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  • How reverse repo rate became benchmark interest rate in the Indian economy?

    Context

    • The Indian economy’s slowdown during 2018 and 2019 is becoming much worse in 2020 with the spread of COVID-19 and the stalling of almost all economic activity.
    • Like most other central banks in the world, the RBI, too, has tried to cut interest rates to boost the economy.
    • However, unlike in the past, when the RBI used its repo rate as the main instrument to tweak the interest rates, today, it is the reverse repo rate that is effectively setting the benchmark.

    We can expect a straight forward question based on this newscard.  For example:  “Critically examine the efficacy of reverse repo rate as benchmark interest rate in the Indian economy. “

    What are repo and reverse repo rates?

    • The repo rate is the rate at which the RBI lends money to the banking system (or banks) for short durations.
    • The reverse repo rate is the rate at which banks can park their money with the RBI.
    • With both kinds of the repo, which is short for repurchase agreement, transactions happen via bonds — one party sells bonds to the other with the promise to buy them back (or repurchase them) at a later specified date.
    • In a growing economy, commercial banks need funds to lend to businesses.
    • One source of funds for such lending is the money they receive from common people who maintain savings deposits with the banks. Repo is another option.

    Repo as benchmark

    • Under normal circumstances, that is when the economy is growing; the repo rate is the benchmark interest rate in the economy.
    • This is because it is the lowest rate of interest at which funds can be borrowed and, as such, it forms the floor rate for all other interest rates in the economy.
    • For instance, the interest rate consumers would have to pay on a car loan or the interest rate they will earn from a fixed deposit etc.

    What has changed now?

    • Over the last couple of years, India’s economic growth has decelerated sharply.
    • This has happened for a variety of reasons and has essentially manifested in lower consumer demand.
    • In response, businesses held back from making fresh investments and, as such, do not ask for as many new loans.
    • Add to this, the pre-existing incidence of high non-performing assets (NPAs) within the banking system.
    • Thus, the banks’ demand for fresh funds from the RBI has also diminished. This whole cycle has acutely intensified with the ongoing lockdown.

    Consequences: Rise in Liquidity

    • As such, the banking system is now flush with liquidity for two broad reasons.
    • On the one hand, the RBI is cutting repo rates and other policy variables like the Cash Reserve Ratio to release additional and cheaper funds into the banking system so that banks could lend.
    • On the other, banks are not lending to businesses, partly because banks are too risk-averse to lend and partly because the overall demand from the businesses has also come down.

    So, how has reverse repo become the benchmark rate?

    • The excess liquidity in the banking system has meant that banks have been using only the reverse repo (to park funds with the RBI) instead of the repo (to borrow funds).
    • As of April 15, RBI had close to Rs 7 lakh crore of banks’ money parked with it.
    • In other words, the reverse repo rate has become the most influential rate in the economy.

    What has the RBI done?

    • Recognising this, the RBI has cut the reverse repo rate more than the repo (see graph) twice in the spate of the last three weeks.
    • The idea is to make it less attractive for banks to do nothing with their funds because their doing so hurts the economy and starves the businesses that genuinely need funds.

    Will the move to cut reverse repo, work?

    • It all depends on the revival of consumer demand in India.
    • If the disruptions induced by the outbreak of novel coronavirus continue for a long time, consumer demand, which was already quite weak, is likely to stay muted.
    • Businesses, in turn, would feel no need to borrow heavily to make fresh investments.
    • If consumer demand revives quickly, the demand for credit will build up as well.

    Concerns of lower reverse repo

    • From the banks’ perspective, it is also important for them to be confident about new loans not turning into NPAs, and adding to their already high levels of bad loans.
    • Until banks feel confident about the prospects of an economic turnaround, cuts in reverse repo rates may have little impact.

    Back2Basics: Long Term Repo Operations (LTRO)

    • The LTRO is a tool under which the RBI provides 1-3 year money to banks at the prevailing repo rate, accepting government securities with matching or higher tenure as the collateral.
    • Funds through LTRO are provided at the repo rate.
    • But usually, loans with higher maturity period (here like 1 year and 3 years) will have a higher interest rate compared to short term (repo) loans.
    • According to the RBI, the LTRO scheme will be in addition to the existing Liquidity Adjustment Facility (LAF) and the Marginal Standing Facility (MSF) operations.
    • The LAF and MSF are the two sets of liquidity operations by the RBI with the LAF having a number of tools like repo, reverse repo, term repo etc.
  • SDR general allocation by IMF

    • Finance Minister has said that India could not support a general allocation of new Special Drawing Rights (SDR) by the IMF because it might not be effective in easing coronavirus-driven financial pressures.
    • FM Nirmala Sitharaman has stated that such a global liquidity boost by the IMF could produce potentially costly side-effects if countries used the funds for “extraneous” purposes.

    Details of SDR mechanism:

    What is SDR?

    • The SDR is an interest-bearing international reserve asset created by the IMF in 1969 to supplement other reserve assets of member countries.
    • To participate in this system, a country was required to have official reserves.
    • This consisted of a central bank or government reserves of gold and globally accepted foreign currencies that could be used to buy the local currency.
    • It is based on a basket of international currencies comprising the U.S. dollar, Japanese yen, euro, pound sterling and Chinese Renminbi.
    • It is not a currency, nor a claim on the IMF, but is potentially a claim on freely usable currencies of IMF members.
    • The value of the SDR is not directly determined by supply and demand in the market but is set daily by the IMF on the basis of market exchange rates between the currencies included in the SDR basket.

    Who can hold SDRs?

    • SDRs can be held and used by member countries, the IMF, and certain designated official entities called “prescribed holders”.
    • It cannot be held, for example, by private entities or individuals.
    • Its status as a reserve asset derives from the commitments of members to hold, accept, and honour obligations denominated in SDR.
    • The SDR also serves as the unit of account of the IMF and some other international organizations.

    General allocation of SDRs

    • An SDR allocation is a low-cost way of adding to members’ international reserves, allowing members to reduce their reliance on more expensive domestic or external debt for building reserves.
    • The IMF has the authority under its Articles of Agreement to create unconditional liquidity through “general allocations” of SDRs to participants in its SDR Department (currently, all members of the IMF) in proportion to their quotas in the IMF.

    The SDR Interest Rate

    • The interest rate on SDRs, or the SDRi, provides the basis for calculating the interest rate that is charged to member countries when they borrow from the IMF and paid to members for their remunerated creditor positions in the IMF.
    • It is also the interest paid to member countries on their own SDR holdings and charged on their SDR allocation.
    • The SDRi is determined weekly based on a weighted average of representative interest rates on short-term government debt instruments in the money markets of the SDR basket currencies, with a floor of five basis points.

    How many SDRs have been allocated so far?

    The general SDR allocation of August 28, 2009 is by far the biggest allocation to date:

    • SDR 9.3 billion was allocated in yearly installments in 1970–72.
    • SDR 12.1 billion was allocated in yearly installments in 1979–81.
    • SDR 161.2 billion was allocated on August 28, 2009.

    What happens to the SDRs once they are allocated?

    • The IMF’s SDR Department keeps records of members’ SDR allocations and holdings; the SDR Department is also the channel through which all transactions and operations involving SDRs are conducted.
    • Once allocated, members can hold their SDRs as part of their international reserves or sell part or all of their SDR allocations.
    • Members can exchange SDRs for freely usable currencies among themselves and with prescribed holders; such exchange can take place under a voluntary arrangement or under designation by the Fund.
    • IMF members can also use SDRs in operations and transactions involving the IMF, such as the payment of interest on and repayment of loans, or payment for future quota increases.

    Issues with new allocations

    • New reserves are allocated according to members’ quotas — or shares in the IMF.
    • A great deal of the benefit in 2009 went to advanced economies that didn’t need help in accessing markets or financing fiscal deficits.
    • If the same system is being used now, only 40 per cent of the total would be given to the emerging economies. That is not good enough.

    Other reasons

    • The possible extraneous purposes FM could be referring to maybe misuse of resources for terror funding or some such purpose by neighbours.
    • This may seem far-fetched to some, but is par for the course for the government.
    • The other possibility is that India is merely trying to prove its loyalty to the Trump administration.
    • India has already requested to access the US Fed’s currency swaps.
  • [pib] What is Big Bang Nucleosynthesis (BBN)?

    Indian researchers have discovered hundreds of Li-rich giant stars produced during BBN indicating that Li is being produced in the stars and accounts for its abundance in the interstellar medium.

    Most of the space based theories and missions are focussed on the formation of our solar system. BBN is the most basic auxillary among them.

    What is Big Bang Nucleosynthesis (BBN)?

    • BBN is the production of nuclei other than those of the lightest isotope of hydrogen during the early phases of the Universe.
    • Primordial nucleosynthesis is believed by most cosmologists to have taken place in the interval from roughly 10 seconds to 20 minutes after the Big Bang.
    • It is calculated to be responsible for the formation of most of the universe’s helium in various isotopic forms.
    • Essentially all of the elements that are heavier than lithium were created much later, by stellar nucleosynthesis in evolving and exploding stars.

    Lithium in space

    • Lithium (Li), is one of the three primordial elements, apart from Hydrogen and Helium (He), produced in the Big Bang Nucleosynthesis (BBN).
    • However, the present measurement of Li in the interstellar medium and very young stars is about 4 times more than the primordial value.
    • Thus, identifying sources of Li enrichment in our Galaxy has been a great interest to researchers to validate BBN as well as a stellar mixing process.
    • In general, stars are considered as Li sinks. This means that the original Li, with which stars are born, only gets depleted over stars’ life-time as Li burns at relatively very low temperatures.
  • [pib] What are Blazars?

    Researchers from the Indian Institute of Astrophysics (IIA), Bangalore have conducted the first systematic study on the gamma-ray flux variability nature on different types of Blazars.

    Strange terminologies from space-based studies are very important from prelims point of view.  We can expect a statement based question seeking to identify the term which is being referred to in the paragraph.

    What are Blazars?

    • At the center of most galaxies, there’s a massive black hole that can have mass of millions or even billions of Suns that accrete gas, dust, and stellar debris around it.
    • As these material falls towards the black hole, their gravitational energy gets converted to light forming active galactic nuclei (AGN).
    • A minority of AGN (~15%) emit collimated charged particles called jets travelling at speeds close to the speed of light.
    • Blazars are AGN whose jets are aligned with the observer’s line of sight.
    • Some blazars are thought to host binary black holes in them and could be potential targets for future gravitational-wave searches.

    Studying blazars

    • Blazars are the most luminous and energetic objects in the known universe were found to be emitters of gamma-rays in the 1990s.
    • It is only with the capability of Fermi Gamma-ray space telescope (launched in 2008) to scan the entire sky once in three hours one is able to probe the flux variability characteristics of blazars on a range of time scales.
    • Gamma-ray band is one of the bands of the electromagnetic spectrum on which there is limited knowledge on the flux variability of blazars.
    • Major problem while studying them is to localize the site for the production of gamma-rays.

    Significance

    • The study of blazars could provide clues to the processes happening close to the black hole, not visible through direct imaging.
    • Exploring blazars will provide key inputs to constrain the high energy production site as well as the high energy emission processes.
  • Matterhorn Mountain of the Swiss Alps

    Switzerland has expressed solidarity with India in its fight against the coronavirus pandemic by projecting the tricolour on the famous Matterhorn Mountain in the Swiss Alps.

    It has been long time since a question on global mountains/mountain ranges has not been asked in the prelims. Gear up for the uncertainty. Make a special sheet of geographical locations in news.

    Mt. Matterhorn

    • The Matterhorn is a mountain of the Alps, separating the main watershed and border between Switzerland and Italy.
    • It is a large, near-symmetric pyramidal peak in the extended Monte Rosa area of the Pennine Alps, whose summit is 4,478 metres.
    • It is one of the highest summits in the Alps and Europe (Mont Blanc being highest).
    • The four steep faces, rising above the surrounding glaciers, face the four compass points and are split by the Hörnli, Furggen, Leone/Lion, and Zmutt ridges.

    Its formation

    • The Matterhorn is mainly composed of gneisses originally fragments of the African Plate before the Alpine orogeny.
    • The mountain’s current shape is the result of cirque erosion due to multiple glaciers diverging from the peak, such as the Matterhorn Glacier at the base of the north face.

    Back2Basics: Alps mountain range

    • The Alps are the highest and most extensive mountain range system that lies entirely in Europe.
    • It stretches approximately 1,200 kilometres across eight Alpine countries (from west to east): France, Switzerland, Monaco, Italy, Liechtenstein, Austria, Germany, and Slovenia.
    • The mountains were formed over tens of millions of years as the African and Eurasian tectonic plates collided.
    • Extreme shortening caused by the event resulted in marine sedimentary rocks rising by thrusting and folding into high mountain peaks such as Mont Blanc and the Matterhorn.
    • Mont Blanc spans the French–Italian border, and at 4,809 m (15,778 ft) is the highest mountain in the Alps.
  • [Prelims Spotlight] Species in News

    Prelims Spotlight is a part of “Nikaalo Prelims 2020” module. This open crash course for Prelims 2020 has a private telegram group where PDFs and DDS (Daily Doubt Sessions) are being held. Please click here to register.

    Species in News


    20 April 2020 

    Trimeresurus Salazar

    • Salazar’s pit viper belongs to the genus Trimeresurus Lacépède comprising “charismatic venomous serpents with morphologically as well as ecologically diverse species”.
    • Pit vipers are venomous snakes distinguished by their heat-sensing pit organs between the eye and the nostril.
    • The name was inspired by Salazar Slytherin, the co-founder of J.K. Rowlings’ fictional Hogwarts School of Witchcraft and Wizardry.

    Himalayan Ibex

    IUCN/WPA Status:    Least Concern / Schedule I

    • Himalayan Ibex (Capra ibex sibirica) is widely found in arid and rocky mountain of Karakoram, Hindukush and Himalayas of Gilgit-Baltistan.
    • The males are characterized by heavy body, large horns, long bears while females have small body small horns.
    • The threats that Himalayan ibex face are the illegal hunting, human disturbance, habitat loss and competition for forage with domestic livestock.

    Red Panda

    IUCN Red List Status: Endangered

    • The red panda (Ailurus fulgens) is a mammal native to the eastern Himalayas and southwestern China.
    • Its wild population is estimated at fewer than 10,000 mature individuals and continues to decline due to habitat loss and fragmentation, poaching, and inbreeding depression.
    • Despite its name, it is not closely related to the giant panda
    • The animal has been hunted for meat and fur, besides illegal capture for the pet trade.
    • An estimated 14,500 animals are left in the wild across Nepal, Bhutan, India, China and Myanmar.
    • About 5,000-6,000 red pandas are estimated to be present in four Indian states – Arunachal Pradesh, Meghalaya, Sikkim and West Bengal.
    • The diminishing habitat is a major threat to the species which is a very selective feeder and survives on selected species of bamboos.

    About South Asia Wildlife Enforcement Network (SAWEN)

    • SAWEN is a Regional network is comprised of eight countries in South Asia: Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka.
    • It aims at working as a strong regional intergovernmental body for combating wildlife crime by attempting common goals and approaches for combating illegal trade in the region.
    • The South Asia region is very vulnerable to illegal traffic and wildlife crimes due to the presence of precious biodiversity and large markets as well as traffic routes for wildlife products in the south East Asian region.
    • The collaboration in harmonizing as well as enforcing the wildlife protection in the region is considered very important for effective conservation of such precious biodiversity.
    • India adopted the Statute of the SAWEN and became its formal member in 2016.

    Swamp wallaby

    IUCN Status: Least Concerned

    • The swamp wallaby is a small macropod marsupial of eastern Australia. It is likely the only mammal pregnant and lactating all lifelong.
    • Female wallabies and kangaroos have two uteri and two separate ovaries.
    • At the end of a pregnancy in one uterus, a new embryo develops in the other uterus.
    • Kangaroos and wallabies regularly have an embryo in the uterus, a young joey in the pouch, and a third semi-dependent young at foot, still drinking its mother’s milk.

    How it is different from Kangaroo?

    • In kangaroos, the new embryo is conceived a day or two after the previous birth.
    • In the swamp wallaby (Wallabia bicolor), the new conception happens one or two days before the previous joey is delivered.

    Eurasian Otters

    • IUCN Status: Near Threatened
    • Species in India: Smooth-coated, Asian small-clawed and Eurasian Otters
    • Habitat: Smooth-coated — all over India; Asian small-clawed — only in the Himalayan foothills, parts of the Eastern and southern Western Ghats; Eurasian — Western Ghats and Himalayas.
    • Diet comprises several small animals, mainly crabs and small fishes.
    • Lives in small packs, is mostly nocturnal, but can be diurnal in areas which are less disturbed.

    Thanatotheristes

    • Tyrannosaurs were one of the largest meat-eating dinosaurs to have ever lived, with very large and high skulls, and the best known among them is the Tyrannosaurus rex, celebrated in the Jurassic Park series.
    • The 79-million-year-old fossil that the researchers have found is the oldest tyrannosaur known from northern North America.
    • Thanatotheristes preyed on large plant-eating dinosaurs such as the horned xenoceratops and the dome-headed colepiochephale.
    • The research suggests that tyrannosaurs did not have one general body type; rather different tyrannosaur species evolved distinct body sizes, skull forms and other such physical features.
    • The fossil specimen is important to understand the Late Cretaceous period, which is the period when tyrannosaurs roamed the Earth.

    Flame-throated Bulbul

    IUCN status: Least Concern

    • The Flame-throated Bulbul is endemic to southern peninsular India where it is locally distributed in southern Andhra Pradesh, eastern Karnataka, Goa, Orissa, eastern Kerala and northern Tamil Nadu.
    • It prefer habitats like rocky, scrub-covered hills mostly in the Eastern Ghats and central peninsular India but also in some places in the Western Ghats.
    • It is a Schedule – IV bird under the Wildlife (Protection) Act, 1972.

    Archaea

    • Archaea (singular archaeon) are a primitive group of microorganisms that thrive in extreme habitats such as hot springs, cold deserts and hypersaline lakes.
    • These slow-growing organisms are also present in the human gut, and have a potential relationship with human health.
    • They are known for producing antimicrobial molecules, and for anti-oxidant activity with applications in eco-friendly waste-water treatment.
    • Archaea are extremely difficult to culture due to challenges in providing natural conditions in a laboratory setting.
    • As archaea are relatively poorly studied, very little is known about how archaea behave in the human body.
    • The organism has potential gene clusters that helps maintain the metabolism of the archaea to survive in extreme harsh conditions.

    Steppe Eagle

    • A lone endangered steppe eagle (Aquila nipalensis) has been sighted by a group of birdwatchers in a paddy field near Vijayawada.
    • The Steppe Eagle is a migratory raptor which has undergone extremely rapid population declines within all its range.
    • It breeds in Russia, Kazakhstan, and Mongolia during the winter season.
    • Steppe eagle is the second-largest migratory eagle species to India.
    • IUCN Status: It has moved from ‘Least Concern’ to ‘Endangered’

    IVF of White Rhinos

    • Researchers had created another embryo — the third — of the nearly extinct northern white rhino. This is seen as a remarkable success in an ongoing global mission to keep the species from going extinct.
    • IVF is a type of assisted reproductive technology used for infertility treatment and gestational surrogacy.
    • A fertilised egg may be implanted into a surrogate’s uterus, and the resulting child is genetically unrelated to the surrogate.
    • Some countries have banned or otherwise regulate the availability of IVF treatment, giving rise to fertility tourism.
    • Restrictions on the availability of IVF include costs and age, in order for a woman to carry a healthy pregnancy to term.
    • IVF is generally not used until less invasive or expensive options have failed or been determined unlikely to work.

    Types of Rhinos

    • The northern white is one of the two subspecies of the white (or square-lipped) rhinoceros, which once roamed several African countries south of the Sahara.
    • The other subspecies, the southern white is, by contrast, the most numerous subspecies of rhino, and is found primarily in South Africa.
    • There is also the black (or hook-lipped) rhinoceros in Africa, which too, is fighting for survival, and at least three of whose subspecies are already extinct.
    • The Indian rhinoceros is different from its African cousins, most prominently in that it has only one horn.
    • There is also a Javan rhino, which too, has one horn, and a Sumatran rhino which, like the African rhinos, has two horns.

    Greylag goose

    • Greylag goose, a migratory specie was recently spotted in Telangana
    • This is the third recorded sighting of the large-sized bird in Telangana, which makes it ‘eligible’ to be the latest addition to the State’s exhaustive list of birds.
    • As per scientific and accepted norms, a species has to be seen three different times in three different places, or by three independent observers, before it can be accepted as an addition to a State’s list.
    • The Greylag geese are common visitors to North India in winters, and are found mostly in wetlands there feeding generally on aquatic weeds and grass.
    • IUCN Status: Least Concerned.

    Chinese paddlefish

    • The Chinese paddlefish (Psephurus gladius) was an iconic species, measuring up to 7 m in length, dating back from 200 million years ago, and therefore swimming the rivers when dinosaurs ruled the Earth.
    • Its ancestral home was the Yangtze River.
    • It was once common in the Yangtze, before overfishing and habitat fragmentation — including dam building — caused its population to dwindle from the 1970s onwards.
    • Between 1981 and 2003, there were just around 210 sightings of the fish. The researchers estimate that it became functionally extinct by 1993, and extinct sometime between 2005-2010.

    Senna spectabilis

    • The Senna spectabilis species was planted as avenue trees in Wayanad. The vayal ecosystem (marshy land) of the forest area now has this plant in large numbers.
    • The spread is posing a major threat to the forest areas of the reserve, owing to its quick growth and coppicing character.
    • The tree species was found in nearly 10 sq km area of the 344.44 sq km sanctuary around five years ago.
    • The plant has started to invade the adjacent Bandipur and Nagarhole tiger reserves in Karnataka and the Mudumalai tiger reserve in Tamil Nadu.
    • Now, it had invaded to more than 50 sq km of the sanctuary Wayanad WLS.
    • A recent study of the Ferns Nature Conservation Society recorded the presence of the plant in 78.91 sq km area of the sanctuary.

    Locusts

    • Locusts are certain species of short-horned grasshoppers that have a swarming phase.
    • Swarming refers to a collective behaviour in which locusts aggregate together just like flocks of birds.
    • These insects are usually solitary, but under certain circumstances they become more abundant and change their behaviour and habits, becoming grouped.
    • They form bands of wingless nymphs which later become swarms of winged adults.
    • Both the bands and the swarms move around and rapidly strip fields and cause damage to crops.
    • The adults are powerful fliers; they can travel great distances, consuming most of the green vegetation wherever the swarm settles.

    Bar-headed goose

    • IUCN conservation status: Least Concern.
    • The Bar-headed geese (Anser Indicus) are found in central China and Mangolia and they breed there.
    • They start migration to the Indian sub-continent during the winter and stay here till the end of the season.
    • They return to their homes by crossing the Himalayan ranges.
    • Their migration has been a fascination for birders as they cross the Himalayas on one of the most high-altitude migrations in the world.

    Himalayan gold’

    • Caterpillar fungus (Ophiocordyceps Sinensis) is a fungal parasite of larvae (caterpillars) that belongs to the ghost moth.
    • It is endemic to the Tibetan Plateau, including the adjoining high Himalaya (3,200-4,500 metres above sea level).
    • It is locally known as Kira Jari (in India), Yartsagunbu (in Tibet), Yarso Gumbub (Bhutan), Dong Chong Xia Cao (China) and Yarsagumba (in Nepal).
    • In the Indian Himalayas, the species has been documented in the region from the alpine meadows of protected areas such as Nanda Devi Biosphere Reserve, Askot Wildlife Sanctuary, Kanchendzonga Biosphere Reserve and Dehan-Debang Biosphere Reserve.

    About Gangetic Dolphins

    • The Gangetic river dolphins can only live in freshwater, are blind and catch their prey in a unique manner, using ultrasonic sound waves.
    • These dolphins prefer deep waters and, as per WWF, they are distributed across seven states in India: Assam, Uttar Pradesh, Madhya Pradesh, Rajasthan, Bihar, Jharkhand and West Bengal.
    • Their numbers have dwindled in the last few decades mainly because of direct killing, habitat fragmentation by dams and barrages and indiscriminate fishing.

    Protection status

    • The Gangetic river dolphins were officially discovered in 1801 and are one of the oldest creatures in the world along with some species of turtles, crocodiles and sharks, a/c to the World Wildlife Fund (WWF).
    • They once lived in the Ganges-Brahmaputra-Meghna and Karnaphuli-Sangu river systems of Nepal, India, and Bangladesh, but are now mostly extinct from many of its early distribution ranges, as per WWF.
    • In 2009, the Gangetic dolphins were declared India’s National Aquatic animal during the first meeting of the erstwhile National Ganga River Basin Authority (NGRBA).
    • It is placed under the “endangered” category by the IUCN.
    • Additionally, the Gangetic dolphins have been included in Schedule -I of the Wildlife Protection Act, 1972, which means they have the highest degree of protection against hunting.
    • They are also one among the 21 species identified under the centrally sponsored scheme, “Development of Wildlife Habitat”.

    Trachischium apteii

    • It was found under fallen logs inside a thickly forested area of the Tally Valley Wildlife Sanctuary near the town of Ziro in Arunachal Pradesh during a field expedition by researchers in July 2019.
    • It belongs to a group of fossorial snakes that live mostly underground, and surface mainly during or after a heavy monsoon shower.
    • Due to the burrowing habits of species of this genus, snakes belonging to the group are seldom seen and hence remain poorly studied.
    • This could have been one of the reasons that the species had eluded the researchers.

    Pliosaurs

    • Over 150 million years ago, enormous reptiles swam the Jurassic oceans.
    • The largest aquatic carnivorous reptiles that have ever lived, they are often dubbed “sea monsters”.
    • Scientifically, they are placed in the suborder Pliosauroidea, whose members are called pliosaurs.
    • Interest in these giants has been revived with the recent discovery of their bones in a cornfield in the Polish village of Krzyzanowice. Remains of pliosaurs are rare in Europe.

    What makes them special?

    • They measured over 10 metres in length and could weigh up to several dozen tons.
    • They had powerful, large skulls and massive jaws with large, sharp teeth.
    • Their limbs were in the form of fins.

    Swietokrzyskie Mountains

    • The Swietokrzyskie Mountains are a mountain range in central Poland.
    • In the Jurassic era, the Swietokrzyskie Mountains area is believed to have been an archipelago of islands, where there were warm lagoons and shallow sea reservoirs, home to the marine reptiles discovered by the palaeontologists.
    • The locality where the remains were discovered is considered to be rich in the fossils of coastal reptiles. Researchers now hope to find more remains in the coming months.

     


  • Time for govt, RBI to rethink bank architecture

    To deal with the damage inflicted by the corona crisis on the economy, both the RBI and the government are planning various monetary and fiscal measures. In its latest measures, the RBI has further reduced the reverse repo rate. This article discusses the impact of these measures and explains why the first round of measures failed in achieving the desired result.

    What was announced in the second round of policy measures by the RBI?

    • RBI reduces the interest on money banks keep in the central bank (reverse repo down by 25 basis points).
    • RBI gives ₹50,000 crores to banks through targeted long-term repo operations or TLTRO 2.
    • And another ₹50,000 crores to Small Industries Development Bank of India (Sidbi) and National Bank for Agriculture and Rural Development (Nabard) to lend to microfinance institutions (MFIs) and non-banking financial companies (NBFCs).

    Banks not transmitting the money

    • Banks globally have a problem.
    • They are not transmitting the money that central banks are providing to businesses that need the money.
    • Imagine that the world has been put into a business coma as we wait for the pandemic to recede.
    • Money to pay rents, interest and salaries is needed by the business to stay alive during this period and banks are showing reluctance to step in.
    • Firms and tiny entrepreneurs need to borrow to stay afloat.
    • Banks typically lend to the larger part of the market and NBFCs and MFIs to the rest—they provide the last mile that banks do not.

    Measures by the RBI to increase the money supply in the market

    • The US Fed buying bonds directly: The US Federal Reserve has taken to buying corporate bonds directly rather than through banks.
    • RBI has not gone that far, but is using its firepower to nudge banks to lend to those who are credit-worthy and who desperately need the money.
    • It has done two things to facilitate this.

    What reduction in Reverse Repo rate by the RBI means?

    • What is reverse repo rate? This is the rate at which banks lend to the central bank—they keep their surplus money with the RBI and get some interest on it.
    • Banks borrow from RBI at the repo rate, which is 4.4% right now.
    • A few weeks ago, the central bank had reduced the reverse repo by a larger percentage than the repo to decrease the incentive to banks to keep money with RBI.
    • But that had a limited impact as on 15 April, banks still had almost ₹7 trillion with the RBI under this window.
    • In the second round, RBI has cut the reverse repo by another 25 basis points to 3.75% to increase the difference between the borrowing rate and the lending rate.
    • What would be the impact of the second reduction in the reverse repo? The RBI is hoping that this would make banks lend to firms, rather than keeping their money safe with RBI.
    • The difference between the rate of borrowing and lending is now 65 basis points.

    An issue of monetary policy transmission is a recurring one. The RBI always try to ensure the transmission but there are several factor that prevent it. Make note of these factors.

    Risk aversion of the banks

    • Banks are displaying deep risk aversion—the desire to keep their capital safe rather than risk investing in investment-worthy bonds.
    • The first round of money put into the system through TLTRO 1.0, brought ₹1 trillion.
    • TLTRO is long-term (one-to-three years) funding to banks at the repo rate or a short-term rate.
    • TLTRO money didn’t reach small and medium firms: Banks took the cheap loan and lent to high-rated public sector units (PSUs) and AA-plus firms—essentially entities who had enough liquidity.
    • The money did not find its way to smaller and medium firms, NBFCs and MFIs—entities that actually reach the last mile.
    • RBI has put another ₹50,000 crores as part of TLTRO 2.0.
    • Banks can only get this money if they lend to NBFCs and MFIs.
    • For A and A-minus (these are still investment-worthy) bonds issued by firms in these sectors, banks stand to get a return of between 10-14%.
    • Banks are borrowing at 4.4% and have the option to lend at a multiplier.
    • That is the incentive given by the RBI to get money down the pipeline.
    • Banks stand to lose 65 basis points if they seek the safety of money with the RBI or stand to gain almost 6-10 percentage points in interest if they lend.
    • It remains to be seen if banks take this nudge and begin lending to lower than the highest safety bonds.

    Refinance to three institutions

    • Another ₹50,000 crores is being provided as a refinance to three institutions-Sidbi, Nabard and National Housing Bank.
    • These banks reach the small-scale firms, rural sector, housing finance firms, NBFCs and MFIs.
    • Again, this should help money reach the last mile.
    • Clearly, there is too much competition at the top end of the market—everybody wants the safe paper and deals.

    The UPSC could ask a direct question with reference to the issue of policy transmission and how it is a serious challenge in crisis such as Covid -19. So, following are some suggestions to deal with this issue.

    Way forward

    • Rethink the bank architecture: With transmission, or the liquidity given by the central bank not going down the line, maybe this is a good time for the government and the RBI to rethink its bank architecture.
    • Develop bond a corporate bond market: There is very little action at the middle and lower end of the market. The development of a robust corporate bond market will help.
    • Early alarm system: The setting up of an early alarm system as proposed by the Financial Resolution and Deposit Insurance (FRDI) Bill to prevent a financial firm failure that takes the whole system down would be a step in the right direction.

    Back2Basics: What is the transmission of monetary policy?

    • Monetary transmission refers to the process by which a central bank’s monetary policy signals (like repo rate) are passed on, through the financial system to influence the businesses and households.
    • There are many monetary policy signals by the RBI; the most powerful one is the repo rate.
    • When repo rate is changed, it brings changes in the overall interest rate in the economy as well.
    • As a result of a decrease in repo rate, the interest rate on loans by banks also changes and this encourages consumption and investment activities of businesses and households.
    • In an economy, both consumption and investment are often financed by borrowings from banks.
    • As the repo rate brings changes in market interest rate, the repo rate channel is often referred to as interest rate channel of monetary transmission.
  • [Burning Issue] Success stories in handling COVID-19 crisis

     

     

    What would happen once lockdown in India is lifted?

    • India faces a similar choice as that of Goldilocks with respect to the COVID-19 pandemic, and the timing of when to ease out the nationwide lockdown.
    • Ease it out too early, and the disease could rapidly spread, wiping out the hard-won gains from the 21-day quarantine.
    • Ease out too slow, and the continued lockdown could wreak havoc on India’s economy, potentially causing permanent damage and losing more lives from economic hardship than from the disease.

     

     

    What then is the right time to ease out the lockdown? This question can be answered after studying this Burning Issue.

     

    Context

    • The so-called sudden outbreak of a novel Coronavirus that began in the Chinese city of Wuhan has rocked the world. Now, infections have been confirmed in almost every country.
    • With crumbling health infrastructure due to overburden, India’s preparedness for handling this epidemic has become a major challenge.
    • The world along with India being no exception has responded with extraordinarily aggressive measures such as phased lockdowns, Bhilwara Model, Pathanamthitta Model, Taiwan model etc.
    • The success of these models is attributed to various best practices which are were implemented days before the thought of nationwide lockdown was incepted.

    An old African proverb says, “An ant can kill an elephant.” This effectively seems true in the current COVID-19 context. While the contagion is ravaging economies, people and livelihoods globally, governments — rich and poor — are gasping for an effective coping strategy.

    There are handfuls of success stories of “Coronavirus Slayers” who have been courageously fighting the pandemic and have emerged successful.

     

    Various models for COVD-19 containment

    (Indian Models)

    1) The Bhilwara Model

    • Rajasthan’s Bhilwara could have become the corona epicentre for the country had it not followed a stringent strategy, courtesy to IAS officer Tina Dabi (AIR 1, 2015) and her pro-active team.
    • The “Bhilwara model” of tackling COVID-19 cases involves, simply, “ruthless containment”.

    What is this ‘ruthless containment’ model about?

    • It refers to the steps taken by the administration in Rajasthan’s Bhilwara district to contain the disease, after it emerged as a hotspot for coronavirus positive cases. It can be summarized as-
    1. District isolation
    2. Aggressive screening in the city and rural parts
    3. Quarantine and isolation wards
    4. Rigorous monitoring

    What were the earliest measures adopted?

    • The measures taken by the state govt. included imposing a curfew in the district which also barred essential services, extensive screening and house-to-house surveys to check for possible cases.
    • It went for detailed contact tracing of each positive case so as to create a dossier on everybody they met ever since they got infected.

    What did the administration do as part of the containment strategy?

    • The administration backed up the surveys by imposing a total lockdown on the district, with the local police ensuring strict implementation of the curfew.
    • Intense contact tracing was carried out of those patients who tested positive, with the Health Department preparing detailed charts of all the people whom they had met since being infected.
    • The state took the help of technology, using an app to monitor the conditions of those under home quarantine on a daily basis along with keeping a tab on them through GIS.
    • The patients were treated with hydroxychloroquine (HCQ), Tamiflu and HIV drugs.

    Groundwork

    • Within three days of the first positive case, the district health administration in Bhilwara constituted nearly 850 teams and conducted house-to-house surveys at 56k houses and of 280k people.
    • Thousands were identified to be suffering from influenza-like illness (ILI) symptoms and were kept in-home quarantine.

    Success:

    Bhilwara which was the first district in Rajasthan to report the most number of COVID cases has now reported only one positive case since March 30.

     

    2) The Agra Model

    • Agra was the first identified cluster in India and continues to have one of the highest district-wise caseloads.
    • The “Agra model” followed a localised yet massive combing operation for contacts, carried out by the district administration and Integrated Disease Surveillance Programme personnel.
    • It worked on war front with devised electronic survey including smart city control centre, drones, CCTVs etc.

    Various measures taken

    • The State, District administration and frontline workers coordinated their efforts by utilizing their existing Smart City Integrated with Command and Control Centre (ICCC) as War Rooms.
    • Under the cluster containment and outbreak containment plans, the district administration identified epicentres, the delineated impact of positive confirmed cases on the map and deployed a special task force as per the micro plan made by the district administration.
    • The hotspots were managed through an active survey and containment plan.
    • The area was identified within a radius of 3 Km from the epicentre while 5 Km buffer zone was identified as the containment zone.

    Massive scale of monitoring

    • In the containment zone, Urban Primary Health Centres were roped in.
    • Health workers including ANMs/ASHA/AWW reached out to 9.3 lakh of people through household screening.
    • Additionally, effective and early tracking of first contact tracing was thoroughly mapped.

    Success:

    The Agra model is important because it has proved effective in areas of high case density, which are being referred to as “hotspots”. Agra was also the earliest reference to community transmission.

     

    3) The Pathanamthitta or Kerala Model

    • Use of technology has been the hallmark of the Pathanamthitta model in Kerala.
    • The district saw its first cases in early March when a three-member Italy-returned family ended up infecting several relatives while socializing with them. The count would eventually go up to 16.

    How it differs from Agra Model?

    • Border sealing and contact tracing happened here too.
    • But more than just screening contacts, every person who had entered the district was screened and a database created so that they could be easily reached at short notice.

    Self-reporting by people

    • Graphics were created showing the travel route of the positive cases and publicized.
    • This helped in self-reporting. As people realized from the route map that they had indeed come in contact with a COVID-19 positive person, many walked up to be screened or treated.

    Intensive use of technology

    • Those under quarantine were checked daily on phone thorough a call centre even as 14 teams of health workers monitored some 4,000 people who had entered the district before its sealing.
    • There was also an app — Corona RM — designed by a few engineering students.
    • Those under home quarantine were monitored through this app as their whereabouts could be tracked and if they broke quarantine that could be immediately detected through the use of GP.

    Success:

    The growth of new cases has slowed down in Kerala, with six of the last 10 days witnessing a single-digit rise. This success of Kerala is being attributed to its “prompt response” to its past “experience (of Nipah) and investment” in health emergency preparedness.


     

    Global Successes

     

    1) Taiwan Model of Total Healthcare Management

    • Located less than 150 kilometres from the original viral source – China – Taiwan has seen far fewer cases of the coronavirus in the past month, with a much lower infection rate.
    • It is also worth noting the practices utilized by Taiwan’s hospitals as they seek to curb the virus and protect patients and medics.

    Following were the not so exceptional measures which helped Taiwan authorities contain coronavirus:

    Smaller staff groups

    • One of the early steps taken was the reduction of the workgroup sizes within medical facilities.
    • This reduces the risk of a community spread within the hospital emerging from infected patients being treated.

    Traffic control in hospitals

    • Hospitals were establishing separate entrances and exits for in- and out-patients to help prevent the spread of infection via regular hospital traffic.
    • In effect, hospital entry began to resemble airport customs, with visitors passing through a temperature checkpoint and showing IDs before admittance.

    Maintaining a high bed-per-capita ratio

    • Many countries have found that they do not have nearly enough hospital beds to care for patients suffering from a highly infectious disease like COVID-19.
    • In response, Taiwan has nearly 1,000 negative pressure isolation rooms (an isolation technique used in hospitals to prevent cross-contamination from room to room) available, with the capacity to add significantly more through room reconfigurations.
    • This is a remarkably high number, given the relatively small population of the island, and speaks to the country’s preparedness and advanced medical infrastructure.

    Best public health policy

    • Finally, Taiwan has benefited greatly from the close coordination between its hospitals and the central government.
    • Within the country’s nationalized healthcare system, every citizen and resident is assigned a health card, embedded with a computer chip reflecting their identity and medical history.

    Success:

    As the global total of infections has neared 700,000, with over 30,000 deaths, Taiwan’s count stood at 300, with only 5 deaths.

     

    2) Prolonged, total lockdown: The Wuhan model

    Wuhan, the capital of Hubei province, and the geographic origin of the coronavirus have had the longest and most comprehensive lockdown of any region in the world, for a staggering 76 days, starting on 23 January and ending on 8 April.

    Actual strategy

    • In January, China effectively shut down Wuhan and placed its 11 million residents in effective quarantine — a move it then replicated in the rest of Hubei province, putting 50 million people in mass isolation.
    • Across the rest of the country, residents were strongly encouraged to stay at home.

    Mass mobilization

    • At least 42,000 doctors and medical personnel were sent to Hubei province to shore up the province’s health services.

    Masks and checks

    • In cities, it quickly became necessary to wear a mask as apartment blocks, businesses and even parks barred entry without one.
    • Widespread mask use may have helped slow the spread of the disease, “particularly when there are so many asymptomatic virus carriers

    Success:

    China had 22 consecutive days (till yesterday) of one new case or less per day, before the lockdown was lifted.

     

    3) No lockdown, rapid testing: South Korea Model

    • As countries across the world used their state machinery to impose partial or complete lockdowns, South Korea decided to follow a different route.
    • A week since the coronavirus started spreading in their neighbouring country, China, the government responded quickly and ordered all the factories to start producing testing kits en masse.
    • Within two weeks, South Korea was producing more than 1,00,000 testing kits per day.
    • Furthermore, the government used all its resources to and had carried out over 2,50,000 tests.
    • This allowed the government to gather data, monitor the spread and treat/isolate the infected individuals.
    • South Korea also used surveillance footage, drone images, credit card activities, etc. to trace the contacts of the infected individuals and put them into isolation.

    Success:

    By acting quickly, South Korea tackled the COVID-19 crisis effectively while keeping its economy up and running. When a third of the world’s population is living under a lockdown, the relative normality of Seoul feels surreal.

     


    All these models have something in common. Guess what?

    • Capacity to contain a virus outbreak depends on the ability to identify cases and contacts in the community on clinical criteria while ensuring smart surveillance on travellers; isolate and identify the causative virus; treat severe cases while counselling mild cases.
    • Dealing with pandemics required a multi-pronged approach which all models did rather than solely focussing on discovering a vaccine.
    • The WHO’s mantra to tackle COVID i.e. “test, trace, isolate, treat” is the key.
    • All these models have followed this strategy either way in their letter and spirit, with exemplary efficiency.

    How is India responding?

    • Health Infrastructure has been described as the basic support for the delivery of public health activities.
    • However, current health infrastructure in India paints a dismal picture of the healthcare delivery system in the country.
    • Public health experts believe that India is ill-equipped to handle such emergencies. It is not prepared to tackle health epidemics, particularly given its urban congestion.
    • The healthcare administration in crowded cities like Agra, Pathanamthitta and Bhilwara have busted this myth.
    • The willingness and effectiveness with which doctors and medical officials in India are working is a testament to the country’s rational and humane approach to the pandemic.

    Way Forward

    • The aerial spread of the pandemic can be contained with an efficient response which combines effective public health, microbiological, clinical and communication responses.
    • In general, hospital services have quickly geared up to treat severe cases in urban areas but rural healthcare needs a step up.
    • Effective risk communication to the general public needs to be circulated to prevent panic and provide advice on precautionary measures.
    • Central and state health agencies must act in tandem and so are the public and private healthcare facilities.
    • The media too must help in increasing awareness without triggering panic through community counselling.
  • A virus, social democracy, and dividends for Kerala

    This article is an analysis of Kerala’s success in dealing with the Covid-19. Factors that emerge are-strong emphasis on the social democracy, the participation of civil society and strong social compact between the government and citizenry. We have also covered the same subject in a previous article but focus there was more on the administrative level.

    Kerala’s success story

    • Kerala was the first State with a recorded case of coronavirus and once led the country in active cases.
    • It now ranks 10th of all States and the total number of active cases (in a State that has done the most aggressive testing in India) has been declining for over a week and is now below the number of recovered cases.
    • Given Kerala’s population density, deep connections to the global economy and the high international mobility of its citizens, it was primed to be a hotspot.
    • Yet not only has the State flattened the curve but it also rolled out a comprehensive ₹20,000 crore economic package before the Centre even declared the lockdown.

    Why does Kerala stand out in India and internationally?

    • Kerala’s much-heralded success in social development has invited endless theories of its cultural, historical or geographical exceptionalism.
    • But taming a pandemic and rapidly building out a massive and tailored safety net is fundamentally about the relation of the state to its citizens.
    • From its first Assembly election in 1957, through alternating coalitions of Communist and Congress-led governments, iterated cycles of social mobilisation and state responses have forged what is in effect a robust social democracy.
    • The current crisis underscores the comparative advantages of social democracy.

    Kerala’s success is built on social democracy in the state. Following are the factors that constitute the social democracy in the state which is helping it fight against the Covid-19 pandemic with considerable success. These factors are also important from the Mains point of view if the question is framed on Kerala’s success story.

    How social democracy is practised in Kerala?

    • Social democracies are built on an encompassing social pact with a political commitment to providing basic welfare and broad-based opportunity to all citizens.
    • In Kerala, the social pact itself emerged from recurrent episodes of popular mobilisation.
    • Popular mobilisations include the temple entry movement of the 1930s to the most recent various gender and environmental movements.
    • These movements nurtured a strong sense of social citizenship.
    • These movements also drove reforms that have incrementally strengthened the legal and institutional capacity for public action.
    • Second, the emphasis on rights-based welfare has been driven by and in turn has reinforced a vibrant, organised civil society.
    • This civil society demands continuous accountability from front-line state actors.
    • Third, this constant demand-side pressure of a highly mobilised civil society and a competitive party system has pressured all governments in Kerala.
    • The pressure made governments to deliver public services and to constantly expand the social safety net, in particular a public health system that is the best in India.
    • Fourth, that pressure has also fuelled Kerala’s push over the last two decades to empower local government.
    • Nowhere in India are local governments as resourced and as capable as in Kerala.
    • Finally, all of this ties into the greatest asset of any deep democracy, that is the generalised trust that comes from a State that has a wide and deep institutional surface area.
    • That on balance treats people not as subjects or clients, but as rights-bearing citizens.

    How the built-in social democracy is helping in dealing with the pandemic?

    • A government’s capacity to respond to a cascading crisis such as the COVID-19 pandemic relies on a very fragile chain of –(1)mobilising financial and societal resources, (2)getting state actors to fulfil directives, (3)coordinating across multiple authorities and jurisdictions and maybe, most importantly, (4)getting citizens to comply.
    • First, an effective response begins with programmatic decision-making.
    • From the moment of the first reported case in Kerala, Chief Minister convened a State response team that coordinated 18 different functional teams.
    • The CM held daily press conferences and communicated constantly with the public.
    • Kerala’s social compact demanded no less.
    • Second, the government was able to leverage a broad and dense health-care system.
    • The health-care system, despite the recent growth of private health services, has maintained a robust public presence.
    • Kerala’s public health-care workers are also of course highly unionised and organised, and from the outset the government lay emphasis on protecting the health of first responders.
    • Third, the government activated an already highly mobilised civil society.
    • As the cases multiplied, the government called on two lakh volunteers to go door to door, identifying those at risk and those in need.
    • A State embedded in civil society — the women’s empowerment Kudumbasree movement being a case in point.
    • Kudumbasree movement was in a good position to co-produce effective interventions, from organising contact tracing to delivering three lakh meals a day through Kudumbasree community kitchens.
    • Fourth, you can get the politics right and you can have a great public health-care system, but its effectiveness in a crisis like this will only be as good as the infamous last kilometre.
    • And this is where two decades of empowering local governments have clearly paid off.

    Conclusion

    At a time when India is dealing with this unprecedented crisis, it is important to be reminded that Kerala has managed the crisis with the most resolve, the most compassion and the best results of any large State in India. And that it has done so precisely by building on legacies of egalitarianism, social rights and public trust. Other states and the Central government must learn from Kerala’s experience.