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GS Paper: GS3

  • Multi Agency Centre (MAC): A common counter-terrorism grid

    The Union government has asked the States to share more intelligence inputs through the Multi Agency Centre (MAC), a common counter-terrorism grid under the Intelligence Bureau (IB).

    Why in news?

    • States are often reluctant to share information on the platform.
    • There are several gaps in sharing critical information at the right time.
    • Plans are afoot for more than a decade to link the system up to the district level.

    About MAC

    • The Multi-Agency Centre (MAC) was formed in December 2001 following the Kargil intrusion and the subsequent overhaul of the Indian national security apparatus suggested by the Kargil Review Committee report.
    • Accordingly, the Intelligence Bureau (IB) was authorized to create a multi-agency centre (MAC) in New Delhi.
    • Now functioning 24×7 as the nodal body for sharing intelligence inputs, MAC coordinates with representatives from numerous agencies, different ministries, both central and state.
    • Various security agencies share real-time intelligence inputs on the MAC.
    • The state offices have been designated as subsidiary MACs (SMACs).
    • As many as 28 organisations, including the Research and Analysis Wing (R&AW), armed forces and State police, are part of the platform.

    Back2Basics: NATGRID

    • NATGRID is an intelligence-sharing network that collates data from the standalone databases of the various agencies and ministries of the Indian government.
    • It collects and collates a host of information from government databases including tax and bank account details, credit/debit card transactions, visa and immigration records and itineraries of rail and air travel.
    • It came into existence after the 2008 Mumbai attacks.
    • It is accessible to only authorized people from 10 security agencies on a case-to-case basis for investigations into suspected cases of terrorism.
    • It will also have access to the Crime and Criminal Tracking Network and Systems, a database that links crime information, including First Information Reports, across 14,000 police stations in India.

    Note: NATGRID data will be made available to 11 central agencies, which are: Research and Analysis Wing (R&AW), Intelligence Bureau (IB), National Investigation Agency (NIA), Central Bureau of Investigation (CBI), Narcotics Control Bureau (NCB), Financial Intelligence Unit (FIU), Enforcement Directorate (ED), Central Board of Direct Taxes (CBDT), Central Board of Indirect Taxes and Customs (CBIC), Directorate of Revenue Intelligence (DRI) and Directorate General of GST Intelligence.

     

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  • Understanding IC15, India’s first Crypto Index

    Superapp CryptoWire recently launched India’s first cryptocurrency index, IC15, which will measure the performance of the 15 most widely traded cryptocurrencies listed on leading crypto exchanges by market capitalization.

    What is IC15?

    • CryptoWire constituted an Index Committee of domain experts, industry practitioners, and academicians that will select cryptocurrencies from the top 400 coins in terms of market capitalization.
    • The eligible cryptocurrency should have traded on at least 90% of the days during the review period and be among the 100 most liquid cryptocurrencies in terms of trading value.
    • Also, the cryptocurrency should be in the top 50 in terms of the circulating market capitalization.
    • The committee will then select the top 15 cryptocurrencies. The index will be reviewed quarterly.

    What is its significance?

    • IC15 can be replicated for creating index-linked products such as index funds or exchange-traded funds (ETFs).
    • Usually, the performance of a mutual fund scheme is assessed with reference to a benchmark, which could be a total return index of the Nifty or the Sensex.
    • IC15 is the first index in India that can act as a benchmark of the underlying cryptocurrency market and the performance benchmark for fund managers.
    • Moreover, robo-advisors, which provide financial advice with moderate to minimal human intervention, can use this index to create investment products at lower costs.

    How  does  IC15  correlate  with other market indicators?

    • IC15’s base value as on 1 April 2018 was 10,000.
    • It would mean that the index has gained 615% in absolute terms to 71,475.48 till 31 December 2021.

    Can  index-based  crypto investment reduce risks?

    • Index investing can be an effective way to diversify against risks as a fund invests in a basket of assets against a few limited coins.
    • However, index-based investing may not fully remove risks associated with investing in crypto assets.
    • Case in point: IC15 saw a 50% plunge in 2018, whereas other asset classes have seen a maximum drop in the range of 3-4%.
    • Further, bitcoin and ethereum have a combined weightage of 77% in the index, making it highly vulnerable to any volatility in these two coins.

    Can crypto funds be launched in India?

    • SEBI has recently asked mutual fund houses not to launch crypto-based funds until the Centre comes out with clear regulations.
    • This means asset management companies for now won’t be able to launch crypto funds based on IC15.
    • However, in the absence of any regulations, crypto platforms can offer products based on the index.
    • Global crypto investment platform Mudrex last year launched Coin Sets—crypto funds based on themes such as decentralized finance or market cap.

     

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  • A reality check on great CAPEX expectations

    Context

    Economists are predicting a potential virtuous capital investments (capex) cycle to kick in globally as we emerge from the pandemic.

    Why do analysts think that capital investment cycle is about to start?

    • Less leveraged: Corporates are less leveraged today compared to 2008.
    • Indian corporates repaid debts of more than Rs 1.5 trillion.
    • Fiscal and monetary support: Companies are also more confident of durable fiscal and monetary support.
    • Increased savings: Households have large excess savings built during Covid — $1.7 trillion in the US and roughly $300 billion in India as per a UBS report.
    • Cash: Lastly, corporates are sitting on a large cash pile – S&P 500 firms’ cash has soared from $1 trillion pre-pandemic to $1.5 trillion now.

    Why capex wave is difficult in India?

    • Fall in capital formation: India’s fixed capital formation rate has steadily fallen from 36 per cent of GDP in 2008 to 26 per cent in 2020.
    • For a set of 718 listed companies for which data is consistently available from 2005, the capex growth rate has decreased from 7 per cent in 2008 to around 2 per cent in 2020.
    • Low return on invested capital: The return on invested capital in FY21 is still low at 2-3 per cent compared with 16-18 per cent returns in 2005-08.
    • Structural issues: Land acquisition is still tough, changes to labour laws have been slow, and reform uncertainty has resurfaced with the rollback of the agriculture reform laws.
    • Discouraging current data: As per CMIE data, the quarter ending in June 2021 saw Rs 2.72 lakh crore worth of new projects announced. This fell to Rs 2.22 lakh crore for the September 2021 quarter.
    • This is much below the average of Rs 4 lakh crore a quarter of new project announcements during 2018 and 2019.
    • Further, new projects are concentrated in fewer industries (power, and technology) with the top three accounting for 44 per cent of the total of new projects announced.
    • Low capacity utilisation: At the same time, capacity utilisation for corporate India is at an all-time low.
    • From a peak of 83 per cent in 2010, when capex was running hot, utilisation levels declined to 70 per cent just before the pandemic, and further to 60 per cent in June 2021 as per the RBI’s latest OBICUS data.
    • Capex is funded either from fresh debt or equity issues or from accumulated cash. Large firms are repaying debt.

    Conclusion

    It is too early in the cycle to predict anything with confidence, but we need more evidence to predict a capex cycle.

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  • Gaganyaan and other new Missions in 2022

    After a rather muted 2021 in terms of satellite launches, Indian Space Research Organization (ISRO) is gearing up for a number of missions in 2022 including the launch of the first unmanned mission of Gaganyaan.

    Gaganyaan Mission

    • Gaganyaan is crewed orbital spacecraft intended to be the formative spacecraft of the Indian Human Spaceflight Programme (IHSP).
    • The IHSP was initiated in 2007 by ISRO to develop the technology needed to launch crewed orbital spacecraft into low Earth orbit.
    • The first uncrewed flight, named Gaganyaan 1, is scheduled to launch no earlier than June 2022 on a GSLV Mark III rocket.
    • ISRO had been working on related technologies and it performed a Crew Module Atmospheric Re-entry Experiment and a Pad Abort Test for the mission.
    • If completed in meantime, India will become the fourth nation to conduct independent human spaceflight after the Russia, US and China.

    Details of the project

    • The spacecraft is being designed to carry three people, and a planned upgraded version will be equipped with rendezvous and docking capability.
    • In its maiden crewed mission, this capsule will orbit the Earth at 400 km altitude for up to seven days with a two or three-person crew on board.
    • This Hindustan Aeronautics Limited (HAL) manufactured crew module had its first un-crewed experimental flight in 2014.
    • DRDO will provide support for critical human-centric systems and technologies like space-grade food, crew healthcare, radiation measurement and protection, parachutes for the safe recovery of the crew module and fire suppression system.

    Other missions this year

    • Earth Observation Satellites: EOS-4 and EOS-6
    • Flights for Crew Escape System of Gaganyaan
    • Chandrayaan-03
    • Aditya Ll
    • XpoSat

    New projects

    • Venus mission
    • DISHA –a twin aeronomy satellite mission
    • TRISHNA, an ISRO-CNES [Centre national d’Ă©tudes spatiales] mission

     

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  • RBI approves Offline E-Payments

    The Reserve Bank of India (RBI) has come out with the framework for facilitating small-value digital payments in offline mode, a move that would promote digital payments in semi-urban and rural areas.

    Offline E-payments

    • Offline digital payment does not require Internet or telecom connectivity.
    • Such payments can be carried out face-to-face (proximity mode) using any channel or instrument like cards, wallets and mobile devices.
    • Such transactions would not require an Additional Factor of Authentication.
    • Since the transactions are offline, alerts (by way of SMS and/or e-mail) will be received by the customer after a time lag.
    • There is a limit of â‚č200 per transaction and an overall limit of â‚č2,000 until the balance in the account is replenished.

    Conditions applied

    • Payment instruments shall be enabled for offline transactions only after the explicit consent of the customer.
    • That apart, these transactions using cards will be allowed without a requirement to turn on the contactless transaction channel.
    • The customers shall have recourse to the Reserve Bank – Integrated Ombudsman Scheme, as applicable, for grievance redressal.
    • RBI retains the right to stop or modify the operations of any such payment solution that enables small value digital payments in offline mode.

     

    Answer this PYQ in the comment box:

    Q. With reference to digital payments, consider the following statements:

    1. BHIM app allows the user to transfer money to anyone with a UPI-enabled bank account.
    2. While a chip-pin debit card has four factors of authentication, BHIM app has only two factors of authentication.

    Which of the statements given above is/ are correct? (CSP 2018)

    (a) 1 only

    (b) 2 only

    (c) Both 1 and 2

    (d) Neither 1 nor 2

     

    [wpdiscuz-feedback id=”naidd0dw2j” question=”Please leave a feedback on this” opened=”1″]Post your answers here.[/wpdiscuz-feedback]

     

     

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  • Preparing for a green energy shift in 2022

    Context

    Political leaders find themselves currently amid a messy reality. The seemingly “irresistible force” for clean energy has met, it would appear, the “immovable object” of an embedded fossil fuel energy system.

    Changes in the energy sector in 2021

    • Commitment to Net-zero: One hundred and thirty-three countries pledged to a “net-zero carbon emissions date” and most governments, corporates and civic entities have shown determination to “phase down” and eventually phase out fossil fuels from their energy basket.
    • Price volatility: The petroleum market seesawed and was expectedly volatile.
    • High price: Natural gas prices reached stratospheric levels as demand exceeded supplies and geopolitics compounded the imbalance. 

    Five trends that will shape the emergent energy landscape

    [1] Transition to clean energy will be long and expensive

    • Redesign and rebuilding: The fossil fuel-based economic system will have to be redesigned and, in parts, rebuilt for clean energy to achieve scale.
    • The process will take decades and require massive capital infusion.
    • No country or multilateral institution can finance this transition individually.
    • The world needs to collaborate: The world will have to collaborate and if it fails to do so, the financing deficit will push back the transition even further.

    [2] Fossil fuels will dominate the energy basket during the transition

    • Fossil fuels will dominate the energy basket during this transition phase.
    • Contributing factors: As has been the case so far, its market will be defined by the “fundamentals” of demand, supply and geopolitics and the “non-fundamentals” of exchange rates and speculative trade.
    • The price movements will be sharp, volatile and unexpected.

    [3] The resurgence of market influence of OPEC plus after private companies move beyond fossil fuel

    • The “ OPEC plus” will resurge in market influence.
    • The low-cost, high resource petrostates (Saudi Arabia, the Gulf nations, Iraq, Iran, Russia) will, in particular, gain greater control over the petroleum market as private companies move beyond fossils under pressure from shareholders and regulators.

    [4] Transition will create new centres of energy power

    • The Democratic Republic of Congo controls, more than 50 per cent of the global supply of cobalt; Australia holds a comparably large share of the lithium market; and China controls the mining, processing and refining of rare earth minerals.
    • It is difficult to tell how and when these countries will exercise their market power but it is clear that the “green transition” will create new centres of energy power.

    [5] Nationalism and political opportunism will influence energy policy

    • The US and China are currently embroiled in a “Cold War” over technology, trade, cyber issues and the South China Sea.
    • The US and China appear to be in a similar face-off. But that has not come in the way of their energy relations.
    • A few weeks ago, the two countries decided to coordinate the release of oil stocks from their strategic reserves to cool off the oil market.
    • The underlying reality is that national self-interest and short-term political ambition will be the defining determinant of future energy supply relations cutting across values and rhetoric.

    Suggestions for India

    • Nurture relations with traditional suppliers: India must assiduously nurture relations with our traditional suppliers of oil and gas.
    • It must not assume their role in the energy market will diminish.
    • Increase storage capacity of strategic reserves: It should accelerate the build-up of the storage capacity for oil and gas; the latter to hold strategic oil reserves, the former to store gas for inter alia conversion to blue hydrogen.
    • Ecosystem for search and development of minerals required for clean energy: It must create a facilitative ecosystem for the search and development of the minerals and metals required for clean energy.
    • Clean energy supply chain: It should create a “clean energy aatmanirbhar supply chain”.

    Conclusion

    The green transition must not lead to import dependency on raw minerals and manufactured inputs, especially from China. The current policy to incentivise the manufacture of semiconductors is a step in the right direction.

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  • Global shortage of Semiconductor Chips

    Worldwide carmakers have slashed production due to an abrupt and cascading shortage of semiconductors.

    Semiconductor Chips

    • Semiconductors — also known as integrated circuits (ICs), or microchips — are most often made of silicon or germanium, or a compound like gallium arsenide.
    • It’s the thing that makes electronic items smart and faster.
    • Made from a material, usually silicon, that “semi-conducts” electricity, the chip performs a variety of functions.
    • Memory chips, which store data, are relatively simple and are traded like commodities.
    • Logic chips, which run programs and act as the brains of a device, are more complex and expensive.

    Reasons for shortages

    • Stay-at-home shift: This pushed chip demand beyond levels projected before the pandemic. Lockdowns spurred growth in sales of smartphones, laptops etc to the highest in a decade
    • Fluctuating forecasts: Automakers that cut back drastically early in the pandemic underestimated how quickly car sales would rebound.
    • Stockpiling: Chinese smartphone industry dominates the global market for 5G networking gear — began building up inventory to ensure it could survive US sanctions.

    How is the chip crisis playing out in geopolitics?

    • The global chip crisis and geopolitical tensions with China have shifted focus back on semiconductors.
    • The US, which was once a leader in chip manufacturing, wants the crown back.
    • The protectionist US is looking to bring manufacturing back to America and reduce its dependency on a handful of chipmakers mostly concentrated in Taiwan and South Korea.
    • China’s renewed aggression on Taiwan is also being seen in light of the chip crisis.

    Impact of semiconductor shortages

    • Chip shortages are expected to wipe out $210 billion of sales for carmakers this year, with the production of 7.7 million vehicles lost.
    • Broadband providers were facing delays of more than a year when ordering internet routers.

    Why is it so hard to compete?

    • Manufacturing advanced logic chips requires extraordinary precision, along with huge long-term bets in a field subject to rapid change.
    • Plants cost billions of dollars to build and equip, and they have to run flat-out 24/7 to recoup the investment.
    • A factory also consumes up enormous amounts of water and electricity and is vulnerable to even the tiniest disruptions, whether from dust particles or distant earthquakes.

     

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  • The functioning of INSACOG

    The Indian SARS-CoV-2 Consortium on Genomics (INSACOG) has sequenced about 1,00,000 samples.

    What is INSACOG?

    • INSACOG is a consortium of 10 labs and 18 satellite labs across India tasked with scanning COVID samples from patients and finding the variants that has led to spike in transmission.
    • The institutes involved include the laboratories of the Department of Biotechnology, Council of Scientific and Industrial Research, Indian Council of Medical Research, and the Health Ministry.
    • Its work began in January 2020, by sequencing all samples with a history of travel from the U.K. and a proportion of positive samples in the community.

    Tasks of INSACOG

    • The NCDC is tasked with coordinating collections of samples from the States as well as correlating disease with certain mutations.
    • It is mainly involved in genomic sequencing which is done by isolating the genetic material of the coronavirus samples.
    • It is also tasked with tracking certain combinations of mutations that become more widespread in India.

    What has it found so far?

    • The INSACOG sequenced about 1,00,000 samples as of early December 2021 when this data was last made publicly available.
    • The bulk of its effort has been focussed on identifying international ‘variants of concern’ (VoC) that are marked out by the WHO as being particularly infectious or pathogenic.
    • International travellers who arrive in India and test positive are the ones whose samples usually get sent to INSACOG for determining the genomic variant.

    Why is genome sequencing useful?

    • Understanding mutations: The purpose of genome sequencing is to understand the role of certain mutations in increasing the virus’s infectivity.
    • Immune response: Some mutations have also been linked to immune escape, or the virus’s ability to evade antibodies, and this has consequences for vaccines.
    • Effectiveness of vaccines: Labs across the world, including many in India, have been studying if the vaccines developed so far are effective against such mutant strains of the virus.
    • Evolution of viruses: Studies such as this have shown that Omicron, for instance, has evolved to evade antibodies much better than the Alpha or Delta variant. This prompted the push towards booster doses.

    How is it done?

    • Genomic sequencing is done by isolating the genetic material (RNA) of the coronavirus samples.
    • RNA consists of millions of nucleotide bases and genomic sequencing is about identifying and comparing the sequence in a given sample to a reference sample.
    • Changes in the sequence are clues to mutations that show that the virus may have undergone distinct changes at some key locations.
    • There are several approaches to genome sequencing — whole genome sequencing, next-generation sequencing — that have different advantages.
    • It has now evolved to a stage where large sequencers can process even thousands of samples simultaneously.

    Various challenges that INSACOG faces

    • Geographical variations: Given that COVID-19 is spreading, mutating and showing geographical variations, the original aim of the group was to sequence at least 5% of COVID-19 samples.
    • Shortage of funds: But only 1% has been achieved yet, primarily due to a shortage of funds, insufficient reagents and tools necessary to rapidly scale up.
    • Red-tapism: The INSACOG, in spite of being peopled by expert scientists, is ultimately within the Central government’s communication structure.
    • Infrastructure lacunae: Not all INSACOG labs have the same quality of equipment and manpower and therefore a surge or spike in some cities can mean difficulties in processing.

     

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  • GST Council defers Tax Rate increase on Textiles

    Hours before the new GST rate was to take effect, the GST Council  has decided to temporarily roll back the increase in tax rate for the textiles sector.

    What was the proposal?

    • The GST Council had recommended making certain rate changes for footwear and textiles to correct the inverted duty structure.

    What is Inverted Duty Structure?

    • An inverted duty structure arises when the taxes on output or final product is lower than the taxes on inputs.
    • This creates an inverse accumulation of input tax credit which in most cases has to be refunded.

    A loss for the govt

    • Inverted duty structure has implied a stream of revenue outflow for the government prompting the government to relook the duty structure.
    • For footwear, the government refunds around Rs 2,000 crore in a year.

    What is the present rate of GST on textiles?

    • At present, tax rate on manmade fibre, yarn and fabrics is 18%, 12% and 5%, respectively.
    • Apparel and clothing up to Rs 1,000 per piece currently attracts 5% GST.

    Issues with the tax increase

    • This decision has created a negative impact resulting in drop in demand and recession.
    • The new rate structure would cause closure of around 1 lakh textile units and losses of 15 lakh jobs nationally.

     

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  • Chisumle- Demchok: Worlds’ Highest Motorable Road

    Ladakh’s Chisumle-Demchok Road, when it crosses the Umling Pass, is now the world’s highest motorable road.

    Chisumle- Demchok Road

    • The project to build the road through the pass — a part of Border Roads Organization (BRO) Project Himank — had been completed in 2017, after which vehicles had started playing on the route.
    • The road is in south Ladakh. It passes through Umling La Pass, which is at a height of over 19,000 feet.
    • The height of the pass makes it the highest motorable road in the world, and was recently recognized as such by Guinness World Records.
    • The 52-km road ‘black-top’ tarmac road from Chisumle to Demchok betters the previous record of a road in Bolivia, which connects the volcano Uturuncu at 18,953 feet.
    • The road was built under extremely challenging conditions, as temperatures in the region can fall to below minus 40 degrees Celsius, and oxygen levels go down to 50 per cent below normal.

    Top of the world

    • At the pass, the road is higher than both the base camps for the climb to Mount Everest, the world’s highest mountain.
    • The South Base Camp in Nepal is at a height of 17,598 ft, while North Base Camp in Tibet is at 16,900 ft.
    • The Chisumle-Demchok road is also higher than the Siachen Glacier, which is situated at 17,700 feet.
    • Khardung La in Leh, which at one time was among the highest roads in the world, is at an altitude of 17,582 feet.

    Military significance of the road

    • This road provides a direct route from Chisumle, which lies on the major road coming from Leh, Karu and Nyoma.
    • All of these stations have important military stations which are close to the Line of Actual Control.
    • Demchok has been an India-China flashpoint earlier, the site of a standoff between the two armies in 2016.
    • In the current standoff in eastern Ladakh, which began in May 2020, Demchok has come up as a point of contention.

    Other benefits offered

    • The new axis will be helpful for the armed forces, making it easier to mobilize troops and equipment, including rations.
    • The road will not only enable faster movement of armed forces to the region but will also boost tourism and improve the socio-economic condition of the local people in the region.

    Certain limitations

    • Since the road goes through such a high pass, road transport will be unfeasible during the winter, when the armed forces rely on air support.

     

     

     

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