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  • Roads, Highways, Cargo, Air-Cargo and Logistics infrastructure – Bharatmala, LEEP, SetuBharatam, etc.

    New Vehicle Scrappage Policy

    | Governance | Mains Paper 2: Government Scheme/Policies

    Auto majors have welcomed the new vehicle scrappage policy rolled out by Union Minister for Road Transport and Highways, saying it would encourage people to replace old vehicles while boosting the sector.

    Under the policy, those choosing to voluntarily scrap their old vehicles will get financial incentives from the government and the automaker.

    Vehicle Scrappage Policy: Key Highlights

    • Personal vehicles older than 20 years and commercial vehicles older than 15 years will have to undergo a fitness test at the government registered ‘Automated Fitness Centres’.
    • Vehicles that fail to pass the test will be declared as ‘end-of-life vehicles’, which would mean that the vehicle would have to be recycled.
    • This will pave the way for older vehicles to be scrapped.
    • In case, the vehicles pass the test, owners will have to pay a hefty fee for re-registration.
    • According to the new policy, the re-registration fee would be hiked around eight times for personal vehicles, and around 20 times for commercial vehicles.

    What Are Automated Fitness Centres?

    • Every vehicle will have to go under a mandatory fitness test at the automated fitness centres.
    • The government aims to have at least 718 centres across the country.
    • These centres will test the vehicle’s emission, and braking and other safety components as prescribed by Central Motor Vehicle Rules, 1989.
    • Appointments to these centres will have to be booked online and the fitness report will be electronically generated.

    Change in Fee Structure

    • The government has increased the fee for renewal and grant of fitness certificate of older vehicles up to 20 times.
    • Here is the new fee structure for personal vehicles older than 15 years:
    1. Two-wheelers – Rs 1,000
    2. Three-wheeler/quadricycles – Rs 3,500
    3. Cars – Rs 7,500

    (Do not worry about the data. It is the state PSCs which may ask such information)

    For commercial vehicles:

    1. Passenger motor vehicles – Rs 10,000
    2. Heavy goods/large motor vehicles – Rs 12,500

    Benefits for buyers

    • In case you decide to scrap your old vehicle at the registered scrapping centres, you will get approximately 4-6 per cent of the value of the vehicle’s ex-showroom price.
    • The ex-showroom price is the cost of the vehicle, excluding the charges paid for registering the vehicle at RTO and insurance.
    • Moreover, if you buy a new vehicle you will be given a flat 5 per cent discount on presenting a scrapping certificate.
    • Registration fees will also be waived on the purchase of a new vehicle.

    Obtaining a Scrapping Certificate

    • Old vehicle owners will be able to formally scrap their registered vehicles at the automated scrapping centres.
    • These centres will be linked with the Vahan database of the transport ministry.
    • After you scrap your vehicle with the government registered agency, you will be provided with the scrapping certificate.
    • You will then be eligible for the benefits proposed under the scheme.

    Implementation

    Tentative timeline for the new rules:

    • Rules for fitness tests and government scrapping centres to come into effect – 1 October 2021
    • The scrapping of government and PSU vehicles above 15 years of age to start – 1 April 2022
    • Fitness testing for heavy commercial vehicles – 1 April 2023

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  • Monetary Policy Committee Notifications

    How did inflation targeting really impact India?

    op-ed snap | Economics | Mains Paper 3: Indian Economy

    The article analyses the success of the inflation targeting mechanism in India and its impact on the growth of the economy.

    Background of the inflation targeting policy in India

    • It has been three decades since inflation targeting was first adopted in New Zealand and subsequently by 33 other countries.
    • India adopted it in 2016.
    • The primary goal of inflation targeting was to contain inflation at around 4 per cent, within the allowable range of 2 to 6 per cent.
    • The RBI has announced a formal review of the policy instrument now.
    • At the first meeting of the RBI Monetary Policy Committee in October 2016, it was also formally announced that the MPC considered a real repo rate of 1.25 per cent as the neutral real policy rate for the Indian economy.
    • By a neutral real policy rate, the RBI meant a policy rate consistent with growth at potential (i.e. growth at full employment).

    Has inflation targeting worked in India

    • The evaluation of IT must provide answers to the following two questions:
    • Did inflation decline post the adoption of inflation targeting and what was the role of IT in the decline in inflation?
    • Was the adoption of inflation targeting associated with the policy of the highest real repo rates in India — ever — for almost three years 2017-2019?
    • The answer is yes to the latter, but it also needs to be acknowledged that high real repo rates were the primary cause of the GDP growth decline in India from 8 per cent to 5 per cent.

    Need to take into account the global context of inflation

    • An interesting feature of the Indian defence of inflation targeting is that very few take into account the global context of inflation in which the decline in inflation has occurred in India.
    • A research paper by Balasubramanian, Bhalla, Bhasin and Loungani at ORF evaluates inflation targeting in a global context and separately for Advanced Economies (AEs) and Emerging Economies (EES).
    • Some facts from the paper are the following.
    • First, the annual median inflation in AEs has been consistently low, so low that many central banks have official campaigns to raise the inflation rate.
    • One conclusion might be that IT succeeded beyond anyone’s dreams in these economies.
    • But attributing this decline in inflation to IT would be erroneous.
    • Inflation is global and price-taking by millions of producers in the world means that no one producer or one country can influence the price of any item.
    • Oil has ceased to be a factor in global inflation, at least post the mid-1980s.
    • The lowest inflation in Indian history occurred during 1999-2005, averaged only 3.9 per cent.
    • The average median rate among EM targetters during 2000-04 was 4 per cent, and among the non-targeting countries was 3.8 per cent.

    Did fiscal deficit play role in inflation targeting

    • In 2003, India passed the FRBM act to control fiscal deficits and inflation.
    • There is precious little evidence, either domestically or internationally, about fiscal deficits affecting inflation.
    • For three consecutive years preceding the FRBM announcement, the consolidated Centre plus state deficits registered 10.9 per cent(in 2001), 10.4 and 10.9 per cent.
    • For the seven-year 1999-2005 period, consolidated fiscal deficits averaged 9.4 per cent of GDP.
    • Yet, that these years represented the golden period of Indian inflation — without FRBM and without IT.

    Cost of inflation targeting in India

    • There are also costs to inflation targeting in India.
    • It led to higher real policy rates, in the mistaken belief that high policy rates affect the price of food, oil, or anything else.
    • But high real rates affect economic growth, by affecting the cost of domestic capital in this ultra-competitive world.
    • It is very likely not a coincidence that potential GDP growth, as acknowledged by RBI, was reached just before the MPC took over decision making in September 2016. 
    •  Since then there was a steady increase in real policy rates, and a steady decline in GDP growth.

    Consider the question “How far has the inflation targeting mechanism been successful in India? Give reasons in support of your argument.” 

    Conclusion

    So, in the inflation targeting mechanism has not been successful in containing the inflation though there had a cost associated with it which we paid in the form of growth.

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  • Mother and Child Health – Immunization Program, BPBB, PMJSY, PMMSY, etc.

    Jharkhand’s SAAMAR campaign to fight malnutrition

    Schemes | Governance | Mains Paper 2: Government Scheme/Policies

    The Jharkhand government has announced the launch of the SAAMAR campaign to tackle malnutrition in the state.

    We can expect an MCQ like:

    Q.SAAMAR campaign sometimes seen in news is related to:

    () Bovine health

    () Mother and Child Health

    () Non-communicable diseases

    () None of these

    SAAMAR

    • SAAMAR is an acronym for Strategic Action for Alleviation of Malnutrition and Anemia Reduction.
    • The campaign aims to identify anaemic women and malnourished children and converge various departments to effectively deal with the problem in a state where malnutrition has been a major problem.
    • Every second child in the state is stunted and underweight and every third child is affected by stunting and every 10th child is affected by severe wasting and around 70% of children are anaemic NFHS-4 data.

    Features of the scheme

    • Although existing schemes are there, seeing the current situation, the intervention was required with a ‘different approach to reduce malnutrition.
    • SAAMAR has been launched with a 1000 days target, under which annual surveys will be conducted to track the progress.
    • It talks of convergence of various departments such as the Rural Development Department and Food and Civil Supplies and engagement with school management committees, gram sabhas among others and making them aware of nutritional behaviour.
    • Most importantly, the campaign, as per the note, also tries to target Primarily Vulnerable Tribal Groups.

    Outlined strategy under the scheme

    • To tackle severe acute malnutrition children, every Anganwadi Centres will be engaged to identify these children and subsequently will be treated at the Malnutrition Treatment Centres.
    • In the same process, the anaemic women will also be listed and will be referred to health centres in serious cases.
    • All of these will be done by measuring Mid-Upper Arm Circumference (MUAC) of women and children through MUAC tapes and Edema levels.
    • Angawadi’s Sahayia and Sevika will take them to the nearest Health Centre where they will be checked again and then registered on the portal of State Nutrition Mission.

    Why need such a scheme?

    • The state government runs various schemes under Child Development Schemes, National Nutrition Mission among others to deal with the situation, but it is not enough.
    • Dealing with malnutrition in the state monitoring has been an important concern due to the lack of doctors or health care workers.

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  • Innovations in Biotechnology and Medical Sciences

    What are the Diatoms?

    Prelims Only | Enviro & Biodiversity | Mains Paper 3: Conservation, Environmental Pollution & Degradation, Eia

    The Maharashtra Anti-Terrorism Squad has relied on a forensic test known as diatom tests for leads in an alleged murder case of a person inviting high stage political drama.

    What are Diatoms?

    • Diatoms are photosynthesizing algae that are found in almost every aquatic environment including fresh and marine waters, soils, in fact, almost anywhere moist.
    • Diatoms have cell walls made of silica, each species has a distinct pattern of tiny holes in the cell wall (frustule) through which they absorb nutrients and get rid of waste.
    • A diatom is a photosynthetic, single-celled organism which means they manufacture their own food in the same way plants do.

    Diatoms are important as they:

    • provide the basis of the food chain for both marine and freshwater micro-organisms and animal larvae
    • are a major source of atmospheric oxygen responsible for 20-30% of all carbon fixation on the planet
    • can act as environmental indicators of climate change
    • form the basis of some household goods such as pest/mite prevention and mild abrasive

    Never underestimate UPSC. Try this PYQ before you reach any conclusion.

    Q.Which one of the following is the correct sequence of a food chain?

    (a) Diatoms-Crustaceans-Herrings

    (b) Crustaceans-Diatoms-Herrings

    (c) Diatoms-Herrings-Crustaceans

    (d) Crustaceans-Herrings-Diatoms

    What is a diatom test?

    • Diagnosis of death by drowning is deemed as a difficult task in forensic pathology.
    • A number of tests have been developed to confirm the cause of such deaths with the diatom test emerging as one of the most important tests.
    • The test entails findings if there are diatoms in the body being tested.

    The science behind

    • A body recovered from a water body does not necessarily imply that the death was due to drowning.
    • If the person is alive when he enters the water, the diatoms will enter the lungs when the person inhales water while drowning.
    • These diatoms then get carried to various parts of the body, including the brain, kidneys, lungs and bone marrow by blood circulation.
    • If a person is dead when is thrown in the water, then there is no circulation and there is no transport of diatom cells to various organs.

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  • Modern Indian History-Events and Personalities

    Places on PM Modi’s Bangladesh Visit

    Prelims Only | | Mains Paper 1: Modern Indian History

    PM Modi will be on a two-day visit to Bangladesh where he will take part in commemorations of some epochal events there.

    Bangabandhu shrine in Tungipara

    • Located about 420 kilometres from Dhaka, Tungipara was the place of birth of Rahman, the architect of the 1971 Bangladesh War of Independence.
    • This is also the place where he lies buried inside a grand tomb called the ‘Bangabandhu mausoleum’.
    • Millions of people gather here every year on August 15, to observe the day when Rahman was assassinated by a group of disgruntled army officers.

    Harichand Thakur’s shrine in Orakandi

    • Thakur was the founder of the Matua Mahasangha, which was a religious reformation movement that originated in Orakandi in about 1860 CE.
    • At a very early age, Thakur experienced spiritual revelation, following which he founded a sect of Vaishnava Hinduism called Matua.
    • Members of the sect were the namasudras who were considered to be untouchables.
    • The objective of Thakur’s religious reform was to uplift the community through educational and other social initiatives.
    • Members of the community consider Thakur as God and an avatar of Vishnu or Krishna.
    • After the 1947 Partition, many of the Matuas migrated to West Bengal.

    ‘Sugandha Shaktipith’ (Satipith) temple in Shikarpur

    • Modi is also scheduled to visit the Sugandha Shaktipeeth which is located in Shikarpur, close to Barisal.
    • The temple, dedicated to Goddess Sunanda is of immense religious significance to Hinduism.
    • It is one of the 51 Shakti Pith temples.
    • The Shakti Pith shrines are pilgrimage destinations associated with the Shakti (Goddess worship) sect of Hinduism.

    Rabindra Kuthi Bari in Kushtia

    • The Kuthi Bari is a country house built by Dwarkanath Tagore, the grandfather of Nobel laureate and Bengali poetic giant Rabindranath Tagore.
    • The latter stayed in the house for over a decade in irregular intervals between 1891 and 1901.
    • In this house Tagore composed some of his masterpieces like Sonar Tari, Katha o Kahini, Chaitali etc. He also wrote a large number of songs and poems for Gitanjali here.
    • It was also in this house that Tagore began translating the Gitanjali to English in 1912, for which he was awarded the Nobel Prize in Literature.

    Ancestral home of Bagha Jatin in Kushtia

    • Jatindranath Mukherjee, better known as ‘Bagha Jatin’ (tiger Jatin) was a revolutionary freedom fighter.
    • He was born in Kayagram, a village in Kushtia district, where his ancestral home is located.
    • Jatin acquired the epithet ‘Bagha’ after he fought a Royal Bengal Tiger all by himself and killed it with a dagger.
    • Jatin was the first commander-in-chief of the ‘Jugantar Party’ which was formed in 1906 as a central association dedicated to train revolutionary freedom fighters in Bengal.
    • This was the period when Bengal was seething with nationalist furore against Lord Curzon’s declaration of Partition of the province.
    • Inspired by Jatin’s clarion call, “amra morbo, jagat jagbe” (we shall die to awaken the nation), many young revolutionaries joined the brand of the freedom struggle that the Jugantar Party represented.

    His legend:

    • Jatin is most remembered for an armed encounter he engaged in with the British police at Balasore in Orissa.
    • They were expecting a consignment of arms and funds from Germany to lead an armed struggle when the British found out about the plot and raided the spot where the revolutionaries were hiding. A
    • lthough Jatin lost his life in the Battle of Balasore, his activities did have an impact on the British forces.
    • The colonial police officer Charles Augustus Tegart wrote about Jatin: “If Bagha Jatin was an Englishman, then the English people would have built his statue next to Nelson’s at Trafalgar Square.”

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  • Government Budgets

    An effective plan to monetise government assets

    | Economics | Mains Paper 3: Government Budgeting,Indian Economy

    The article discusses the government’s proposal to monetise assets and proposes the idea of an independent commission to carry out the task of monetisation.

    Roadmap for monetisation of asset: National Monetisation Pipeline

    • Finance Minister had introduced a roadmap for monetisation of asset in the Union Budget.
    • In the budget, the government proposed to launch a ‘National Monetisation Pipeline’ to assess the potential value of underutilised and unused government assets.
    • A number of countries including the United States, Australia, Canada, France and China have effectively utilised this policy.
    • In India too, the concept was suggested by a committee led by Vijay Kelkar on the roadmap for fiscal consolidation in 2012.
    •  The committee had suggested that the government start monetisation as a key instrument to raise resources for development.
    •  It asked the government to use these resources for financing infrastructure needs.

    Why monetisation

    • The global pandemic forced the government to increase spending.
    • Thus, total expenditure of the government has jumped to ₹34.50 trillion against the target of ₹30.42 trillion.
    • On the flip side, revenue of the government is shrinking.
    • As a result, total borrowing has increased by 2.3 times, from ₹7.96 trillion to ₹18.49 trillion.
    • An increase in borrowing also increases interest cost.
    • The ratio of interest payment to revenue receipts was 36.3% in 2019-20.
    • As per revised data, it has increased to 44.5% in the current fiscal year and is projected at an all-time high of 45.3% in 2021-22.
    • Almost half of the revenue is going towards servicing old debts. To revive the economy, capital expenditure is indispensable.

    National Infrastructure Pipeline

    • In this backdrop, the government has already launched the National Infrastructure Pipeline (NIP), with 6,835 projects in December 2019.
    • The project pipeline has been increased to 7,400.
    • The NIP has its own specific target and the government is committed to achieve it in the coming years.
    • It called for a major increase in funding.
    • For 2021-22, the government has proposed to spend ₹5.54 trillion, which is 34.5% higher than the budgeted amount of 2020-21.
    • Now, the government found that monetisation of government- and public sector-owned assets would be an important financing option for new infrastructure construction.

    Model for monetisation of asset: REITs

    • The government is looking at the Real Estate Investment Trusts (REITs) model for monetisation of assets.
    • Under REITs, the land assets are transferred to a trust providing investment opportunity for institutional investors.
    • The government has another option to lease or rent out the assets instead of going for monetisation.
    • The government expects monetisation will generate ₹2.5 trillion in non-debt capital revenue.
    • The objective of asset monetisation is to raise resources for future investment into the sector.
    • A pipeline monetisation plan for Indian Oil, GAIL, and Hindustan Petroleum has been drawn up by the government.
    • It is expected that the government will raise ₹0.17 trillion by selling stakes in these three companies.

    Consider the question “What is asset monetisation? What strategy should be followed by the government in the monetisation of assets?

    Conclusion

    To handle effectively the task of monetisation of assets, the government should constitute an independent commission clothed with requisite powers and staffed by professionals and researchers to formulate and implement its monetisation initiative.

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  • Financial Inclusion in India and Its Challenges

    Digital lending

    op-ed snap | Economics | Mains Paper 3: Indian Economy

    Digital lending has been on the rise in India. However, there are several concerns about the model. The article discusses these concerns and suggests the policy approach.

    3 digital lending models

    • Presently, there are three digital-lending models, seen through the regulatory-approach lens:
    • 1) Bank/NBFC-owned digital platforms operating under the direct regulatory purview of RBI.
    • 2) Fintech companies’ proprietary digital platforms, working in partnership with banks/NBFCs.
    • Being mere intermediaries, these platforms are not required to seek any registration with RBI, and are only indirectly regulated through RBI’s outsourcing guidelines applicable to Banks/NBFCs.
    • 3) Peer-to-peer (P2P) lending platforms, which usually involve the otherwise unregulated retail lenders.
    • RBI has mandated such platforms to seek registration as NBFC-P2P; thus, they are directly regulated by RBI.

    Issues with digital lending

    • The specific issues are unauthorised lenders, exorbitant rates of interest, use of coercive repayment methods, and non-consensual collection or use of user data.
    • These issues entail serious adverse implications for borrowers and have systemic implications, hampering the rise of legitimate fintech players.

    Steps taken

    • With a view to curb such practices, RBI, in 2020, issued a notification to Banks/NBFCs mandating additional disclosures/compliances, and an advisory to borrowers warning them against such platforms.
    • Following the notification, Google removed several such loan apps from its PlayStore.
    • The Digital Lenders’ Association of India (DLAI) also issued guidelines to help borrowers identify such unscrupulous platforms.
    • In the regulatory pipeline on this front is the report of the working group on digital lending, constituted by RBI in January 2021.

    Framing effective policy solutions

    • Given the significant contribution of legitimate fintech players, it is important to ensure that any policy solutions to address such issues do not impede the growth of such players.
    • The key to this lies in adoption of light-touch regulation, along with the effective implementation of the already proposed regulatory initiatives.
    • For instance, the primary cause of the rising supply of unauthorised lending platforms is the existing credit information asymmetry that genuine lenders face in respect of small borrowers.
    • Here, operationalising and on-scale implementation of RBI’s proposed ‘Public Credit Registry’ and the ‘Open Credit Enablement Network’ (an infrastructure protocol enabling digital low cost lending to small borrowers through access of consented data) would lead to increased participation of legitimate players and curb proliferation of unauthorised lenders.
    • Another foundation for framing effective policy solutions lies in leveraging the interdependence and impact of each individual constituent of the digital lending ecosystem, on other constituents.
    • Apart from lenders/platforms/borrowers, these constituents also include the digital lending industry associations, consent managers and technology developers.
    • Regulators and industry associations working together can provide the necessary foundations for addressing these issues.
    • Other solutions spear-headed by industry associations could be to establish ‘certification system’ based maintenance of a repository of lending platforms for easy identification of genuine players.
    • Similarly, on the data protection aspect, a structural solution through coordinated efforts of various digital lending constituents is required.

    Consider the question “Examine the factors aiding the growth of digital lending in India. What are the challenges the sector face? Suggest the measures to deal with these challenges.”

    Conclusion

    For the continued development of the Indian digital lending economy, it is important to implement policy solutions that adequately protect the borrowers from malpractices, while, at the same time, do not dampen innovation in this fast-evolving sector.

    Source:-

    https://www.financialexpress.com/opinion/soft-touch-regulation-for-digital-lending/2215702/

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  • Electoral Reforms In India

    Plea against sale of Electoral Bonds

    | Polity | Mains Paper 2: Governance, Transparency & Accountability, Citizens Charters

    CJI has agreed to urgently hear a plea to stay the sale of a new set of electoral bonds on April 1, before Assembly elections in crucial states such as West Bengal and Tamil Nadu.

    Note the denominations of the Electoral Bonds and the issuers.

    What is the news?

    • Data obtained through RTI has shown that illegal sale windows have been opened in the past to benefit certain political parties.
    • There is a serious apprehension that any further sale of electoral bonds before the upcoming State elections would further increase illegal and illicit funding of political parties through shell companies.

    What are Electoral Bonds?

    • The electoral bonds were introduced on January 29, 2018.
    • An electoral bond is like a promissory note that can be bought by any Indian citizen or company incorporated in India from select branches of the State Bank of India.
    • The citizen or corporate can then donate the same to any eligible political party of his/her choice.
    • The bonds are similar to banknotes that are payable to the bearer on demand and are free of interest.
    • An individual or party will be allowed to purchase these bonds digitally or through a cheque.

    How to invest?

    • The bonds will be issued in multiples of Rs 1,000, Rs 10,000, Rs 100,000 and Rs 1 crore (the range of a bond is between Rs 1,000 to Rs 1 crore).
    • These will be available at some branches of SBI.
    • A donor with a KYC-compliant account can purchase the bonds and can then donate them to the party or individual of their choice.
    • Now, the receiver can encash the bonds through the party’s verified account. The electoral bond will be valid only for fifteen days.
    • The 29 specified SBI branches are in cities such as New Delhi, Gandhinagar, Chandigarh, Bengaluru, Bhopal, Mumbai, Jaipur, Lucknow, Chennai, Kolkata and Guwahati.

    Issues with them

    • The plea has argued that the sale of electoral bonds had become an avenue for shell corporations and entities to park illicit money and even proceeds of bribes with political parties.
    • There are documents from the RBI and the Election Commission that say the electoral bonds scheme is detrimental to democracy.

    Govt.’s view: Anonymity of the donor matters

    • The government has defended the scheme in court, saying it allowed anonymity to political donors to protect them from “political victimisation”.
    • The Ministry of Finance’s affidavit in the top court had dismissed the Election Commission’s version that the invisibility afforded to benefactors was a “retrograde step” and would wreck transparency in political funding.
    • The government affidavit had said the clause of secrecy was a product of “well-thought-out policy considerations”.
    • It said the earlier system of cash donations had raised a “concern among the donors that, with their identity revealed, there would be competitive pressure from different political parties receiving donation”.

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  • FDI in Indian economy

    Insurance (Amendment) Bill, 2021

    | Economics | Mains Paper 3: Effects Of Liberalization On The Economy, Changes In Industrial Policy and their effects on Industrial Growth

    The Rajya Sabha has passed the Insurance Amendment Bill 2021 that increases the maximum foreign investment allowed in an insurance company from 49% to 74%.

    It is very intriguing to see several amendments in news these days. Isn’t it?

    Insurance Amendment Bill

    • The Bill seeks to amend the Insurance Act, 1938.
    • The Act provided the framework for functioning of insurance businesses and regulates the relationship between an insurer, its policyholders and its shareholders.
    • It also had provisions regarding the regulator (the Insurance Regulatory and Development Authority of India).

    Key highlights of the bill

    The Bill seeks to increase the maximum foreign investment allowed in an Indian insurance company.

    () Foreign investment

    • The Act allows foreign investors to hold up to 49% of the capital in an Indian insurance company, which must be owned and controlled by an Indian entity.
    • The Bill increases the limit on foreign investment in an Indian insurance company from 49% to 74%, and removes restrictions on ownership and control.
    • However, such foreign investment may be subject to additional conditions as prescribed by the central government.

    () Investment of assets 

    • The Act requires insurers to hold a minimum investment in assets which would be sufficient to clear their insurance claim liabilities.
    • If the insurer is incorporated or domiciled outside India, such assets must be held in India in a trust and vested with trustees who must be residents of India.
    • The Act specifies in an explanation that this will also apply to an insurer incorporated in India, in which at least: (i) 33% capital is owned by investors domiciled outside India, or (ii) 33% of the members of the governing body are domiciled outside India.
    • The Bill removes this explanation.

    Expected outcomes

    • More capital at dispense: The FDI limit increase is also expected to provide access to fresh capital to some of the insurance companies, which are struggling to raise capital from their existing promoters.
    • Better solvency: This would not only increase the solvency position for some insurers but would provide long-term growth capital for other companies to invest in newer technologies.
    • Insurance penetration: These technologies would not only help in managing losses but also in customer acquisition and thus insurance penetration.
    • Technological impetus: The additional funds could be used to invest in technology to adapt to the evolving customer needs like responsive service through digital platforms.

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  • Blockchain Technology: Prospects and Challenges

    Carbon footprint of Bitcoins

    | Science Tech | Mains Paper 3: Awareness in various sc and tech fields

    At a time when investors around the world are scrambling to follow the newest financial trend, very few are bothered about the carbon footprint that the cryptocurrency is leaving behind.

    If Bitcoin were a country, it would consume more electricity than Austria or Bangladesh!

    Footprint of Bitcoins

    • T A recent study by Alex de Vries, a Dutch economist, has shown that Bitcoins leave behind a carbon footprint of 38.10 Mt a year.
    • The annual carbon footprint of Bitcoins is almost equivalent to that of Mumbai, or to put it to a global perspective, as high as the carbon footprint of Slovakia.
    • A recent study has shown that Bitcoins leave behind a carbon footprint of 38.10 Mt a year.
    • According to a study titled ‘CO2 Emissions from Fuel Combustion (Highlights) 2017’, Mumbai’s yearly carbon footprint stands at 32 Mt, while Bangalore’s is at 21.60 Mt.
    • Vries has been able to create a Bitcoin Energy Consumption Index, one of the first systematic attempts to estimate the energy use of the bitcoin network.

    Relation between creating bitcoins and electricity required

    • Bitcoins are created by “mining” coins, for which high-tech computers are used for long hours to do complex calculations.
    • The more coins there are in the market, the longer it takes to “mine” a new one and in the process, more electricity is consumed.
    • As mining provides a solid source of revenue, people are willing to run power-hungry machines for hours to get a piece.
    • In 2017, the Bitcoin network consumed 30 terawatt-hours (TWh) of electricity a year.
    • As such, each bitcoin transaction roughly requires an average of 300kg of carbon dioxide – which is equivalent to the carbon footprint produced by 750,000 credit cards swiped.

    Calculating the carbon footprint

    • The major problem with mining Bitcoin is not its massive energy-consumption nature; it is the fact that most of the mining facilities are located in regions that rely heavily on coal-based power.
    • Earlier, determining the carbon impact of the Bitcoin network was difficult as tracking down miners was never easy.
    • As per the estimates of De Vries, roughly 60% of the costs of bitcoin mining is the price of the electricity used.
    • The price of a Bitcoin stood at $42,000 and at this rate; miners would be earning around $15 billion annually.

    Other impacts of Bitcoin mining

    • The effects of cryptocurrency mining often spill over to other parts of the economy.
    • With miners using high-tech computers for hours to formulate new blockchains, these machines do not last long.
    • Manufacturers of Bitcoin mining devices need a substantial number of chips to produce these machines and recently, during the Covid-19 crisis, the world had witnessed a shortage of these chips.
    • This shortage, now, in turn, started affecting the production of electric vehicles around the world.

    What can be done to control the carbon footprint?

    • The Dutch economist asks policymakers to follow the path shown by Québec in Canada, where a moratorium on new mining operations has been imposed.
    • Although Bitcoin might be a decentralized currency, many aspects of the ecosystem surrounding it are not.
    • Large-scale miners can easily be targeted with higher electricity rates, moratoria, or, in the most extreme case, confiscation of the equipment used.
    • Governments can also ban cryptocurrencies from digital asset marketplaces as it will affect the prices of a digital currency.

    India and the cryptocurrency

    • The country, at present, has around 75 lakh cryptocurrency investors who have together pooled over Rs 10,000 crore into Bitcoins and other such digital currencies.
    • The prices have surged by over 900%, courtesy of the worldwide boom – a single bitcoin that used to cost around Rs 4 lakh in 2020 now costs somewhere around Rs 41 lakh now.
    • FM Nirmala Sitharaman has said that the Centre will take a “calibrated approach” and leave a window open for experiments with blockchain technology.

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