator and tax reformer, which included uniform rates across the UK and prepayment by sender via postage stamps.

    What is USOF?

    • The Universal Service Obligation Fund (USOF) was formed by an Act of Parliament, was established in April 2002 under the Indian Telegraph (Amendment) Act 2003.
    • It aims to provide financial support for the provision of telecom services in commercially unviable rural and remote areas of the country.
    • It is an attached office of the Department of Telecom, and is headed by the administrator, who is appointed by the central government.

    Scope of the USOF

    • Initially, the USOF was established with the fundamental objective of providing access to ‘basic’ telecom services to people in rural and remote areas at affordable and reasonable prices.
    • Subsequently, the scope was widened.
    • Now it aims to provide subsidy support for enabling access to all types of telecom services, including mobile services, broadband connectivity and the creation of infrastructure in rural and remote areas.

    Funding of the USOF

    • The resources for the implementation of USO are raised by way of collecting a Universal Service Levy (USL), which is 5 percent of the Adjusted Gross Revenue (AGR) of Telecom Service Providers.

    Nature of the fund

    • USOF is a non-lapsable Fund.
    • The Levy amount is credited to the Consolidated Fund of India.
    • The fund is made available to USOF after due appropriation by the Parliament.

     

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  • Need for overhaul of India’s economic performance measurement framework

    Context

    It is then apparent that GDP growth matters to the average Indian only if it can generate good quality jobs and incomes for them.

    Background

    • Nobel laureate Simon Kuznets, who conceived of GDP as a measure of economic performance, never intended it to be the single-minded economic pursuit for a nation that it has now become, and warned repeatedly that it is not a measure of societal well-being.
    • Irrefutably, GDP is an elegant and simple metric that is a good indicator of economic progress which can be compared across nations.
    • But a compulsive chase for GDP growth at all costs can be counter-productive, since it is not a holistic but a misleading measure.
    • The excessive obsession over GDP growth by policymakers and politicians can be unhealthy and dangerous in a democracy.
    • If growth in GDP does not translate into equivalent economic prosperity for the average person, then in a one person-one vote democracy, exuberance over high GDP growth can backfire and trigger a backlash among the general public.
    • Global phenomenon: Sri Lanka’s mass uprising and people’s revolution can partly be explained through this prism of the structural break between headline GDP growth and economic prosperity for the people.
    • The U.S. today produces fewer new jobs for every percentage point of GDP growth than it did in the 1990s.
    • China produces one-third the number of new jobs today than it did in the 1990s for every percentage of its GDP growth.

    Employment intensity of economic growth

    • Data of ‘employment in public and organised private sectors’ published by the Reserve Bank of India (RBI) shows that in the decade between 1980 and 1990, every one percentage point of GDP growth (nominal) generated roughly two lakh new jobs in the formal sector.
    • In the subsequent decade from 1990 to 2000, every one percentage point of GDP growth yielded roughly one lakh new formal sector jobs, half of the previous decade.
    • In the next decade between 2000 and 2010, one percentage point of GDP growth generated only 52,000 new jobs.
    • The RBI stopped publishing this data from 2011-12.
    • In essence, one percentage of GDP growth today yields less than one-fourth the number of good quality jobs that it did in the 1980s.
    • It is amply clear that the correlation between formal sector jobs and GDP growth has weakened considerably.

    Implications of decline in GDP growth’s contribution to job creation

    • Irrelevant as a political measure: GDP growth may be an important economic measure, but it is becoming increasingly irrelevant as a political measure, since it impacts only a select few and not the vast majority.
    • Indicates changed nature of economic development: This divorce of GDP growth and jobs is both a reflection of the changed nature of contemporary economic development with emphasis on capital-driven efficiency at the cost of labour and GDP being an inadequate measure.
    • Political backlash: The perils of the obsession over GDP growth will be felt by politicians who have to answer voters on lack of jobs and incomes despite robust headline growth.
    • Voter disenchantment over the economy not working for them is already rife in many democracies across the world that have catalysed agitations and social disharmony.
    • Electoral outcomes in favour of extreme positions in mature democracies such as the U.S., the U.K., France and Germany in the last decade may partly be a reflection of voters’ sense of deception over economic gains.

    Way forward

    • It is time for India’s political leaders to not be drawn into argument over GDP growth every quarter and instead clamour for an overhaul of India’s economic performance measurement framework to reflect what truly matters to the common person.

    Conclusion

    GDP growth has turned into a misleading and dangerous indicator that portrays false economic promises, betrays people’s aspirations and hides deeper social problems.

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  • Recent Supreme Court judgment on IBC may weaken insolvency regime

    Context

    In the recent judgement the Supreme Court held that the National Company Law Tribunal (NCLT) cannot admit an insolvency application filed by a financial creditor merely because a financial debt exists and the corporate debtor has defaulted in its repayment.

    Why the point of trigger is important in insolvency law

    • A critical element for any corporate insolvency law is the point of trigger.
    • The law must clearly provide the grounds on which an insolvency application against a corporate debtor should be admitted.
    • If there is any confusion at this stage, precious time could be wasted in litigation.
    • That would cause value destruction of the distressed business.
    • On the other hand, if the law is clear and litigation can be minimised, the distressed business could be resolved faster.
    • Its value could be preserved.
    • And all stakeholders collectively would benefit.
    • Evidently, objective legal criteria for admission are critical for an effective corporate insolvency law.

    Determining insolvency and implications of the SC ruling

    • The balance-sheet test is one method for determining insolvency at the point of trigger.
    • This test, however, is vulnerable to the quality of accounting standards.
    • That’s why the Bankruptcy Law Reforms Committee did not favour this test in the Indian context.
    • Instead, it recommended that a filing creditor must only provide a record of the liability (debt), and evidence of default on payments by the corporate debtor.
    • This twin-test was expected to provide a clear and objective trigger for insolvency resolution. 
    • The Supreme Court’s latest ruling is likely to radically alter these expectations.

    Implications of the Supreme Court ruling

    • Resisting the admission by debtor: Now due to the Supreme Court ruling, even if the NCLT is satisfied that a financial debt exists and that the corporate debtor has defaulted, it may not admit the case for resolution if the corporate debtor resists admission on any other grounds.
    • Corporate debtors are likely to use this precedent to the fullest to resist admission into IBC.
    • Risk of value destruction due to delay: The likely outcome would be more litigation and delay at the admission stage, enhancing the risks of value destruction in the underlying distressed business.

    Conclusion

    In all fairness, the Supreme Court has been extremely pragmatic in its interpretation and application of the IBC. Even in the recent ruling, the court has rightly cautioned that the NCLT should not exercise its discretionary power in an arbitrary or capricious manner. Yet, this decision may have opened a Pandora’s box. Policymakers would be well-advised to take note before history starts repeating itself.

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  • A path to global connectivity

    Context

    As terrestrial 5G mobile networks are being rolled out across countries, there is a renewed interest in integrating Non-Terrestrial Networks.

    SatNets for 5G

    • Satellites and terrestrial networks have always been considered two independent ecosystems, and their standardisation efforts have proceeded independent of each other.
    • The primary non-terrestrial network that is being considered is the low latency Low Earth Orbit (LEO) satellite networks (SatNets), as a complement to terrestrial networks.
    • Towards this, Starlink, operated by the Elon Musk-owned SpaceX, and OneWeb, promoted by Bharti Global, have launched about 2,500 and 648 LEO satellites respectively at an altitude of about 1,200 km with the objective of promoting global broadband connectivity.
    • There are other players such as Reliance Jio in a joint venture with Luxembourg-based SES and Amazon’s Project Kuiper.

    Benefits of using SatNets

    • 1] Service continuity in emergency: service continuity to provide seamless transition between terrestrial networks and SatNets in case of public safety, disaster management and emergency situations;
    • 2] Providing service in remote area: Service ubiquity to provide 5G services in unserved and underserved areas of the world, thereby bridging the digital divide;
    • 3] Scalability: Service scalability that utilises the unique capabilities of SatNets in multicasting and broadcasting similar content over a large geographical area.
    • 4] Service to in-motion user: The LEO SatNets can provide service not only to stationary but also to in-motion users.
    • 5] Low latency over long distance: Wireless communications through LEO satellites over long distances is proven to be 1.47 times faster than communication over the same distance through terrestrial optic fibre. It is this advantage along with global coverage that provide a strong use case for LEO SatNets to complement terrestrial optic fibre networks.
    • SatNet in standardisation: In view of the above advantages, standard-setting organisations such as the Third Generation Partnership project (3GPP), comprising telcos and equipment manufacturers around the world, started integrating SatNets in the standardisation process.

    Measures by the government

    • Realising the advantages, the Government, in its National Digital Communications Policy 2018, has indicated the development of an ecosystem for local manufacturing of satellite communication systems and promoting participation of private players for the strengthening of satellite communication infrastructure in the country.
    • Accordingly, the New Space India Limited (NSIL), a public sector enterprise, was established in 2019 to re-orient space activities from a ‘supply driven’ model to a ‘demand driven’ model, thereby ensuring optimum utilisation of the space assets.
    • The Department of Space also established in 2020 a new regulatory body named the Indian National Space Promotion and Authorisation Centre (IN-SPACe).
    • IN-SPACe is intended to provide a level playing field for private companies to use Indian space infrastructure.

    Issues and challenges

    • Allocation of frequency: Issues will involve addressing issues around frequencies to be allocated for satellite broadband, the methodology of allocation, the relatively higher cost of consumer equipment and the placement and interconnections of SatNets with terrestrial public landline/ mobile networks at the ground stations
    • Cost: The other major challenge in LEO SatNets is the cost of user terminal and access charges to the end users.
    • A recent research analysing both Starlink and OneWeb concludes that the standalone LEO SatNets have a distinct cost advantage only if the density is less than 0.1 person per square km compared to terrestrial broadband networks.
    • Hence it is to the advantage of LEO SatNet providers to integrate their networks with terrestrial 5G networks to improve the cost economies.

    Conclusion

    All these, along with the proposed revisions to the Satellite Communications Policy of the Government, will provide the required fillip to LEO SatNets to become an integral part of the communication infrastructure of the country.

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    Back2Basics: LEO satellites

    • LEO satellites orbit between 2,000 and 200 kilometers above the earth. LEO satellites are commonly used for communications, military reconnaissance, spying and other imaging applications.
    • A low earth orbit (LEO) satellite is an object, generally a piece of electronic equipment, that circles around the earth at lower altitudes than geosynchronous satellites.
    • Satellites made for communications benefit from the lower signal propagation delay to LEO.
    • This lower propagation delay results in less latency.
    • Being closer to the earth has an obvious benefit for many types of earth observational satellites by resolving smaller subjects with greater detail.