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Economic Indicators and Various Reports On It- GDP, FD, EODB, WIR etc

Understanding the monetisation of deficit

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Relation between bond yield

The RBI could finance the government debt by buying bonds from the secondary market. Or it could directly finance the debt. And both could stoke inflation. But, do they carry the same inflation risk. The answer is an unambiguous ‘No’. So, how monetisation of debt is different from Open Market Operation by the RBI? Read the article to know…

What is Monetised deficit?

  • The Monetised Deficit is the extent to which the RBI helps the central government in its borrowing programme.
  • In other words, monetised deficit means the increase in the net RBI credit to the central government, such that the monetary needs of the government could be met easily.

What monetisation of deficit mean (and doesn’t mean)

  • Monetisation of the deficit does not mean the government is getting free money from the RBI.
  • If one works through the combined balance sheet of the government and the RBI, it will turn out that the government does not get a free lunch.
  • But it does get a heavily subsidised lunch.
  • That subsidy is forced out of the banks.
  • And, as in the case of all invisible subsidies, they don’t even know.

So, is the RBI monetising the debt?

  • It is not as if the RBI is not monetising the deficit now; it is doing so.
  • It is doing so indirectly by buying government bonds in the secondary market through what are called open market operations (OMOs).
  • Note that both monetisation and OMOs involve printing of money by the RBI.
  • But there are important differences between the two options that make shifting over to monetisation a non-trivial decision.

Historical context of the monetisation of debt: An agreement

  • In the pre-reform era, the RBI used to directly monetise the government’s deficit almost automatically.
  • That practice ended in 1997 with a landmark agreement between the government and the RBI.
  • It was agreed that henceforth, the RBI would operate only in the secondary market through the OMO route.
  • The implied understanding also was that the RBI would use the OMO route not so much to support government borrowing.
  • So, the RBI uses OMO as liquidity instrument to manage the balance between the policy objectives of supporting growth, checking inflation and preserving financial stability.

So, what were the outcomes of the agreement?

  • The outcomes of that agreement were historic.
  • Since the government started borrowing in the open market, interest rates went up.
  • HIgh interest rates incentivised saving and thereby spurred investment and growth.
  • Also, the interest rate that the government commanded in the open market acted as a critical market signal of fiscal sustainability.
  • Importantly, the agreement shifted control over money supply, and hence over inflation, from the government’s fiscal policy to the RBI’s monetary policy.
  • The India growth story that unfolded in the years before the global financial crisis in 2008 when the economy clocked growth rates in the range of 9 per cent was at least in part a consequence of the high savings rate and low inflation which in turn were a consequence of this agreement.

What is the reasoning for jeopardising the hard-won gains of agreement?

  • The Fiscal Responsibility and Budget Management Act as amended in 2017 contains an escape clause.
  • Escape clause permits monetisation of the deficit under special circumstances.
  • What is the case for invoking this escape clause?
  • The case is made on the grounds that there just aren’t enough savings in the economy to finance government borrowing of such a large size.
  • Bond yields would spike so high that financial stability will be threatened.
  • The RBI must therefore step in and finance the government directly to prevent this from happening.

No, the situation is not so grim-Look at the bond yields

  • There is no reason to believe that we are anywhere close to the above-mentioned situation.
  • Through its OMOs, the RBI has injected such an extraordinary amount of systemic liquidity that bond yields are still relatively soft.
  • In fact the yield on the benchmark 10 year bond which was ruling at 8 per cent in September last year has since dropped to just around 6 per cent.
  • Even on the day the government announced its additional borrowing to the extent of 2.1 per cent of GDP, the yield settled at 6.17 per cent.
  • That should, if anything, be evidence that the market feels quite comfortable about financing the enhanced government borrowing.

Why worry about monetisation if OMO also leads to inflation?

The following four issues make clear the difference in OMO and monetisation

1. Issue of RBI’s control over monetary policy

  • Both monetisation and OMOs involve expansion of money supply which can potentially stoke inflation.
  • If so, why should we be so wary of monetisation?
  • Because although they are both potentially inflationary, the inflation risk they carry is different.
  • OMOs are a monetary policy tool with the RBI in the driver’s seat, deciding on how much liquidity to inject and when.
  • In contrast, monetisation is, and is seen, as a way of financing the fiscal deficit with the quantum and timing of money supply determined by the government’s borrowing rather than the RBI’s monetary policy.
  • If RBI is seen as losing control over monetary policy, it will raise concerns about inflation.
  • That can be a more serious problem than it seems.

2. Credibility of RBI on curbing inflation

  • India is inflation prone.
  • Note that after the global financial crisis when inflation “died” everywhere, we were hit with a high and stubborn bout of inflation.
  • In hindsight, it is clear that the RBI failed to tighten policy in good time.
  • Since then we have embraced a monetary policy framework and the RBI has earned credibility for delivering on inflation within the target.
  • Forsaking that credibility can be costly.

3. Yield on bond could shoot up anyway

  • If, in spite of above problems, the government decides to cross the line, markets will fear that the constraints on fiscal policy are being abandoned.
  • Perception in the market will be that the government is planning to solve its fiscal problems by inflating away its debt.
  • If that occurs, yields on government bonds will shoot up, the opposite of what is sought to be achieved.

4. Monetisation is not inevitable yet

  • What is the problem that monetisation is trying to solve?
  • There are cases when monetisation — despite its costs — is inevitable.
  • If the government cannot finance its deficit at reasonable rates, then it really doesn’t have much choice.
  • But right now, it is able to borrow at around the same rate as inflation, implying a real rate (at current inflation) of 0 per cent.
  • If in fact bond yields shoot up in real terms, there might be a case for monetisation, strictly as a one-time measure.
  • We are not there yet.

Consider the question asked in 2019, “Do you agree with the view that steady GDP growth and low inflation have left the Indian economy in good shape? Give reasons in support of your argument.”

Conclusion

Though OMO and monetisation both leads to inflation, the issues with monetisation have far-reaching consequences. Also, the situation we are in doesn’t yet warrant monetisation which should be seen as a last resort.

Back2Basics:  Open Market operation

  • OMOs are conducted by the RBI by way of sale and purchase of G-Secs to and from the market with an objective to adjust the rupee liquidity conditions in the market on a durable basis.
  • When the RBI feels that there is excess liquidity in the market, it resorts to sale of securities thereby sucking out the rupee liquidity.
  • Similarly, when the liquidity conditions are tight, RBI may buy securities from the market, thereby releasing liquidity into the market.

 

 

Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Alleviating the farmers’ pain

Note4Students

From UPSC perspective, the following things are important :

Prelims level : APMC Act, ECA

Mains level : Paper 3- Reforms in agri-marketing and amendment in ECA and APMC Acts.

The article discusses the recently announced reforms in the agri-marketing. The legal changes promised are expected to deal with problems farmer face in selling their products and a law dealing with contract farming. These legal reforms are expected to increase farmers’ income.

Some of the issues faced by the farmers

  • If any class of economic agents of our country has been denied the constitutional right of freedom of trade, it is farmers.
  • They don’t have the freedom of selling their produce even in their neighbourhood.
  • Remunerative price is still a mirage for them.
  • Their farm incomes are at the mercy of markets, middlemen and money lenders.
  • For every rupee that a farmer makes, others in the supply chain get much more.
  • Both farmers and consumers are the sufferers of the exploitative procurement and marketing of farm produce.
  • The public investments in irrigation and other infrastructure has increased.
  • The institutional credit and minimum support price given over the years has been increasing.
  • Yet, farmers are shackled when it comes to selling their produce.

Restriction on the farmers: Echoes from the past

  • This exploitation of farmers has its roots in the Bengal famine of 1943, World War II, and the droughts and food shortages of the 1960s.
  • The Essential Commodities Act, 1955, and the Agricultural Produce Market Committee (APMC) Acts of the States are the principle sources of violation of the rights of farmers to sell their produce at a price of their choice.
  • These two laws severely restrict the options of farmers to sell their produce.
  • Farmers continue to be the victims of a buyers’ market.
  • This is the principal cause of their exploitation.
  • Renowned farm scientist M.S. Swaminathan has for long argued for the right of farmers to sell their produce as they deem fit.

Balancing the interest of consumers and the farmers

  • Given the economic disparities in the country, the interests of consumers need to be protected.
  • But that should not happen at the cost of the producers of the very commodities that the consumers need.
  • For various reasons, a balance in this regard could not be struck.
  • The restrictive trade and marketing policies being practised with respect to agricultural prices have substantially eroded the incomes of farmers.

Let’s have a look at a study on agricultural policies in India

  • A study on agricultural policies in India by the Indian Council for Research on International Economic Relations-Organisation for Economic Co-operation and Development (2018), co-authored by the renowned farm economist Ashok Gulati, was published with startling revelations.
  • It concluded that the restrictions on agricultural marketing amounted to ‘implicit taxation’ on farmers to the tune of ₹45 lakh crore from 2000-01 to 2016-17.
  • This comes to ₹2.56 lakh crore per year.
  • No other country does this.

Reforms to remove the hurdles in farmer getting remunerative price

  • Recently announced package has approximately ₹4 lakh crore support for farming and allied sectors, aimed at improving infrastructure and enhancing credit support.
  • But the most welcome feature of this package is the firm commitment to rewriting the Essential Commodities Act and the APMC laws.
  • The revision of these restrictive laws is long overdue and will remove the hurdles that farmers face in getting a remunerative price for their produce by giving them more options to sell.
  • This long-awaited revision needs to be undertaken with care and responsibility so that no space or scope is left for farmers to be exploited yet again.
  • While allowing several buyers to directly access the produce from the farmers, a strong and effective network of Farm Producers’ Organisations should be created to enhance the bargaining power of farmers.
  • This will ensure that individual farmers are not exploited.
  • An effective law on contract farming is also the need of the hour.
  • Law on contract farming will secure incomes of farmers besides enabling private investments.
  • Yet another unique feature of this package has been its comprehensiveness towards improving the incomes of farmers through a range of activities.
  • A study by the National Institute of Agricultural Extension Management has revealed that of the 3,500 farmers’ suicides examined, there was no farmer who had supplementary incomes from dairy or poultry.
  • The huge support to animal husbandry and fisheries in the stimulus package underlines the need for diversifying the income sources of farmers.

Consider the question “The APMC Acts of the has been blamed for poor price realisation by the farmers. Recently announced reforms promise to do away with such issues in the APMC Act. In light of this, examine the issues with APMC Acts and how the promised reforms are expected to resolve such issues.”

Conclusion

It is time to allow our farmers to sell their produce anywhere for their benefit. All stakeholders should be taken on board while revising restrictive agri-marketing laws.

Coronavirus – Economic Issues

How effective is the stimulus package to revive the supply chains?

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Upstream and downstream sectors

Mains level : Paper 3-Disruption in supply chains and ways to ensure their recovery.

Disruption of the supply chains lies at the heart of the decline in the output amid lockdown. And the government has announced the fiscal stimulus to revive the economy. How effective will be the fiscal stimulus to streamline the supply chains? The focus of this article is on tackling this question.

Disruption in supply chains and decline in output

  • Much of the decline in output is due to supply chain disruptions generated by the lockdown.
  • Government spending can do little to alleviate this.
  • Putting money in the hands of people can increase the demand for goods but cannot increase the supply of goods and services.
  • In modern economies, the production of goods happens through complex supply chains that traverse geographical boundaries.

Let’s understand how supply chains work

  •  Upstream sectors like ‘mining’ produce metals that are in turn used to produce machines.
  • These machines are used to sow seeds, harvest crops, and transport fuel.
  • Finally, the harvested crops are used by downstream sectors to produce flour and bread.
  • At each step, machines and labour combine to produce goods which are the inputs for sectors further downstream.

So, how lockdown affected the supply chains?

  • Under the lockdown, numerous inputs have not moved from their producers to their users.
  • These disruptions may not at first generate a reduction in consumer goods like bread.
  • However, the availability of consumer goods will begin to decline as bakers run out of flour, and mills exhaust their stocks of wheat.
  • And there is no way to guarantee the flow of essential goods while suspending the production of non-essential goods.
  • Automotive spare parts may be non-essential in the short run, but become essential as food-carrying trucks begin to break down.(i.e. in the long run)
  • How far is the long run? This is difficult to say; there may be some variation across goods.

Impact of labour shortage on supply chains

  • The supply chain disruptions are going to be amplified by labour shortage as workers remain at home.
  • Countries like India are likely to experience a greater reduction in output on this count than, say, Europe or the U.S.
  • This is because of the higher labour intensity of production in India.
  • To understand this, think of the difference in unloading of goods in the port at Rotterdam and the port at Kochi.
  • Is it viable to substitute labour with capital? Poorer countries are less likely to be able to substitute locked down labour with capital because of the dearth of capital in these nations.

Adapting and Adjusting to the new reality

  • As economies emerge out of the lockdown, entrepreneurs, workers, and consumers must adjust to the new reality.
  • The world supply chain must adapt.
  • Firms may choose to source inputs from suppliers in their geographical proximity to minimise the risk of future disruptions.
  • But this involves building productive capacity at new locations, all of which requires investments fuelled by savings.
  • Furthermore, the investments must be guided by price signals.
  • Within a market economy, the movement of prices provides the incentive and information needed to adapt and grow.
  • As economist Ronald Coase put it, prices are bundles of information wrapped in an incentive.
  • As the prices of some inputs rise, the buyers of these inputs look for alternate suppliers, and firms which did not hitherto produce the good have an incentive to do so.
  • The key to economic recovery lies in millions of such adjustments.
  • Through such adjustments, firms locate new providers of inputs, new buyers of their output, and build factories at new locations.

How fiscal stimulus would disrupt the recovery of supply chains?

  • Market adjustment processes are likely to be disrupted by government stimulus packages.
  • Governments spend by printing money, raising debt, or increasing taxes.
  • Irrespective of the way in which the expenditure in funded, resources are transferred from private entrepreneurs to government bureaucrats.
  • When governments print money, they draw resources through inflation.
  • Bureaucrats tend to be less efficient than profit-motivated firms in allocating scarce resources.
  • Bureaucrats have little incentive or information to bring about the granular supply chain adjustments necessary to revive growth.
  • As the stimulus package kicks in, economic efficiency is likely to decline and so are the chances of a timely recovery of output.

A lesson from West Germany after WW II

  • The experience of West Germany after World War II has a useful lesson for India.
  • Beginning mid-1944, Allied bombing disrupted the German supply chain by targeting bottleneck sectors like electric power generation.
  • This destruction of the supply chain devastated the German economy.
  • Per person food production fell to about half of its pre-war level.
  • Two years later, this changed after Chancellor Ludwig Erhard lifted price controls and cut taxes.
  • West German entrepreneurs re-established a thriving supply chain through which goods went from upstream sectors to final consumers.
  • By 1950, per capita income in West Germany had reached its pre-war level.

Consider the question “Supply chain disruption has been at the core of economic consequences of the corona pandemic. New adjustment in the supply chains would be the norm in the aftermath of the pandemic. What these readjustments would entail? Suggest the measures to help the supply chains recover.”

Conclusion

The recent supply chain disruptions are likely to last long. The path to recovery lies in cutting government expenditure, removing price controls, and opening up trade.

Foreign Policy Watch: India-South Korea

What is the Korean Armistice Agreement?

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Korean Armstice Agreement

Mains level : Korean Armstice Agreement

A United Nations investigation into a recent exchange of gunfire between North Korea and South Korea inside the Demilitarized Zone (DMZ) has determined that both countries violated the armistice that ended the 1950-53 Korean War.

Practice question for mains:

Q. What is the Korean Armstice Agreement? Discuss the concept of the Demilitarized Zone (DMZ)?

The Korean Armstice Agreement

  • The Korean Armstice Agreement signed on 27 July 1953 is the armistice that brought about a complete cessation of hostilities of the Korean War.
  • It was not the end of a war, but only a cessation of hostilities in an attempt to negotiate a lasting peace.
  • Military commanders from China and North Korea signed the agreement on one side, with the US-led United Nations Command signing on behalf of the international community.

What is the Demilitarized Zone (DMZ)?

  • The DMZ marks where the 1950-53 Korean War — when China and North Korea battled UN forces led by the United States — ended with an armistice, not a treaty.
  • It is a 2 km-wide buffer, stretching coast to coast across the peninsula, lined by both sides with razor wire, heavy armaments and tank traps.
  • It is 60 km from Seoul and 210 km from the North Korean capital of Pyongyang. Inside the DMZ is a Joint Security Area (JSA).
  • The so-called ‘peace village’ of Panmunjom, where the armistice that halted the Korean War was signed in 1953, is located in the 800-metre-wide and 400-metre-long JSA zone.
  • A Military Demarcation Line (MDL) marks the boundary between the two Koreas.

Why it is significant?

  • Vast stretches of the DMZ have been no man’s land for more than 60 years, where wildlife has flourished undisturbed.
  • Last year, US President Donald Trump met with North Korean leader Kim Jong Un at the demilitarized zone separating the two Koreas, in Panmunjom.

NPA Crisis

What is the doctrine of Force Majeure?

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Doctrine of Force Majeure

Mains level : Doctrine of Force Majeure, frustration of a contract

The recent spread of the Coronavirus has triggered a global slowdown and has rendered ongoing business operations of several organisations to almost a standstill. This has resorted them to invoking the ‘force majeure’ clause to seek some relief.

Practice question for mains:

Q) What is the doctrine of Force Majeure and Frustration of a Contract? Discuss how it can worsen the NPA crisis in India.

What is Force Majeure?

  • Force majeure is purely a contractual remedy available to an affected party under a contract and for seeking relief, the reference would be to the express terms of the contract.
  • It is a contractual provision allocating the risk of loss if performance becomes impossible or impracticable, especially as a result of an event that the parties could not have anticipated or controlled.
  • While force majeure has neither been defined nor specifically dealt with, in Indian statutes, some reference can be found in Section 32 of the Indian Contract Act, 1872 (the “Contract Act”).
  • It envisages that if a contract is contingent on the happening of an event which event becomes impossible, then the contract becomes void.

Where are such clauses found?

  • Force majeure clauses can usually be found in various contracts such as power purchase agreements, supply contracts, manufacturing contracts, distribution agreements, project finance agreements, agreements between real estate developers and home buyers, etc.

Circumstances qualified for force majeure

  • A force majeure clause typically spells out specific circumstances or events, which would qualify as force majeure events, conditions which would have be fulfilled for such clause to apply.
  • As such, for a force majeure clause to become applicable the occurrence of such events should be beyond the control of the parties.
  • The parties will be required to demonstrate that they have made attempts to mitigate the impact of such force majeure event.
  • If an event or circumstance qualifies, the consequence would be that parties would be relieved from performing their respective obligations to be undertaken by them under the contract.

Why it is in news, now?

  • Due to the lockdown restrictions placed by the government, the parties’ ability to perform and fulfil their contractual obligations is affected.
  • Where the contract does not specifically cover the current situation is a matter of debate.
  • The Indian Contract Act, 1872 is more than a century old and does not have any specific provisions relating to suspension of contracts or termination of contracts in cases of a pandemic.
  • The Act clearly provides that an agreement to do an act impossible in itself is void (Section 56).
  • After a contract is made, if any act becomes impossible or unlawful by reason of some event, such a contract becomes void.

What is the difference between force majeure and frustration of a contract?

  • Under the doctrine of frustration, the impossibility of a party to perform its obligations under a contract is linked to the occurrence of an event/circumstance subsequent to the execution of a contract and which was not contemplated at the time of execution of the contract.
  • However, under in case of a force majeure, parties typically identify, prior to the execution of a contract, an exhaustive list of events, which would attract the applicability of the force majeure clause.
  • The doctrine of Frustration renders the contract void and consequently, all contractual obligations of the parties cease to exist.

What did the Supreme Court say?

  • Recently, the Supreme Court observed that the doctrine of frustration as enumerated in the Act would apply only where the parties have not specified the consequences of an event which renders the performance of the contract impossible.
  • Termination of a frustrated contract would be possible only in cases where the contract becomes impossible to perform which means the damage to the contract should be of permanent nature and not something which can be performed with the passage of time.
  • Hence a temporary inability or force majeure event would not qualify under the doctrine.

What lies ahead?

  • The force majeure clause in contracts should not be misconstrued as an event of frustration covered under the Act.
  • Force majeure is purely a contractual remedy available to an affected party under a contract and for seeking relief; the reference would be to the express terms of the contract.
  • However, a party claiming frustration of contract and seeking to escape liability or other obligation under a contract will necessarily have to approach an appropriate judicial forum.
  • It is likely that ‘force majeure’ clauses in contracts need to be more heavily negotiated to include references to epidemics or pandemics, in addition to other situations.

Disasters and Disaster Management – Sendai Framework, Floods, Cyclones, etc.

Heatwaves and its unusualness this year

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Heatwaves, Western Disturbances

Mains level : Heatwaves and various threats posed

For the past five days, Rajasthan, Delhi, Uttar Pradesh, Madhya Pradesh, and Maharashtra have been experiencing severe to very severe heatwave conditions. Here is why this summer is slightly unusual.

Heatwaves being more frequent phenomena, the UPSC may end up asking a prelim as well as mains question about it.  It may ask Q. What are heat waves and how are they classified? What are the external factors on which it is depended?

A MCQ may be a statement based question mentioning the criteria for declaring a heatwave.

What is a heatwave and when is it declared?

Heatwaves occur over India between March and June.

  • IMD declares a heatwave event when the maximum (day) temperature for a location in the plains crosses 40 degrees Celsius.
  • Over the hills, the threshold temperature is 30 degrees Celsius.

Following criteria are used to declare heatwave:

To declare heatwave, the below criteria should be met at least in 2 stations in a Meteorological subdivision for at least two consecutive days and it will be declared on the second day.

a) Based on Departure from Normal

  • Heat Wave: Departure from normal is 4.5°C to 6.4°C
  • Severe Heat Wave: Departure from normal is >6.4°C

b) Based on Actual Maximum Temperature (for plains only)

  • Heat Wave: When actual maximum temperature ≥ 45°C
  • Severe Heat Wave: When actual maximum temperature ≥47°C

How long can a heatwave spell last?

  • A heatwave spell generally lasts for a minimum of four days. On some occasions, it can extend up to seven or ten days.
  • The longest recorded heatwave spell, in recent years, was between 18 – 31 May 2015.
  • This spell had severely affected parts of West Bengal along with Odisha, Andhra Pradesh, and Telangana.
  • Heatwave conditions occurring in May have been observed to last longer, as the season reaches its peak this month.
  • Whereas those reported in June often die down sooner, often due to the onset of Southwest monsoon over the location or in its neighbourhood.

Does all of India experience heatwave conditions?

  • Heatwaves are common over the Core Heatwave Zone (CHZ) — Rajasthan, Punjab, Haryana, Chandigarh, Delhi, West Madhya Pradesh, Uttar Pradesh, Chhattisgarh, Orissa, Vidarbha in Maharashtra.
  • The CHZ also includes parts of Gangetic West Bengal, Coastal Andhra Pradesh and Telangana, as categorised by IMD.
  • Several recent studies indicate that CHZ experience more than six heatwave days per year during these four months.
  • Many places in the northwest and cities along southeastern coast report eight heatwave days per season.
  • However, the regions in the extreme north, northeast and southwestern India are lesser prone to heatwaves.

Whats’ so unusual this year?

  • Summer season reaches its peak by May 15 in India when the day temperatures across north, west, and central India cross 40 degrees and hover close to 45 degrees then on.
  • This year, north India did not experience such temperatures till May 21.
  • It was mainly because of the continuous inflow of Western Disturbances that influenced the weather in the north till as late as April.
  • Since last winter, there was frequent passing of Western Disturbances over the north, appearing after every five to seven days.

What are these Western Disturbances?

  • Originating in the Mediterranean Sea, Western Disturbances are eastward-moving winds that blow in lower atmospheric levels.
  • They affect the local weather of a region during its onward journey.
  • Between January and March this year, there were about 20 Western Disturbances, a record of sorts.
  • When Western Disturbances interact with weather systems heading from the two southern seas, that is, warm winds blowing in from the Bay of Bengal or the Arabian Sea, they cause snowfall or rainfall over the north.
  • A significant influence of Western Disturbances is experienced from December to February. However, this year, its influence persisted until early May.
  • The recent Western Disturbances got support from easterly winds blowing over from the Bay of Bengal.

Has cyclone Amphan influenced the current heatwave?

  • Since the event of severe heat has emerged immediately after the passing of Cyclone Amphan, experts confirm its role in leading to the present heatwave spell.
  • Cyclone Amphan, which was a massive Super Storm covering 700 km, managed to drag maximum moisture from over the Bay of Bengal to entire Peninsula.
  • All the moisture that was otherwise built during the thunderstorm and rainfall got gradually depleted from over vast areas as the storm advanced towards West Bengal and Bangladesh between May 16 and 20.
  • It has now triggered dry north-westerly winds to blow over Rajasthan, Madhya Pradesh, Uttar Pradesh and Maharashtra causing severe heatwave.

New Species of Plants and Animals Discovered

Specie in news: Charru mussel (Mytella strigata)

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Charru mussel

Mains level : NA

An invasive mussel native to the South and Central American coasts is spreading quickly in the backwaters of Kerala.

Try this PYQ from CSP 2018:

Q. Why is a plant called Prosopis juliflora often mentioned in news?

(a) Its extract is widely used in cosmetics.

(b) It tends to reduce the biodiversity in the area in which it grows

(c) Its extract is used in the pesticides.

(d) None of the above

Charru mussel

  • The rapid spread of the Charru mussel (Mytella strigata) may have been triggered by Cyclone Ockhi which struck the region in 2017.
  • With a population as high as 11,384 per sq metre here, it has replaced the Asian green mussel (Perna Viridis) and the edible oyster Magallana bilineata (known locally as muringa).
  • Externally, the Charru mussel resembles the green and brown mussels (kallummekka in Malayalam) but is much smaller in size. Its colour varies from black to brown, purple or dark green.
  • Surveys show the presence of the Charru mussel in the Kadinamkulam, Paravur, Edava-Nadayara, Ashtamudi, Kayamkulam, Vembanad, Chettuva and Ponnani estuaries/backwaters.
  • Ashtamudi Lake, a Ramsar site in Kollam district, remains the worst-hit.

Threats posed

  • Though this smaller mussel is edible, the overall economic loss and impact on biodiversity are much bigger, it is pointed out.
  • It is throwing out other mussel and clam species and threatening the livelihoods of fishermen engaged in shrimp fisheries.

Wildlife Conservation Efforts

Species in news: Dugong

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Dugong

Mains level : NA

The dugong, commonly known as the sea cow, is fighting for its survival in Indian waters experts have said on the eve of ‘World Dugong Day’ on May 28, 2020.

Try this question from CSP 2015:

Q) With reference to ‘dugong’, a mammal found in India, which of the following statements is/are correct?

1) It is a herbivorous marine animal.

2) It is found along the entire coast of India

3) It is given legal protection under Schedule 1 of the Wildlife (Protection) Act, 1972.

Select the correct answer using the code given below.
(a) 1 and 2
(b) 2 only
(c) 1 and 3
(d) 3 only

Dugong

  • Dugongs are mammals, which means they give birth to live young and then produce milk and nurse them.
  • It is the flagship animal of Gulf of Mannar Marine National Park.
  • Once the female is pregnant, she will carry the unborn baby, called a foetus for 12-14 months before giving birth.
  • Female dugongs give birth underwater to a single calf at three to seven-year intervals.
  • Dugongs graze on seagrass, especially young shoots and roots in shallow coastal waters. They can consume up to 40 kilograms of seagrass in a day.
  • Dugongs are an IUCN Endangered marine species like sea turtles, seahorses, sea cucumbers and others.
  • They are protected in India under Schedule I of the Wild (Life) Protection Act, 1972.

Threats to dugongs

  • Human activities such as the destruction and modification of habitat, pollution, rampant illegal fishing activities, vessel strikes, unsustainable hunting or poaching and unplanned tourism are the main threats to dugongs.
  • The loss of seagrass beds due to ocean floor trawling was the most important factor behind dwindling dugong populations in many parts of the world.

Why needs urgent attention?

  • There were just 250 dugongs in the Gulf of Mannar in Tamil Nadu, the Andaman and Nicobar Islands and the Gulf of Kutch in Gujarat according to the 2013 survey report of the Zoological Survey of India (ZSI).
  • Hundreds of dugongs inhabited waters off the Odisha, West Bengal and Andhra Pradesh coasts two centuries back. But they are extinct in these areas now, he added.
  • Seagrass in Odisha’s Chilika Lake is a proper habitat for dugongs. However, there is not an extant population in Chilika.

Other facts:

  • The 13th CoP of the Convention on the Conservation of Migratory Species of Wild Animals (CMS), an environmental treaty under the aegis of the UNEP, was hosted by India this year at Gandhinagar in Gujarat.
  • India is a signatory to the CMS since 1983.
  • India has signed non-legally binding Memorandums of Understanding with CMS on the conservation and management of Siberian Cranes (1998), Marine Turtles (2007), Dugongs (2008) and Raptors (2016).
  • Proper conservation is the only way to save dugongs from extinction. Conservation in other places like Australia has seen their population crossing 85,000.

Coronavirus – Disease, Medical Sciences Involved & Preventive Measures

What is the FAITH’ Trial?

Note4Students

From UPSC perspective, the following things are important :

Prelims level : FAITH and Solidarity Trials

Mains level : Clinical trials and ethical issues involved

With the number of COVID-19 patients rising in India, a pharma company has announced a new randomized study to test the combined efficacy of two antiviral drugs under the ‘FAITH Trials’.

Misleading names: One may get confused over the names given to these clinical trials. The name ‘FAITH’ and ‘Solidarity’ appear more like a judicial trial or some Human Rights violation related trials. UPSC can knock such areas in prelims.

FAITH Trials

  • The two drugs: Favipiravir and Umifenovir will be tried as a potential COVID-19 treatment strategy.
  • This new combination clinical trial will be called FAITH – (FA vipiravir plus Um I fenovir (efficacy and safety) Trial in Indian Hospital setting).
  • The two antiviral drugs have different mechanisms of action, and their combination may demonstrate improved treatment efficacy by effectively tackling high viral loads in patients during the early stages of the disease.
  • This trial offers a comprehensive antiviral cover on pre-entry and post-entry life-cycle of the SARS-CoV-2 virus.

Dosages under the trial

  • Patients taking the drug will receive Faviprivir 1800 mg bid and Umifenovir 800 mg bid on Day 1.
  • Thereafter, they will receive Faviprivir 800mg bid and Unifenovir 800mg bid for the remaining course of treatment.
  • Duration of treatment will be 14 days and patients will be discharged after clinical cure and two consecutive negative tests.
  • While one group will be receiving Favipiravir and Umifenovir (with standard supportive care), the other group will receive Favipiravir along with standard supportive care.

Other trials in news: The Solidarity Trial

  • “Solidarity” is an international initiative for clinical trials launched by the WHO, along with partners, to help find an effective treatment for Covid-19.
  • It was originally supposed to look at four drugs or drug combinations: Remdesivir, HCQ, Ritonavir/Lopinavir and Lopinavir/Ritonavir/Interferon beta 1a.
  • Now with HCQ trial enrolment stalled for at least the next few weeks, the Solidarity trial will proceed with the other three arms.