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Archives: News

  • PPP Investment Models: HAM, Swiss Challenge, Kelkar Committee

    Reviving the private investment in infrastructure

    Declining private investment in the infrastructure needs policy overhaul. The article suggests the changes in the policy and approach on the part of the government to achieve the sustainable 40 per cent private investment in the infrastructure. 

    Declining private investment in infrastructure

    Currently, private financing into the infrastructure sector has declined to around 20 per cent of the total funding.

    Reasons for the decline are-

    • 1) the crisis in the non-banking finance sector.
    • 2) the financial challenges faced by infrastructure companies.
    • 3) the inadequately developed Indian market for infrastructure financing.
    • The Economic Survey 2017-18 has assessed India’s infrastructure financing needs at $4.5 trillion by 2040.
    • Reviving private investment flows into infrastructure to around 40 per cent will be key to attaining this threshold.

    Actions need to be taken to revive the private investment in infrastructure

    • The Vijay Kelkar committee had put out a balanced report in 2015 on overhauling the PPP ecosystem, including governance reform, institutional redesign, and capacity-building.

    Ramping up private investments in infrastructure will need action on two fronts:

    • 1) Refreshing institutions and policies for channelling financing.
    • 2) Providing a stable, durable, and empowering ecosystem for private players to partner with government entities.

    1) Institutions and policies for channelling financing

    • Due to long-duration profitability cycles of infrastructure projects, successful PPP  requires stable revenue flow assurances and a settled ecosystem to investors over long periods.
    • This could be achieved means of policy stability, assurances possibly secured by law.
    • PPP contracts also need to provide for mid-course corrections to factor in uncertainties including utilisation patterns, as well as the creation of competing infra assets.
    • Government partners in PPP arrangements need to ensure that open-ended arrangement that might entail unforeseeable risk are minimised for the private investor, including aspects such as land availability and community acceptance.

    2) Institution and policies for financing

    • There is a need to change the culture and attitude towards the conjoining of government entities and private partners.
    • Kelkar committee has stated that there needs to be an approach of “give and take” and the Government should avoid a purely transactional approach.
    • Government should avoid trying to minimise risk to themselves by passing on uncertain elements in a project — like the land acquisition risk — to the private partner.
    • This attitudinal change can be achieved by amending the Prevention of Corruption Act to encompass modern-day requirements, including factoring in the need for government agents to take calibrated risks while engaging with the private sector.
    • The private partners also need to be incentivised to focus on project outcomes, with guard-rails in place to discourage rent-seeking behaviour.
    • In sum, risk avoidance by the public entity and rent-seeking by the private partner are the twin challenges that need to be carefully addressed.
    • On the regulatory front, a compelling need would be to promulgate a PPP legislation which can provide a robust legal ecosystem and procedural comfort.

    Consider the question “Declining private investment in the infrastructure has several implications for the economy. In ligh of this, examine the factor for such decline and suggest the measures to boost the private investment in the infrastructure.” 

    Conclusion

    After we emerge out of this pandemic, a focus area for public policy has to be the creation of a modern-day, sustainable and resilient infrastructure. . Designing a fresh approach and creating a stable policy environment that provides comfort and incentives to private investors will be key to attaining this goal.

  • Telecom and Postal Sector – Spectrum Allocation, Call Drops, Predatory Pricing, etc

    Television Rating Points (TRP) System and its loopholes

    Mumbai police are investigating the alleged manipulation of Television Rating Points (TRP) by an extremely right-wing opinionated news reporter.

    Try this question:

    Q.What do you mean by “TRP Journalism”? Discuss the loopholes in the present system of self-regulation in Indian media.

    What is TRP?

    • In simple terms, anyone who watches television for more than a minute is considered a viewer.
    • The TRP or Target Rating Point is the metric used by the marketing and advertising agencies to evaluate this viewership.
    • In India, the TRP is recorded by the Broadcast Audience Research Council (BARC) using Bar-O-Meters that are installed in televisions in selected households.
    • As on date, the BARC has installed these meters in 44,000 households across the country. Audio watermarks are embedded in video content prior to broadcast.
    • These watermarks are not audible to the human ear, but can easily be detected and decoded using dedicated hardware and software.
    • As viewing details are recorded by the Bar-O-Meters, so are the watermarks.

    What is BARC?

    • It is an industry body jointly owned by advertisers, ad agencies, and broadcasting companies, represented by The Indian Society of Advertisers, the Indian Broadcasting Foundation and the Advertising Agencies Association of India.
    • Though it was created in 2010, the I&B Ministry notified the Policy Guidelines for Television Rating Agencies in India on January 10, 2014, and registered BARC in July 2015 under these guidelines, to carry out television ratings in India.

    How are the households selected?

    • Selection of households where Bar-O-Meters are installed is a two-stage process.
    • The first step is the Establishment Survey, a large-scale face-to-face survey of a sample of approximately 3 lakh households from the target population. This is done annually.
    • Out of these, the households which will have Bar-O-Meters or what the BARC calls the Recruitment Sample are randomly selected. The fieldwork to recruit households is not done directly by BARC.
    • The BARC on its website has said that the viewing behaviour of panel homes is reported to BARC India daily. Coincidental checks either physically or telephonically are done regularly.

    Vigilance activities by BARC

    • Certain suspicious outliers are also checked directly by BARC India.
    • BARC India also involves a separate vigilance agency to check on outliers that it considers highly suspicious.
    • And as per the guidelines of the Ministry of Information and Broadcasting, these households rotate every year.
    • This rotation is in such a manner that older panel homes are removed first while maintaining the representativeness of the panel.
    • The Ministry guidelines further say that the secrecy and privacy of the panel homes must be maintained, and asked the BARC to follow a voluntary code of conduct.

    What are the loopholes in the process?

    • Several doubts have been raised on many previous occasions about the working of the TRP.
    • As per several reports, about 70% of the revenue for television channels comes from advertising and only 30% from subscriptions.
    • It is claimed that households were being paid to manipulate the TRP.
  • Air Pollution

    What is Graded Response Action Plan (GRAP)?

    The Supreme Court has directed Delhi and neighbouring States to implement air pollution control measures under “very poor” and “severe” category air quality of the Graded Response Action Plan (GRAP).

    Note the various measures under the GRAP under various grades of Air Quality.

    Graded Response Action Plan (GRAP)

    • In 2014, when a study by the WHO found that Delhi was the most polluted city in the world, panic spread in the Centre and the state government.
    • Approved by the Supreme Court in 2016, the plan was formulated after several meetings that the Environment Pollution (Prevention and Control) Authority (EPCA) held with state government and experts.
    • The result was a plan that institutionalized measures to be taken when air quality deteriorates.
    • GRAP works only as an emergency measure.

    How does it work?

    • As such, the plan does not include action by various state governments to be taken throughout the year to tackle industrial, vehicular and combustion emissions.
    • When the air quality shifts from poor to very poor, the measures listed under both sections have to be followed since the plan is incremental in nature.
    • If air quality reaches the severe+ stage, GRAP talks about shutting down schools and implementing the odd-even road-space rationing scheme.

    Measures taken under GRAP

    1)Severe+ or Emergency

    (PM 2.5 over 300 µg/cubic metre or PM10 over 500 µg/cu. m. for 48+ hours)

    • Stop entry of trucks into Delhi (except essential commodities)
    • Stop construction work
    • Introduce odd/even scheme for private vehicles and minimise exemptions
    • Task Force to decide any additional steps including shutting of schools

    2) Severe

    (PM 2.5 over 250 µg/cu. m. or PM10 over 430 µg/cu. m.)

    • Close brick kilns, hot mix plants, stone crushers
    • Maximise power generation from natural gas to reduce generation from coal
    • Encourage public transport, with differential rates
    • More frequent mechanized cleaning of road and sprinkling of water

    3) Very Poor

    (PM2.5 121-250 µg/cu. m. or PM10 351-430 µg/cu. m.)

    • Stop use of diesel generator sets
    • Enhance parking fee by 3-4 times
    • Increase bus and Metro services
    • Apartment owners to discourage burning fires in winter by providing electric heaters during winter
    • Advisories to people with respiratory and cardiac conditions to restrict outdoor movement

    4) Moderate to poor

    (PM2.5 61-120 µg/cu. m. or PM10 101-350 µg/cu. m.)

    • Heavy fines for garbage burning
    • Close/enforce pollution control regulations in brick kilns and industries
    • Mechanized sweeping on roads with heavy traffic and water sprinkling
    • Strictly enforce a ban on firecrackers

    Has GRAP helped?

    • The biggest success of GRAP has been in fixing accountability and deadlines.
    • For each action to be taken under a particular air quality category, executing agencies are clearly marked.
    • In a territory like Delhi, where a multiplicity of authorities has been a long-standing impediment to effective governance, this step made a crucial difference.
  • Foreign Policy Watch: India-Australia

    Deterrence in Australia-China Ties

    Australia and China’s cordial economic ties, established over the last three decades, have been soured this year over several points of friction.

    Try this question

    Q. Discuss the Quadrilateral Security Dialogue (or the Quad) and its purpose to establish “Asian Arc of Democracy”.

    Various points of friction

     (1) Australia’s Covid-19 inquiry

    • Australia’s appeal for an independent global inquiry into the origins and initial response of Covid-19 created fury in Beijing.
    • China alleged that Australia was teaming up with the US to spread “anti-China propaganda”.

    (2) Tension over journalists

    • The second diplomatic spat began with the detention of an Australian news anchor based in Beijing by the Chinese authorities after she was suspected of “criminal activities” that endangered China’s national security.
    • The Australian government said the journalist was held under “residential surveillance” at an unknown location.
    • Following this, the journalists sought refuge in Australian diplomatic missions, as they were not allowed to leave the country.

    (3) Ideological issues

    • The two countries have also been at loggerheads on other ideological issues previously too.
    • After reports of China keeping Uighur Muslims in state-run detention camps surfaced, Australia was swift to respond and expressed “deep concern” over the “human rights situation.”
    • Australia also supported Hong Kong’s autonomy cause. It decided to extend visas for Hong Kong residents.
    • In both instances, China responded staunchly and asked Australia to not meddle in its “internal matters.”

    (4) Economic dependence

    • China is Australia’s largest trading partner in terms of both exports and imports.
    • China’s share in Australia’s exports reached a record A$117 billion, or 38 per cent, in 2019, more than any other country.
    • Australian sectors like mining, tourism, education benefit from trade with China. China even imports products such as milk, cheese, wine and meat.
    • Over the years, it has been increasing its investment in Australian infrastructure and real estate products too.

  • New Species of Plants and Animals Discovered

    Species in news: Abortelphusa Namdaphaensis

    A crab specie was recently named after Arunachal Pradesh’s pristine forests on the edge of a small stream in Namdapha Tiger Reserve.

    Try this question from CSP 2020:

    Q.With reference to India’s Biodiversity, Ceylon frogmouth, Coppersmith barbet, Gray-chinned minivet and White-throated redstart are:

    (a) Birds
    (b) Primates
    (c) Reptiles
    (d) Amphibians

    Abortelphusa Namdaphaensis

    • The species, a small freshwater crab species, is a tribute to Namdapha, the largest protected area in the Eastern Himalayan Biodiversity Hotspot and the Abor Hills.
    • It is the first Gecarcinucidae to be found in the Himalayan region. Freshwater crabs are divided into two families/categories: Potamidae and Gecarcinucidae.
    • Both differ in abdomen shape and size. Potamidae species have a broad triangular abdomen, whereas, in Gecarcinucidae, the abdomen is mostly T-shaped.
    • While the Gecarcinucidae is found in the peninsular region, the Western Ghats and the Eastern Ghats, Potamidae are found in the Himalayan region.

    What makes it special?

    • The new species was found in a dry area, despite being a “freshwater” crab.
    • Freshwater crabs use their gills to absorb dissolved oxygen from water, but for food, breeding, and other purposes, they do not need water, and thus roam on the land near water.
    • The only reason it was possible to spot this on land is that the habitat around the water body has been preserved, untouched even.
    • Of the 125 freshwater crabs in India, the north-east accounts for 37. Arunachal Pradesh has 15 and Assam has 21.
    • The discovery highlights the potential of Arunachal Pradesh as one of the richest biodiversity hotspots in the country.

    Back2Basics: Namdapha

    • Namdapha (named a National Park in 1983) is known for its rich biodiversity and believed to be the rare area that harbours four large cats: tigers, snow leopards, clouded leopards and leopards.
    • The Abor Hills, bordered by the Mishmi Hills and Miri Hills, is historically known for the Abor Expedition.
    • It is a punitive expedition against the Abors in the North-Eastern Frontier Agency (which corresponds to parts of present-day Assam and Arunachal Pradesh) from October 1911 to April 1912.
    • The expedition had thrown up a plethora of new floral and faunal species, making it a zoological and botanical expedition as well.
  • Economic Indicators and Various Reports On It- GDP, FD, EODB, WIR etc

    Is Indian economy going through stagflation

    The article analyses the challenge faced by the Monetary Policy Committee in wake of a pandemic where falling growth is accompanied by the rising inflation.

    Dilemma with inflation targetting in pandemic

    • After the RBI’s adoption of a flexible inflation targeting framework from August 2020, it became even more focused on anchoring inflation and inflation expectations than ever before.
    • But the COVID pandemic has created a dilemma for the RBI.
    • Higher-than-anticipated inflation compelled the monetary policy committee (MPC) to hold policy rates despite the contraction in April-June GDP by 23.9 per cent.

     CPI vs. WPI: Which should be focused for inflation targeting?

    • Inflation-targeting framework based on one narrow nominal consumer price index (CPI)  has highlighted the challenges of conducting monetary policy in a severe growth shock scenario.
    • Inflation targeting is particularly challenging if it coincides with a sharp increase in headline CPI inflation as in the current period.
    • The current framework has led to an excessive and obsessive emphasis on point CPI estimates, at the cost of ignoring other indicators.
    • WPI core inflation, which essentially represents the manufacturing sector, is below 1 per cent but this does not find much mention.
    • This is strange because ultimately, the GDP deflator is calculated using both CPI and WPI inflation, with the latter having a greater weight.
    • This should be taken into consideration, while reviewing the existing monetary policy framework.
    • Given the composition of the current CPI basket, RBI’s monetary policy actions can at best impact only 41.35 per cent of the overall items.
    • Food and beverages, fuel items, gold and silver tobacco/intoxicants are items over which the RBI does not have any control.[58.65 per cent of the overall items]

    This is a different time

    • In normal times, a sustained increase in food and fuel prices can lead to a generalised increase in prices.
    • But this argument is not valid in the current context where a large number of people have lost their jobs or have seen fall in incomes.
    • In the current context, higher food and fuel prices would lead to reduction in expenditure on discretionary items.
    • So there will be only a relative shift in prices, without any fear of a generalised spiral, as households will not be in any position to demand higher wages to compensate for the increase in prices of food and fuel items.
    • Given the amount of slack in the economy, a scenario of sustained generalised increase in prices seems unlikely over the next 6-9 months.

    How to measure the success of inflation targeting

    • The CPI inflation targeting framework has helped to reduce inflation expectations during FY17-FY21 on average (9.3 per cent) compared to the previous period of FY12- FY16 (12.8 per cent).
    • However, the gap between inflation expectations and actual CPI inflation has remained unchanged at 5.1 per cent during these two periods.
    • The success of the inflation-targeting framework should not only be judged by the actual CPI inflation trend, but also in terms of gap between the two.

    How RBI performed without inflation targeting framework in the past

    • Even without any formal inflation-targeting framework, India had successfully managed to keep inflation low during FY02-FY06.
    • The RBI’s stance then was based on a multiple-indicator approach to conduct monetary policy.
    • First factor that made it possible was the increase in minimum support prices of food-grains was kept below 3 per cent on average.
    • Second factor was the composition of growth which was better during this period with investment growth surpassing consumption growth by several percentage points.
    • It is for this reason that CPI inflation remained contained at 4 per cent on average during this period even with 7 per cent real GDP growth.

    Risk of structural increase in inflation

    • In the current cycle, investment growth is likely to be impacted more severely than consumption growth.
    • Given the acute weakness in the demand side of the economy, persistent problems in the real estate sector, continued deleveraging of the NBFC sector and significant job losses structural increase in inflation is limited.

    What should be the policy response

    • The scope for rate cuts remains dim in the near-term.
    • But the RBI to remain active with a host of unconventional measures, which will likely include more proactive bond purchases to ensure that market interest rates do not rise significantly due to fiscal and market borrowing-related concerns.

    Conclusion

    Given the prevailing unholy mix of growth and inflation, it is tempting to categorise India’s economic situation as one of “stagflation”. But, in our view, it is too early to conclude decisively on this matter, given the fluid nature of things.


    Back2Basics: Inflation expectations

    • Inflation expectations are what people expect future inflation to be, and they matter because these expectations actually affect people’s behavior.
    • If people expect inflation to be lower and they act on those beliefs, they could, in fact, cause inflation to be lower.
    • If businesses expect lower inflation, they may raise prices at a slower rate; they don’t want the prices of their items to look too out of line with those of their competitors.
    • If workers expect lower inflation, they may ask for smaller wage increases.
    • The combination of businesses and workers acting in this manner will result in the economy experiencing lower inflation.

     

     

     

  • Labour, Jobs and Employment – Harmonization of labour laws, gender gap, unemployment, etc.

    Provisions for platform workers in the labour code and issues with them

    The article examines the provision made for the platform workers and the gig workers in the labour codes passed by the Parliament recently and explains the issues with it.

    Context

    • The three new labour codes passed by Parliament recently acknowledge platform and gig workers as new occupational categories in the making.

    Definition issue

    • The specific issues of working in factories, the duration of time needed on a factory floor, and associated issues are recognised as the parameters for defining an ideal worker.
    • The Code on Wages, 2019, tries to expand this idea by using ‘wages’ as the primary definition of who an ‘employee’ is.
    • Yet, the terms ‘gig worker’, ‘platform worker’ and ‘gig economy’ not defined with in connection with their wages.
    • The new Code on Social Security allows a platform worker to be defined by their vulnerability — not their labour, nor the vulnerabilities of platform work.

    Issues with the code

    • Since the laws are prescriptive, what is written within them creates the limits to what rights can be demanded, and how these rights can be demanded.
    • Platform delivery people can claim benefits, but not labour rights.
    • This distinction makes them beneficiaries of State programmes.
    • This does not allow them to go to court to demand better and stable pay, or regulate the algorithms that assign the tasks.
    • This also means that the government or courts cannot pull up platform companies for lapses[ ex. choice of pay, work hours etc].

    Benefits with no guarantee

    • In the Code on Social Security, 2020, platform workers are now eligible for benefits like maternity benefits, life and disability cover, old age protection, provident fund, employment injury benefits, and so on.
    • None of these are secure benefits.
    • This means that from time to time, the Central government can formulate welfare schemes that cover these aspects of personal and work security, but they are not guaranteed.
    • Actualising these benefits will depend on the political will at the Central and State government-levels and how unions elicit political support.
    • The language in the Code is open enough to imply that platform companies can be called upon to contribute either solely or with the government.

    Consider the question “What are the provisions for gig workers and platform workers in the new labour code? What are the issues with the provision?”

    Conclusion

    The ‘platform worker’ identity has the potential to grow in power and scope, but it will be mediated by politicians, election years, rates of under-employment, and large, investment- heavy technology companies that are notorious for not complying with local laws.

  • US policy wise : Visa, Free Trade and WTO

    H-1B visa amid the U.S. elections

    Trump administration’s two moves on the visa could have implication for both  India and corporate America. It needs to be seen whether the situations will remain the same after the Presidential elections in the U.S.

    Context

    • The U.S. President announced a hike in the salaries for those arriving in the U.S. on H-1B or skilled-worker visas.

    Implications for India

    • This hike is expected to cut visa applications by around 33%.
    • Trump administration has in its earlier executive actions banned the issuance of new skilled worker visas and new green cards.
    • India’s export of services to the U.S. is estimated to be at $29.6 billion in 2018, 4.9% more than in 2017, and 134% more than 2008 levels.
    • The U.S. has been issuing 85,000 H-1B visas annually, of which 20,000 are given to graduate students and 65,000 to private sector applicants, approximately 70% of which are granted to Indian nationals.
    • The visa issuance ban, combined with the mandatory salary floor soon to be instituted, will seriously hit U.S. imports of services from India.

    Criticism of the move

    • A federal judge in the Northern District of California blocked the enforcement of the new visa ban, ruling that the President “exceeded his authority” under the U.S. Constitution.
    • Google CEO hit out at the ban, saying, “Immigration has contributed immensely to America’s economic success, making it a global leader in tech, and also Google the company it is today.”

    Consider the question “What makes the H-1B visa important for India? What are the implications of the recent rise in the salary floor by the U.S. for the visa on India?”

    Conclusion

    While the ban and floor limit on salary come in the election milieu, India should prepare for the after election scenario.

  • Freedom of Speech – Defamation, Sedition, etc.

    Right to Protest

    The Supreme Court has found the indefinite “occupation” of a public road by the Shaheen Bagh protestors unacceptable.

    Right to Protest

    • The right to protest is the manifestation of the right to freedom of assembly, the right to freedom of association, and the right to freedom of speech.
    • The Constitution of India provides the right of freedom, given in Article 19 with the view of guaranteeing individual rights that were considered vital by the framers of the constitution.
    • The Right to protest peacefully is enshrined in Article 19(1) (a) guarantees the freedom of speech and expression; Article 19(1) (b) assures citizens the right to assemble peaceably and without arms.
    • Article 19(2) imposes reasonable restrictions on the right to assemble peaceably and without arms.

    What did the Court say?

    • The court said the protest, considered an iconic dissent mounted by mothers, children and senior citizens of Shaheen Bagh against the Citizenship (Amendment) Act, became inconvenient to commuters.
    • The judgment upheld the right to peaceful protest against the law but made it unequivocally clear that public ways and public spaces cannot be occupied, and that too indefinitely.
    • Democracy and dissent go hand in hand, but then the demonstrations expressing dissent have to be in designated places alone.
    • The present case was not even one of the protests taking place in an undesignated area but was a blockage of a public way which caused grave inconvenience to commuters.

    Reasonable restrictions do exist in practice

    • Fundamental rights do not live in isolation. The right of the protester has to be balanced with the right of the commuter. They have to co-exist in mutual respect.
    • The court held it was entirely the responsibility of the administration to prevent encroachments in public spaces.
  • Nobel and other Prizes

    Nobel Prize in Chemistry for CRISPR Technology

    French-American duo Emmanuelle Charpentier and Jennifer Doudna have been awarded the 2020 Nobel Prize for the chemistry of CRISPR, which allows scientists to ‘cut-paste’ inside a genetic sequence.

    Try this PYQ:

    Q.What is Cas9 protein that is often mentioned in news?

    (a) A molecular scissors used in targeted gene editing

    (b) A biosensor used in the accurate detection of pathogens in patients

    (c) A gene that makes plants pest-resistant

    (d) A herbicidal substance synthesized in genetically modified crops

    The CRISPR technology

    • The CRISPR is an acronym for Clustered Regularly Interspaced Short Palindromic Repeats, developed in the year 2012
    • CRISPR has made gene editing very easy and simple, and at the same time extremely efficient.
    • The technology works in a simple way — it locates the specific area in the genetic sequence which has been diagnosed to be the cause of the problem, cuts it out, and replaces it with a new and correct sequence that no longer causes the problem.
    • The technology replicates a natural defence mechanism in some bacteria that use a similar method to protect itself from virus attacks.

    Working of CRISPR

    • An RNA molecule is programmed to locate the particular problematic sequence on the DNA strand.
    • A special protein called Cas9, often described in popular literature as ‘genetic scissor’, is used to break and remove the problematic sequence.
    • A DNA strand, when broken, has a natural tendency to repair itself. But the auto-repair mechanism can lead to the re-growth of a problematic sequence.
    • Scientists intervene during this auto-repair process by supplying the desired sequence of genetic codes, which replaces the original sequence.
    • It is like cutting a portion of a long zipper somewhere in between and replacing that portion with a fresh segment.
    • Because the entire process is programmable, it has a remarkable efficiency and has already brought almost miraculous results.

    Uses of CRISPR

    • There are a whole lot of diseases and disorders, including some forms of cancer, that are caused by an undesired genetic mutation.
    • These can all be fixed with this technology. There are vast applications elsewhere as well. Genetic sequences of disease-causing organisms can be altered to make them ineffective.
    • Genes of plants can be edited to make them withstand pests, or improve their tolerance to drought or temperature.

    Ethical concerns

    • In November 2018, a Chinese researcher in Shenzen created an international sensation with his claim that he had altered the genes of a human embryo that eventually resulted in the birth of twin baby girls.
    • This was the first documented case of a ‘designer babies’ being produced using the new gene-editing tools like CRISPR.
    • What made matters worse was that the gene-editing was probably done without any regulatory permission or oversight.

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