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GS Paper: GS3

  • RBI must tackle surplus liquidity on way to policy normalisation

    Context

    Monetary Policy Committee (MPC) voted to maintain status quo on policy rates, with one member continuing to dissent on the “accommodative” stance of policy.

    What is accommodative stance of policy?

    Accommodative monetary policy is when central banks expand the money supply to boost the economy. Monetary policies that are considered accommodative include lowering the Federal funds rate. These measures are meant to make money less expensive to borrow and encourage more spending.

    Overview of RBI policy measures during Covid-related lockdown

    • Cut in policy rates and injection of liquidity: The RBI had moved proactively to cut the repo and reverse repo rate and inject unprecedented amounts of funds into banks and other intermediaries.
    • The short-term interest rate at reverse repo level: a combination of the lower reverse repo rate and the large liquidity injection had resulted in a drop in various short-term rates down to (and occasionally below) the reverse repo rate, making it the effective operating rate of monetary policy.
    • Gap between repo and reverse repo increased to 65 bps: In addition, both the repo and reverse repo rates had been cut to 4.0 and 3.35 per cent, respectively, with the gap – the “corridor” – between the rates widening from the usual 25 basis points to 65 bps.

    Central bank’s role in modern monetary policy

    • Determining basic overnight interest rate: A central bank’s main role in modern monetary policy operating procedures is to determine the basic overnight interest rate, deemed to be consistent with prevailing macroeconomic conditions and their economic policy objectives, in balancing the ecosystem for sustained growth together with moderate inflation.
    • This is achieved through buying and selling very short-term (predominantly overnight) funds (mainly) from banks to keep a specified operating rate (the weighted average call rate in our case) very close to the policy rate.

    Liquidity management: Key pillar of monetary policy normalisation

    • Liquidity management: Liquidity management in the extended banking and financial system (which includes non-banking intermediaries like NBFCs, mutual funds and others) will now be the key pillar of normalisation.
    • This process is the domain of RBI and not MPC.
    • These operations will be conducted within RBI’s liquidity management framework.
    •  There are two sources of liquidity additions:
    • (i) Exogenous: which are largely due to inflows of foreign currency funds and outflows of currency in circulation (cash) from the banking sector.
    • (ii) Voluntary or endogenous: which is the result of the creation of base money by RBI through buying and selling of bonds, thereby injecting or extracting rupee funds.

    How RBI is managing liquidity surplus?

    • Stopped GSAP and OMOs: Post the October review, RBI had stopped buying bonds under the Govt Securities Asset Purchase (GSAP) and done negligible Open Market Operations (OMOs), thereby stopping addition of voluntary liquidity injection into the system, our own version of “tapering”.
    • Union government balances with RBI, arising from cash flow mismatches between receipts and expenditures, has hybrid characteristics and also impacts liquidity.
    • Use of reverse repo window: RBI has used the reverse repo window to absorb almost all this liquidity surplus from banks.
    • Allowed repaying TLRTOs: It has again allowed banks the option to prepay the outstanding borrowings from the Targeted Long Term Repo Operations (TLTROs), thereby potentially extracting another Rs 70,000 crores.

    How RBI is managing interest rate in the policy normalisation process

    • Increased rates and closed the gap between repo and reverse repo: RBI – post the October review – has gradually guided short-term rates up with a sure hand from near the reverse repo rate to close to the repo rate.
    • It has shifted its liquidity absorption operations from the predominant use of fixed rate reverse repos (FRRR) into (largely) 14-day variable rate reverse repo (VRRR) auctions to guide a rise in interest rates.
    • Since early October, these rates had steadily moved up in a smooth and orderly fashion up to 3.75-3.9 per cent.
    • The VRRR rates moving up have also resulted in various short-term funding interest rates like 90-day Treasury Bills, Commercial Papers (CP) and banks’ Certificates of Deposits (CD) moving up from the reverse repo rate or below in September to 3.5 per cent and higher since December.
    • The OMO and GSAP operations have also helped in managing medium- and longer-term interest rates in the yield curve.

    Way forward

    • There is a likelihood of further additions to exogenous system liquidity.
    • Other instruments to absorb surpluses: There might consequently be a need for other instruments to absorb these surpluses apart from VRRR auctions.
    • Liquidity surplus of non-banking intermediaries: Managing liquidity surpluses of the non-banking intermediaries, especially mutual funds, will be another challenge since they do not have direct access to VRRR operations.

    Consider the question “Since the onset of the Covid-related lockdowns, RBI had moved proactively to cut the repo and reverse repo rate and inject unprecedented amounts of funds into banks and other intermediaries. In this context, what are the challenges in monetary policy normalisation as RBI plans to absorb the excess liquidity and increase the interest rates ?”

    Conclusion

    The shift to the tightening phase, with hikes in the repo rate, is likely towards the late months of FY23, with shifts “if warranted by changes in the economic outlook”.

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    Back2Basics: Monetary Policy Corridor

    • The Corridor in monetary policy of the RBI refers to the area between the reverse repo rate and the MSF rate.
    • Reverse repo rate will be the lowest of the policy rates whereas Marginal Standing Facility is something like an upper ceiling with a higher rate than the repo rate.
    • The MSF rate and reverse repo rate determine the corridor for the daily movement in the weighted average call money rate.

  • Cabinet nods for Ken-Betwa Interlinking Project

    The Union Cabinet has approved the funding and implementation of the Ken-Betwa river interlinking project at the 2020-21 price level.

    Ken-Betwa Interlinking Project

    • The Ken-Betwa Link Project is the first project under the National Perspective Plan for the interlinking of rivers.
    • Under this project, water from the Ken River will be transferred to the Betwa River. Both these rivers are tributaries of the river Yamuna.
    • The project is being managed by India’s National Water Development Agency (NWDA), under the Ministry of Jal Shakti.
    • Implementation of the project
    1. Phase-I: Daudhan dam complex and its appurtenances like Low Level Tunnel, High Level Tunnel, Ken-Betwa link canal and Power houses
    2. Phase-II: Lower Orr dam, Bina complex project and Kotha Barrage

    Utility of the Project

    • Irrigation: The project is slated to irrigate 10.62 lakh hectares annually, provide drinking water supply to 62 lakh people and generate 103 MW of hydropower and 27 MW of solar power.
    • Water supply: The project will be of immense benefit to the water-starved Bundelkhand region, spread across Madhya Pradesh and Uttar Pradesh.
    • Agricultural boost: The project is expected to boost socio-economic prosperity in the backward Bundelkhand region on account of increased agricultural activities and employment generation.
    • Addressing Rural Distress: It would also help in arresting distress migration from this region.

    Many hurdles

    • Submergence of critical wildlife habitat: The project will partly submerge the Panna Tiger Reserve in Madhya Pradesh and affect the habitat of vultures and jackals.
    • Clearance: After years of protests, it was finally cleared by the apex wildlife regulator, the National Board for Wildlife, in 2016.
    • Water sharing disputes: Then UP and MP could not agree on how water would be shared, particularly in the non-monsoonal months.

    Back2Basics: River Interlinking in India

    History

    • The idea of interlinking of rivers in the Indian subcontinent is atleast 150 years old.
    • During the British Raj in India, Sir Arthur Cotton, a British general and irrigation engineer, first suggested linking the Ganga and the Cauvery for navigational purposes.
    • K.L. Rao’s Proposal (1972), which had 2640 km long Ganga – Cauvery link as its main component involved large scale pumping over a head of 550 m.
    • The Central Water Commission, which examined the proposal, found it to be grossly under estimated and economically prohibitive.

    Capt. Dastur Proposal (1977)

    It envisaged the construction of two canals:

    1. 4200 km Himalayan Canal at the foot of Himalayan slopes running from the Ravi in the West to the Brahmaputra and beyond in the east
    2. 9300 km Garland Canal covering the central and southern parts

    Beginning of implementation

    • The Indian Rivers Inter-link aims to link India’s rivers by a network of reservoirs and canals and so reduce persistent floods in some parts and water shortages in other parts of India.
    • The idea to link rivers got a shot in the arm with the establishment of the National Water Development Agency in 1982 by then PM Indira Gandhi.
    • The Inter-link project was split into three parts:
    1. Northern Himalayan rivers inter-link component
    2. Southern Peninsular component
    3. Intrastate rivers linking component

    Objectives of inter-linking

    • Connect the Himalayan and peninsular rivers via a network of canals so that
    • Excess water from one channel can be diverted to another which has an inadequate flow
    • Flood moderation in the Ganga-Brahmaputra system
    • Hydropower generation through excess water

    Prospects of River inter-linking

    • Engineering challenges: This is one of the most daring feats of engineering attempted in the history of mankind.
    • Ecosystem challenges: It is a reimagining of the entire aquatic ecosystem of a country as large and diverse as India.

    Advantages offered by river inter-linking

    • Flood control and mitigation: Problems related to flood control, irrigation, limiting droughts and boosting farm output—can be sorted out by linking the country’s rivers.
    • Economic boost: Potential benefits to transport infrastructure through navigation, as well as to broadening income sources in rural areas through fish farming.

    Issues with such projects

    • Migration: It will lead to massive displacement of people
    • Topography change: Since the Ganga basin topography is flat, building dams would not substantially add to river flows.
    • Inundation: The transfer of such enormous amounts of water will inundate forests and land for reservoirs.
    • Seismic hazards: The weight of billions of liters of water can have seismic implications in the Himalayan region.
    • Financial expense: River inter-linking is an expensive business from building the link canals to the monitoring and maintenance infrastructure.
    • Political will: Implementation of the project not only needs a huge financial capital but also political support both is scarce commodities as of now.
    • Consensus building for land acquisition: Another important issue is building consensus among states and Land acquisition.
    • Ecological feasibility: Once the project is implemented it would lead to large-scale displacement of people and animals.

    Criticisms of such projects

    • Bad Science: Such projects are built on bad science and an outdated understanding of water systems and water management.
    • Human determinism: Such projects go in contravention with natural process thereby generating more scope for threat than any opportunity.

     

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  • Ambergris: The Floating Gold

    The Crime Branch in Pune and seized 550 grams of ambergris, also known as ‘floating gold’.

    What is Ambergris?

    • Ambergris, which means gray amber in French, is a waxy substance that originates from the digestive system of the protected sperm whales.
    • It is incorrectly referred to as ‘whale vomit’.
    • It is produced in the gastrointestinal tract of some of the sperm whales for the passage of hard, sharp objects that are ingested when the whale eats large quantities of marine animals.

    Why is it so expensive?

    • Investigating agencies from across India who have seized ambergris in the recent past estimate its value to be somewhere between Rs 1 to 2 crores per kilogram, depending on the purity and quality.
    • Being extremely rare contributes to its high demand and high price in the international market.

    Its uses

    • Traditionally, ambergris is used to produce perfumes that have notes of musk.
    • While there are records of it being used to flavor food, alcoholic beverages and tobacco in some cultures in the past, it is rarely used for these purposes presently.

    Legalities and recent cases of seizure in India

    • While there is a ban on possession and trade of ambergris in countries like the USA, Australia and India, in several other countries it is a tradable commodity.
    • In the Indian context, the sperm whales are a protected species under Schedule 2 of the Wildlife Protection Act, 1972 and possession or trade of any of its by-products, including Ambergris is illegal.
    • It has been observed that the gangs smuggling the ambergris procure it from coastal areas and ship it to destination countries via some other countries with whom India has comparatively less stringent sea trade.

     

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  • To check stubble burning, monitor policy implementation

    Context

    Every October and November, parts of north India are engulfed by a dense fog. Farmers resort to the practice due to the limited time they have between the harvesting of kharif paddy and sowing of the rabi wheat.

    Government initiatives to stop the stubble burning

    • Policy measures: In 2014, the Ministry of Agriculture and Farmers Welfare developed a National Policy for the Management of Crop Residue.
    • Ban by NGT: In 2015, the National Green Tribunal banned stubble burning in Rajasthan, Uttar Pradesh, Delhi, Haryana and Punjab.
    • Weak enforcement: The enforcement of the ban has, however, been weak, largely due to inadequate political will.
    • Legal measures: Stubble burning was considered an offence under Section 188 of the Indian Penal Code and in the Air and Pollution Control Act, 1981.
    • However, it has now been decriminalised as per a recent government announcement.
    • The Central Scheme on Promotion of Agricultural Mechanisation for In-Situ Management of Crop Residue was introduced in 2018-19.
    • Over 1.5 lakh crop residue management machineries have been supplied to farmers and custom hiring centres between 2018-19 to 2020-21.

    How successful were the measures?

    • As a result of these efforts, the number of crop residue burning events declined from 2016 to 2019.
    • This year satellite data did show an almost 50 per cent decline in the number of stubble burning events in Punjab, Haryana and UP in October.
    • However, after including burning events till November 21, the decline reduced to about 8 per cent.
    • Experts suggest that the respite in October was temporary as the initial decline can be attributed to the delayed withdrawal of monsoon.
    • It is thus evident that despite various government initiatives, substantial stubble burning continues in several states.

    Suggestions

    • Subsidise operational cost for crop residue management: To ease farmers’ financial burden, the government could consider subsidising operational costs along with providing farmers capital subsidy on crop residue management equipment.
    • Ex-situ management of crop residue: Ex-situ management of crop residue can also be explored under the schemes covering products such as bales and pellets for biomass power generation and supplementary feedstock in coal-fired power plants.
    • Awareness generation: Awareness generation and trust building exercises should be undertaken with the support of local civil society organisations.
    • Adopt targeted and cluster-based approach: Stubble burning is fairly concentrated in regions within states.
    • A targeted and cluster-based approach can be undertaken by identifying districts with a higher number of stubble burning incidents.
    • Central and state government interventions can then be concentrated in these districts.
    • Monitoring system at local level: To make these interventions effective, there is a requirement for formulating a robust monitoring system at the local level to track the progress of different activities.

    Consider the question “Stubble burning by farmers of the adjacent states contributes significantly to the air pollution in Delhi. In this context, examine the initiatives taken by the government to deal with the problem and suggest the way forward.”

    Conclusion

    Dealing with the practice of stubble burning requires efforts on multiple levels. A combination of these measures can complement the existing initiatives to encourage farmers to adopt zero stubble burning practices.

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  • Reciprocal Exchange of Logistics (RELOS) Agreement with Russia

    India and Russia are set to ink the RELOS logistics exchange pact during the visit of Russian President Vladimir Putin for the Indo-Russia summit.

    What are Logistics Agreements, in general?

    • Logistical exchange agreements are designed so that partner countries can enjoy ease of access to use each other’s military facilities like ports, bases, and military installations.
    • Such agreements save enormous time and also frees up the need for constant paperwork when one military obtains assistance on matters like refuelling, berthing, use of aviation infrastructure, etc.

    RELOS Agreement with Russia

    • RELOS agreement with Russia would grant “access to Russian naval port facilities in the Arctic”, thus enhancing “Indian Navy’s reach and operational experience in Polar waters”.

    Need for RELOS

    • Despite growing engagement with the US on military hardware and tech, Russia remains a partner with whom India has shared traditionally deep defence ties.
    • Russia’s growing proximity to China and Pakistan has of late been seen as casting a shadow on the Moscow-New Delhi engagement.
    • To that extent, RELOS will be an important step forward in the military sphere as it aims at fostering interoperability and sharing of logistics.
    • The “long overdue” agreement was to have come up for signing in 2019 but that was put off pending finalisation of its terms.

    Strategic significance of RELOS Agreement

    • Naval Cooperation: It is usually the Indian Navy, the most outgoing force of the three services, that stands to benefit the most from a logistical exchange agreement.
    • Interoperability: These impart enhanced operational turnaround and strengthened interoperability on the high seas.
    • Military enhancements: Given the percentage of Russian military hardware in the Indian armed forces, the two sides can take advantage, through RELOS, of increased interoperability “in any hostile situation in the future”.
    • Future defence purchases: India has acquired advanced defence systems from Russia, including fighter jets, and is looking to again obtain a nuclear-powered attack submarine on a long-term lease from Moscow.

    Fulfilling Arctic aspirations of India

    • Navigation: From a geostrategic point of view, it would give Indian Navy better access to northern sea routes and Russian ports in the Arctic, where India is looking to set up an Arctic station.
    • Energy cooperation: Russia and India are also exploring enhanced energy cooperation in the Arctic region.
    • Competing China: India’s presence in Arctic will act as a strategic counterweight to China’s strategic posturing with Beijing and Moscow sharing “synergy” in the Arctic.

    Does India have similar arrangements with other Countries?

    • India has logistical exchange agreements with six other countries, including Quadrilateral Security Dialogue, or Quad, partners US (LEMOA), Japan and Australia.
    • Singapore, France and South Korea are the other countries with which similar arrangements have been effected.
    • India has become more comfortable in concluding such arrangements with other countries and is currently pursuing one with the UK while exploring arrangement with other partners like Vietnam.

    Other defence trade between the two countries

    • Russia continues to be among India’s biggest defence suppliers.
    • The two sides are now looking to move from licence manufacture to joint research and co-development of defence equipment.
    • Both nations have agreed for the manufacture of over six lakh AK-203 assault rifles by a Joint Venture, Indo-Russian Rifles Private Ltd, at Korwa, Amethi, in UP.
    • Russia has started deliveries of the S-400 Triumf long-range air defence systems to India. The first division will be delivered by the end of 2021.
    • There are several other big such as procurement of 21 Mig-29s and 12 Su-30MKI fighters, Igla-S short-range air defence systems and the manufacture of 200 K-226T utility helicopters.

    Future trajectory of the defence cooperation

    • Timely supply of spares and support to the large inventory of Russian hardware in service with Indian military has been a major issue from India.
    • To address this, Russia has made legislative changes allowing its companies to set up joint ventures in India to address it following an Inter-Governmental Agreement signed in 2019.
    • This is in the process of being implemented.
    • With increased competition from the U.S., France, Israel and others who have bagged major deals in recent years, Russia is also focusing on timely deliveries and lifetime support.

    Conclusion

    • Russia will remain a key defence partner for India for decades to come.
    • In line with India’s quest for self-sufficiency, such partnerships help curb the reliance of India over other countries.
    • This will thereby curb India’s dependency in near future.

     

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  • Kasturirangan Committee Recommendations for Western Ghats Conservation

    Recently, the Karnataka CM has informed the Centre that the state is opposed to the Kasturirangan Committee report on the Western Ghats.

    What is the issue?

    • The Kasturirangan committee report proposes 37 per cent of the total area of Western Ghats, which is roughly 60,000 square kilometers, to be declared as eco-sensitive area (ESA).
    • Declaring this would adversely affect the livelihood of people in the region, asserted the Karnataka CM.

    Kasturirangan Committee Report

    • The Western Ghats Ecology Expert Panel (WGEEP), also known as the Gadgil Commission after its chairman Madhav Gadgil, was an environmental research commission.
    • It was appointed by the Ministry of Environment and Forests of India. The commission submitted the report in 2011.
    • The WGEEP was succeeded by an eminent scientist K. Kasturirangan.

    Key recommendations

    (1) Declaration of Eco-Sensitive Area (ESA)

    • The committee report proposes 37 per cent of the total area of Western Ghats, which is roughly 60,000 square km, to be declared as eco-sensitive area (ESA).
    • Out of this, 20,668 sq km of the area falls in Karnataka (46.50%) covering 1,576 villages.

    (2) Ban on various activities

    • The report recommended a blanket ban on mining, quarrying, setting up of red category industries and thermal power projects.
    • It also stated that the impact of infrastructural projects on the forest and wildlife should be studied before permission is given for these activities.

    (3) Urging of UNESCO World Heritage tag

    • It has sought for UNESCO Heritage tag as an opportunity to build global and domestic recognition of the enormous natural wealth that exists in the Western Ghats.
    • The 39 sites are located across the Western Ghats and distributed across the states (Kerala 19), Karnataka (10), Tamil Nadu (6) and Maharashtra (4).

    Reasons behind rejection by Karnataka

    • Hitherto conservation measures: Karnataka has the distinction of being one of the states with extensive forest cover and the government has taken care to protect the biodiversity of Western Ghats.
    • Curb over development activities: The state believes that implementation of the report will halt the developmental activities in the region.
    • Issues over satellite observations: The Kasturirangan report has been prepared based on the satellite images, but the ground reality is different.
    • Adaptation by People: People of the region have adopted agriculture and horticultural activities in an eco-friendly manner.

    Significance of the recommendations

    • There have been massive encroachments across the state forest areas and these have been done at the behest of political leaders.
    • We are in the throes of extreme climate events, which are impacting nature and people.
    • Hence it is prudent to conserve the fragile ecosystems as it costs less compared to the situation prone to calamities (with changes in the climate).

     

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  • World Inequality Report, 2022

    As per the ‘World Inequality Report 2022’, India is among the most unequal countries in the world, with rising poverty and an ‘affluent elite.’

    World Inequality Report

    • This report is published by Mr. Lucas Chancel, the co-director of the World Inequality Lab of the Paris School of Economics.
    • It was coordinated by famed French economist Thomas Piketty.

    Key highlights of the report

    (1) Income divide

    • The report highlights that the top 10% and top 1% in India hold 57% and 22% of the total national income respectively while the bottom 50% share has gone down to 13%.
    • The average national income of the Indian adult population is Rs 2,04,200.
    • The bottom 50% earns 20 times more than the top 10%.

     (2) Decline in public wealth

    • The report notes that the share of public wealth across countries has been on a decline for decades now.
    • Public assets typically include public buildings housing administrations, schools, universities, hospitals, and other public services.

    (3) Inequality during Colonial India

    • Going back in time, the report shows that the income inequality in India under the British colonial rule (1858-1947) was very high, with a top 10% income share around 50%.
    • After independence, due to socialist-inspired five-year plans, this share was reduced to 35-40%.
    • Owing to poor post-Independence economic conditions, India embarked upon deregulation and loosening controls in the form of liberalization policies.

    (4) Wealth inequality

    • The average household wealth in India is around Rs 9,83,010.
    • The bottom 50% of the nation can be seen to own almost nothing, with an average wealth of Rs 66,280 or 6% of the total pie.
    • The middle class is relatively poor with an average wealth of Rs 7,23,930 or 29.5% of the total.
    • The top 10% owns 65% of the total wealth, averaging Rs 63,54,070 and the top 1% owns 33%, averaging Rs 3,24,49,360.

    (5) Gender Inequality

    • Gender inequality in India is also considered on the higher end of the spectrum.
    • The share of female labor income share in India is equal to 18% which is significantly lower than the average in Asia (21%, excluding China) & is among the lowest in the world.
    • Although, the number is slightly higher than the average share in the Middle East (15%).
    • However, a significant increase has been observed since 1990 (+8 p.p.) but it has been insufficient to lift women’s labor income share to the regional average.

    (6) Poor States, wealthy population

    • Countries across the world have become richer over the past 40 years, but their governments have become significantly poorer.
    • The report shows that the share of wealth held by public actors is close to zero or negative in rich countries, meaning that the totality of wealth is in private hands.
    • Following the pandemic, governments borrowed the equivalent of 10-20% of GDP, essentially from the private sector.

    (7) Issue over data availability

    • The report goes on to say that over the past three years, the quality of inequality data released by the government has seriously deteriorated.
    • This has made it particularly difficult to assess recent inequality changes.

    Conclusions from the report

    (1) Wealth is mostly inherited and has a snowball effect

    • People accumulate wealth across generations through inheritance.
    • It has a snowball effect, wherein successive generations will gain more, but in their concentrated section.
    • More capital incentivizes banks to lend. This is why the rich section’s wealth grows faster.

    (2) Wealth management is necessary

    • Public wealth has been declining for two reasons:
    1. First, governments have been privatizing assets and natural resources at low costs.
    2. Second, governments contract debt to the private sector, making it richer.
    • Without assets, governments have low resources to invest and to mitigate climate change impacts, particularly in the energy sector.
    • Currently, governments have more debts than assets. This calls for strategic management of the economy.

     

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  • Laser Communications Relay Demonstration (LCRD)

    NASA has launched its new Laser Communications Relay Demonstration (LCRD) — the agency’s first-ever laser communications system.

    What is LCRD?

    • LCRD involves laser communications – also called optical communications which uses infrared light to send information.
    • LCRD is launched in a geosynchronous orbit, over 35,000km above Earth.
    • LCRD has two optical terminals – one to receive data from a user spacecraft, and the other to transmit data to ground stations.
    • The modems will translate the digital data into laser signals. This will then be transmitted via encoded beams of light.

    Benefits offered by LCRD

    • Currently, most NASA spacecraft use radio frequency communications to send data.
    • Optical communications will help increase the bandwidth 10 to 100 times more than radio frequency systems.
    • The LCRD will help the agency test optical communication in space.

    Laser vs Radio

    • Laser communications and radio waves use different wavelengths of light. It uses infrared light and has a shorter wavelength than radio waves.
    • This will help the transmission of more data in a short time.
    • Using infrared lasers, LCRD will send data to Earth at 1.2 gigabits-per-second (Gbps).
    • It would take roughly nine weeks to transmit a completed map of Mars back to Earth with current radio frequency systems. With lasers, we can accelerate that to about nine days, says NASA.

    Other advantages

    Optical communications systems are smaller in size, weight, and require less power compared with radio instruments.

    • A smaller size means more room for science instruments.
    • Less weight means a less expensive launch.
    • Less power means less drain on the spacecraft’s batteries.

     

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  • The brush with crypto offers some lessons for regulation

    Context

    The fact that crypto exchanges successfully managed to signal legitimacy for their services and offer these tokens to a mostly-uninformed public for over a year provides lessons on how the government and sectoral regulators may need to act before the game gets out of hand.

    Regulating the technology innovation

    • Technology innovation typically remains a step ahead of regulatory frameworks, which are designed with current practices in mind.
    • Problems occur when these innovations push the envelope beyond accepted codes of social and ethical behaviour.
    • Digital lending apps: The joint parliamentary committee (JPC) on a proposed data privacy law that recently released its controversial report has pointed to dubious “digital” lending apps proliferating on the Android platform.
    • Blockchain technology, of which cryptos are a part, is an innovation that can facilitate transactions across assorted functions.

    Issues with unregulated cryptocurrencies in India

    • Some estimates show that over 15 million Indians have invested in cryptos, many of whom live in Tier-II or Tier-III towns.
    • But crypto exchanges in India have pushed the boundaries of this invention.
    • Important disclaimer not communicated properly: They have been advertising aggressively across media platforms often announcing important disclaimers at warp speed.
    • These provisos were supposed to communicate that cryptos are neither currencies nor strictly “assets”, and that these trading platforms are not truly “exchanges”, that crypto values are not determined by the usual dynamics governing other income-yielding assets, and that investing in cryptos was an exceedingly risky proposition.
    •  In the meantime, with advertising overload stimulating viewer interest, many scam crypto issuers and exchanges have sprung up in attempts to separate the gullible from their savings.

    Regulation challenges and how government is tackling it

    • The government has now stepped in, seized with the political perils of speculative investments turning sour.
    •  Unfortunately, sectoral regulators, such as the Reserve Bank of India (RBI) and Securities Exchange Board of India (Sebi), were unable to step in and act earlier because they are governed by specific Acts which do not mention cryptos as a category that needs regulation.
    • Need for enabling clauses: This episode provides a valuable lesson on how these Acts should perhaps include some enabling clauses that allow financial sector regulators to intervene whenever any intermediary tries to sell a financial service or any new innovative financial service poses the risk of disrupting financial stability.
    • Two important documents have recently been released which discuss entry norms into formal banking, both further strengthening RBI’s hands.
    • Think-tank Niti Aayog’s paper on licensing digital banks recommends an evolutionary path for digital banks that’s RBI-regulated at all stages: first a restricted licence, then a regulatory sandbox offering some relaxations, and finally a “full-stack” digital banking licence.
    • Simultaneously, RBI has accepted some of the suggestions of its internal working group and modified a few to make entry norms stricter, but has maintained silence on the entry of private sector corporate houses into banking.
    • The JPC’s concerns over unregulated digital lending have also focused attention on an RBI-appointed committee’s report on digital lending, given that multiple fintech-based online lenders have mushroomed during the pandemic.

    Conclusion

    This highlights the need for principle-based regulations, rather than rule-based regulations, to allow for flexibility and adaptability in a fast-changing technology environment.

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  • What is Armed Forces (Special Powers) Act, 1958?

    The death of at least 14 civilians in Nagaland as a result of the action of the Indian Army has brought back into focus the controversial Armed Forces (Special Powers) Act, 1958 [AFSPA].

    AFSPA: A Backgrounder

    • The AFSPA, 1958 came into force in the context of insurgency in the North-eastern States decades ago.
    • It provides “special power” to the Armed Forces applies to the Army, the Air Force and the Central Paramilitary forces etc.
    • It has been long contested debate whether the “special powers” granted under AFSPA gives total immunity to the armed forces for any action taken by them.

    Armed Forces (Special Powers) Act, 1958

    • Armed Forces Special Powers Act, to put it simply, gives armed forces the power to maintain public order in “disturbed areas.”
    • AFSPA gives armed forces the authority use force or even open fire after giving due warning if they feel a person is in contravention of the law.
    • The Act further provides that if “reasonable suspicion exists”, the armed forces can also arrest a person without warrant; enter or search premises without a warrant; and ban the possession of firearms.

    What are the Special Powers?

    The ‘special powers’ which are spelt out under Section 4 provide that:

    (a) Power to use force, including opening fire, even to the extent of causing death if prohibitory orders banning assembly of five or more persons or carrying arms and weapons, etc are in force in the disturbed area;

    (b) Power to destroy structures used as hide-outs, training camps, or as a place from which attacks are or likely to be launched, etc;

    (c) Power to arrest without warrant and to use force for the purpose;

    (d) Power to enter and search premises without a warrant to make arrest or recovery of hostages, arms and ammunition and stolen property etc.

    What are the Disturbed Areas?

    • A disturbed area is one that is declared by notification under Section 3 of the AFSPA.
    • As per Section 3, it can be invoked in places where “the use of armed forces in aid of the civil power is necessary”.

    Who can declare/notify such areas?

    • The Central Government or the Governor of the State or administrator of the Union Territory can declare the whole or part of the State or Union Territory as a disturbed area.
    • A suitable notification would have to be made in the Official Gazette.

    Presently ‘Disturbed Areas’

    • AFSPA is currently in force in Assam, Nagaland, Manipur, 3 districts of Arunachal Pradesh, and areas falling within the jurisdiction of 8 police stations in Arunachal Pradesh bordering Assam.
    • In Jammu and Kashmir, a separate law Armed Forces (Jammu and Kashmir) Special Powers Act, 1990 has been in force.

    AFSPA: Is it a License to Kill?

    While the operation of the Section has been controversial in itself, it has attracted much criticism when actions have resulted in the death of civilians.

    • Power to kill: Section 4 of the Act granted officers the authority to “take any action” even to the extent to cause the death.
    • Protection against prosecution: This power is further bolstered by Section 6 which provides that legal can be instituted against the officer, except with the previous sanction of the Central Government.

    Supreme Court’s Observations over AFSPA

    • These extra-judicial killings became the attention of the Supreme Court in 2016.
    • It clarified that the bar under Section 6 would not grant “total immunity” to the officers against any probe into their alleged excesses.
    • The judgment noted that if any death was unjustified, there is no blanket immunity available to the perpetrator(s) of the offense.
    • The Court further noted that if an offense is committed even by Army personnel, there is no concept of absolute immunity from trial by the criminal court constituted under the CrPC.

    Constitutionality of AFSPA

    • Attempts have been made to examine the constitutionality of the Act on the grounds that it is contravention to the:
    1. Right to Life and Personal Liberty (Article 21) and
    2. Federal structure of the Constitution since law and order is a State subject

    Recommendations to repeal AFSPA

    (1) Justice B.P. Jeevan Reddy Commission

    • The 2004 Committee headed by Justice B.P. Jeevan Reddy, the content of which has never officially been revealed by the Government, recommended that AFSPA be repealed.
    • Additionally, it recommended that appropriate provisions be inserted in the Unlawful Activities Prevention Act, 1967 (UAPA) instead.
    • It also recommended that the UAPA be modified to clearly specify the powers of the armed forces and paramilitary forces and grievance cells should be set up in each district where the armed forces are deployed.

    (2) ARC II

    • The Administrative Reforms Commission in its 5th Report on ‘Public Order’ had also recommended that AFSPA be repealed.
    • It recommended adding a new chapter to be added to the Unlawful Activities Prevention Act, 1967.
    • However, the recommendation was considered first and then rejected.

    Other issues with AFSPA

    (1) Sexual Misconduct by Armed Forces

    • The issue of violation of human rights by actions of armed forces came under the consideration of the Committee on Amendments to Criminal Law (popularly known as Justice Verma Committee) set up in 2012.
    • It observed that- in conflict zones, legal protection for women was neglected.

    (2) Autocracy

    • The reality is that there is no evidence of any action being taken against any officer of the armed forces or paramilitary forces for their excesses.

    Caution given by the Supreme Court

    A July 2016 judgment authored by Justice Madan B. Lokur in Extra Judicial Execution Victim Families Association quoted the “Ten Commandments” issued by the Chief of the Army Staff for operations in disturbed areas:

    1. Definite circumstances: The “power to cause death is relatable to maintenance of public order in a disturbed area and is to be exercised under definite circumstances”.
    2. Declaration preconditions: These preconditions include a declaration by a high-level authority that an area is “disturbed”.
    3. Due warning: The officer concerned decides to use deadly force on the opinion that it is “necessary” to maintain public order. But he has to give “due warning” first.
    4. No arbitrary action: The persons against whom the action was taken by the armed forces should have been “acting in contravention of any law or order for the time being in force in the disturbed area”.
    5. Minimal use of force: The armed forces must use only the “minimal force required for effective action against the person/persons acting in contravention of the prohibitory order.”
    6. Empathy with perpetrators: The court said that: the people you are dealing with are your own countrymen. All your conduct must be dictated by this one significant consideration.
    7. People friendliness: The court underscored how the Commandments insist that “operations must be people-friendly, using minimum force and avoiding collateral damage – restrain must be the key”.
    8. Good intelligence: It added that “good intelligence is the key to success”.
    9. Compassion: It exhorted personnel to “be compassionate, help the people and win their hearts and minds. Employ all resources under your command to improve their living conditions”.
    10. Upholding Dharma (Duty): The judgment ended with the final Commandment to “uphold Dharma and take pride in your country and the Army”.

    Conclusion

    • Despite demands by civil society groups and human rights activities, none of the recommendations have not been implemented to date.

     

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