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  • Physics Nobel for discoveries about Black Holes

    Three scientists won this year’s Nobel Prize in Physics for advancing our understanding of black holes, the all-consuming monsters that lurk in the darkest parts of the universe.

    Try this PYQ:

    Q.Recently, scientists observed the merger of giant ‘blackholes’ billions of light-years away from the Earth. What is the significance of this observation?

    (a) ‘Higgs boson particles’ were detected.

    (b) ‘Gravitational waves’ were detected.

    (c) Possibility of inter-galactic space travel through ‘wormhole’ was confirmed.

    (d) It enabled the scientists to understand ‘singularity’.

    Who are these laureates?

    • Briton Roger Penrose received half of this year’s prize for the discovery that black hole formation is a robust prediction of the general theory of relativity.
    • German Reinhard Genzel and American Andrea Ghez received the second half of the prize for the discovery of a supermassive compact object at the centre of our galaxy.

    What are black holes?

    • A black hole is formed when stars collapse and can be defined as a space in the universe with an escape velocity so strong that even light cannot escape it.
    • Escape velocity is the speed at which an object must travel to override a planet or an object’s gravitational force.
    • For instance, for a spacecraft to leave the surface of the Earth, it needs to be travelling at a speed of about 40,000 km per hour.
    • Since light cannot get out, black holes are invisible and can only be tracked with the help of a space telescope or other special tools.
    • And the reason light cannot escape is mainly that the gravity inside a black hole is very strong as a result of a lot of matter being squeezed into a small space.

    Their contributions

    • Penrose has been awarded the prize for the discovery that black hole formation is a robust prediction of the general theory of relativity.
    • Genzel and Ghez have been awarded the prize for the discovery of a supermassive compact object at the centre of our galaxy.
    • Penrose’s work has shown that black holes are a direct consequence of Albert Einstein’s general theory of relativity.
    • Einstein himself did not believe that black holes exist and presented his theory in November 1915, providing a new way to look at and understand the gravity that shapes the universe “at the largest scale”.
    • Penrose used Einstein’s general theory of relativity in order to prove that the process of formation of black holes is a stable one.
    • Genzel and Ghez, on the other hand, have discovered that an invisible and an extremely heavy object governs the stars’ orbit at the centre of the Milky Way.

  • Supersonic Missile Assisted Release of Torpedo (SMART) System

    DRDO successfully conducted the flight test of its Supersonic Missile Assisted Release of Torpedo (SMART) system.

    Try this MCQ:

    Q.The SMART system recently tested by the DRDO is essentially a-

    a)Radar

    b)Torpedo

    c)UAV

    d)Missile

    What is the SMART system?

    • Torpedoes are self-propelled weapons that travel underwater to hit a target but are limited by their range.
    • In the mid-2010s, DRDO undertook a project to build capacity to launch torpedoes assisted by missiles; Monday’s was the first known flight test of the system.
    • This SMART system comprises a mechanism by which the torpedo is launched from a supersonic missile system with modifications that would take the torpedo to a far longer range than its own.
    • For example, a torpedo with a range of a few kilometres can be sent a distance to the tune of 1000 km by the missile system from where the torpedo is launched.

    Why is it significant?

    • SMART is a game-changing technology demonstration in anti-submarine warfare.
    • India’s anti-submarine warfare capacity building is crucial in light of China’s growing influence in the Indian Ocean region.
    • Assets of such warfare consist of the deployment of submarines, specialised anti-submarine ships, air assets and state-of-the-art reconnaissance and detection mechanisms.
    • The Navy’s anti-submarine warfare capability got a boost in June after the conclusion of a contract for Advanced Torpedo Decoy System Maareech, capable of being fired from all frontline warships.
    • India has been indigenously developing and building several anti-submarine systems and vessels in the recent past.

  • Kozhikode-Wayanad Tunnel Project

    Kerala CM has launched a tunnel road project that would connect Kozhikode with Wayanad.

    Try this PYQ:

    Q.From the ecological point of view, which one of the following assumes importance in being a good link between the Eastern Ghats and the Western Ghats?

    (a) Sathyamangalam Tiger Reserve

    (b) Nallamala Forest

    (c) Nagarhole National Park

    (d) Seshachalam Biosphere Reserve

    Kozhikode-Wayanad Tunnel Project

    • The 7-km tunnel, being described as the third-longest in the country, is part of an 8-km road cutting through sensitive forests and hills of the Western Ghats.
    • Its endpoints are at Maripuzha in Thiruvambady village panchayat (Kozhikode) and Kalladi in Meppadi panchayat (Wayanad).
    • The tunnel is an outcome of a decades-long campaign for an alternative road as the Thamarassery Ghat Road is congested and gets blocked by landslides during heavy monsoon.

    How will the road impact the ecology?

    • The Forest Department has identified the proposed route as a highly sensitive patch comprising evergreen and semi-evergreen forests, marshlands and shola tracts.
    • This region is part of an elephant corridor spread between Wayanad and Nilgiri Hills in Tamil Nadu.
    • Two major rivers, Chaliyar and Kabani that flows to Karnataka, originate from these hills in Wayanad.
    • Eruvazhanjipuzha, a tributary of Chaliyar and the lifeline of settlements in Malappuram and Kozhikode, begins in the other side of the hills.
    • The region, known for torrential rain during the monsoon, has witnessed several landslides, including in 2019 at Kavalappura near Nilambur and at Puthumala, Meppadi in Wayanad.

    Environmental clearance issues

    • Proponents of the project have been stressing that the tunnel will not destroy forest (trees).
    • The MoEFCC guidelines state that the Forest Act would apply not only to surface area but the entire underground area beneath the trees.
    • For tunnel projects, conditions relating to underground mining would be applicable.
    • As the proposed tunnel is 7 km long, it will require emergency exit points and air ventilation wells among other measures, which would impact the forest further.

  • Asset Reconstruction Companies

    The article argues for the greater role to Asset Reconstruction Companies by allowing them to invest in the equity [shares] of the distressed companies.

    Context

    • In a recently released paper “Indian Banks: A time to reform” Viral Acharya and Raghuram Rajan argued for a greater role for Asset Reconstruction Companies.
    • They argue that when there are fewer bids in a bankruptcy auction, the value on loans is better realised if read an asset reconstruction company takes over the borrower and places the firm under new management.

    Current limits on the role of ARC

    • The RBI limited the role of  ARC to participation in resolutions under the Insolvency and Bankruptcy Code, 2016 (IBC) only by partnering with an equity investor, which is the resolution applicant.
    • If the application succeeds, the equity investor would acquire the shares, while the ARC trust would acquire the debt.

    Background of the ARCs

    •  Some stakeholders are asking for extending the role of ARCs by allowing direct invest in the equity of distressed companies through IBC resolution just like private equity funds.
    • The RBI doesn’t appear to favour such an extended role for ARCs.
    • This is due to the uninspiring performance of the Asset Reconstruction Companies in the past.
    • At the time of the Asian Financial Crisis,  India’s non-performing assets stood at a whopping 14.4 per cent.
    •  It was in this context that the Narasimham Committee (1998) recommended setting up an ARC specifically for purchasing NPAs from banks and financial institutions.
    • Subsequently, the SARFAESI Act, 2002 created the legal framework for establishing multiple private ARCs.
    • This policy achieved only modest success.
    • The maximum average recovery by ARCs as a percentage of total bank claims stood at 21.5 per cent in 2010.
    • Since then, it has steadily declined and reached 2.3 per cent in 2018.
    • This low recovery could be the result of collateral disposal rather than genuine business turnarounds [i.e. operating the business and turning it profitable].

    Need for extending the role of ARCs

    • In 2002, India lacked an effective bankruptcy system.
    • There was no market for corporate control of distressed firms.
    • ARCs were originally designed for this peculiar institutional ecosystem.
    • They were required to hand over the distressed business back to the original promoter once they had generated enough value to repay the debt.
    • Consequently, ARCs had little incentive to turn around distressed businesses.
    • This situation completely changed in 2016 as the IBC seeks to maximise the value of distressed businesses through a market for corporate control.
    • ARCs should be able to fully participate in this market and attempt successful turnarounds by acquiring strategic control over distressed businesses.
    • In a solvent company, shareholders have stronger incentives than creditors to maximise enterprise value.
    • This is because an increase in enterprise value automatically increases the value of its equity.
    • In contrast, creditors do not benefit from increases in enterprise value beyond their individual claims.
    • If ARCs could hold more equity instead of debt in the resolved company, they would also have a stronger incentive to take strategic control to ensure successful turnaround.

    Way forward

    • The law should enable ARCs to invest in a distressed company’s equity, whether by infusing fresh capital or by converting debt into equity.
    • Effectively, an ARC should act more like a private equity fund, as Acharya and Rajan suggested.
    • This in turn would make the market for corporate control under IBC deeper and more liquid, improving ex-ante recovery rates for banks.

    Consider the question “What are Asset Reconstruction Companies? How allowing the ARCs to invest in equity of distressed companies under IBC help successful turnaround of the distressed business?”

    Conclusion

    •  If only ARCs are allowed to directly participate in IBC resolutions by infusing equity, they could emerge as the most efficient vehicle for turning around distressed Indian businesses.

    Back2Basics: Difference between debt and equity

    • Debt market and equity market are two broad categories of investment available in the general investment milieu.
    • Equity markets trade in shares or stocks of the company listed on the stock exchanges.
    • A stock in a company indicates a unit in the ownership of the company.
    • As shareholders, you become part owners of the company.
    • The largest shareholder, with 50% or more shares, becomes the owner of the company.
    • Equity markets are riskier than debt markets.
    • Debt is a form of borrowed capital.
    • The central or state governments raise money from the market by issuing government securities or bonds.
    • In effect, the government is borrowing money from you and will pay interest to you at regular intervals.
    • The principal amount is returned on maturity.
    • In the same way, a company raises money from the market by selling debt market securities such as corporate bonds.
    • The debt market is made up of bonds issued by government authorities and companies.

  • GST Council and its Functioning

    The Goods and Services Tax (GST) Council has failed to iron out differences between some States and the Centre over the plan to get States to borrow from the market to meet the shortfall in compensation cess collections this year.

    Try this question from CSP 2018:

    Q.Consider the following items:

    1. Cereal grains hulled
    2. Chicken eggs cooked
    3. Fish processed and canned
    4. Newspapers containing advertising material

    Which of the above items is/are exempt under GST (Goods and Services Tax)?

    (a) 1 only

    (b) 2 and 3 only

    (c) 1, 2 and 4 only

    (d) 1, 2, 3 and 4

    About GST Council

    • The GST Council is a federal body that aims to bring together states and the Centre on a common platform for the nationwide rollout of the indirect tax reform.
    • It is an apex member committee to modify, reconcile or to procure any law or regulation based on the context of goods and services tax in India.
    • The GST Council dictates tax rate, tax exemption, the due date of forms, tax laws, and tax deadlines, keeping in mind special rates and provisions for some states.
    • The predominant responsibility of the GST Council is to ensure to have one uniform tax rate for goods and services across the nation.

    How is the GST Council structured?

    • The GST is governed by the GST Council. Article 279 (1) of the amended Indian Constitution states that the GST Council has to be constituted by the President within 60 days of the commencement of the Article 279A.
    • According to the article, the GST Council will be a joint forum for the Centre and the States. It consists of the following members:
    1. The Union Finance Minister will be the Chairperson
    2. As a member, the Union Minister of State will be in charge of Revenue of Finance
    3. The Minister in charge of finance or taxation or any other Minister nominated by each State government, as members.

    Terms of reference

    • Article 279A (4) specifies that the Council will make recommendations to the Union and the States on the important issues related to GST, such as the goods and services will be subject or exempted from the Goods and Services Tax.
    • They lay down GST laws, principles that govern the following:
    1. Place of Supply
    2. Threshold limits
    3. GST rates on goods and services
    4. Special rates for raising additional resources during a natural calamity or disaster
    5. Special GST rates for certain States

  • 2020 Nobel for Hepatitis C Virus discovery

    Americans Harvey J Alter and Charles M Rice, and British scientist Michael Houghton were awarded the Nobel Prize for Medicine or Physiology on Monday for the discovery of the hepatitis C virus.

    Try this PYQ:

    Q.Which one of the following statements is not correct? (CSP 2019)

    (a) Hepatitis B virus is transmitted much like HIV.

    (b) Hepatitis B. unlike Hepatitis C, does not have a vaccine.

    (c) Globally, the number of people infected with Hepatitis B and C viruses arc several times more than those infected with HIV.

    (d) Some of those infected with Hepatitis B and C viruses do not show the symptoms for many years.

    Hepatitis C Virus

    • Hepatitis C virus (HCV) is a bloodborne virus and causes liver diseases. It refers to an inflammatory condition of the liver.
    • The novel virus caused several deaths in the 1960s and 1970s — but remained unknown until its discovery in the late 1980s.

    What are other Hepatitis Viruses?

    • Before the discovery of the Hepatitis C virus, two other viruses were known to cause hepatitis in patients.
    • The Hepatitis A virus was known to spread mainly through contaminated food and water and caused a relatively milder form of liver inflammation.
    • Hepatitis B, discovered in the 1960s, was known to transmit mainly through infected blood and caused a more serious form of the disease.
    • Incidentally, the discovery of the Hepatitis B virus too was rewarded with a Nobel Prize in Medicine, given to Baruch Blumberg in 1976. There are vaccines available for this disease now.

    How Hepatitis C came to observation?

    • The discovery and identification of the Hepatitis B virus facilitated the development of a diagnostic test to detect its presence in blood.
    • Thereafter, only blood sanitized from this virus would be given to patients, but it was observed that even this sanitized blood was able to prevent only 20% of the blood-borne hepatitis cases.
    • It was then that the search for the new virus began.

    How is Hepatitis C treated?

    • Presently there is no vaccine available for HCV. However, it can be treated with antiviral medication.
    • Hepatitis A and B are preventable by vaccine.

    Back2Basics:

    https://www.civilsdaily.com/news/in-news-nobel-prize/

  • What is Sheltering of Taxes?

    This newscard is an excerpt from an original article published in TH.

    We can expect a statement based question comparing Tax Shelters and Tax Heavens.

    What is a Tax Shelter?

    • A tax shelter is a financial vehicle that an individual can use to help them lower their tax obligation and, thus, keep more of their money.
    • It is a legal way for individuals to “stash” their money and avoid getting it taxed.
    • A tax shelter is entirely different from a tax haven because the latter exists outside the country and its legality can, at times, be questionable.
    • A tax shelter, on the other hand, is entirely legal and keeps all monies within an individual’s home country.

  • What is Ketogenic Diet?

    Ketogenic or Keto Diet is popularly followed as a weight loss diet across the world.

    Try this PYQ:

    Q.Regular intake of fresh fruits and vegetables is recommended in the diet since they are a good source of antioxidants. How do antioxidants help a person maintain health and promote longevity? (CSP 2014)

    (a) They activate the enzymes necessary for vitamin synthesis in the body and help prevent vitamin deficiency.

    (b) They prevent excessive oxidation of carbohydrates, fats and proteins in the body and help avoid unnecessary wastage of energy.

    (c) They neutralize the free radicals produced in the body during metabolism.

    (d) They activate certain genes in the cells of the body and help delay the ageing process.

    What is Ketogenic Diet?

    • The Keto Diet is one of the most popular weight-loss diets the world over.
    • It consists of a high-fat, moderate-protein and low-carb diet.
    • It helps in weight loss by achieving ketosis — a metabolic state where the liver burns body fat and provides fuel for the body, as there is limited access to glucose.

    What constitutes a keto diet?

    • A classic keto generally requires that 90 per cent of a person’s calories come from fat, 6 per cent from protein and 4 per cent from carbs.
    • But there are many versions doing the rounds since this one was designed for children suffering from epilepsy to gain control over their seizures.

    How does it impact the body?

    • If we starve the body of carbohydrate, after burning out the glucose, the liver starts breaking down fats for energy.
    • Ketosis is common in all kinds of fasting, but in a keto diet, when one is feeding it by giving a lot of fats from outside without carbs, it can become mildly toxic.
    • It may lead to many nutrient deficiencies such as carbohydrates, proteins, vitamins (especially vitamin A, D, E, & K) and minerals like calcium, phosphorus, sodium.
    • Extreme carbohydrate restriction can lead to hunger, fatigue, low mood, irritability, constipation, headaches, and brain fog, which may last days to weeks

    What impact does it have on our kidneys?

    • Even the moderate increase in protein needs to be carefully monitored, especially in those who are already suffering from chronic kidney disease, as it could lead to kidney failure.
    • One should get a thorough assessment and make sure they have normal kidney function before choosing this diet.
    • This diet could lead to increased stress on the kidneys and result in kidney stones, as they are made to work overtime.

  • Need for streamlining the Insolvency and Bankruptcy Code

    The article analyses the impact of Insolvency and Bankruptcy Code (IBC) on the insolvency resolution and on Indian economy.

    Measures that will improve investment

    1)  IBC: transforming insolvency resolution

    • IBC replaced inefficient bankruptcy law regime and has transformed insolvency resolution in India.
    • The IBC has focused on time-bound resolution, rather than liquidation.
    • IBC acts as an empowering tool to support companies falling within its ambit.
    • It has successfully instilled confidence in the corporate resolution methodology.
    • It has allowed credit to flow more freely to and within India while promoting investor and investee confidence.
    • The IBC is both flexible and dynamic, which makes it impactful, given how forward thinking the concept of an omnibus legislation of its nature actually is.
    • Through the Insolvency and Bankruptcy Board of India (IBBI), it has established an unprecedented organisation that both regulates and develops insolvency policy, and assesses market realities.

    Impact of IBC

    •  According to the Resolving Insolvency Index, India’s ranking improved to 52 in 2019 from 108 in 2018.
    • Further, the recovery rate improved nearly threefold from 26.5% in 2018 to 71.6% in 2019
    • The overall time taken in recovery also improved nearly three times, coming down from 4.3 years in 2018 to 1.6 years in 2019.

    2) Decriminalisation of minor offences

    • Criminal penalties including imprisonment for minor offences act as major deterrents for investors.
    • The Government of India is also working toward decriminalisation of minor offences.
    • This will significantly reduce the risk of imprisonment for actions or omissions that are not necessarily fraudulent or an outcome of mala fide intent.

    3) Other legislative measures

    • Together with the IBC, following 3 reforms suggests major and multi-dimensional effort by the government.
    • 1) The rolling out of the commercial courts.
    • 2) Commercial divisions and the Commercial Appellate Divisions Act, 2015, to allow district court-level commercial courts.
    • 3) Removal of over 1,500 obsolete and archaic laws.

    Way forward

    • There could perhaps be a look at institutionalising the introduction of a pre-packed insolvency resolution process.
    • This will also help resolve matters expeditiously, outside of the formal court system, and allow resolution even during the COVID-19 altered reality.

    Consider the question “Examine the impact of Insolvency and Bankruptcy Code (IBC) on the insolvency resolution procedure and suggest the further improvements in the IBC.”

    Conclusion

    The IBC has provided a major stimulus to ease of doing business, enhanced investor confidence, and helped encourage entrepreneurship while also providing support to MSMEs. Its further streamlining and strengthening will surely instil greater confidence in both foreign and domestic investors as they look at India as an attractive investment destination.

    B2BASICS

  • ATAL: World’s Longest Highway Tunnel

    PM Modi has inaugurated the Atal Tunnel at Rohtang at an altitude of above 3,000 metres in Himachal Pradesh.

    Refer this link to read more about Himalayan passes and rivers

    https://www.civilsdaily.com/the-northern-and-northeastern-mountains-part-1/

    Atal Tunnel

    • The 9.02 km-long-tunnel, built by the Border Roads Organisation (BRO), is the world’s longest highway tunnel and connects Manali to Lahaul-Spiti valley.
    • It provides all-weather connectivity to the landlocked valley of Lahaul-Spiti, which remains cut-off for nearly six months in a year as the Rohtang Pass is usually snow-bound between November and April.
    • Before the tunnel construction, the Lahaul Valley used to remain closed for vehicular movement due to bad weather conditions.
    • It reduces the distance by 46 km between Manali and Leh and the travel time by about 4 to 5 hours. It is expected to boost tourism and winter sports in the region.
    • The tunnel, also significant from the military logistics viewpoint, will provide better connectivity to the armed forces in reaching Ladakh.