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  • Destroy Geography in Prelims 2021 And Kick-start Geography for 2022 || One session can transform your Geography preparation

    Destroy Geography in Prelims 2021 And Kick-start Geography for 2022 || One session can transform your Geography preparation

    Dear aspirants,

    You may be gearing up for Prelims 2021 or beginning your preparation for UPSC 2022, either way, one free session with Vikash Sir can transform your Geography preparation completely. 

    click here to register now

    Here’s what you can expect from the webinar:

    1. Don’t feel confident in Geography for Prelims 2021: You can excel in 5 days by cracking the nerve of all topic – The physicals of Geography
    2. Live solution and answering techniques for 2015-2020 Geography questions.
    3. Want to start GS Geography Pre+Mains 2022? Crack the syllabus with Vikash sir
    4. Live answer writing session for UPSC mains on Geography
    5. Know your allies in the UPSC battle – Focused resource exploration of NCERT, G.C. Leong (Ch 15-25), and Maps (Static + Places in news)

    Do not miss this opportunity to destroy Geography in your exam and score above the cut-off. The webinar is absolutely free. 

    Date: 5/9/2021 (Sunday)

    Time: 7:00 P.M.

    Limited slots are available. Please register immediately.

    Click here to register now

  • [RSTV Archive] Circular Economy: Concept & Challenges

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

    With a growing population, rapid urbanization, climate change and environmental pollution, India must move towards a circular economy. An economic approach aimed at eliminating waste and the continual use of resources, the circular economy offers a new paradigm that emphasizes the need to take a comprehensive view of products and processes.

    In this article, we shall understand the concept of a Circular economy over a linear one and also look at challenges that lie ahead.

    Circular Economy: The Concept

    • A circular economy (also referred to as “circularity”)is an economic system that tackles global challenges like climate change, biodiversity loss, waste, and pollution.
    • Most linear economy businesses take a natural resource and turn it into a product which is ultimately destined to become waste because of the way it has been designed and made.
    • This process is often summarized by “take, make, waste”.
    • By contrast, a circular economy includes 3 R’s (Reduce, Reuse and Recycle), Refurbishment, Recover, and Repairing of materials.
    • Hence, Circular Economy focuses on increasing productivity in terms of more efficient utilization of resources.

    Principles of Circular Economy

    The concept is based on three main principles:

    #1 Minimization of waste and pollution

    The concept suggests the minimization of waste and pollution by reducing damages from economic activities.

    #2 Extension of the useful life of products and materials

    A circular economy aims to extend the useful life of the products and materials by creating the loops of the materials and products circulating in the economy. The goal is achieved through the active reuse, repair, and remanufacturing of the products and materials utilized in the economy.

    #3 Regeneration of natural systems

    The regeneration of natural systems is one of the fundamental concepts of a (circular) economy. It enhances natural capital and creates the necessary conditions for the regeneration of natural systems.

    Why is the global attention towards this?

    • Raw material supply: Circular Economy fulfills the need for raw materials required by industries, especially the manufacturing industries.
    • Input costs are minimized: The output produced by industries in a circular economy comes back to the industries in the form of input.
    • QCDF improvement: Ultimately, QCDF (Quality, Cost, Delivery, and Flexibility) and sustainability level of industries get improved.

    Applications of Circularity

    (A) Construction sector

    (B) Food and Agriculture

    (C) Transportation and Mobility

    Benefits offered by Circular Economy

    For Economy

    • Economic growth, as defined by GDP, would be achieved mainly through a combination of increased revenues from emerging circular activities.
    • It lowers the cost of production through the more productive utilization of inputs.  
    • These changes in input and output of economic production activities affect economy-wide supply, demand, and prices.
    • Its effects ripple through all sectors of the economy adding to overall economic growth.

    For Environment

    • It solves the problem of disposal of waste by converting waste into raw materials.
    • Besides the problem of solid waste management, the circular economy also solves the problem of air pollution, water pollution, and land pollution.

    For Individuals

    • Lower cost for products and services
    • Greater utility and choice
    • Reduced negative externalities, e.g. congestion, pollution
    • Increased Efficiency of the products

    Limitations to the circular economy models

    There is some criticism of the idea of the circular economy.

    • Linearity: Recovery and recycling of materials that have been dispersed through pollution, waste and end-of-life product disposal require energy and resources, which increase in a nonlinear manner as the percentage of recycled material rises
    • Waste management: Impossibility for waste producers to dissociate themselves from their waste and emphasizes the contingent, multiple, and transient value of waste.
    • Unavoidability: A key tenet of this principle is to consider waste as avoidable and worthy of interest.
    • Utopian concept:  Circular Economy analogy of a circle evokes endless perfection; the analogy of scats evokes disorienting messiness.
    • Capability: Proponents of the circular economy have tended to look at the world purely as an engineering system and have overlooked the economic part of the circular economy.
    • Invisible economy: Invisible hand of market forces will conspire to create full displacement of virgin material of the same kind.

    Need of the hour

    • India has a huge potential for reuse and recycling as less than 10-15% of the total waste generated goes into the recycling process.
    • Circular Economy will boost the reuse and recycling of materials.
    • To start with, sectors like construction, agriculture and vehicle and mobility can be considered as they are going to get the largest growth in coming years and thus India will be able to save more than Rs. 40 lakh Crore by 2030.

    India’s roadmap

    • ‘Digital India’: This mission contains a significant component of the recycling of electronic wastes. Swachh Bharat Mission is also about making wealth out of wastes.
    • Vehicle Scrappage Policy: This most recent reflects the perfect application of circular economy in Automobile sector.

    Way forward

    • Build circular economy knowledge and capacity: Taking maximum advantage of circular models requires decision-makers throughout the organisation to understand the benefits and take them into account in business decisions.
    • Innovate to create new products and business models and demonstrate their success: Businesses can foster innovation to address challenges, such as transition costs, more rapidly by collaborating with research institutions and by making information open source.
    • Collaborate with other businesses, policymakers, and the informal economy: Participation in pre-competitive collaboration in cross-industry and cross-value-chain networks can enable businesses to drive change that they cannot create on their own.
    • Invest in circular economy opportunities: While sizing and prioritizing the value of investment related to the circular economy opportunities outlined in this report requires detailed analysis, the circular economy offers attractive opportunities for both businesses and financial institutions.

    Conclusion

    • Resources in the world are finite. The circular economy will help the inefficient utilization of resources.
    • Political will is the key for implementation of Circular Economy.
    • Countries including India need to think about what they are taking from the environment and what they are contributing to it.
    • They also need to ensure that the material gets recycled or reused before it turns into waste.

  • Streak Daily Compilation of Questions & Videos – Sep 2, 2021

    Maintaining consistency is one of the biggest issues faced by IAS Aspirants. Streak’s initiative is to help Aspirants in their day-to-day preparation. You can follow the monthly, weekly, and daily timetables and continue this streak until you find yourself on the final list.

    Please register for Streak Initiative (free) through this link:- https://www.civilsdaily.com/course/streak-daily-initiative/

    You will get following study material:-

    1. Questions (PDF).
    2. RSTV/Yojana monthly notes (PDF).
    3. Burning issue (PDF).
    4. Subject specific (PDF).
    5. Mentor’s phone call for support & encouragement.

    _____________________________________________

    UPSC Daily Study Plan For 2021 and 2022 || STREAK – by Ravi Ranjan

    CSAT for UPSC Prelims || Free CSAT Sessions by Civilsdaily – by Ravi Ranjan

    UPSC PRELIMS-2021 || Current Affairs Based Most Probable Questions – by Sukanya Rana

    Q1) Which of the following can cause DNA damage and mutations in humans?

    a. Absorption of UV – A and UV – B

    b. Absorption of UV – B

    c. Absorption of UV – A

    d. Absorption of UV – A and UV – C

    Q2) Consider the following statements:

    1. The objective of the Minamata Convention is to protect human health and the environment from anthropogenic emissions and releases of mercury and mercury compounds.
    2. The treaty also addresses the direct mining of mercury, its export and import, its safe storage and its disposal once as waste.
    3. Dental fillings which use amalgam are also regulated under the convention.

    Select the correct option:

    a. 1 only

    b. 1 and 2

    c. 1 and 3

    d. 1, 2 and 3

    Q3) Consider the following statements about ozone hole over Arctic 

    1. It has reached a maximum extension of around 1 million sq km. 
    2. Recently, the German Aerospace Centre observed the closure of ozone holes mainly because of the reduced pollution levels due to covid-19 lockdown. 

    Which of the above statement(s) given above is/are correct? 

    a. 1 only 

    b. 2 only 

    c. Both 1 and 2 

    d. Neither 1 nor 2

    Q4) Consider the following statements with respect to Deepor Beel Lake 

    1. It is a permanent freshwater lake, in a former channel of the Brahmaputra River. 
    2. It is the only wetland in Assam designated as a site of importance under Ramsar Convention on Wetlands. 

    Which of the statement(s) given above is/are correct? 

    a. 1 only 

    b. 2 only 

    c. Both 1 and 2 

    d. Neither 1 nor 2

    Q5) Consider the following statements with respect to Galathea National Park 

    1. It is located on the island of Great Nicobar in the Andaman & Nicobar Islands.
    2. It is an iconic nesting site in India of the enigmatic Giant Leatherback, the world’s largest marine turtle. 
    3. The park is home to the indigenous Shompen community. 

    Which of the statements given above are correct? 

    a. 1 and 2 only 

    b. 1 and 3 only 

    c. 2 and 3 only 

    d. 1, 2 and 3

    UPSC PRELIMS-2021 || Most Probable Questions on Environment & Ecology – by Santosh Gupta

    Q1) Which of the following are regarded as ‘Ecosystem services’?

    1. Soil formation
    2. Nutrient cycling
    3. Habitat for wildlife
    4. Climate regulation
    5. Tourism 

    Select the correct answer using the code

    given below.

    a. 1 and 2 only

    b. 3, 4 and 5only

    c. 1, 2 and 3 only

    d. All of them

    Q2) Which of the following is/are the causes of coral bleaching in India?

    1. Excessive sedimentation in the reef
    2. ecosystem
    3. Excess nutrients like ammonia and
    4. nitrates entering the reef system
    5. Increased exposure to Ultraviolet (UV)
    6. Radiation
    7. Repeated EL- Nino and La- Nina

    Select the correct answer using the code given below.

    a. 1 and 3 only

    b. 1, 2 and 3 only

    c. 2 and 4 only

    d. All of them 

    Q3) Which of the following contribute in the Cultural eutrophication?

    1. Excessive use of fertilisers
    2. Untreated sewage
    3. Detergents containing phosphorus
    4. Discharge of industrial waste
    5. Acid rain 

    Select the correct answer using the code given below.

    a. 2, 3 and 4 only

    b. 1, 2 and 4 only

    c. 1 and 3 only

    d. All of them 

    Q4) Which of the following is/are the reasons for ozone depletion by polar stratospheric clouds?

    1. They convert free radicals of halogens to oxide which then reacts with ozone causing its depletion. 
    2. They remove gaseous nitric acid which reacts with oxides of halogens. 

    Select the correct answer using the code given below.

    a. 1 only

    b. 2 only

    c. 1 and 2 

    d. None of them

    Q5) Consider the following statements

    1. The acidified ocean water leads to reduction of sulphur which may lead to decreased cloud formation and raising global temperatures. 
    2. Ocean acidification occurs through the uptake of carbon dioxide (CO2) from the atmosphere only

    Which of the statement(s) given above is/are correct?

    a. 1 only

    b. 2 only

    c. 1 and 2 

    d. None of them

    Daily Dose: Complete Snapshots of Everyday News – by Shweta Mishra

  • Our banks are mispricing capital

    Context

    We have a situation in India today where the policy repo rate has been kept low. Banks are just about managing their non-performing assets (NPAs) and there is uncertainty in the air.

    Mispricing of capital by banks

    • There are different components of the cost of funds for banks, which are captured by the MCLR or marginal cost of funds-based lending rate.
    • For every ₹100 deposits that enter the banking system, there are different accompanying costs for the system.
    • These are deposit costs, provisioning for NPAs, return on assets (ROA or minimum profit), and the regulatory cost of cash reserve and statutory liquidity ratio balances (CRR and SLR) that perforce have to be held.
    • Adding these components, the basic cost works out to be 8.9%, which should be the rate at which incremental lending should take place.
    • By offering loans at a much lower rate of 7.23%, the system is actually mispricing capital.
    • It may be noted that deposit rates have been compressed to a very large degree and so this cost of 4% is very low.
    • Banks do have the advantage of getting free demand deposits and the right to offer differential rates on saving accounts.
    • Clearly, deposit-holders are subsidizing borrowers quite significantly.

    Issue of NPA provisioning in India

    • In the past couple of years, provisions as a proportion of NPAs have averaged 30-40%.
    • As NPAs increase, ideally, banks should load this cost onto their borrowers.
    • But that rarely happens in India. Instead, it is taken on banks’ books and gets reflected in their balance sheets.
    • If NPAs were kept in the region of, say, 4-5% of assets, it would have been possible to bring the cost down to 1.5% (from 3%), which would then have justified the present MCLR.

    Low return on assets (ROA)

    • The ideal return norm is 1%, which should be derived from all assets.
    • This does not happen for banks’ investment portfolios, and the value imputed here is only for loans.
    • The ROA for banks is abysmally low, as this aspect does not go into the pricing of products on the asset side.
    • Deposit costs have been driven down as savers don’t have a choice.
    • But a commensurate return does not materialize in the loan books of banks.

    Cost of regulations

    • The CRR component gets no compensation, while the SLR part earns around 6%, which is the average cost of fresh borrowing for the Union government.
    • While these numbers vary across banks, the minimum rate of 8.9% would hold for the system, which will vary by the level of NPAs.
    • The concept of linking benchmarks to certain loans further misprices fresh lending, as those loans are not ideal anchors to use, for they are being manually driven downwards by a deluge of liquidity in the system after the pandemic.
    • Excess liquidity of ₹4-7 trillion a day since April 2020 has meant banks have been placing funds costing them 8.9% with the central bank which gives them just 3.35%.
    • This is eventually borne by bank shareholders.

    Implications

    • With rather rigid policies on corporate lending to avert possible NPAs, banks have preferred lending to the retail segment, which is less risky, and small businesses, backed by the Centre’s credit guarantee.
    • The central bank’s government-bond buying programme to provide liquidity has been successful.
    • But in the absence of fructification of lending and a continuous rollover of funds at the reverse-repo window, Indian banks are bearing a negative carry trade, with a 6% return traded for just 3.35%.

    Conclusion

    Banks must price capital appropriately and not get overly influenced by arguments in favor of cheap credit or the fact that loans are cheaper in the West. We need to get practical on this issue.

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    Back2Basics: CRR and SLR

    • Cash Reserve Ratio, or popularly known as CRR is a compulsory reserve that must be maintained with the Reserve Bank of India.
    • Every bank is required to maintain a specific percentage of their net demand and time liabilities as cash balance with the RBI.
    •  The banks are not allowed to use that money, kept with RBI, for economic and commercial purposes.
    • It is a tool used by the apex bank to regulate the liquidity in the economy and control the flow of money in the country.
    • Statutory Liquidity Ratio, shortly called as SLR also an obligatory reserve to be kept by the banks, as prescribed securities, based on a certain percentage of net demand and time liabilities.
    •  It is used to maintain the stability of banks by limiting the credit facility offered to its customers.
    • CRR is maintained in the form of cash while the SLR is to be maintained in the form of gold, cash, and government-approved securities.

  • India must commit to net zero emissions

    Context

    The United Nations Climate Change Conference (COP26) in November in Glasgow is shaping up to be the most important climate meeting since the Paris Agreement in 2015.

    What are net-zero emissions?

    Carbon neutrality refers to achieving net-zero carbon dioxide emissions. This can be done by balancing emissions of carbon dioxide with its removal or by eliminating emissions from society.

    Increase in pace and scale of climate action

    • Over 50% of the global economy is already committed to net zero emissions by 2050.
    • Over 100 countries have already committed to net zero emissions by 2050, with more expected at COP26.
    • The pace and scale of climate action are only set to increase, with the recent IPCC report unequivocal on the need for urgent and stronger responses.
    • It is not only governments that are increasing climate action. The business world is too, not just to protect themselves against the risks of climate change but also to take advantage of the massive opportunities arising as the global economy shifts to net-zero emissions.

    Why India should commit to a net-zero target

    • National interest due to vulnerability: India itself has a national interest in ambitious global and national climate action.
    • It is among the most vulnerable countries to climate change and, therefore, should be among the more active against the threats.
    • Influence as a rising power: Second, as a rising power, India naturally seeks stronger influence globally.
    • Being an outlier on the global challenge facing our generation does not support this aim.
    • Drag on international diplomacy: India’s reluctance to commit to net-zero will become a significant drag on India’s international diplomacy.
    • This applies not just to key relationships like with the U.S., but also with much of the Group of 77 (G77) states, who are increasingly concerned to see climate action, and in multilateral groupings such as the United Nations and ASEAN-APEC.
    • Interconnected with the economy: There is no longer a trade-off between reducing emissions and economic growth.
    • For example, the U.K. has reduced emissions by over 40% and grown its economy by over 70% since 1990.
    • Solar energy costs have fallen 90% in recent years, providing the cheapest electricity in India ever seen.
    • Also, given the negative impacts, addressing climate change in India’s economic development is now central to success, not an added luxury to consider.
    • The transition of the global economy to net zero emissions is the biggest commercial opportunity in history.
    • In just the energy sector alone, an estimated $1.6 to $3.8 trillion of investment is required every year until 2050.

    India’s climate actions

    • India is set to significantly exceed its Paris Agreement commitment of reducing the emissions intensity of its GDP by 33-35% below 2005 levels by 2030.
    • Emphasis on renewable: India is impressing the world with its leading roll-out of renewable energy and target for 450GW by 2030, linked to its leadership on the International Solar Alliance and recent national hydrogen strategy.
    • Corporates: Indian corporates are also stepping up, with the Tata Group winning awards on sustainability, Mahindra committing to net-zero by 2040, and Reliance by 2035.
    • Notwithstanding reasonable arguments about historical responsibility, per capita emissions, and equity, India’s national interests in climate action are now engaged in ways that go significantly beyond waiting for donor support to drive ambition.

    The way forward: International cooperation

    • The world needs to work together for success in the form of stronger political engagement, policy support in areas of mutual challenge such as energy policy, carbon markets, and economic recovery.
    • Practical support and cooperation in areas like renewable energy and integrating it with the national grid, zero-emissions transport, decarbonising hard to abate sectors like steel, cement, and chemicals, and decarbonising agriculture offer significant scope to raise ambition.
    • As does working with India on innovative green financing for decarbonizing investment.

    Conclusion

    India’s tryst with destiny rests in its own remarkable hands, as it always has been. In a land where the earth is called mother, and Mahatma Gandhi, major religions, and the Constitution enshrine environmental care, commitment to net zero emissions by 2050 should almost be foretold.

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  • Destroy Geography in Prelims 2021 And Kick-start Geography for 2022 || One session can transform your Geography preparation

    Destroy Geography in Prelims 2021 And Kick-start Geography for 2022 || One session can transform your Geography preparation

    Dear aspirants,

    You may be gearing up for Prelims 2021 or beginning your preparation for UPSC 2022, either way, one free session with Vikash Sir can transform your Geography preparation completely. 

    click here to register now

    Here’s what you can expect from the webinar:

    1. Don’t feel confident in Geography for Prelims 2021: You can excel in 5 days by cracking the nerve of all topic – The physicals of Geography
    2. Live solution and answering techniques for 2015-2020 Geography questions.
    3. Want to start GS Geography Pre+Mains 2022? Crack the syllabus with Vikash sir
    4. Live answer writing session for UPSC mains on Geography
    5. Know your allies in the UPSC battle – Focused resource exploration of NCERT, G.C. Leong (Ch 15-25), and Maps (Static + Places in news)

    Do not miss this opportunity to destroy Geography in your exam and score above the cut-off. The webinar is absolutely free. 

    Date: 5/9/2021 (Sunday)

    Time: 7:00 P.M.

    Limited slots are available. Please register immediately.

    Click here to register now

  • Important Straits

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

    02 Sept 2021

    A strait is a naturally formed, narrow, typically navigable waterway that connects two larger bodies of water. Most commonly it is a channel of water that lies between two landmasses. Some straits are not navigable, for example, because they are too shallow, or because of an unnavigable reef or archipelago.

    1. Strait of Hormuz
    • It links the Persian Gulf (west) with the Gulf of Oman and the Arabian Sea (southeast).
    • On the north coast lies Iran, and on the south coast the United Arab Emirates and Musandam, an exclave of Oman. 
    • The strait is 35 to 60 miles (55 to 95 km) wide and separates Iran from the Arabian Peninsula.
    • It contains the islands of Qeshm (Qishm), Hormuz, and Hengām (Henjām) and is of great strategic and economic importance, especially as oil tankers collecting from various ports on the Persian Gulf must pass through the strait.
    • OPEC members Saudi Arabia, Iran, the UAE, Kuwait and Iraq export most of their crude via the Strait
    • Qatar, the world’s biggest liquefied natural gas (LNG) exporter, sends almost all of its LNG through the Strait
    • The UAE and Saudi Arabia have sought to find other routes to bypass the Strait, including building pipelines.

    2. Strait of Malacca

    • Strait of Malacca connects the Andaman Sea (Indian Ocean) and the South China Sea (Pacific Ocean).
    • Stretching about 800km, it is the longest straits in the world and facilitates not just shipping and the movement of people in the surrounding communities but is a confluence of trade, cultures, ideas, and knowledge between the East and West.
    • It runs between the Indonesian island of Sumatra to the west and peninsular (West) Malaysia and extreme southern Thailand to the east and has an area of about 25,000 square miles (65,000 square km).
    • The strait derived its name from the trading port of Melaka (formerly Malacca)—which was of importance in the 16th and 17th centuries—on the Malay coast.
    • As the link between the Indian Ocean and the South China Sea, the Strait of Malacca is the shortest sea route between India and China and hence is one of the most heavily travelled shipping channels in the world.
    • Singapore, one of the world’s most important ports, is situated at the strait’s southern end.
    • The global shift in economic power from the West to the East coupled with burgeoning trade, investments, and production in areas spanning the Indian and Pacific Ocean regions has given increasing importance to this region.

    3. Bab-el-Mandab

    • The Bab al-Mandab strait is the narrow waterway that separates the Arabian Peninsula from the Horn of Africa.
    • It links the Red Sea to the Gulf of Aden and the Indian Ocean.
    • At its narrowest point, the strait is only 29 km wide between Yemen on one side and Djibouti and Eritrea on the other.
    • It is a key strategic channel for commerce and trade, with an estimated 4 percent of global oil supply passing through it.

    4. Palk Strait

    • It connects the Bay of Bengal in the northeast with Palk Bay in the southwest.
    • The strait is 40 to 85 miles (64 to 137 km) wide, 85 miles long, and less than 330 feet (100 metres) deep.
    • It receives several rivers, including the Vaigai (India), and it contains many islands on the Sri Lankan side.
    • The Sethusamudram Ship Canal Project (SSCP) is a 167 km long shipping canal, and envisages the creation of a navigable canal from the Gulf of. Mannar to the Bay of Bengal to facilitate the movement of ships.
    • The Adam’s Bridge is a series of sand shoals created by sedimentation over a period of time.
    • All islands are made up of a calcareous framework of dead reef and sand.
    • In India, the Gulf of Mannar region in Tamil Nadu is one of the four major coral reef areas and the others are Gulf of Kutch in Gujarat, Lakhsadweep and Andaman and Nicobar islands.
    • With its rich biodiversity of over 4,000 species of various flora and fauna, part of this Gulf of Mannar between Rameswaram and Tuticoirin covering 21 islands and the surrounding shallow coastal waters was declared as a Marine National Park in 1986.

    5.Sunda Strait

    • It links the Java Sea (Pacific Ocean) with the Indian Ocean (south).
    • Sunda Strait, Indonesian Selat Sunda, is a channel, 16–70 miles (26–110 km) wide, between the islands of Java (east) and Sumatra.
    • The Sunda Strait is an important passage connecting the Indian Ocean with eastern Asia.
    • The strait stretches in a roughly northeast/southwest orientation, with a minimum width of 24 km (15 mi) at its northeastern end between Cape Tua on Sumatra and Cape Pujat on Java.
    • It is very deep at its western end, but as it narrows to the east it becomes much shallower, with a depth of only 20 m (65 feet) in parts of the eastern end.
    • It is notoriously difficult to navigate because of this shallowness, very strong tidal currents, sandbanks, and man-made obstructions such as oil platforms off the Java coast.
    • The strait’s narrowness, shallowness, and lack of accurate charting make it unsuitable for many modern, large ships, most of which use the Strait of Malacca instead.

    6.Mozambique Channel

    • It is located between the island nation of Madagascar on the east and Mozambique on the African mainland (west).
    • About 1,000 miles (1,600 km) long, it varies in width from 250 to 600 miles (400 to 950 km) and reaches a maximum depth of 10,000 feet (3,000 m).
    • The Comoro Archipelago marks the northern entrance, and the islands of Bassas da India and Europa lie in the south.
    • An important route for shipping in eastern Africa, it receives all major Madagascar rivers and has the ports of Mahajanga (Majunga) and Toliary (Tuléar) on the same coast.
    • Along the opposite coast are the mouth of the Zambezi River and the ports of Maputo (formerly Lourenço Marques), Moçambique, and Beira.
    • The Mozambique Current passes through the strait.

    7.Gibraltar Strait

    • It is a channel connecting the Mediterranean Sea with the Atlantic Ocean, lying between southernmost Spain and northwesternmost Africa.
    • It is 36 miles (58 km) long and narrows to 8 miles (13 km) in width between Point Marroquí (Spain) and Point Cires (Morocco).
    • It is one of the most significant global sea lanes because it provides a means of seaborne transit for shipping between the Atlantic and Mediterranean, and via the Suez Canal into the Indian Ocean and beyond.
    • After the English Channel, the Strait is the world’s busiest shipping lane.

    8. Bosphorus strait and Dardanelles strait

    • Bosphorus,also known as the Strait of Istanbul, is a narrow, natural strait and an internationally significant waterway located in northwestern Turkey.
    • The Bosporus connects the Black Sea with the Sea of Marmara, and, by extension via the Dardanelles, the Aegean and Mediterranean seas.
    • It is the world’s narrowest strait used for international navigation.
    • Dardanelles is a narrow, natural strait and internationally significant waterway in northwestern Turkey that forms part of the continental boundary between Europe and Asia, and separates Asian Turkey from European Turkey.
    • The Dardanelles connects the Sea of Marmara with the Aegean and Mediterranean Seas, while also allowing passage to the Black Sea by extension via the Bosphorus.
    • The Dardanelles is 61 kilometres (38 mi) long, and 1.2 to 6 kilometres (0.75 to 3.73 mi) wide, averaging 55 metres (180 ft) deep with a maximum depth of 103 metres (338 ft) at its narrowest point abreast the city of Çanakkale

    9. Yucatan Strait

    Joining seas/ Water Bodies : Gulf of Mexico and Caribbean Sea

    Location: Mexico-Cuba

    10. Mesina Strait  

    Joining seas/ Water Bodies : Mediterranean Sea

    Location: Italy-Sicily

    11. Otranto Strait

    Joining seas/ Water Bodies :Adriatic Sea & Ionian Sea

    Location: Italy-Albania

    12. Cook Strait 

    Joining seas/ Water Bodies :South Pacific Ocean

    Location:  New Zealand (North & South Islands)

    13. North Channel

    Joining seas/ Water Bodies :Irish Sea & Atlantic Ocean

    Location: Ireland-England

    14. Hudson strait     

    Joining seas/ Water Bodies : Gulf of Hudson & Atlantic Ocean

    Location: Canada

    15. Magellan strait   

    Join: Pacific and South Atlantic Ocean

    Location: Chile

    16. Makassar Strait

    Joining seas/ Water Bodies: the Java Sea & Celebes Sea

    Location: Indonesia

    17. Tsugaru Strait 

    Joining seas/ Water Bodies: Japan Sea and Pacific Ocean

    Location: Japan (Hokkaido-Honshu Island)

    18. Tatar Strait  

    Joining seas/ Water Bodies: Japan Sea & Okhotsk Sea

    Location: Russia (East Russia-Sakhalin Islands)

    19. Fovex Strait 

    Joining seas/ Water Bodies: South Pacific Ocean

    Location: New Zealand (South Island- Stewart Island)

    20. Formosa Strait  

    Joining seas/ Water Bodies: the South China Sea & East China Sea

    Location: China-Taiwan

    21. Taurus Strait

    Joining seas/ Water Bodies:Arafura Sea & Gulf of Papua

    Location: Papua New Guinea — Australia

    22. Bass Strait

    Joining seas/ Water Bodies: the Tasman Sea & South Sea

    Location: Australia

    23. Bering Strait

    Joining seas/ Water Bodies: the Bering Sea & Chukchi Sea

    Location: Alaska-Russia

    24. Bonne-Fasio Strait

    Joining seas/ Water Bodies: Mediterranean Sea

    Location: Corsica — Sardinia

    25. Davis Strait  

    Joining seas/ Water Bodies : the Baffin Bay & Atlantic Ocean

    Location: Greenland-Canada

    26. Denmark Strait 

    Joining seas/ Water Bodies: North Atlantic and the Arctic Ocean

    Location: Greenland-Iceland

    27. Dover strait  

    Joining seas/ Water Bodies: The English Channel & North Sea

    Location: England-France

    28. Florida Strait

    Joining seas/ Water Bodies: Gulf of Mexico and the Atlantic Ocean

    Location: USA-Cuba

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  • Gauging household income key for microfinance clients

    Context

    The Reserve Bank of India’s (RBI) recently released a Consultative Document on Regulation of Microfinance in June 2021.

    Consultative document makes household income a critical variable

    • Following the Malegam Committee Report, which is a decade old now, the current document looks to reassess and realign the priorities of the sector.
    • Some of the key regulatory changes proposed in the document take household income as a critical variable for loan assessment
    • Definition of microfinance: The definition of microfinance itself is proposed to mean collateral-free loans to households with annual household incomes of up to ₹1,25,000 and ₹2,00,000 for rural and urban areas respectively.
    • Household income assessment: The document requires all Regulated Entities to have a board-approved policy for household income assessment.
    • Cap on repayment: It caps loan repayment (principal and interest) for all outstanding loans of the household at 50% of household income.
    • Therefore, measuring household income accurately becomes critical for the effective implementation of these norms.

    Challenges in measuring the income of Low-Income-Household (LIH)

    • Seasonal and volatile: Low-Income Households (LIHs), who typically form the customer base for Microfinance Institutions (MFIs), often also have seasonal and volatile income flows. 
    • Measuring expenditure doesn’t reflect their income: Since income for LIHs is seasonal and volatile, there have been attempts to understand their inflows by measuring their expenditure.
    • But, given the rotational debts they avail to fund a consumption expenditure here and a loan repayment obligation there, expenditure also does not truly reflect the household’s income.
    • Not separate personal expenditure: Moreover, for most LIHs, their expenditure on income-related activity is not separate from their personal expenses.
    • Therefore, it is difficult to separate the household’s personal expenses from that of their occupational pursuits.
    • Given these complexities, we need to understand and accept that for the bulk of LIHs, household finance is not just personal family finance, but their business finance as well.

    3 ways to measure household income for microfinance client

    • Structured survey approach: A structured survey-based approach could be used by Financial Service Providers (FSPs) to assess a household’s expenses, debt position and income from various sources of occupation and seasonality of income.
    • Template-based approach: A template-based approach could be used wherein FSPs could create various templates for different categories of households (as per location, occupation type, family characteristics, etc.).
    • These templates could then be used to gauge the household income of a client matching a particular template.
    • Centralised database: FSPs could also form a consortium to collect and maintain household income data through a centralised database.
    • This would allow for uniformity in data collection across all FSPs and, over time, can be used to validate the credibility of any new client’s reported income.
    • Such a database would also enable FSPs to track the changes in household income over time.

    Way forward

    • Use technology: Finding cost-effective yet accurate ways of capturing this information becomes crucial.
    • Creating new technology to document and analyze cash flows of LIHs would not only facilitate credit underwriting but also innovation in the standard microcredit contracts through customized repayment schedules and risk-based pricing, depending on a household’s cash flows.

    Conclusion

    Eventually, an accurate assessment of household-level incomes would avoid instances of over-indebtedness and ensure the long-term stability of the ecosystem.

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  • Sri Lanka declares Economic Emergency

    Sri Lankan President has declared an economic emergency to contain soaring inflation after a steep fall in the value of the country’s currency caused a spike in food prices.

    Sri Lankan Economic Emergency

    • President Rajapaksa declared the state of emergency under the public security ordinance to prevent the hoarding of essential items, including rice and sugar.
    • The government has appointed a former army general as commissioner of essential services, who will have the power to seize food stocks held by traders and retailers and regulate their prices.
    • The military will oversee the action which gives power to officials to ensure that essential items, including rice and sugar, are sold at government-guaranteed prices or prices based on import costs at customs and prevent hiding of stocks.
    • The emergency move followed sharp price rises for sugar, rice, onions and potatoes, while long queues have formed outside stores because of shortages of milk powder, kerosene oil and cooking gas.
    • The wide-ranging measure is also aimed at recovering credit owed to State banks by importers.

    Why came such an emergency?

    • Sri Lanka, a net importer of food and other commodities, is witnessing a surge in COVID-19 cases and deaths which has hit tourism, one of its main foreign currency earners.
    • Partly as a result of the slump in tourist numbers, Sri Lanka’s economy shrank by a record 3.6% last year.
    • The Sri Lankan rupee has fallen by 7.5% against the US dollar this year.
    • The Central Bank of Sri Lanka recently increased interest rates in a bid to shore up the local currency.
    • According to bank data, Sri Lanka’s foreign reserves fell to $2.8 billion at the end of July, from $7.5 billion in November 2019.

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    Back2Basics: Financial Emergency in India

    • The President of India can declare the Financial Emergency on the aid and advise of the Council of Ministers.
    • She/ He has to be satisfied that a situation has arisen due to which the financial stability or credit of India or any part of its territory is threatened.
    • Article 360 gives authority to the President of India to declare a financial emergency.
    • However, the 44th Constitutional Amendment Act of 1978 says that the President’s ‘satisfaction’ is not beyond judicial review.
    • It means the Supreme Court can review the declaration of a Financial Emergency.

    Parliamentary Approval and Duration

    • A proclamation of financial emergency must be approved by both the Houses of Parliament within two months from the date of its issue.
    • A resolution approving the proclamation of financial emergency can be passed by either House of Parliament (Lok Sabha or Rajya Sabha) only by a simple majority.
    • Once approved by both the Houses of Parliament, the Financial Emergency continues indefinitely till it is revoked.
    • It may be revoked by the President anytime without any Parliamentary approval (but with the usual aid and advice).

    Effects of Financial Emergency

    • During the financial emergency, the executive authority of the Center expands and it can give financial orders to any state according to its own.
    • All money bills or other financial bills, that come up for the President’s consideration after being passed by the state legislature, can be reserved.
    • Salaries and allowances of all or any class of persons serving in the state can be reduced.
    • The President may issue directions for the reduction of salaries and allowances of: (i) All or any class of persons serving the Union and the judges of the Supreme Court and the High Court.

    Try this PYQ:

    With reference to the Constitution of India, prohibitions or limitations or provisions contained in ordinary laws cannot act as prohibitions or limitations on the constitutional powers under Article 142. It could mean which one of the following?

     

    (a) The decisions taken by the Election Commission of India while discharging its duties cannot be challenged in any court of law.

    (b) The Supreme Court of India is not constrained in the exercise of its powers by laws made by the Parliament.

    (c) In the event of grave financial crisis in the country, the President of India can declare Financial Emergency without the counsel from the Cabinet.

    (d) State Legislatures cannot make laws on certain matters without the concurrence of the Union Legislature.

     

    Post your answers here.

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  • China’s new Maritime Law

    China’s new maritime rules designed to control the entry of foreign vessels in what Beijing calls “Chinese territorial waters” take effect.

    What is the new Maritime Law?

    • Foreign vessels, both military and commercial, will be henceforth required to submit to Chinese supervision in “Chinese territorial waters,” as per the new law.
    • Operators of submersibles, nuclear vessels, ships carrying radioactive materials, and ships carrying bulk oil, chemicals, liquefied gas, and other toxic and harmful substances are required to report their detailed information upon their visits to Chinese territorial waters.
    • Vessels that “endanger the maritime traffic safety of China” will be required to report their name, call sign, current position and next port of call, and estimated time of arrival.
    • The name of shipborne dangerous goods and cargo deadweight will also be required.

    Impact of the move

    • The move is expected to have far-reaching consequences for the passage of vessels, both commercial and military, in the disputed South China Sea, East China Sea, and Taiwan Strait.
    • It is likely to escalate the existing tension with the US and its neighbors in the region.

    Why is this important?

    • South China Sea: The South China Sea, which lies between China, Taiwan, the Philippines, Brunei, Malaysia, Indonesia, and Vietnam, is of great economic importance globally.
    • Shipping: Nearly one-third of the world’s shipping passes through its lanes, and the waters house numerous important fisheries.

    Significance for India

    • The South China Sea is a critical route for India, both militarily and commercially.
    • It plays a vital role in facilitating India’s trade with Japan, South Korea, and ASEAN countries, and assists in the efficient procurement of energy supplies.
    • More than 55% of India’s trade passes through the South China Sea and Malacca Straits.
    • India is also involved in oil and gas exploration in offshore blocks in the margins of the Sea, which has led to standoffs with Chinese authorities.

    The actual row

    • The waters around China are hotly contested.
    • Under a “nine-dash line” map, China claims most of the South China Sea as its sovereign territory.
    • This claim is contested by its neighbors in the region and by the United States, which, though it has no claim in the Sea, backs the smaller nations in the fight against Chinese overreach.

    International position

    • Currently, international maritime activities are governed by an international agreement called the United Nations Convention on the Law of the Sea (UNCLOS).
    • China, India, and over a hundred other countries are signatories of UNCLOS (the US, significantly, is not).
    • Accordingly, states have the right to implement territorial rights up to 12 nautical miles into the sea.
    • The UNCLOS also states that all vessels have the right of “innocent passage” through this region – China’s new law violates this.

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