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  • Foreign Policy Watch: India-SCO

    Can the SCO be the regional body that stabilizes Afghanistan?

    On the face of it, the summit meeting of the Shanghai Cooperation Organisation (SCO) this week in Dushanbe, Tajikistan, is well placed to lead the stabilization of Afghanistan after the American retreat.

    About SCO

    • After the collapse of the Soviet Union in 1991, the then security and economic architecture in the Eurasian region dissolved and new structures had to come up.
    • The original Shanghai Five were China, Kazakhstan, Kyrgyzstan, Russia and Tajikistan.
    • The SCO was formed in 2001, with Uzbekistan included. It expanded in 2017 to include India and Pakistan.
    • Since its formation, the SCO has focused on regional non-traditional security, with counter-terrorism as a priority.
    • The fight against the “three evils” of terrorism, separatism and extremism has become its mantra. Today, areas of cooperation include themes such as economics and culture.

    India’s and the SCO

    • India and Pakistan both were observer countries.
    • While Central Asian countries and China were not in favor of expansion initially, the main supporter — of India’s entry in particular — was Russia.
    • A widely held view is that Russia’s growing unease about an increasingly powerful China prompted it to push for its expansion.
    • From 2009 onwards, Russia officially supported India’s ambition to join the SCO. China then asked for its all-weather friend Pakistan’s entry.

    Afghanistan and SCO

    • Afghanistan has been engaged with the SCO for over 15 years.
    • In 2012, Afghanistan became an observer in the SCO when then-Afghan president Hamid Karzai visited China.
    • In 2015, Kabul applied for full membership in the group.
    • Kabul sought to be a member of the SCO as it believes that it is a natural candidate.
    • Geographically, Afghanistan is a part of the SCO region.

    Limited (or No) progress made by SCO

    • For all the political hype, the SCO has not deepened regionalism in Central Asia.
    • Two decades after its formation — it was set up just weeks before the 9/11 attacks on New York and Washington — the institutional promise of the SCO remains just that — a promise.
    • Seen from the subcontinent, the SCO certainly looks better than the South Asian Association of Regional Cooperation (SAARC).
    • That India and Pakistan, whose differences have prevented even regular meetings of SAARC, are actively participating in the SCO, would point to its attractiveness.
    • But then SAARC is such a low bar.

    Opportunities for role-play in Afghanistan

    The crisis in Afghanistan presents a major opportunity for the SCO to realize its regional ambitions.

    • Involvement of regional superpowers: The SCO’s importance for Afghanistan seems self-evident when you look at its sponsors and members. Its founding leaders are the two great powers of the east — Russia and China.
    • Neighborhood are members: Its other initial members were Uzbekistan, Tajikistan, Kyrgyzstan, and Kazakhstan to the north and northeast of Afghanistan.
    • Observers vested interest: Besides Afghanistan, Iran, Belarus and Mongolia are observers. Iran is said to be on track for full membership.
    • Many dialogue partners: The SCO has a number of “dialogue partners”. They include Armenia and Azerbaijan from the neighboring Caucasus region and Turkey a step further to the West. Nepal and Sri Lanka from the subcontinent and Cambodia from southeast Asia are also dialogue partners.

    Issues with SCO

    • China centrism: For an organization that bears the name of Shanghai, but is focused on Central Asia, its associates look disparate.
    • Lack of coherence: The Central Asian members of the SCO have quarrels of their own, and have struggled to develop collective approaches to their common regional security challenges.
    • Dint go beyond dialogues: As it broadened its membership, the SCO has, unsurprisingly, struggled to deepen institutional cooperation.
    • Not comprehensive: There is also one important country missing in the mix. It is Turkmenistan, which shares an 800 km border with Afghanistan and a 1,150 km border with Iran.
    • Neutrality of members: The organizing principle of Turkmenistan rulers is absolute “neutrality” — think of it as an extreme form of “non-alignment”. It refuses to join any regional institution, political or military.
    • Individual interests: Russia’s effort to build a regional institution in its Central Asian periphery ran parallel to its plans for the so-called “strategic triangle” with China and India. India and Pakistan, needless to say, are poles apart on the Taliban.

    No common interest in Afghan Peace

    • The US military retreat from Afghanistan has brought cheer to both Moscow and Beijing, although publicly they criticize President Joe Biden’s hasty retreat.
    • The US retreat might weaken the glue that binds Moscow and Beijing in Central Asia or tightens it.
    • Although Russia and China are closer to each other than ever before, their interests are not entirely the same in Central Asia.

    Russian alternatives to SCO

    (1) Central Security Treaty Organisation

    • While military confidence-building measures have grown under the SCO banner, Russia had its own security organisation for the region, called the Central Security Treaty Organisation (CSTO).
    • Three of the SCO members — Kazakhstan, Kyrgyzstan, and Tajikistan — along with Armenia and Belarus are members of the CSTO.
    • Russia sees itself as the sole protector of the former Soviet Republics and may not be ready to share that role with China — “yes” to coordination, but “no” to a Sino-Russian security dyarchy.

    (2) Eurasian Economic Union

    • Moscow also appears reluctant to back Chinese proposals to promote trade integration under the SCO banner; it prefers the Eurasian Economic Union (EAEU) under its own leadership.
    • China is not a member of either CSTO or EAEU. This is one reason for the weakness of SCO regionalism.

    Other deterrents

    (1) Affinity with Taliban

    • China has openly admitted to cooperating with the Taliban by restoring all formal diplomatic ties. It is the first such country to acknowledge the Taliban.
    • Turkmenistan too, which is not part of SCO, has been quite open to engaging the Taliban in sync with its principles of neutrality.
    • Some Russian analysts see Turkmenistan as the potential weak link in the defense against the Taliban’s potential threats to the region.
    • Uzbekistan seems open to a cautious engagement with the Taliban.

    (2) Iranian aspirations for unwarranted interference (just like Turkey does regarding Kashmir)

    • Iran, which has ethnic and linguistic links with the Persian-speaking Tajiks, appears equally worried about the Taliban’s policies towards minorities.
    • As Moscow and Beijing, Tehran was happy to see the Americans leave in humiliation and appeared hopeful of a positive engagement with the Taliban.
    • Those hopes may have been suspended for now, if not discarded.

    What can the SCO do now?

    • The Afghanistan debacle presents an opportunity for the SCO to play a constructive role in meeting the region’s burgeoning security challenge.
    • Providing humanitarian relief, tending to refugees, facilitating an inclusive dialogue and national reconciliation constitute immediate and long-term goals in which the organization can fill a role.
    • The SCO can also pressure the Taliban to share power with other domestic actors and refrain from providing sanctuary to foreign terror organizations (through foreign funds from Saudi*).
    • It can suspend Afghanistan’s observer status, curtail border traffic or withhold recognition, investments, and aid, should Kabul be found wanting.

    Way forward

    • While the SCO is not an impressive regional institution, it remains an important diplomatic forum.
    • India has sought to make full use of the SCO’s diplomatic possibilities without any illusions about its effectiveness.
    • At the SCO summit this week, PM Modi would remind other leaders of the “three evils” that the SCO set out to defeat — terrorism, extremism, and separatism.
    • Few would disagree that the Taliban embodied all the three sins in the past. Today, the Taliban and its mentor Pakistan say the sinner wants to become a saint.
    • India must focus on finding common ground with those members of the SCO who do share India’s concerns about Afghanistan.

    Conclusion

    • Given this divergence, it is unlikely that the SCO can come up with a “regional solution” for the Afghan crisis.
    • The only real Afghan convergence today is between Pakistan and China.
    • Expect them to try and nudge the SCO towards a positive engagement with the Taliban.

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  • Goods and Services Tax (GST)

    GST Council may consider bringing petrol, diesel under GST

    The GST Council might consider taxing petrol, diesel and other petroleum products under the single national GST regime.

    About GST Council

    • The GST Council is a constitutional 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.
    • It 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 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 to 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

    Why bring Petro/Diesel under GST?

    • GST is being thought to be a solution for the problem of near-record high petrol and diesel rates in the country, as it would end the cascading effect of tax on tax.
    • The state VAT is being levied not just on the cost of production but also on the excise duty charged by the Centre on such output.

    Why were they left out of GST?

    • When a national GST subsumed central taxes such as excise duty and state levies like VAT on July 1, 2017, five petroleum goods – petrol, diesel, ATF, natural gas and crude oil – were kept out of its purview.
    • This is because both central and state government finances relied heavily on taxes on these products.
    • Since GST is a consumption-based tax, bringing petroleum under the regime would have mean states where these products are sold get the revenue and not the producer ones.
    • Simply put, Uttar Pradesh and Bihar with their huge population and a resultant high consumption would get more revenues at the cost of states like Gujarat.

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  • Goods and Services Tax (GST)

    What is Input Tax Credit?

    The Supreme Court has confirmed a Madras High Court judgment which upheld a fiscal formula included in the Central Goods and Service Tax Rules to execute refund of unutilized Input Tax Credit (ITC) accumulated on account of input services.

    What is Input Tax Credit?

    • Input credit means at the time of paying tax on output, you can reduce the tax you have already paid on inputs.
    • Say, you are a manufacturer – tax payable on output (FINAL PRODUCT) is Rs 450 tax paid on input (PURCHASES) is Rs 300 You can claim INPUT CREDIT of Rs 300 and you only need to deposit Rs 150 in taxes. See here:

    Pc: Cleartax.in

    The case in discussion

    • The apex court Bench led, by Justice D.Y. Chandrachud, passed the judgment in the face of two contradicting judgments of Gujarat and Madras High Courts on the validity of Rule 89(5) of the Central GST Rules, 2017.
    • Rule 89(5) provides a formula for the refund of ITC, in “a case of refund on account of inverted duty structure”.
    • The Gujarat High Court had held that by prescribing a formula in sub-Rule (5) of Rule 89 to execute refund of unutilized ITC accumulated on account of input services.
    • The Madras High Court, while delivering its judgment declined to follow the view of the Gujarat High Court.

    Answer this PYQ in the comment box:

    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

     

    Post your answers here

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  • North-East India – Security and Developmental Issues

    50th anniversary of Meghalaya’s Statehood

    The Meghalaya Assembly has given an indigenous touch to the National Anthem ahead of the 50th anniversary of Meghalaya’s Statehood in 2022.

    About Meghalaya

    • Meghalaya meaning “abode of clouds” was formed by carving out two districts from the state of Assam: the United Khasi Hills and Jaintia Hills, and the Garo Hills on 21 January 1972.
    • It was previously part of Assam, but on 21 January 1972, the districts of Khasi, Garo and Jaintia hills became the new state of Meghalaya.
    • It is the wettest region of India, with the wettest areas in the southern Khasi Hills recording an average of 12,000 mm (470 in) of rain a year.
    • About 70 percent of the state is forested.
    • The Meghalaya subtropical forests ecoregion encompasses the state; its mountain forests are distinct from the lowland tropical forests to the north and south.

    Note the chronology of reorganization states in India

    State Formation Year Status prior to the formation
    Andhra 1953 Part of the state of Madras
    Gujarat 1960 Part of the state of Bombay
    Maharashtra 1960 Part of the state of Bombay
    Kerala 1956 State of Travancore and Cochin
    Nagaland 1963 Union territory
    Haryana 1966 Part of Punjab
    Karnataka 1956 State of Mysore was formed in 1953, enlarged Mysore in 1956 which was renamed in 1973.
    Himachal Pradesh 1971 Union Territory
    Manipur, Tripura 1972 Union Territories
    Meghalaya 1972 Autonomous state within state of Assam
    Sikkim 1975 Associate state since 1974 and a protectorate of India before that.
    Mizoram 1987 District of Assam till 1972 and Union Territory from 1972 to 1987.
    Arunachal Pradesh 1987 Union Territory
    Goa 1987 Union Territory
    Uttarakhand 2000 Part of Uttar Pradesh
    Chhattisgarh 2000 Part of Madhya Pradesh
    Jharkhand 2000 Part of Bihar
    Telangana 2014 Part of Andhra Pradesh

     

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  • Tiger Conservation Efforts – Project Tiger, etc.

    Places in news: Pilibhit Tiger Reserve

    A herd of around 25 elephants from Nepal’s Shuklaphanta National Park reached the tiger reserve in Uttar Pradesh almost a month back.

    Pilibhit Tiger Reserve

    • Pilibhit Tiger Reserve is located in Pilibhit district of Uttar Pradesh and was notified as a tiger reserve in 2014.
    • It is one of the few well-forested districts in Uttar Pradesh.
    • It forms part of the Terai Arc Landscape in the upper Gangetic Plain along the India-Nepal border.
    • The habitat is characterized by sal forests, tall grasslands and swamp maintained by periodic flooding from rivers.
    • The Sharda Sagar Dam extending up to a length of 22 km is on the boundary of the reserve.
    • The tiger reserve got the first international award TX2 for doubling the tiger population in a stipulated time.

    Try answering this PYQ:

    Q.Consider the following protected areas:

    1. Bandipur
    2. Bhitarkanika
    3. Manas
    4. Sunderbans

    Which of the above are declared Tiger Reserves?

    (a) 1 and 2 only

    (b) 1, 3 and 4 only

    (c) 2, 3 and 4 only

    (d) 1, 2, 3 and 4

     

    Post your answers here.

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  • Financial Inclusion in India and Its Challenges

    Financial inclusion

    Context

    There are 63.4 million MSMEs in India and 99 per cent of which are micro-enterprises with less than Rs 10 lakh in investment. Financial inclusion and integration is key to bring these businesses into the formal economy.

    Financial integration

    • What is Financial inclusion? On the front of “financial inclusion”, which refers to the accessibility of banking and availability of credit, we have made significant progress.
    • Financial integration:  The journey from inclusion to integration is not only about making products available and accessible, but also about making them relevant, applicable, and acceptable.

    Demand size challenges

    1) Gap between demand and supply of capital

    • Due to a limited risk appetite, low or thin-file data on customers and challenging regulatory oversight, capital remains a constraint in designing bespoke products.
    • Way forward: For India to overcome these challenges, the existing infrastructure must be adapted to our new purpose, providing easy-to-use, customer-centric experiences.

    2) Accessibility

    •  Greater accessibility has major benefits for not only the customer but also the supplier.
    • For example, in rural India, people tend to save in the post office, because of village postal agents collect their savings from their doorstep.

    3) Intelligent product design and delivery

    • Products must be designed and delivered intelligently to meet the customer where they are, and by keeping in mind that they use products to reach their goals.
    • This involves tailoring the products to the needs and income profile of the customer, including being cognisant of their environment, geography, and demography.

    4) Lowering the operating costs

    • In the traditional financial system, the design and distribution cost on financial products at sachet size is high.
    • Financial service providers are consequently dissuaded from attempting to reach rural, financially excluded groups.
    • By using the power of machine learning and cloud infrastructure, we can significantly lower operating costs while offering customers affordable, bespoke financial products.

    5) Demand-side issues: Financial literacy and technology readiness

    • Financial literacy and technology readiness are two critical issues on the demand size.
    • Financial education assists people in making sound financial decisions.

    Consider the question “Benefits of the financial inclusion remain unrealised without financial integration. In light of this, examine the challenge in financial integration in India and suggest the way forward” 

    Conclusion

    It is our responsibility to create an ecosystem for them to deploy this capital of courage.

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  • Temple entry for women : Gender Equality v/s Religious Freedom

    State control over Temples

    Context

    On August 14, 2021, the Tamil Nadu government appointed 24 trained archakas (priests) in temples across the State. In the weeks since, a series of writ petitions have been filed before the Madras High Court assailing these appointments.

    Administration of  Hindu temples in Tamil Nadu by government and challenges to it

    • The Hindu Religious and Charitable Endowments (HR&CE), 1959, is the governing law on the administration of Hindu temples and religious institutions.
    • In 1971, Section 55 of the HR&CE Act was amended to abolish hereditary priesthood.
    • Removal of caste-based discrimination: In 2006, the amendment provided for the appointment of sufficiently trained Hindus irrespective of their caste as archakas to Hindu temples by the government.
    • Challenges in the Court: Challenges to both amendments were taken to the Supreme Court, which upheld the law, as amended.
    •  In Seshammal v. Union (1972), the Supreme Court observed that the amendment to the HR&CE Act abolishing hereditary priesthood did not mean that the government intended to bring about any “change in the rituals and ceremonies”.
    • Constitutional legitimacy: In Adi Saiva Sivachariyargal v. Govt. of Tamil Nadu (2015), the Supreme Court observed that “the constitutional legitimacy, naturally, must supersede all religious beliefs or practices”.
    • The Court further went on to state that appointments should be tested on a case-by-case basis and any appointment that is not in line with the Agamas will be against the constitutional freedoms enshrined under Articles 25 and 26 of the Constitution.

    Judicial balancing of the various rights by the Supreme Court

    • In Indian Young Lawyers’ Association v. State of Kerala (the Sabarimala case) and Joseph Shine v. Union of India (2018), the Supreme Court reiterated the need to eliminate “historical discrimination which has pervaded certain identities”’, “systemic discrimination against disadvantaged groups”.
    • In these cases the Supreme Court rejected stereotypical notions used to justify such discrimination.
    • In all these cases, the Court prioritised judicial balancing of various constitutional rights.
    • The constitutional order of priority: In the Sabarimala case, it held that “in the constitutional order of priorities, the individual right to the freedom of religion was not intended to prevail over but was subject to the overriding constitutional postulates of equality, liberty and personal freedoms recognised in the other provisions of Part III”.

    Way forward

    • Building on the Sabrimala case: The constitutional courts will now be called upon to build on the gains of the Sabarimala case when it comes to administration of temples, insofar as it concerns matters that are not essentially religious.
    • Dealing with the gender bias: The Supreme Court, in Navtej Singh Johar v. Union of India (2018), interpreted Article 15 as being wide, progressive and intersectional.
    • Today, while most of the debate is around whether men from all caste groups can become archakas, we have failed to recognise the gender bias inherent in these discussions.

    Consider the question “We have been witnessing the evolution of rights-based jurisprudence in the various judgements of the Supreme Court. This will help to eliminate “systemic discrimination against disadvantaged groups”, and reject stereotypical notions used to justify such discrimination. Comment.”

    Conclusion

    At once, caste orthodoxy and patriarchy entrenched within the realm of the HR&CE Act can be eliminated and supplanted with a vision of a just, equal and dignified society.

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  • North-East India – Security and Developmental Issues

    In Manipur, a case for asymmetric federalism

    As a normative idea and an institutional arrangement that supports the recognition and provision of an expansive ‘self-rule’ for territorially concentrated minority groups, asymmetric federalism has recently received bad press in India.

    India’s Federalism: A backgrounder

    • Nations are described as ‘federal’ or ‘unitary’, depending on the way in which governance is organised.
    • In a unitary set-up, the Centre has plenary powers of administration and legislation, with its constituent units having little autonomy.
    • In a federal arrangement, the constituent units are identified on the basis of region or ethnicity and conferred varying forms of autonomy or some level of administrative and legislative powers.
    • In India, the residuary powers of legislation, that is the power to make law in a field not specified in the Constitution, is vested in Parliament.
    • Hence India has a quasi-federal framework.

    Why is it said that India has asymmetric federalism?

    • The main forms of administrative units in India are the Centre and the States.
    • Just as the Centre and the States do not have matching powers in all matters, there are some differences in the way some States and other constituent units of the Indian Union relate to the Centre.
    • This creates a notable asymmetry in the way Indian federalism works.
    • But there are other forms, too, all set up to address specific local, historical and geographical contexts.

    The asymmetric structure

    • Besides the Centre and the States, the country has Union Territories with a legislature, and Union Territories without a legislature.
    • When the Constitution came into force, the various States and other administrative units were divided into Parts A, B, C and D.
    • Part A States were the erstwhile provinces, while Part B consisted of erstwhile princely states and principalities. Part C areas were the erstwhile ‘Chief Commissioner’s Provinces’.
    • They became Union Territories, and some of them initially got legislatures and were later upgraded into States.
    • Himachal Pradesh, Manipur, Tripura, Mizoram, Arunachal Pradesh and Goa belong to this category.

    Power apparatus in these asymmetries: Sixth Schedule

    • The Sixth Schedule to the Constitution contains provisions for the administration of tribal areas in Assam, Meghalaya, Tripura and Mizoram.
    • These create autonomous districts and autonomous regions.
    • Any autonomous district with different Scheduled Tribes will be divided into autonomous regions.
    • These will be administered by District Councils and Regional Councils.
    • These Councils can make laws with respect to allotment, occupation and use of land, management of forests other than reserve forests and water courses.
    • Besides they can regulate social customs, marriage and divorce and property issues.

    An integrationist approach adopted by the Constituent Assembly

    • Post-independence, India was criticized for arguably becoming a ‘homogenous Hindu nation’ after Partition.
    • To counter this, the Gopinath Bordoloi Committee, a sub-committee of the Constituent Assembly sought to accommodate the distinctive identity, culture and way of life of tribal groups in the NE by envisioning ‘self-rule’.
    • This distinctive constitutional status to territorially concentrated minorities fosters centrifugal tendencies.
    • Asymmetric federalism fosters subversive institutions, political instability and breakup of States.

    Curious case of Manipur: Recent developments

    • Article 371 gives expansive constitutional powers to Manipur’s Hill Areas Committee (Article 371C) over tribal identity, culture, development and local administration, are exemplars.
    • The integrationist approach resonates powerfully in two recent attempts by Manipur’s government to
    1. stall the introduction and passage of the Manipur (Hill Areas) Autonomous District Council (Amendment) Bill, 2021, and
    2. induct nine Assembly members from the valley areas into the Hill Areas Committee.
    • This move is being perceived as a “malicious” and “direct assault” on the Hill Areas Committee and the constitutional protection accorded to the Hill Areas of Manipur under Article 371C.

    A determined move

    • These moves marks a calculated initiative to use this as a double-edged sword to simultaneously set apace electoral agenda for the upcoming Assembly elections in early 2022 and reclaim its agency to fortify state-level constitutional asymmetry.
    • The attempt to increase membership of the six district councils to 31 members each and secure more powers to the councils by giving more developmental mandate are welcome.

    Managing HAC: A difficult task

    • If history is any guide, the task of reclaiming the Hill Areas Committee’s agency is not going to be easy.
    • Its members often leverage tribe/party loyalty over-commitment to protect constitutional asymmetry and common tribals’ cause.
    • How the HAC and various tribal groups strategically navigate their politics to offset the majoritarian impulse to manipulate the legal and political process to dilute/dissolve extant constitutional asymmetry remains to be seen.

    Way forward

    • There should be sincere commitment to promote tribal development, identity and culture that Article 371C seeks to bridge.
    • Recognizing and institutionally accommodating tribal distinctiveness is not just as a matter of political convenience
    • This valuable and enduring good will be key to promote the State’s integrity, stability and peace in the long run.

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  • Climate Change Impact on India and World – International Reports, Key Observations, etc.

    Thawing Permafrost

    The latest IPCC report has warned that increasing global warming will result in reductions in Arctic permafrost and the thawing of the ground is expected to release greenhouse gases like methane and carbon dioxide.

    What is Permafrost?

    • ‘Permafrost’ or permanently frozen ground is land that has been frozen at or below 0 degrees Celsius for two or more consecutive years.
    • A staggering 17 per cent of Earth’s entire exposed land surface is comprised of permafrost.
    • Composed of rock, sediments, dead plant and animal matter, soil, and varying degrees of ice, permafrost is mainly found near the poles, covering parts of Greenland, Alaska, Northern Canada, Siberia and Scandinavia.
    • The Arctic region is a vast ocean, covered by thick ice on the surface (called sea ice), surrounded by land masses that are also covered with snow and ice.

    Permafrost thawing

    • When permafrost thaws, water from the melted ice makes its way to the caves along with ground sediments, and deposits on the rocks.
    • In other words, when permafrost thaws, the rocks grow and when permafrost is stable and frozen, they do not grow.

    Why thawing?

    • The link between the Siberian permafrost and Arctic sea ice can be explained by two factors:
    • One is heat transport from the open Arctic Ocean into Siberia, making the Siberian climate warmer.
    • The second is moisture transport from open seawater into Siberia, leading to thicker snow cover that insulates the ground from cold winter air, contributing to its warming.
    • This is drastically different from the situation just a couple of decades ago when the sea ice acted as a protective layer, maintaining cold temperatures in the region and shielding the permafrost from the moisture from the ocean.
    • If sea ice (in the summer) is gone, permafrost start thawing.

    Impact on Climate Change

    • Due to relentlessly rising temperatures in the region, since the late-twentieth century, the Arctic sea ice and surrounding land ice are melting at accelerating rates.
    • When permafrost thaws due to rising temperatures, the microbes in the soil decompose the dead organic matter (plants and animals) to produce methane (CH4) and carbon dioxide (CO2), both potent greenhouse gases.
    • CH4 is at least 80 times more powerful than CO2 on a decadal timescale and around 25 times more powerful on a century timescale.
    • The greenhouse gases produced from thawing permafrost will further increase temperatures which will, in turn, lead to more permafrost thawing, forming an unstoppable and irreversible self-reinforcing feedback loop.
    • Experts believe this process may have already begun. Giant craters and ponds of water (called ‘thermokarst lakes’) formed due to thawing have been recorded in the Arctic region. Some are so big that they can be seen from space.

    Why a matter of concern?

    • An estimated 1,700 billion tonnes — twice the amount currently present in the atmosphere — of carbon is locked in all of the world’s permafrost.
    • Even if half of that were to be released to the atmosphere, it would be game over for the climate.
    • Scientific estimates suggest that the Arctic Ocean could be largely sea ice-free in the summer months by as early as 2030, based on observational trends, or as late as 2050, based on climate model projections.

    Potential to cause another pandemic

    Ans. Permafrost has many secrets.

    • When the permafrost was formed thousands of years ago, there weren’t many humans who lived in that region which was necessarily very cold.
    • Researchers recently found mammoths in the permafrost in Russia.
    • And some of these mammoth carcasses when they begin to degrade again may reveal bacteria that were frozen thousands of years ago.
    • So there will be surprises. But whether they will be lethal surprises is just not possible to say.

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  • Capital Markets: Challenges and Developments

    National Financial Reporting Authority (NFRA)

    Audit regulator National Financial Reporting Authority (NFRA) wants to be positioned as a regulator for the entire gamut of financial reporting, covering all processes and participants in the financial reporting chain.

    What is NFRA?

    • NFRA is an independent regulator to oversee the auditing profession and accounting standards in India under Companies Act 2013.
    • It came into existence in October 2018.
    • After the Satyam scandal took place in 2009, the Standing Committee on Finance proposed the concept of the National Financial Reporting Authority (NFRA) for the first time in its 21st report.
    • Companies Act, 2013 then gave the regulatory framework for its composition and constitution.

    Functions

    • NFRA works to improve the transparency and reliability of financial statements and information presented by listed companies and large unlisted companies in India.

    Powers & duties

    • NFRA is responsible for recommending accounting and auditing policies and standards in the country.
    • It may undertake investigations, and impose sanctions against defaulting auditors and audit firms in the form of monetary penalties and debarment from practice for up to 10 years.
    • Since 2018, the powers of the NFRA were extended to include the governing of auditors of companies listed in any stock exchange, in India or outside of India, unlisted public companies above certain thresholds.

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