💥Mains Ready By December. Smash Mains & Smash PYQ Admissions Open
Talk to Mentor

Civilsdaily

Login

Archives: News

  • Places in news: Solomon Islands

    solomon

    Solomon Islands PM has assured Australia that his nation will not allow a Chinese military presence in its territory.

    Where is the Solomon Islands located?

    • The Solomon Islands is a sovereign country consisting of six major islands and over 900 smaller islands in Oceania, to the east of Papua New Guinea and northwest of Vanuatu.
    • Its capital, Honiara, is located on the largest island, Guadalcanal.
    • It is part of the ethnically Melanesian group of islands in the Pacific and lies between Papua New Guinea and Vanuatu.
    • The country takes its name from the Solomon Islands archipelago, which is a collection of Melanesian islands that also includes the North Solomon Islands (a part of Papua New Guinea).
    • It excludes outlying islands, such as the Santa Cruz Islands and Rennell and Bellona.

    Quick recap of its past

    • The islands, which were initially controlled by the British Empire during the colonial era, went through the hands of Germany and Japan.
    • It then went back to the UK after the Americans took over the islands from the Japanese during World War II.
    • The islands became independent in 1978 to become a constitutional monarchy under the British Crown, with a parliamentary system of government.
    • Nevertheless, its inability to manage domestic ethnic conflicts led to close security relations with Australia, which is the traditional first responder to any crisis in the South Pacific.

    How did China enter the picture?

    • Earlier this year, the Solomon Islands established a security agreement with China, saying it needed Beijing’s assistance with its domestic security situation.
    • But the announcement had rattled the west, esp. the US, Australia and others in the Indo-Pacific region.
    • The concerns were that the agreement could potentially lead to a Chinese military base on the island nation and a gain in power-projection capabilities.
    • At that time, following intense scrutiny, the Solomon Islands had denied that the agreement would allow China to establish a naval base.
    • The Island insisted that the agreement was only to assist the Solomon Islands with what he called “hard internal threats”.

    What is the Solomon Islands’ stance?

    • The government has asked all partner countries with plans to conduct naval visits or patrols to put them on hold until a revised national mechanism is in place.
    • The revised national mechanism applied to all foreign vessels seeking access to the country’s ports.
    • The nation wanted to build up its own naval capacity.
    • It has some unfortunate experiences of foreign naval vessels entering its waters without any diplomatic clearance.

    What is behind China’s growing influence in the region?

    • There is no dispute that China has been rapidly increasing its presence and influence in the region for over three decades, particularly in the South Pacific.
    • Certainly Beijing views the Pacific Island region as an important component of its Belt and Road Initiative (BRI).
    • Specifically, it sees the region as a critical air freight hub in its so-called Air Silk Road, which connects Asia with Central and South America.

    Concerns of the West

    • The United States and its regional allies, such as Australia and New Zealand, are concerned that the China-Solomon Islands security pact allows Chinese naval vessels to replenish there.
    • That could open the door to a Chinese naval base, which would significantly extend China’s military reach in the South Pacific.”
    • It is likely that this security agreement between China and the Solomon Islands has been driven by, what the CFR calls, Beijing’s “sense of vulnerability” in the region.

    What is the rationale for the Solomon Islands’ increasing proximity to China?

    • The Solomon Islands had cultivated strong ties with Taiwan, which ended with the emergence of the current government in Honiara.
    • In 2019, the regime change switched Taiwan for China.
    • This was supposedly after Beijing offered half a billion US dollars in financial aid, roughly five times what Taiwan spent on the islands in the past two decades.
    • It has been alleged by the pro-Taiwan Opposition that the incumbent government has been bribed by China.

    Why is China interested in the Solomon Islands?

    • Isolating Taiwan: The Solomon Islands was one among the six Pacific island states which had official bilateral relations with Taiwan.
    • Supporter in UN: The small Pacific island states act as potential vote banks for mobilising support for the great powers in international fora like the United Nations.
    • Larger EEZ: These states have disproportionately large maritime Exclusive Economic Zones when compared to their small sizes.
    • Natural resources: Solomon Islands, in particular, have significant reserves of timber and mineral resources, along with fisheries.
    • Countering US: But more importantly, they are strategically located for China to insert itself between America’s military bases in the Pacific islands and Australia.

    What does this mean for the established geopolitical configuration in the region?

    • Diminishing western influence: The Pacific islands, in the post-World War II scenario, were exclusively under the spheres of influence of the Western powers, in particular, the US, UK, France and Australia and New Zealand.
    • Inserting into western hegemony: All of them have territorial possessions in the region, with the three nuclear powers among them having used the region as a nuclear weapons testing ground.
    • Shifting of dependencies: The smaller island nations of the region are heavily dependent on them, especially Australia as it is a resident power.

     

    UPSC 2023 countdown has begun! Get your personal guidance plan now! (Click here)

  • Amendments to Bharat Series Rules

    bharat

    The Ministry of Road Transport and Highway has issued a draft notification proposing new rules to further increase the scope of implementation of the BH series vehicle registrations.

    Bharat series (BH-series)

    • There was a procedure of re-registration of a vehicle while moving to another state.
    • A vehicle bearing BH registration mark shall not require assignment of a new registration mark when the owner of the vehicle shifts from one State to another.
    • Format of Bharat series (BH-series) Registration Mark –

    Registration Mark Format:

    1. YY BH #### XX
    2. YY – Year of first registration
    3. BH- Code for Bharat Series
    4. ####- 0000 to 9999 (randomized)
    5. XX- Alphabets (AA to ZZ)

    Why such move?

    • Station relocation occurs with both Government and private sector employees.
    • Such movements create a sense of unease in the minds of such employees with regard to transfer of registration from the parent state to another state.
    • Under section 47 of the Motor Vehicles Act, 1988, a person is allowed to keep the vehicle for not more than 12 months in any state other than the state where the vehicle is registered.

    Who can get this BH series?

    • BH-series will be available on voluntary basis to Defense personnel, employees of Central Government/ State Government/ Central/ State PSUs and private sector companies/organizations.
    • The motor vehicle tax will be levied for two years or in multiple of two.
    • This scheme will facilitate free movement of personal vehicles across States/UTs of India upon relocation to a new State/UT.
    • After the completion of the fourteenth year, the motor vehicle tax shall be levied annually which shall be half of the amount which was charged earlier for that vehicle.

     

    UPSC 2023 countdown has begun! Get your personal guidance plan now! (Click here)

  • Moonlighting: Overemployment or Underpayment

    MoonlightingContext

    • In July, Kotak Securities said in a study that at least 60% of 400 employees surveyed said they themselves had, or knew someone who had engaged in moonlighting.

    What is mean by moonlighting?

    • Moonlighting is a state where employees work for remuneration with entities other than their employers. It is not defined in any of the statutes in India. However, there are enactments that deal with double employment.

    MoonlightingHow does it affect companies and what are latest examples?

    • Wipro: According to Wipro CEO, there is a lot of chatter about people moonlighting in the tech industry. This is cheating plain and simple. The company sacked 300 employees following the discovery that they were working for rival firms on the side, leading to conflict of interest.
    • Infosys: Infosys has warned staff against moonlighting, saying it could lead to termination.
    • Effect of WFH: Another software firm DXC Technologies said that moonlighting by employees was a challenge for employers but that wouldn’t affect its WFH (work from home) policy that has worked well for both the firm and its staff.
    • Moonlighting policy: Swiggy announced a moonlighting policy’ that allows employees to pursue their passion for economic interests alongside their fulltime employment.”

    MoonlightingWhat is the Legal status of moonlighting?

    • Factory act: Section 60 of the Factories Act deals with restriction on double employment stating that “No adult worker shall be required or allowed to work in any factory on any day on which he has already been working in any other factory, save in such circumstances as may be prescribed. However, this enactment is applicable only to employees working in factories.
    • The Tamil Nadu Shops & Establishments Act, 1947: There are State enactments which deal with employment of persons working in offices, banks, shops, etc. In Tamil Nadu, it is termed as The Tamil Nadu Shops & Establishments Act, 1947. However, there is no provision wherein dealing with dual employment.
    • Glaxo Laboratories (I) Limited vs Labour Court, Meerut and others: The apex court held that “The employer has hardly any extra territorial jurisdiction. He is not the custodian of general law and order situation or the Guru or mentor of his workmen for their well-regulated cultural advancement. If the power to regulate the behaviour of the workmen outside the duty hours and at any place wherever they may be was conferred upon the employer, contract of service may be reduced to contract of slavery.” This case was not specifically about moonlighting but the court’s observation gives us an idea as to how the law may view such cases.

    MoonlightingWay forward

    • More earning: The Minister of State for Skill Development and Entrepreneurship, and Electronics and IT, said that employers should not to suppress employees who want to monetise, develop and demonstrate but also urged employees not to violate their agreements with employers.
    • Working hours: Moonlighting is subject to law of the land. The sphere of employment cannot be extended by the employer beyond working hours and outside his place of employment.
    • Socialistic view: The Courts of law in India dealing with employment are Writ Courts and Labour Courts, which exercise jurisdiction based on equity or fairness. Therefore, the Courts may lean in favour of the employee unless the contravention of the employee has led to serious prejudice and loss to the employer

    Conclusion

    • Employees are not the slaves of employers. What they do beyond the working hours is none of the business of employer unless it affects company financially or causes substantial damage to business. Government should bring the legal statute to regulate moonlighting and prevent the unjustified punishment of employees.

    Mains Question

    Q. What is moonlighting? Why employees do moonlighting? Discuss the legal framework about moonlighting in India.

    UPSC 2023 countdown has begun! Get your personal guidance plan now! (Click here)

  • Corporate Social Responsibility(CSR) & Social Justice

    SocialContext

    • Since the establishment of the Corporate Social Responsibility (CSR) regime in India under Section 135 of the Companies Act 2013, CSR spending in India has risen from RS.10,065 crore in 2014-15to Rs.24,865crore in 2020-21.But there is no data to verify whether this increase is commensurate with the increase in profits of Indian and foreign (having a registered arm in India) companies.

    What is Corporate Social Responsibility (CSR)?

    • Voluntary spending: Corporate social responsibility (CSR) is a form of international private business self-regulation which aims to contribute to societal goals of a philanthropic, activist, or charitable nature by engaging in or supporting volunteering or ethically oriented practices.
    • Ministry Corporate Affairs: The National Corporate Social Responsibility Data Portal is an initiative by Ministry of Corporate Affairs, Government of India to establish a platform to disseminate Corporate Social Responsibility related data and information filed by the companies registered with it.
    • Companies Act, 2013: The Corporate Social Responsibility concept in India is governed by Section 135 of the Companies Act, 2013 (‘Act’), Schedule VII of the Act and Companies (CSR Policy) Rules, 2014 wherein the criteria has been provided for assessing the CSR eligibility of a company, Implementation and Reporting of their CSR Policies.

    Social

    How CSR helps in achieving social justice?

    • Sustainable Goals: India having the most elaborated CSR mechanism and implementation strategy has started its journey to set a benchmark in attaining sustainability goals and stakeholder activism in nation building.
    • Corporate philanthropy: company donations to charity, including cash, goods, and services, sometimes via a corporate foundation.
    • Community volunteering: company-organized volunteer activities, sometimes while an employee receives pay for pro-bono work on behalf of a non-profit organization
    • Socially-responsible business practices: ethically produced products that appeal to a customer segment.
    • Corporate social marketing: Company-funded behaviour-change campaigns, Company-funded advocacy campaigns, donations to charity based on product sales.

    Why there is need to review the CSR?

    • Declining number: There was also a decline in the number of companies participating in CSR 25,103 in FY2019 to 17,007 in FY2021.
    • Flaw in the law: If a company spends an amount in excess of the minimum 2%, as stipulated, the excess amount is liable to be set off against spending in the succeeding three financial years. Ideally, companies should have been shown courage to spend more than this.
    • Own trusts: many private companies have registered their own foundations/trusts to which they transfer the statutory CSR budgets for utilisation. It is unclear if this is allowed under the Companies Act/CSR rules.
    • Geographical bias: The first proviso to Section 135(5) of the Act is that the company should give preference to local areas/areas around it where it operates. This is logical. However, a report by Ashoka University’s Centre for Social Impact and Philanthropy says that 54% of CSR companies are concentrated in Maharashtra, Tamil Nadu, Karnataka, and Gujarat(receiving the largest CSR spends) while populous Uttar Pradesh and Madhya Pradesh receive little.
    • Spending on environment: Item (iv) of Schedule VII of the Act deals with broader environmental issues to create a countervailing effect. However, an analysis of CSR spending (2014-18)reveals that while most CSR spending is in education (37%) and health and sanitation (29%), only 9% was spent on the environment even as extractive industries such as mining function in an environmentally detrimental manner in several States
    • Incomplete information: The Standing Committee on Finance had observed that the information regarding CSR spending by companies is insufficient and difficult to access. As per the ‘Technical Guide on Accounting’ issued by the Institute of Chartered Accountants of India, a company is only required to mention its CSR spends, non-spend, under-spend, and overspend in the ‘Notes to Accounts’.

    SocialWhat are the suggestions to improve the mechanism of CSR?

    • Centralized platform: There is a need to curate a national level platform centralised by the MCA where all States could list their potential CSR admissible projects so that companies can assess where their CSR funds would be most impactful across India with, of course, preferential treatment to areas where they operate.
    • India Investment Grid: Invest India’s ‘Corporate Social Responsibility Projects Repository’ on the India Investment Grid (IIG) can serve as a guide for such efforts. This model would be very useful for supporting deserving projects in the 112aspirational districts and projects identified by MPs under the Government’s Sansad AdarshGram Yojana.
    • Increase environment spending: Companies need to prioritise environment restoration in the area where they operate, earmarking at least 25% for environment regeneration.
    • Public participation: All CSR projects should be selected and implemented with the active involvement of communities, district administration and public representatives.
    • Transparency: Recommendations by the high-level committee in 2018 should be incorporated in the current CSR framework to improve the existing monitoring and evaluation regime. These include strengthening the reporting mechanisms with enhanced disclosures concerning selection of projects, locations, implementing agencies, etc.; bringing CSR within the purview of statutory financial audit with details of CSR expenditure included in the financial statement of a company, and mandatory independent third party impact assessment audits.
    • Monitoring by government: The MCA and the line departments need to exercise greater direct monitoring and supervision over CSR spend by companies through the line ministries (for public sector undertakings) and other industry associations(for non-public units) instead of merely hosting all information on the Ministry’s website.

    SocialConclusion

    • Corporate social responsibility is an effective tool to address the social and income inequality. Present legal arrangements are toothless and based on voluntary actions. For an effective change CSR spending should be made more transparent and accountable.

    Mains Question.

    Q.Present arrangement of CSR is not yielding the desired result. Enlist the current weakness in CSR spending Suggest the changes needed for efficient implantation of CSR.

    UPSC 2023 countdown has begun! Get your personal guidance plan now! (Click here)

     

  • India’s Rice Exports and food Insecurity

    ExportsContext

    • On August 8, India banned the exports of broken rice and imposed a 20 per cent duty on the exports of various grades of rice amid high cereal inflation and uncertainties with respect to domestic supply.

    Background

    • This is surely not the first time an attempt is being made to ban wheat and rice exports.
    • It was also done in 2007-08, in the wake of the global financial crisis.
    • Perhaps government will also impose stocking limits on traders for a host of commodities, suspend futures trading in food items, and even conduct income tax raids on traders of food.

    Exports

    What is the current status of rice in India?

    • World’s largest rice exporter: India has exported more than 20 MT of rice worth a record $9. 6 billion to more than 150 countries in 2021-22.It has been the world’s largest rice exporter of the grain in the last decade and has a share of around 44% global trade.
    • Likely to fall in production: India’s rice production is likely to decline by 6 per cent t to 104.99 million tonnes in the kharif season due to a fall in paddy acreage amidst rainfall deficit in key producing states, including Jharkhand, Madhya Pradesh and West Bengal.
    • Kharif season: Sowing in the kharif season begins with the onset of the southwest monsoon from June and harvesting from October onwards .About 85 per cent of India’s total production comes from this season.
    • Deficient rainfall: West Bengal, the biggest rice producer amongst states, has received deficient rainfall in 15 of its 23 districts, raising the likelihood of crop loss. Uttar Pradesh, the second biggest producer of rice has received 42% less rainfall than benchmark. The rainfall deficiency in the other eastern states Bihar (-34%) and Jharkhand (-48%).
    • Depleting stocks: There are concerns about rice stocks with the Food Corporation of India (FCI) depleting to a 10-year low level by April, 2023 year, if the free ration scheme is extended to the second half of the financial year. The government may have to impose some curbs on rice exports though minimum export price or an export tax if the scheme is extended.

    Why India’s rice export ban is cause for worry?

    • Thin world rice market and the impact on prices: Given that 90 per cent of production is consumed domestically, As a result, any small change in exports and imports has an enormous impact on prices, especially if it leads to panic buying of food grains by rich countries.
    • Limited Import option: The stakes are higher as it is India’s largest agricultural crop. Unlike with wheat, the options for import in rice due to any production shortfall are limited, when India’s own share in the global trade of the cereal is more than 40%.
    • Affect the credibility: The export uncertainties will affect the credibility of Indian exporters, create a disincentive for future exports, and will enable buyers to shift towards other major rice-exporting countries.
    • Affect a section of farmers: Though Indian farmers in general lack market access, and hence do not take advantage of high market prices, the fall in prices may adversely affect a section of farmers who hope to get a better price for their produce through exports. The exporters who face the burden of the unfeasibility of exports may pass it on to farmers in the form of lower prices during procurement.
    • Affect low-income and low middle-income Countries: India’s export restrictions will adversely affect several low-income and low-middle-income countries like Bangladesh, Senegal, Nepal and Benin, which are among the largest importers of Indian rice.
    • Domestic prices and to safeguard food security: Frequent changes in export policies undoubtedly have long-term ramifications on domestic prices

    Exports

    What are the Issues in India’s rice export strategy?

    • Highest ever volume: India exported the highest-ever volume of 21 million metric tonnes (MMT) of rice in 2021-22 (FY22) in a global market of about 51.3 MMT, which amounts to about 41 per cent of global exports.
    • Reduced price: Such large volumes of rice exports brought down global prices of rice by about 23 per cent in March (YoY), when all other cereal prices, be it wheat or maize, were going up substantially in global markets. In fact, in FY22, the unit value of exports of common rice was just $354/tonne, which was lower than the minimum support price (MSP) of rice.
    • Below MSP buying or leakage from PMGKAY: This meant that rice exporters were either buying rice (paddy) from farmers and millersat below the MSP or that quite a substantial part of rice was given free under the PM Garib Kalyan Ann Yojana (PMGKAY) was being siphoned away for exports at prices below MSP.
    • Artificial competitive advantage: Free electricity for irrigation in several states, most notably Punjab, and highly subsidised fertilisers, especially urea, create an artificial competitive advantage for Indian rice in global markets.

    Problems with India’s rice cultivation

    • Lower yield: India’s rice yield is lower than the world average. However, India’s yield is better than Thailand and Pakistan but worse than Vietnam, China and the US.
    • Higher cost of cultivation and price support: The cost of cultivation in India is also increasing, and hence there will be a need for a higher MSP to make production remunerative. This will exacerbate the pressure to re-think its price-support-backed food security mechanism.
    • Water-intensive nature: India’s rice production likely to fall amidst the shortfall of rainfall in major rice producing states and increasing salinity of soil because of over usage of water. The water-intensive nature of rice cultivation, along with frequent export restrictions will adversely affect the long-run sustainability of rice production. In India, around 49 per cent of rice cultivation depends on groundwater which is depleting rapidly.

    ExportsWhat is the link between Rice cultivation and groundwater depletion?

    • Ground water depletion: In India, around 49 per cent of rice cultivation depends on groundwater which is depleting rapidly.
    • Food and Agriculture Organization (FAO) data: As per the latest data available from the Food and Agriculture Organization (FAO), agricultural water withdrawal as a percentage of total available renewable water resources has increased from 26.7 per cent in 1993 to 36 per cent in 2022.
    • Virtual water trade (VWT): Rice exports are leading to an indirect export of water to other countries a phenomenon known as virtual water trade (VWT). The relative per capita water availability in India is lower than a majority of its major importing countries. The other major exporters of rice, such as Thailand and Vietnam, also have better per capita water availability in comparison to India.
    • Renewable water resources: Out of 133 countries in which India has positive net rice exports, only 39 countries have relatively lower per capita renewable water resources. Out of these 39 countries, 12 countries are high-income countries with the ability to buy food at a higher price.

    Conclusion

    • Depletion of groundwater resources and rising cost of cultivation may threaten rice production in the future. Adequate water saving measures in the form of widespread adoption of water saving practices like System of Rice Intensification (SRI) need to be taken to keep input requirements, costs and production sustainable.

    Mains question

    Q.As many developing countries depend on Indian rice, rice export restrictions have raised food security concerns in the global market. In this context discuss the causes and effects of India’s restrictions on rice export.

    UPSC 2023 countdown has begun! Get your personal guidance plan now! (Click here)

  • Human Rights Council rejects debate on Xinjiang Abuses

    xinjiang

    The UN Human Rights Council has voted against holding a debate on alleged abuses in China’s Xinjiang region after intense lobbying by Beijing, in a major setback for Western nations.

    What is the news?

    • India and 10 other nations abstained.

    Who are the Uighurs?

    xinjiang

    • There are about 12 million Uighurs, mostly Muslim, living in north-western China in the region of Xinjiang, officially known as the Xinjiang Uyghur Autonomous Region (XUAR).
    • The Uighurs speak their own language, similar to Turkish, and see themselves as culturally and ethnically close to Central Asian nations.
    • They make up less than half of the Xinjiang population.
    • In recent decades, there’s been a mass migration of Han Chinese (China’s ethnic majority) to Xinjiang, and the Uighurs feel their culture and livelihoods are under threat.
    • In the early 20th Century, the Uighurs briefly declared independence, but the region was brought under complete control of mainland China’s new Communist government in 1949.

    Where is Xinjiang?

    • Xinjiang lies in the north-west of China and is the country’s biggest region.
    • Like Tibet, it is autonomous, meaning – in theory – it has some powers of self-governance. But in practice, both face major restrictions by the central government.
    • It is a mostly desert region, producing about a fifth of the world’s cotton.
    • It is also rich in oil and natural gas and because of its proximity to Central Asia and Europe is seen by Beijing as an important trade link.

    What was the build-up to the Uighur crackdown?

    • Anti-Han and separatist sentiment rose in Xinjiang from the 1990s, flaring into violence on occasion.
    • In 2009 some 200 people died in clashes in Xinjiang, which the Chinese blamed on Uighurs who want their own state.
    • Xinjiang is now covered by a pervasive network of surveillance, including police, checkpoints, and cameras that scan everything from number plates to individual faces.
    • According to Human Rights Watch, police are also using a mobile app to monitor peoples’ behaviour, such as how much electricity they are using and how often they use their front door.
    • Since 2017 when President Xi Jinping issued an order saying all religions in China should be Chinese in orientation, there have been further crackdowns.

    Chinese narrative

    • China says the crackdown is necessary to prevent terrorism and root out Islamist extremism and the camps are an effective tool for re-educating inmates in its fight against terrorism.
    • It insists that Uighur militants are waging a violent campaign for an independent state by plotting bombings, sabotage and civic unrest.
    • China has dismissed claims it is trying to reduce the Uighur population through mass sterilizations as “baseless”, and says allegations of forced labor are “completely fabricated”.

    Why did India abstain from voting against China?

    • India has traditionally voted against or abstained from such country-specific resolutions at the UNHRC.
    • It is understood that China’s presence within the UNHRC was a factor in the decision since any backing for the Xinjiang issue could have led to similar moves by China on other issues in India.
    • This is particularly in the context of the Kashmir issue.

    Try this PYQ:

    Q.Very recently, in which of the following countries have lakhs of people either suffered from severe famine/acute malnutrition or died due to starvation caused by war/ethnic conflicts?
    (a) Angola and Zambia
    (b) Morocco and Tunisia
    (c) Venezuela and Colombia
    (d) Yemen and South Sudan

     

    [wpdiscuz-feedback id=”j7gai3srqk” question=”Please leave a feedback on this” opened=”1″]Post your answers here.[/wpdiscuz-feedback]

     

    UPSC 2023 countdown has begun! Get your personal guidance plan now! (Click here)

  • NOPEC: the US bill to pressure the OPEC+ oil group

    nopec

    US legislation NOPEC which could open members of oil producing group OPEC+ to antitrust lawsuits has emerged as a possible tool to tackle high fuel prices.

    What is NOPEC?

    • NOPEC stands for No Oil Producing and Exporting Cartels (NOPEC).
    • It is a bill to protect US consumers and businesses from engineered oil spikes.
    • But some analysts warn that implementing it could also have some dangerous unintended consequences.

    Why such a move by the US?

    • OPEC+, which groups the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, agreed to steep production cuts, curbing supply in an already tight market.
    • After the decision, the US decided to reduce the group’s control over energy prices.

    Key feature of the NOPEC bill

    • The bipartisan NOPEC bill would tweak US antitrust law to revoke the sovereign immunity that has protected OPEC+ members and their national oil companies from lawsuits.
    • If signed into law, the US attorney general would gain the option to sue the oil cartel or its members, such as Saudi Arabia, in federal court.
    • It is unclear exactly how a federal court could enforce judicial antitrust decisions against a foreign nation.

    Is such bill effective?

    • Previous versions of the NOPEC bill have failed amid resistance by oil industry groups, including the top US oil lobby groups.
    • Saudi Arabia has rebuffed repeated lobbying during visits by Biden officials not to cut production.
    • Instead, OPEC+ has agreed to cut output by the most since the start of the COVID-19 pandemic.

    Implications of NOPEC

    • NOPEC more or less is a knee-jerk reaction from the US against oil hegemony of the OPEC+.
    • If passed into law, it could lead to unintended blowback.
    • In 2019, for example, Saudi Arabia threatened to sell its oil in currencies other than the dollar if Washington passed a version of the NOPEC bill.
    • There is a possibility that other countries could take similar action on the US for withholding agricultural output to support domestic farming, for example.

     

    UPSC 2023 countdown has begun! Get your personal guidance plan now! (Click here)

  • Vyommitra Humanoid to undergo pre-flight tests

    vyommitra

    Vyommitra, the humanoid designed and developed by the ISRO to fly aboard unmanned test missions ahead of the Gaganyaan human space-flight mission, is undergoing pre-flight ground tests at the ISRO Inertial Systems Unit (IISU).

    Vyommitra

    • The AI-based robotic system is developed at a robotics lab at the Vikram Sarabhai Space Centre (VSSC) at Thumba, Thiruvananthapuram.
    • Vyommitra will be used for an unmanned flight of ISRO’s GSLV III rocket in December 2020, which, along with a second unmanned flight in July 2021.
    • This will serve as the test of ISRO’s preparedness for its maiden manned space mission, Gaganyaan, being targeted for 2022 to mark 75 years of India’s independence.

    Functions of the humanoid

    • Vyommitra, equipped with a head, two arms and a torso, is built to mimic crew activity inside the crew module of Gaganyaan.
    • Attaining launch and orbital postures, responding to the environment, generating warnings, replacing carbon dioxide canisters, and operating switches, monitoring of the crew module, receiving voice commands, and responding via speech (bilingual) are among the functions listed.
    • It will have a human-like face, with lips synchronized for movement to mimic speech.
    • Once it is fully developed, Vyommitra will be able to use the equipment on board the spacecraft’s crew module, like safety mechanisms and switches, as well as receive and act on commands sent from ground stations.

    What is the recent development?

    • The IISU has successfully integrated it with a computer “brain”, which enables it to “read” control panels aboard the unmanned test flights and communicate with the ISRO ground stations.
    • It has a certain level of intelligence.
    • It is intended to operate and read the display panels and communicate back to ground station using its own voice.

    Back2Basics: Gaganyaan Mission

    • Gaganyaan is crewed orbital spacecraft intended to be the formative spacecraft of the Indian Human Spaceflight Programme (IHSP).
    • The IHSP was initiated in 2007 by ISRO to develop the technology needed to launch crewed orbital spacecraft into low Earth orbit.
    • ISRO had been working on related technologies and it performed a Crew Module Atmospheric Re-entry Experiment and a Pad Abort Test for the mission.
    • If completed in meantime, India will become the fourth nation to conduct independent human spaceflight after Russia, US, and China.

     

    UPSC 2023 countdown has begun! Get your personal guidance plan now! (Click here)

  • Governor: 1st essential part of State Legislature

    GovernorContext

    • In Tamil Nadu, the Governor forwarded the Bill for exemptio from the National Eligibility cum Entrance Test (NEET) to the President after considerable delay.
    • In Kerala the situation has become a bit curious with the Governor publicly announcing that he would not give assent to the Lokayukta Amendment Bill and the Kerala University Amendment Bill. Such actions by Governors throw the legislative programmes of governments out of gear because of the uncertainty surrounding the assent.

    What is Role of Governor in Legislature?

    • Integral part: A Bill passed by the State Assembly becomes law only after it is assented to by the Governor.The Governor being a part of the State legislature, the process of law making is complete only when he signs it, signifying his assent.
    • Established practice: In all democratic countries, similar provision exists in their constitutions.

    Governor What is the Power of Governor Vis-e-vis legislature?

    • What Article 200 says: The Constitution provides certain options for the Governor to exercise when a Bill reaches him from the Assembly.
    • There are four possible scenarios:
    1. Assent: He may give assent.
    2. Reconsider: He can send it back to the Assembly requesting it to reconsider some provisions of the Bill, or the Bill itself. In this case, if the Assembly passes the Bill without making any change and sends it back to the Governor, he will have to give assent to it.
    3. Reserve: The third option is to reserve the Bill for the consideration of the President.
    4. Withhold: The fourth option, of course, is to withhold the assent.

    What are the Legislative practice in other democracies ?

    • UK: The royal assent is necessary for a Bill to be passed by Parliament to become law and the crown has the power to withhold assent. But it is a dead letter.
    • No power of veto: By practice and usage there is no power of veto exercised by the crown in England now. Moreover, refusal of royal assent on the ground that the monarchy strongly disapproves of the Bill or that the Bill is very controversial is treated as unconstitutional.
    • USA: In the United States, the President is empowered by the Constitution to refuse assent and return a Bill to the House but if the Houses again pass it with two thirds of each House the Bill becomes law.

    GovernorWhy there is an ambiguity over the role of governors in India?

    • Role of the governor: The question of whether a Governor is permitted by the Constitution to cause uncertainty in the matter of giving assent to the Bills passed by State legislatures assumes great importance.
    • Presidential Assent: The provision concerned makes it clear that a Bill can be reserved for the consideration of the President only if the Governor forms an opinion that the Bill would endanger the position of the High Court by whittling away its powers. The Constitution does not mention any other type of Bill which is required to be reserved for the consideration of the President. Nevertheless, the courts have conceded a certain discretion to the Governors in the matter of sending Bills to the President.
    • Constitution is silent: the Constitution does not mention the grounds on which a Governor may withhold assent to a Bill.
    • No remedy: The Indian Constitution, however, does not provide any such remedy as that of USA or UK . The courts too have more or less accepted the position that if the Governor withholds assent, the Bill will go. Thus, the whole legislative exercise will become fruitless. It does not square with the best practices in old and mature democracies.

    What is the Court mandated legislative practice?

    • According to Article 361: The Constitution prohibits the court from initiating proceedings against a Governor or the President for any act done in exercise of their powers. They enjoy complete immunity from court proceedings. It is in fact a unique situation where a government is placed in a situation of having to challenge a Governor’s action of withholding assent to a Bill.
    • Reasons: Governor while declaring that he withholds assent will have to disclose the reason for such refusal.
    • No Arbitrary actions: Being a high constitutional authority, the Governor cannot act in an arbitrary manner
    • Unconstitutional: If the grounds for refusal disclose mala fide or extraneous considerations or ultravires, the Governor’s action of refusal could be struck down as unconstitutional.
    • Rameshwar Prasad and Others. vs Union of India case: The Court held: “the immunity granted by Article 361(1) does not, however, take away the power of the Court to examine the validity of the action including on the ground of malafides”.
    • Pocket veto: since the Constitution does not fix any timeline for the Governor to decide the question of assent, he can wait for any length of time without doing anything. This is illogical and militates against the constitutional scheme in respect of law making by the legislatures.

    GovernorConclusion

    • The legislature reflects the will of the people and is the constitutionally designated body to make laws. If the Governor who does not reflect in any way the aspirations of the people of the State refuses assent, and thereby defeats the legislative programme of the elected government, it would be against the spirit of the Constitution.

    Mains Question

    Q.Governor is the connecting link between state and central executive. Discuss the duties of Governor with respect to state legislature? Why Governor tilt more towards centre than state?

    UPSC 2023 countdown has begun! Get your personal guidance plan now! (Click here)

  • Analysing Insolvency and bankruptcy Code

    InsolvencyContext

    • Speaking at the Sixth anniversary of the insolvency and bankruptcy Board of India (IBBI) on October 1, Union Finance Minister Nirmala Sitharaman said that the country could not afford to lose the “sheen” of its insolvency law, the Insolvency and Bankruptcy code(IBC)

    What is Insolvency?

    • Simply speaking, insolvency is a financial state of being one that is reached when you are unable to pay off your debts on time.
    • Insolvency is essentially the state of being that prompts one to file for bankruptcy. An entity a person, family, or company becomes insolvent when it cannot pay its lenders back on time.
    • Typically, those who become insolvent will take certain steps toward a resolution. One of the most common solutions for insolvency is bankruptcy.

    What is Bankruptcy?

    • Bankruptcy, on the other hand, is a legal process that serves the purpose of resolving the issue of insolvency.
    • Bankruptcy is a legal declaration of one’s inability to pay off debts. When one files for bankruptcy, one obliges to pay off what is owed with help from the government.

    InsolvencyWhat is Insolvency and Bankruptcy Code (IBC)?

    • In a growing economy, a healthy credit flow and generation of new capital are essential.
    • When a company or business turns insolvent or “sick”, it begins to default on its loans.
    • In order for credit to not get stuck in the system or turn into bad loans, it is important that banks or creditors are able to recover as much as possible from the defaulter, as quickly as they can.

    Why the IBC introduced?

    • Increasing Non ­Performing Assets: In 2016, at a time when India’s Non Performing Assets and debt defaults were piling up, and older loan recovery mechanisms were performing badly, the IBC was introduced to overhaul the corporate distress resolution regime in India.
    • Time bound mechanism: To consolidate previously available laws to create a time bound mechanism with a creditor­ in­ control model as opposed to the debtor ­in ­possession system.
    • Two positive outcomes: When insolvency is triggered under the IBC, there can be just two outcomes: resolution or liquidation. liquidation means the process of winding up a corporation or incorporated entity

    InsolvencyImportance of the Insolvency and bankruptcy code

    • Resolution: First objective is finding a way to save a business through restructuring, change in ownership, mergers etc.
    • Maximising the value: The second objective is to maximise the value of assets of the corporate debtor  maximise the value .
    • Credit facility: To promote entrepreneurship, availability of credit, and balancing the interests of all stakeholders.
    • Easy exit: The Insolvency and Bankruptcy Code would provide such an environment to ensure easy exit for sick companies and help the country to improve its position in ease of doing business.
    • Speedy winding up: The bankruptcy code will make it easier for companies to wind up failed businesses and bring India on a par with developed nations in terms of resolving bankruptcy issues.
    • Time bound disposal: Timeliness is key here so that the viability of the business or the value of its assets does not deteriorate further. It minimizes the problem of delay as there are strict timelines within which the case has to be disposed off. Quick disposal of cases will maximize the recovery amount.
    • Information database: It prepares a database to provide information on the insolvency status of individuals. In addition to this, specialized insolvency professionals helps in guiding through the process.
    • Easy process of claim: Easy process of claim by the creditors also encourages financial institutions to extend credit facilities thus strengthening the financial markets with increased availability of credit for business.

    What are the challenges before IBC?

    • Weak Resolution: IBBI data for the 3,400 cases admitted under the IBC in the last six years, more than 50% of the cases ended in liquidation, and only 14% could find a proper resolution.
    • Increasing deadlines: The IBC was thus initially given a 180 day deadline to complete the resolution process, with a permitted 90 day extension. It was later amended to make the total timeline for completion 330 days is almost a year.
    • In FY22, it took 772 days to resolve cases involving companies that owed more than 1,000 crore. The average number of days it took to resolve such cases increased rapidly over the past five years.
    • On Haircuts (Debts that banks forgo):The Parliamentary Standing Committee on Finance pointed out in 2021 that in the five years of the IBC, creditors on an average had to bear an 80% haircut in more than 70% of the cases.
    • As per The Hindu Data Team, in close to 33 of 85 companies so far that owed more than 1,000 crore, lenders had to take above 90% haircuts. In case of the resolution of the Videocon Group for instance, creditors bore a haircut of 95.3%.

    InsolvencyWhat  are experts saying?

    • Addressing the delays: In order to address the delays, the Parliamentary Standing Committee suggested that the time taken to admit the insolvency application and transfer control of the company to a resolution process, should not be more than 30 days after filing the case.
    • New mechanism: The IBBI has also called for a new yardstick to measure haircuts. It suggested that haircuts not be looked at as the difference between the creditor’s claims and the actual amount realized but as the difference between what the company brings along when it enters IBC and the value realized.

    Conclusion

    • Insolvency and Bankruptcy Code is a comprehensive and systemic process, which gives a quantum leap to the functioning of the credit market. However, it is the need of the hour to find new and innovative alternatives to make this system comprehensible and address the challenge of delay and resolution.

    Mains Question

    Q. Insolvency and Bankruptcy Code (IBC) is a comprehensive and systemic process, which gives a quantum leap to the functioning of the credit market. Discuss the challenges and way ahead in the resolution mechanism of IBC.

    UPSC 2023 countdown has begun! Get your personal guidance plan now! (Click here)