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  • [Sansad TV] Perspective: India’s “Per Capita Income” Doubles

    [Sansad TV] Perspective: India’s “Per Capita Income” Doubles

    Context

    • Since 2014-15 when the NDA government came to power at the Centre, the nation’s per capita income has doubled to Rs 1.72 lakh.

    India’s GDP doubles

    • According to National Statistics Office (NSO) data, the per capita income in terms of net national income, in current prices, stood at Rs 1,72,000 in 2022-23 with a growth rate of 15.8% over the previous year. 
    • This would be nearly double ₹86,647 in 2014-15.
    • Per capita income at the current prices was estimated at Rs1,27,065 and Rs 1,48,524 respectively for the years 2020-21 and 2021-22.

    This indicates that there has been a consistent rise in per capita income.

    What is Per-Capita Income (PCI)?

    • The per capita income of a geographical location (say, a country, state, city, or others) measures the amount of money earned by every person in that area.
    • It determines the average income of a person in a country, a state, or a specific region.
    • This helps us evaluate the standard of livelihood and the quality of life of people in the geographical location.
    • It is calculated for an average per person and then expressed as a ratio.

    Key parameters indicated by PCI

    • Average income: Per-capita income measures the average income earned per person in a particular geographic area. It provides an indication of the overall level of prosperity in the area.
    • Economic growth: Per-capita income is often used as an indicator of economic growth, as it reflects changes in the overall level of income earned by the population.
    • Standard of living: Higher PCI typically correspond to higher standards of living, as people are able to afford better healthcare, education, housing, and other essential goods and services.
    • Purchasing power: Per-capita income can be used to compare the relative purchasing power of different geographic areas.  
    • Inflation-adjusted: Per-capita income is often reported in real terms, which takes into account inflation and provides a more accurate representation of purchasing power over time.
    • Income distribution: Per-capita income does not provide information about the distribution of income within a particular area. It is possible for an area to have a high per-capita income but still have significant income inequality.

    How is Per Capita Income Calculated?


    We use this formula to calculate the per capita income of a particular area.

    PCI = Population’s total income / Population of a specific area

    When you calculate the PCI of a country, you’ve to divide a country’s total income by that country’s total population.

    The various uses of PCI are-
    (1) Gross Domestic Product Per Capita
    The GDP Per Capita calculates a country’s economic output by the number of people in that country. You have to divide a nation’s total economic domestic production by that nation’s population. The formula for calculating GDP Per Capita is:

    GDP Per Capita = Gross Domestic Product/ Population

    (2) Gross National Income Per Capita
    To determine the Gross National Income per Capita, you have to take into account Gross Domestic Product Per Capita along with the value generated by the people of a country living abroad.

    Other Uses

    • Per Capita Income is used to find out an area’s wealth or lack thereof.
    • It is also used to find out the affordability of an area regarding data on real estate prices.
    • Prominent business chains and owners consider an area’s per capita income before opening a store branch or shop in a concerned area.
    • The higher PCI of a place, the higher the chances of making considerable revenue.
    • The chances of profitable revenue fall drastically in those places where PCI is low.

    What are the Limitations of Per Capita Income?

    Despite being a commonly used measurement entity, per capita income comes with some limitations. Some of them are:

    • Sensitive to Outliers: When calculating a country’s PCI, every individual is taken into account. The calculation includes men, women, children, and babies. This is mainly because the measurement considers the entire country’s population or specific geographical location.
    • Inflation: Per Capita Income doesn’t count for an economy’s inflation (the rate of price rise). Inflation deducts the power of purchases of consumers and limits income increase. This results in overstating the average income of a place’s population.
    • International Comparisons: Making international comparisons can be unfair and inaccurate. This is because it does not include the currency exchange rate in the measurements while calculating the per capita income. Some economies are known to use non-monetary activity and barter systems. Again, this is not considered in calculations of the per capita income.
    • Distorted results: Per Capita Income includes non-earning individuals like children and even newborn babies. When a country’s average income is included, the babies or kids are counted even when they don’t add to the income. Those economies and countries with lots of children will, therefore, get a distorted result when using the PCI parameter to calculate an economy’s average income.
    • Savings are not accounted: The Per Capita Income calculations do not consider every individual’s savings. An individual could have a lot of wealth from his savings, which he uses to maintain a high quality of livelihood but earns a meagre income. Hence, the calculations will still count the wealthy person as a very low-income earner and decrease the per capita income.
    • Welfare parameters ignored: Per Capita Income is used to determine the living quality or livelihood in an area or geographical region. But the calculations do not count for quality of working conditions, literacy level, and overall health benefits.

    Way forward

    • Look beyond just income inequality: While income inequality is an important indicator of economic health, it’s important to also consider other factors like the Gini Coefficient (a measure of income distribution) to get a more comprehensive understanding of the issues at hand. Over-focusing on income inequality alone can lead to a dependence on freebies and other short-term solutions.
    • Address the aspirations of young people: It’s important to invest in the development of skills and employment opportunities to provide young people with a clear path forward and to prevent them from being left behind in the economy.
    • Ensure equitable access to education and healthcare: Access to education and healthcare are critical components of ensuring that everyone has an equal opportunity to succeed. Investing in these areas can help promote social mobility and reduce inequality.
    • Focus on manufacturing and infrastructure: Manufacturing and infrastructure are key areas of economic growth and development, as they have a multiplier effect on the economy and can help distribute income more evenly. It’s important to invest in these areas to help promote equitable economic growth.
    • Diversify the economy: Dependence on any one sector of the economy can be risky, so it’s important to diversify the economy to reduce vulnerability to economic shocks. Diversifying away from agriculture and towards manufacturing and services can help promote equitable growth.
    • Invest in infrastructure: Investment in infrastructure, such as logistics, railways, and highways, can help reduce transportation costs and improve efficiency, promoting economic growth.
    • Reduce existing divides: Finally, it’s important to take proactive steps to reduce existing divides and promote social and economic equality. This can include measures like improving access to credit, reducing discrimination, and investing in social programs that benefit marginalized communities.

  • Africa’s splitting plates could give birth to a new Ocean: Study

    africa

    Central idea

    • Scientists predict a new ocean will be created as Africa splits into two separate parts connected to the East African Rift
    • This geological process will inevitably divide the continent resulting in new coastlines and sub-sea internet infrastructure but also will have significant repercussions

    What is Rifting?

    • The Earth’s lithosphere, comprising the crust and upper part of the mantle, is divided into tectonic plates that move in relation to each other at varying speeds.
    • Tectonic forces move the plates and can cause them to rupture, resulting in the formation of a rift and potentially leading to the creation of new plate boundaries.
    • Rifting refers to the geological process in which a single tectonic plate is split into two or more plates separated by divergent plate boundaries.
    • In the present day, the gradual separation of the Somali and Nubian tectonic plates is leading to the formation of a rift that could eventually lead to the creation of a new ocean basin.
    • The movement of tectonic plates is a fascinating geological phenomenon.

    Rifting in African Continent

    • The African continent is located on the African Plate, which is one of the Earth’s major tectonic plates.
    • The continent is characterized by a number of geological features, including rift valleys.

    Most profound feature: The East African Rift System

    • The East African Rift System is the most prominent example of rifting in Africa.
    • It stretches for over 6,000 kilometers from the Red Sea in the north to the Zambezi River in the south.
    • The rift system includes a series of interconnected rift valleys, volcanoes, and lakes.

    Causes of the East African Rift System

    • The rift system is caused by the movement of the African Plate away from the Arabian Plate and the Somalian Plate.
    • This movement creates tension in the Earth’s crust, causing it to pull apart and form a rift.

    Impact: Lakes Formed by Rifting

    • Over time, the rifting process has led to the formation of several large lakes in the region.
    • These lakes include Lake Victoria, Lake Tanganyika, and Lake Malawi.
    • They are believed to have formed as a result of the sinking of the land between the rift valleys.

    Future of Rifting in Africa

    • The rifting process is ongoing and may eventually lead to the splitting of the African continent into two or more separate land masses.
    • However, this process is expected to take millions of years and is not likely to have a significant impact on human populations in the near future.
    • The necessary evacuation of people and potential loss of lives will be an unfortunate cost of this natural phenomenon.
    • The emergence of new coastlines will unlock opportunities for economic growth
    • As the plates continue to split in the future, this phenomenon will result in the displacement of communities, settlements, and various flora and fauna.

    Conclusion

    • The movement of tectonic plates has significant implications for the continent’s future.
    • It is important to study and monitor these changes while remembering the power of the Earth’s natural forces and the impact they can have over time.
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  • Low Temperature Thermal Desalination (LTTD) Technology

    desalin-lttd

    The National Institute of Ocean Technology (NIOT) is making efforts to make its ongoing water provision project in Lakshadweep eco-friendly by eliminating emissions in its Low Temperature Thermal Desalination technology.

    What is LTTD Technology?

    • LTTD Technology is a desalination process that uses low-grade thermal energy, typically below 70°C, to evaporate seawater and produce fresh water.
    • The technology is designed to be efficient and cost-effective, and it has been successfully used in various locations worldwide to provide potable water.

    How does LTTD Technology work?

    • LTTD Technology works by using a low-grade thermal source, such as warm seawater, to heat up a chamber containing seawater.
    • As the seawater is heated, it evaporates and produces fresh water vapor.
    • The vapor is then condensed and collected, leaving behind concentrated seawater, which can be discharged back into the ocean.
    • The fresh water produced can be used for various purposes, such as drinking water, irrigation, or industrial applications.

    Benefits of this technology

    • One of the main benefits of LTTD Technology is that it uses low-grade thermal energy, which is readily available in many locations, especially in coastal areas.
    • This makes it a cost-effective and sustainable way of producing fresh water.
    • Additionally, LTTD Technology is modular and can be easily scaled up or down, depending on the water demand.
    • It also has a relatively low environmental impact compared to other desalination technologies.

    Challenges of LTTD Technology

    • One of the main challenges of LTTD Technology is that it requires a constant source of low-grade thermal energy, which can be affected by weather conditions and seasonal changes.
    • Additionally, the technology is relatively new and may require further research and development to optimize its efficiency and performance.

    How is NIOT working to make LTTD Technology emission-free?

    • NIOT is working on making LTTD Technology emission-free by using renewable energy sources, such as solar energy, to power the desalination process.
    • The goal is to reduce the carbon footprint of the technology and make it more sustainable and environmentally friendly.

    Try this MCQ:

    Q. The LTTD technology involves the use of which of the following processes to produce potable water?

    A) Reverse osmosis B) Distillation C) Filtration D) Chlorination

    Post your answer here.

     

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  • What is GPT-4 and how is it different from ChatGPT?

    gpt

    Central idea: OpenAI announced GPT-4 as the next big update to the technology that powers ChatGPT and Microsoft Bing.

    What is GPT-4?

    • GPT-4 is a large multimodal model created by OpenAI that accepts images as input, making it a more advanced version of GPT-3 and GPT-3.5.
    • It exhibits human-level performance on various professional and academic benchmarks, and it can solve difficult problems with greater accuracy.

    How is GPT-4 different from GPT-3?

    • GPT-4 is multimodal, allowing it to understand more than one modality of information, unlike GPT-3 and GPT-3.5, which were limited to textual input and output.
    • It is harder to trick than previous models, and it can process a lot more information at a time, making it more suitable for lengthy conversations and generating long-form content.
    • It has improved accuracy and is better at understanding languages that are not English.

    GPT-4’s abilities

    • GPT-4 can use images to generate captions and analyses, and it can answer tax-related questions, schedule meetings, and learn a user’s creative writing style.
    • It can handle over 25,000 words of text, opening up a greater number of use cases that include long-form content creation, document search and analysis, and extended conversations.
    • It significantly reduces hallucinations and produces fewer undesirable outputs, such as hate speech and misinformation.

    Multilingual abilities of GPT-4

    • GPT-4 is more multilingual and can accurately answer thousands of multiple-choice questions across 26 languages.
    • It handles English best, with an 85.5% accuracy, but Indian languages like Telugu aren’t too far behind either, at 71.4%.

    Availability of GPT-4

    • GPT-4 has already been integrated into products like Duolingo, Stripe, and Khan Academy for varying purposes.
    • Image inputs are still a research preview and are not publicly available.
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  • Same-sex marriage: Petitions For Legal Recognition

    same-sex

    Central idea

    • Recently, the Supreme Court referred a batch of petitions seeking the legal recognition of same-sex marriages to a Constitution Bench. The Union government has opposed the petitions. Law Minister Kiren said that marriage is a matter of policy to be decided by Parliament and the executive alone.

    What is mean by Same-sex marriage?

    • Same-sex marriage is the legal recognition of a marriage between two individuals of the same sex.
    • It grants same-sex couples the same legal and social recognition, rights, and privileges that are traditionally associated with marriage, including property rights, inheritance rights, and the ability to make decisions for each other in medical emergencies.
    • The recognition of same-sex marriage varies around the world, with some countries legalizing it while others do not.
    • The issue has been the subject of much debate and controversy, with arguments for and against same-sex marriage based on religious, cultural, social, and legal considerations.

    Same-sex marriage in India

    • Same-sex marriage is currently not legally recognized in India.
    • Section 377 of the Indian Penal Code, which criminalized homosexuality, was struck down by the Supreme Court of India in 2018, which was a landmark decision for LGBTQ+ rights in the country.
    • However, there is still no law that allows same-sex couples to legally marry or have any legal recognition of their relationships.

    Government’s argument

    • In its affidavit to the Supreme Court, the government argued that the traditional concept of marriage, consisting of a biological man, woman and child, cannot be disrupted.
    • It claimed that recognising same-sex marriages could cause havoc in the system of personal laws.
    • As different from many liberal democracies, in India, aspects of marriage, succession and adoption are governed by religious personal laws.

    What petitioners are claiming?

    1. Same-sex marriage as a matter of rights
    • Any social policy is liable to judicial interference if rights are violated.
    • The petitioners rely on the rights to equality and non-discrimination as laid out in Articles 14 and 15.
    • The Constitution prohibits the state from discriminating on the basis of sex.
    • Sex has been interpreted by the Supreme Court in Navtej Singh Johar (2018) to include sexual orientation. Granting the right to marry to heterosexual couples and not to homosexual couples clearly discriminates on the basis of their sexual orientation.
    1. Same-sex marriage is a matter of privacy
    • Right to privacy: Supreme Court recognised this right to be part of the right to life and liberty under Article 21 of the Constitution in the celebrated Puttaswamy (2017) verdict.
    • What court said on privacy: Privacy includes at its core the preservation of personal intimacies, the sanctity of family life, marriage, procreation, the home and sexual orientation.
    • State currently denies this right: The right to privacy entails the right of the citizens to make decisions about their family life and marriage. The state currently denies same-sex couples this right.
    • The Special Marriage Act: The Special Marriage Act is a secular law which works alongside religious personal laws. Same-sex marriages can be recognised under the Special Marriage Act. The Act already speaks of marriages between any two persons which are solemnised under it. Any two persons can include two persons of the same sex.

    Special Marriage Act

    • The Special Marriage Act is a law in India that allows individuals of different religions or nationalities to marry each other.
    • It was enacted in 1954 and came into effect from 1955.
    • The Special Marriage Act allows for inter-caste and inter-religious marriages, and couples who register under this act are not required to change their religion or follow any religious rites or rituals.
    • The act also provides for divorce on certain grounds and maintenance to the spouse and children.

    Consider the situation in the United States

    • In Obergefell v Hodges (2015), the Supreme Court of the United States held that same-sex couples have a constitutional right to marriage.
    • Thirty-one out of the 50 states in the United States have marriage laws that define marriage as between a man and a woman.

    Conclusion

    • The debate on legal recognition of same-sex marriages in India continues to be a contentious issue, with the government and petitioners presenting opposing views. However, given the complex social, cultural, and legal considerations, any decision regarding same-sex marriage should be carefully evaluated to ensure that it is inclusive and respects individual rights. Ultimately, it is important to arrive at a balanced and just solution that upholds the principles of equality and non-discrimination for all individuals, regardless of their sexual orientation.

    Mains Question

    Q. What do you understand by same-sex marriage? Describe same sex marriage situation in India by highlighting both the arguments.

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  • 16th Mar 23 | Prelims Daily with Previous Year Questions

    16th Mar 23 | Prelims Daily with Previous Year Questions

    [WpProQuiz 1275]

    [WpProQuiz_toplist 1275]

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  • Women Leadership: Conditions To Unleash Her Potential

    Women

    Central Idea

    • Today the world is home to a transformative generation of 900 million adolescent girls and young women poised to shape the future of work and growth. If this cohort of young women could be equipped with the right resources and opportunities to nurture the 21st century skills, they would become the largest segment of women leaders, change-makers, entrepreneurs, and innovators in history.

    Women In India

    • India is home to one of the largest generations of girls and young women, has made significant progress across various domains, such as education, health, digital and financial inclusion, and leadership building, to achieve Sustainable Development Goal 5, which envisions a more gender-equal world by 2030.
    • To unleash the gender dividend and create conditions for female leadership to flourish, women at all levels of society must have inclusion in the Information and Communications Technology (ICT), bodily autonomy and safety, shared responsibility within the household, and equal participation in decision-making spaces.

    Women

    What are the necessary conditions that must be in place for Women leadership to thrive?

    1. Cultivating Agency:
    • Given the socio-economic barriers that adolescent girls confront from their earliest years that the work to cultivate their agency must begin early.
    • India’s initiatives across various domains, such as education, health, digital and financial inclusion, and leadership building, to achieve Sustainable Development Goal 5, which envisions a more gender-equal world by 2030.
    1. Inclusion in ICT:
    • Inclusion in Information and Communications Technology (ICT) for women at all levels of society is very important.
    • As access to digital technology increasingly becomes an arena of opportunity and basic service, EdTech can bridge the accessibility gap in education through hybrid learning models, even where girls’ access to schooling is restricted by harmful norms.
    1. STEM Education:
    • The prevailing stereotypes that characterize STEM education as a traditionally masculine domain, even though over 43% of Indian STEM graduates are women.
    • The gender norms that disproportionately allocate domestic and care responsibilities to women, representation of men as leaders of STEM, finance, and entrepreneurial fields in the public perception, and institutional mechanisms are some of the barriers that explain why increased women’s representation in STEM education does not translate into work participation.
    • There is need of inclusion of grade-appropriate STEM, financial education, and entrepreneurship syllabi into the educational curriculum for girls to counter these stereotypes actively.
    1. Bodily Autonomy and Safety
    • Empowering women to make decisions about their bodies and be free from all forms of violence and harassment is very important.
    • These basic conditions are critical to enable women and young girls to chart the trajectory of their personal and professional lives.
    1. Sport for Leadership
    • The sporting activities can promote leadership, self-sufficiency, and teamwork. The inclusion of adolescent girls and young women in sports can build their self-confidence, strengthen self-belief, and impart the nuances of teamwork.
    • The National Sports Policy and inclusion programs for children from vulnerable communities, which have seen remarkable success.
    1. Redistribute Care Work
    • The backbone of thriving families, communities, and economies largely falls on women, increasing in times of crisis such as the COVID-19 pandemic.
    • It is crucial to recognize, reduce and redistribute unpaid care and domestic work, so that women may enjoy economic opportunities and outcomes on an equal footing to men.
    • The policies that provide services, social protection and basic infrastructure, promote sharing of domestic and care work between men and women, and create more paid jobs in the care economy, which are urgently needed to accelerate progress on women’s economic empowerment.

    Do you know?  STEM education

    • STEM education refers to a curriculum that focuses on four academic disciplines: Science, Technology, Engineering, and Mathematics.
    • STEM education is designed to promote and enhance the critical thinking, problem-solving, and analytical skills of students, while also encouraging their creativity and innovation.
    • The curriculum typically integrates these four subjects to show how they are interconnected and applicable to real-world problems.
    • STEM education is becoming increasingly important in today’s world, as technology continues to advance and the demand for skilled workers in these fields grows.

    Women

    Conclusion

    • Nurturing the leadership abilities of adolescent girls and young women is crucial for breaking down restrictive gender norms and barriers and accelerating progress across the Sustainable Development Goals. By working together to empower girls and women, we can create a more gender equal world and unlock the full potential of the next generation of female leaders.

    Mains Question

    Q. What are the necessary conditions that must be established for female leadership to flourish in India?

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  • China-India: Facilitating an Asian Century

    China

    Central idea

    • China’s recent developments in steady growth, people’s well-being, opening up, and win-win cooperation, as well as its willingness to strengthen communication and coordination with India, can provide new opportunities for all countries in the world, especially neighbouring countries. importance of China-India relations and their role in facilitating an Asian Century.

    China’s focus areas of development 

    • Modernization: China is currently advancing modernization in all fronts, based on its practices, and a focus on high-quality development.
    • Overall development: The country aims to modernize its huge population, ensuring common prosperity for all, material and cultural-ethical advancement, harmony between humanity and nature, and peaceful development.
    • New opportunities: China’s development will create new opportunities for all countries, especially neighbouring countries.

    China

    The development of China in recent years

    1. Steady Growth:
    • In 2022, China’s economy grew by 3%, and the country added a total of 12.06 million urban jobs.
    • The country’s GDP increased to 121 trillion yuan (approximately $18 trillion), registering an annual growth rate of 5.2% over the past five years and an annual growth of 6.2% over the past decade, with GDP increasing by nearly 70 trillion yuan.
    • China’s economic strength is steadily reaching new heights.
    1. People’s Well-being:
    • China has historically resolved absolute poverty, with the alleviation of close to 100 million rural residents from poverty.
    • Over 70% of the government’s expenditure went toward ensuring people’s well-being.
    • Basic old age insurance covers 1.05 billion people, an increase of 140 million. Living standards continue to witness new improvements.
    1. Opening Up:
    • In 2022, China’s total volume of trade in goods exceeded 40 trillion yuan, registering an annual growth rate of 8.6%.
    • China’s actual use of foreign capital was up by 8%, and the country remained one of the top destinations for foreign investors.
    • The overall tariff level continues to fall, from 9.8% to 7.4%. China’s doors to the outside world are opening even wider.
    1. Win-Win Cooperation
    • In the period 2013-2021, China’s contribution to global economic growth averaged 38.6%, higher than that of G7 countries combined (25.7%).
    • More than 100 countries have expressed their support, and over 60 countries have joined the Group of Friends of the Global Development Initiative (GDI) since Chinese President, Xi Jinping, proposed it in a speech at the United Nations General Assembly in 2021.

    China

    China-India Relations

    • Emerged as Representatives: As neighboring and ancient civilizations, China, and India are representatives of developing countries and emerging economies.
    • National rejuvenation: Both countries are currently in the process of national rejuvenation and a crucial period of modernization where challenges need to be overcome and problems need to be solved.
    • Interests than differences: China and India have far more common interests than differences.

    China- India Trade

    • China and India are important trading partners, with bilateral trade volume reaching $135.984 billion in 2022.
    • Although there is a trade deficit, India’s import of equipment and materials from China reduces the overall cost of Made-in-India products, benefits Indian downstream industries and consumers, enhances the competitiveness of Indian exports, and in turn facilitates India’s integration into global industrial and supply chains.

    China

    Facilitating an Asian Century

    • Chinese Foreign Minister recently stated that the development and revitalization of China and India embody a boost to the force of developing countries, which will change the destiny of a third of the world’s population and have a bearing on the future of Asia and beyond.
    • This echoes what India’s External Affairs Minister S. Jaishankar had expressed in 2022 that the Asian Century will happen when China and India come together.

    Conclusion

    • China’s development and its relationship with India are important for the region and the world. Both countries are in the process of modernization and face challenges that need to be overcome. China and India are important trading partners, and their cooperation can facilitate an Asian Century and contribute to peace and stability in the region and beyond.

    Mains Question

    Q. Provide your insights on the role of China and India in shaping the destiny of the developing countries and their impact on the future of Asia and beyond

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  • Foreign lawyers, firms can operate in India: Bar Council

    bar

     

    Central Idea: The Bar Council of India (BCI) has opened up law practice in India to foreign lawyers and law firms. It has framed the ‘Bar Council of India Rules for Registration of Foreign Lawyers and Foreign Law Firms in India, 2021’.

    About Bar Council of India (BCI)

    • The BCI is a statutory body established under the section 4 of Advocates Act 1961 that regulates the legal practice and legal education in India.
    • Its members are elected from amongst the lawyers in India and as such represents the Indian bar.
    • It prescribes standards of professional conduct, etiquettes and exercises disciplinary jurisdiction over the bar.
    • It also sets standards for legal education and grants recognition to universities whose degree in law will serve as a qualification for students to enroll themselves as advocates upon graduation.

    History

    • In March 1953, the ‘All India Bar Committee’, headed by S. R. Das, submitted a report which proposed the creation of a bar council for each state and an all India bar council as an apex body.
    • It was suggested that the all-India bar council would regulate the legal profession and set the standard of legal education.
    • The Law Commission of India was assigned the job of assembling a report on judicial administration reforms and helps India to reform justice and equity to whole country.
    • In 1961, the Advocates Act was introduced to implement the recommendations made by the ‘All India Bar Committee’ and ‘Law Commission’.

    Functions

    The functions of the Bar Council are to:

    1. Lay down standards of professional conduct and etiquette for advocates.
    2. Lay down procedure to be followed by disciplinary committees
    3. Safeguard the rights, privileges and interests of advocates
    4. Promote and support law reform
    5. Deal with and dispose of any matter which may be referred by a State Bar Council
    6. Promote legal education and lay down standards of legal education.
    7. Determine universities whose degree in law shall be a qualification for enrollment as an advocate.
    8. Conduct seminars on legal topics by eminent jurists and publish journals and papers of legal interest.
    9. Organise and provide legal aid to the poor.
    10. Recognise foreign qualifications in law obtained outside India for admission as an advocate.
    11. Manage and invest funds of the Bar Council.
    12. Provide for the election of its members who shall run the Bar Councils.

    Constitution

    • As per the Advocates Act, the BCI consists of members elected from each state bar council, and the Attorney General of India and the Solicitor General of India who are ex officio members.
    • The council elects its own chairman and vice-chairman for a period of two years from among its members.
    • Assisted by the various committees of the council, the chairman acts as the chief executive and director of the council.

    Why such move?  

    • The BCI notification also stated that the Rules would help to address the concerns expressed about the flow of Foreign Direct Investment into the country.
    • The Rules would also help make India a hub for international commercial arbitration.

    Move to benefit Indian lawyers

    • The rules enable foreign lawyers and law firms to “practice foreign law, diverse international law and international arbitration matters in India on the principle of reciprocity in a well-defined, regulated and controlled manner”.
    • The BCI said that the move would benefit Indian lawyers, whose standards of proficiency in law are comparable with international standards.
    • The legal fraternity in India is not likely to suffer any disadvantage since the move would be mutually beneficial for lawyers from India and abroad.

    How foreign lawyers can begin operating in India?

    • The Rules prescribe that foreign lawyers and firms would not be entitled to practice law in India without registration with the BCI.
    • Foreign lawyers and law firms are not allowed to practice Indian law in any form or before any court of law, tribunal, board or any other authority legally entitled to record evidence on oath.
    • However, the restriction does not apply to law practice by a foreign lawyer or foreign law firm on a ‘fly in and fly out basis’ for the purpose of giving legal advice to a client in India on foreign law or international legal issues.
    • In such a case, the lawyer or firm cannot have an office in India, and their practice cannot exceed 60 days in any 12-month period.

    Requirements for foreign lawyers and firms

    A primary qualification required from foreign lawyers and firms is-

    1. Certificate from the competent authority of their country that they are entitled to practice law in that country.
    2. Undertaking that they shall not practice Indian law in any form or before any court of law, tribunal, board or any other authority legally entitled to record evidence on oath.

     

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  • India’s Foreign Trade Policy set to be revised from April 1

     

    trade

    Central idea: The revision of India’s Foreign Trade Policy, which has been unchanged since 2015 and due for three years, may finally be announced by the end of this month.

    What is a Foreign Trade Policy?

    • India’s Foreign Trade Policy (FTP) is a set of guidelines for goods and services imported and exported.
    • These are developed by the Directorate General of Foreign Trade (DGFT), the Ministry of Commerce and Industry’s regulating body for the promotion and facilitation of exports and imports.
    • FTPs are enforceable under the Foreign Trade Development and Regulation Act 1992.

    What is India’s Foreign Trade Policy?

    • In line with the ‘Make in India,’ ‘Digital India,’ ‘Skill India,’ ‘Startup India,’ and ‘Ease of Doing Business initiatives, the Foreign Trade Policy (2015-20) was launched on April 1, 2015.
    • It provides a framework for increasing exports of goods and services, creating jobs, and increasing value addition in the country.
    • The FTP statement outlines the market and product strategy as well as the steps needed to promote trade, expand infrastructure, and improve the entire trade ecosystem.
    • It aims to help India respond to external problems while staying on top of fast-changing international trading infrastructure and to make trade a major contributor to the country’s economic growth and development.

    Issues with FTP (2015-2020)

    • Acting on Washington’s protest, a WTO dispute settlement panel ruled in 2019 that India’s export subsidy measures are in violation of WTO norms and must be repealed.
    • Tax incentives under the popular Merchandise Exports from India Scheme (MEIS) (now renamed as RODTEP Scheme)and Service Exports from India Scheme (SEIS) programmes were among them.
    • The panel found that because India’s per capita gross national product exceeds $1,000 per year, it may no longer grant subsidies based on export performance.

    Why such a delay in Foreign Trade Policy?

    • Geopolitical uncertainty: The geo-political situation is not suitable for long-term foreign trade policy, said Union Commerce Minister.
    • Global recession: Currently, fears of a recession in major economies like the US and Europe have escalated a panic among investors.
    • Decline in USD inflows: Foreign investors have begun to pull back their money from equities.
    • Rupee depreciation: The US Dollar is at a 22-year high, while the Rupee hit a new all-time low of $81.6.
    • Huge trade deficit: The trade deficit widened by more than 2-folds to $125.22 billion (April – August 2022) compared to $53.78 billion in the same period last year.
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  • Smart Cities Mission: With 2023 deadline looming, a status check

    smart-cities

    Central idea: The Govt asks 20 worst-performing cities to improve as June 2023 Smart Cities Mission deadline nears.

    What is the Smart Cities Mission?

    smart cities

    • The Smart Cities Mission is an initiative of the Union Housing and Urban Affairs Ministry that was launched by PM on June 25, 2015.
    • Cities across the country were asked to submit proposals for projects to improve municipal services and to make their jurisdictions more liveable.
    • Between January 2016 and June 2018 (when the last city, Shillong, was chosen), the Ministry selected 100 cities for the Mission over five rounds.

    Deadline of the project

    • The projects were supposed to be completed within five years of the selection of the city.
    • However, in 2021 the Ministry changed the deadline for all cities to June 2023, which was earlier the deadline for Shillong alone.

    What kinds of projects were proposed?

    • Project proposals ranged from making certain stretches of roads more accessible and pedestrian-friendly to more capital-intensive ones like laying water pipelines and constructing sewage treatment plants.
    • All 100 cities have constructed Integrated Command and Control Centres.
    • These centres monitor all security, emergency and civic services.
    • During the peak of the Covid-19 pandemic, many of these centres were converted into emergency response units by the cities.

    What is the status of the projects?

    • As of March 3, 100 cities have issued work orders for 7,799 projects worth Rs 1.80 lakh crore.
    • Out of these, 5,399 projects worth Rs.1.02 lakh crore have been completed, and the rest are ongoing.
    • Only around 20 cities are likely to meet the June deadline. The rest will need more time.
    • Shillong has completed just one of its 18 proposed projects.

     

  • What is the McMahon Line?

    McMahon

    Central idea: Republican and Democrat senators introduced a resolution in US Congress reiterating that the US recognises the McMahon Line as the international boundary between China and India in Arunachal Pradesh.

    Significance of such move

    • This resolute confirms US (both ruling and opposition) stand with India at a time when China poses a threat to the Free and Open Indo-Pacific.
    • The resolution reaffirms India’s position that Arunachal Pradesh, which China calls ‘South Tibet’, is an integral part of India.

    What is the McMahon Line?

    • The McMahon Line serves as the de facto boundary between China and India in the Eastern Sector and represents the boundary between Arunachal Pradesh and Tibet.
    • China disputes the boundary and claims the state of Arunachal Pradesh as part of the Tibetan Autonomous Region (TAR).

    Under what circumstances was the McMahon Line drawn?

    • The McMahon Line was drawn during the Simla Convention of 1914, officially described as the Convention between Great Britain, China, and Tibet.
    • The British led an expedition into Tibet and signed the Convention of Lhasa in 1904, alarmed at the growing Russian influence in the region.
    • China invaded at the same time, taking control of the southeastern Kham region and pushing British officials to advocate extending British jurisdiction into the tribal territory.
    • The convention attempted to settle the question of Tibet’s sovereignty and avoid further territorial disputes in the region.

    What happened at the Simla Convention of 1913-14?

    • The Tibetan government in Lhasa was represented by its plenipotentiary Paljor Dorje Shatra, and Britain by Sir Arthur Henry McMahon, foreign secretary of British India at Delhi.
    • The Chinese plenipotentiary was Ivan Chen.
    • The treaty divided the Buddhist region into “Outer Tibet” and “Inner Tibet” and determined the border between China proper and Tibet as well as Tibet and British India.
    • The final convention was only signed by McMahon on behalf of the British government and Shatra on behalf of Lhasa.
    • Ivan Chen did not consent to the convention, arguing that Tibet had no independent authority to enter into international agreements.

    How was the border between British India and China decided?

    • The 890-km border from the corner of Bhutan to the Isu Razi Pass on the Burma border was drawn largely along the crest of the Himalayas, following the “highest watershed principle”.
    • However, exceptions were made, such as Tawang, which was included in British India due to its proximity to the Assam Valley.

    What has the status of the McMahon line been since 1914?

    • While there were disputes regarding the McMahon line from the beginning, after the communists took power in 1949, they pulled China out of all international agreements.
    • The McMahon line was not mentioned during the Bandung Conference of 1955, which was held in Indonesia and saw Asian and African leaders agree to a common stand against colonialism and the Cold War.
    • However, the Chinese have recently raised the issue of the McMahon line, and in 2017, Beijing officially renamed six places in the Arunachal Pradesh region, including the disputed area of Tawang.
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  • 15th Mar 23 | Nikaalo Prelims- Mini Test 10 (External Sectors of India)

    15th Mar 23 | Nikaalo Prelims- Mini Test 10 (External Sectors of India)

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  • India-Italy Flourishing Relations

    Italy

    Central Idea

    • The recent summit between Italian Prime Minister Giorgia Meloni and Indian Prime Minister Narendra Modi marked the 75th anniversary of diplomatic relations between Italy and India. It also marked a significant turning point in the relations between the two countries, as they have established a strategic partnership for the first time.

    Italy

    Highlights of the current visit of PM Meloni

    • Now strategic partners: India and Italy have decided to elevate the ties to the level of strategic partnership and identified defence as one of the areas where they can start a new chapter.
    • Boost to startups: The meet led to the establishment of a ‘Startup Bridge’ between India and Italy.
    • Bilateral defence exercise: Another important area of mutual cooperation is defence. They also decided to organise joint military exercises and training courses on a regular basis.
    • Enhance people’s mobility: India and Italy also signed a Declaration of Intent on migration and mobility and inked a memorandum of understanding between Rabindra Bharati University, Kolkata, and Italian Consulate General; and Morarji Desai Institute of Yoga and Sarva Yoga International, Italy.

    India-Italy Flourishing Partnership

    • Bilateral Trade: Italy and India have intensified their collaboration in recent years, resulting in a record figure of around 15 billion euros in 2022, doubling the figure recorded in 2020.
    • Five-Year Action Plan: In 2020, a five-year action plan was adopted with a well-defined range of priorities including energy transition, food processing, advanced manufacturing, creative industry, and infrastructure.
    • Multilateral Initiatives: Italy has joined all the multilateral initiatives promoted by India, from the Indian Ocean Rim Association (IORA) to the Coalition for Disaster Relief Infrastructure (CDRI), to the International Solar Alliance.
    • Cultural Collaboration: Italy and India have enhanced their collaboration in the cultural field, from the heritage front to the creative industry, including fashion, design, cinema, etc.
    • Scientific Research and Technology: The partnership between the two countries has registered the launch of 13 new joint projects in scientific research and technology.
    • Mobility: In recent years, there has been a significant increase in the flow of Indian students and workers in Italy, where an Indian community that exceeds a figure of 2,00,000 is already actively operating in the Italian economy.
    • Health Sector: During the pandemic, Italy and India collaborated by exchanging experiences and practices, with humanitarian initiatives and promoting joint research projects.
    • Strategic Partnership: The Joint Declaration approved in the last summit affirms the commitment of the two governments to develop a strategic partnership that will also focus on sectors such as defence, cybersecurity, space, and energy.
    • Indo-Pacific and Enlarged Mediterranean: A connection was identified between the Indo-Pacific and the enlarged Mediterranean where Italy is a front-line player in terms of energy security, investments, and commerce.
    • Support for G20 Presidency: Italy offered full support to the Indian Presidency of the G20, contributing around issues that were at the centre of Italy’s G20 Presidency in 2021.
    • Ukraine Conflict: Italy and India will be engaged in trying to find a cessation of the conflict in Ukraine.
    • European-Indian Strategic Partnership: Both the Prime Ministers expressed their commitment to enhancing the European-Indian strategic partnership and their support for the ongoing negotiations for Free Trade Agreements and agreements on investment protection and geographical indication protection.

    What makes Italy a crucial partner for India?

    • Economic Cooperation: Italy is one of the largest economies in the European Union and is home to several global corporations. India has a growing economy, and both countries have strong economic ties.
    • Trade and Investment: Italy is the 13th largest investor in India with around 700 Italian companies having a presence in India. Italian companies are investing in various sectors in India, including infrastructure, energy, automotive, and textiles.
    • Cultural Ties: India and Italy share a rich cultural heritage, and their cultural ties go back centuries. Both countries have a long history of art, literature, music, and architecture. Italy is known for its classical art, and India is renowned for its rich cultural diversity.
    • Strategic Cooperation: Both have a shared vision of a multi-polar world order, and are committed to promoting peace and security. Both countries work closely on global issues such as climate change, counter-terrorism, and UN reform.
    • People-to-People Contacts: Italy and India have a significant number of people-to-people contacts, with a large Indian diaspora in Italy. There are over 150,000 people of Indian origin living in Italy, and they contribute significantly to the cultural, social, and economic fabric of the country. The growing tourism sector is also promoting more significant people-to-people contacts between the two countries.

    Italy

    Conclusion

    • The strategic partnership between Italy and India is based on respect for international law, freedom of navigation, and territorial integrity. It aims to strengthen bilateral relations and focus on sectors such as defence, cybersecurity, space, and energy. In these challenging times, the two countries aim to give a strong impulse to their relations based on the common recognition of the value of true friendship and solidarity.

    Mains Question

    Q. What are the key highlights of the recent visit of Italian Prime Minister Giorgia Meloni to India, and how does it mark a significant turning point in the relations between Italy and India? Also Discuss the factors that make Italy a crucial partner for India.

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  • 15th Mar 23 | Prelims Daily with Previous Year Questions

    15th Mar 23 | Prelims Daily with Previous Year Questions

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  • Nikaalo Prelims Spotlight || External Sectors of India

    Dear Aspirants,

    This Spotlight is a part of our Mission Nikaalo Prelims-2023.

    You can check the broad timetable of Nikaalo Prelims here

    Session Details

    YouTube LIVE with Parth sir – 1 PM  – Prelims Spotlight Session

    Evening 04 PM  – Daily Mini Tests

    Telegram LIVE with Sukanya ma’am – 06 PM  – Current Affairs Session

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    15th Mar 2023

    External Sectors of India 

    All economic activities of an economy which take place in foreign currency fall in the external sector such as balanced of payment, export, import, foreign investment, external debt, current account, capital account, exchange rates etc.

    FOREX RESERVES

    Foreign exchange reserves are assets denominated in a foreign currency that are held on reserve by a central bank. These may include foreign currencies, bonds, treasury bills and other government securities.

     

    Forex Reserves Consist of:

     

    • Bank deposits

    • Gold

    • Special drawing rights (SDRS)

    • Reserve tranche position (RTP)

    • Foreign currency assets (FCA)

    • Government securities

    SDR

     

    • SDR is an international reserve asset, created by the IMF in 1969.

    • Value of the SDR is based on a basket of five currencies- Dollar, Euro, Renminbi, Yen, and Pound Sterling.

    • It is neither a currency nor a claim on the IMF. Rather, it is a potential claim on the freely usable currencies of IMF members.

    EXCHANGE RATE

    Exchange rate is Price at which one currency is converted into or exchanged for another currency.

    Various Exchange rates mechanism:

     

    FIXED EXCHANGE RATE

    FLOATING EXCHANGE RATE

    MANAGED FLOATING RATE

    Complete intervention of Authority (government or central bank) in determination of the currency exchange rate.

    Market forces(demand and supply) determine the value of currency

    No role of authority

    Exchange rate is largely determined by market forces.

    In crisis, central banks may intervene to stabilize the exchange rate

    NEER vs REER

     

    Nominal Effective Exchange Rate (NEER)

    Real Effective Exchange Rate (REER)

    Weighted average of bilateral nominal exchange rates of the home currency in terms of foreign currencies

    Weighted average of nominal exchange rates, adjusted for inflation.

    It is the exchange rate of one currency against a basket of currencies, weighted according to trade with each country (not adjusted for inflation).

    Is calculated on the basis of NEER.

    Captures inflation differentials between country and its major trading partners and reflects the degree of external competitiveness

    CURRENCY CONVERTIBILITY

    Currency convertibility is the ease with which the currency of a country can be freely converted into any other foreign currency or gold at market determined exchange rate.

     

    Partial Convertibility:

    • Portion allowed by the government which can be converted into foreign currency with least restrictions.

    • Union Budget for 1992-93, introduced it on current account under Liberalized Exchange Rate Management System (LERMS)

    • Also known as Dual exchange system.

    • Presently partial convertibility still operational on capital account.

    Full Convertibility:

    • Freedom to convert domestic currency into any foreign currency and vice versa without any regulatory intervention.

    • Dual exchange rate system got automatically abolished and LERMS was now based upon the open market exchange.

    • In 1994, the Government of India declared full convertibility of Rupee on Current account.

    Tarapore Committee I (1997) and II (2006):

    • Constituted by the RBI for suggesting a roadmap on full convertibility of Rupee on Capital Account.

     

    Advantages of capital account convertibility:

    • Availability of large funds
    • Reduction in cost of capital.
    • Greater financial competitiveness.
    • Increase in FII/FPI flow.

    BALANCE OF PAYMENT

    A systematic record of all economic transactions between the residents of one country with the residents of the other country in a financial year.

    It consists of balance of trade, balance of current account and capital account.

    Balance of trade: Difference between the monetary value of a nation’s exports and imports over a certain time period.

    Balance of payments divides transactions in two accounts:

    Current account

    Capital account

     

    Current Account

    Invisible

    Visible

    Goods(+)

    Services [+)

    Income

    1. Dividend

    2. Interest

    3. Profit

    Transfer [+]

    1. Gift

    2. Donation

    3. Remittance

    Capital account [+]

    Investment [+]

    1.Sovereign 2.Commercial

    NRI account [+]

    1. Gift

    2.Donation 3.Remittance

    Loan (+)

    1 FDI 2. FII/FPI
     

    CURRENT ACCOUNT

    CAPITAL ACCOUNT

    Meaning

    • Records imports and exports of visible and invisibles

    • Short term implication transactions

    • Covers only earnings and spending.

    • Excludes any borrowings and lending.

    • Shows capital expenditure and income for country

    • Long term implication transactions

    • Only includes borrowings and lending by a country

    Components

    • Visible trade(Export and Import of goods-Merchandise transactions )

    • Invisible trade(Export and Import of services)

    • Unilateral transactions

    • Direct Investment (FDI)

    • Portfolio Investment (FPI)

    • Loans / External commercial borrowing (ECB)

    • Non-resident’s investment in Bank, Insurance, Pension schemes.

    • RBI’s foreign exchange reserve

    Deficit (CAD)

    • If the value of the goods and services imported exceeds the value of those exported.

    • Current Account deficit = Trade gap(export – import) + Net current transfers (foreign aid) + Net factor income (Interest, Dividend)

    • When more money is flowing out of a country to acquire assets and rights abroad

    Surplus

    • If the value of the goods and services exported exceeds the value of those imported.

    • Money is flowing into the country, but these inflows reflect changes in the ownership of national assets by way of sale or borrowing.

    Convertibility

    • Current account convertibility relates to the removal of restrictions on payments relating to the international exchange of goals, services and factor incomes.

    • Capital account convertibility refers to a liberalization of a country’s capital transactions such as loans and investment.

    Current status

    • Allowed Full convertibility

    • Only Partial convertibility

    EXTERNAL DEBT

    Part of a country s debt which has been borrowed from foreign creditors which includes private commercial banks, international financial institutions such as the World Bank, International Monetary Fund (IMF), and sovereign governments.

    Types of external debts:

    Short term debt: Maturity period 1 year or less

    Long term debt: Maturity period more than 1 year

    Sovereign debt : Bonds issued by the national government in any foreign currency to generate funds to meet its financial expenses.

     

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  • [Burning Issue] Silicon Valley Bank Crisis

    silicon

    Context

    • Startup-focused lender SVB Financial Group on March 10 became the largest bank to fail since the 2008 financial crisis, in a collapse that roiled global markets. Regulators had abruptly shut down Signature Bank to prevent a crisis in the broader banking system.
    • In this context, this edition of the burning issue will talk about this crisis, scenarios which could emerge, how India will be impacted by it and how the government is responding to the situation.

    About Silicon Valley Bank

    • It is a financial institution that provides banking services to the technology industry and venture capital firms.
    • Founded in 1983, it has since become the go-to bank for startups and entrepreneurs in Silicon Valley and beyond.
    • It is unique in that it understands the specific needs and challenges of the tech industry, and provides a range of services that cater to startups, including loans, deposits, and investment management.
    • It has become a critical player in the startup ecosystem, providing funding and financial services to many of the world’s most successful startups, including Tesla, Uber, and LinkedIn.

    Why did it collapse?

    • Heavy investment in government bonds: During the period of near-zero interest rates, SVB invested billions of dollars in US government bonds. What appeared to be a safe investment quickly unravelled as the Federal Reserve aggressively raised interest rates to combat inflation.
    • A decline in bond prices: Bond prices decline when interest rates rise, hence the rate increase undermined the value of SVB’s bond holdings. According to Reuters, the portfolio was yielding an average of 1.79% last week, well below the 10-year Treasury yield of roughly 3.9%.
    • Customers panicking: SVB disclosed that it had sold a slew of securities at a loss and would sell $2.25 billion in new shares to plug a hole in its finances. Customers panicked, and they withdrew enormous sums of money.
    • Bank’s Stock prices plummeted: The bank’s stock fell 60% dragging down rival bank shares as investors began to fear a replay of the global financial catastrophe a decade and a half ago.
    • Regulators stepped in: Trading in SVB shares had ceased and the company had abandoned efforts to raise funds or find a buyer. California regulators stepped in, closing the bank and placing it in receivership under the Federal Deposit Insurance Corporation, which normally entails liquidating the bank’s assets to repay depositors and creditors.
    • A case of liquidity risk: The case represents a classic case of an economic crisis situation called liquidity risk. Liquidity risk is the risk that a bank won’t be able to meet its obligations when they come due without incurring losses.
    silicon

    Reasons for SVB’s downfall

    • A downturn of tech stocks: The bank was hit hard by the downturn in technology stocks over the past year as well as the Federal Reserve’s aggressive plan to increase interest rates to combat inflation.
    • Lower bond yield due to lower interest rates: SVB bought billions of dollars’ worth of bonds over the past couple of years, using customers’ deposits as a typical bank would normally operate.
    • Mostly startup account holders: SVB’s customers were largely startups and other tech-centric companies that started becoming needier for cash over the past year.
    • Drying VC funding: Venture capital funding was drying up, and companies were not able to get additional rounds of funding for unprofitable businesses.
    • Fear over deposit insurance: Since its customers were large businesses and the wealthy, they likely were more fearful of a bank failure since their deposits were over $250,000, which is the government-imposed limit on deposit insurance.

    Is this a start of a banking crisis?

    • The demise of both Silicon Valley Bank and Signature Bank put a spotlight on the challenges surrounding small and midsize banks, which tend to focus on niche businesses and can be more vulnerable to bank runs than larger peers.
    • The most immediate concern is that the failure of one would scare off customers of other banks. Both Silicon Valley Bank and Signature are small compared with the nation’s largest banks — Silicon Valley Bank’s $209 billion and Signature’s $110 billion in assets pale next to the more than $3 trillion at JPMorgan Chase. But bank runs can happen when customers or investors panic and start pulling their deposits.
    • Shares of bigger banks were not affected as much. All banks face interest rate risk today on some of their holdings because of the Fed’s rate-hiking campaign. This has resulted in $620 billion in unrealized losses on bank balance sheets as of December 2022.
    • But most banks are unlikely to have significant liquidity risk.

    Implications

    • The collapse of Silicon Valley Bank and Signature Bank made a huge impact on global finances as stocks have lost $465 billion in market value so far.
    • Startups scramble: Many startups and other companies that relied on the bank’s services were suddenly left without access to their funds, which caused financial strain and uncertainty for these businesses.
    • Ripple effect: They now fear that they might have to pause projects or lay off or furlough employees until they could access their funds.
    • Huge uninsured deposits: The vast majority of these were uninsured due to its largely startup and wealthy customer base.
    • No scope for asset reconstruction: There is no potential buyer of Silicon Valley Bank.

    How India could be impacted?

    • SVB has invested in around 21 Indian start-ups including Paytm, Paytm Mall, Shaadi.com, CarWale, Naaptol, and One97 Communications – though the amount remains unclear. But according to the data, SVB has no ‘significant investments in Indian start-ups post-2011.
    • For Indian mutual fund investors who have exposure to international mutual funds and international hybrid mutual funds, this news is not a good news.

    Impact on Indian startups

    • Uncertainty over deposits: The failure of SVB is likely to have a ripple effect on Indian startups, many of which have significant amounts of funds deposited with the bank.
    • Hamper the funding: SVB has been a major player in the Indian startup ecosystem, providing banking services and funding to many of the country’s most successful startups, including Flipkart, Ola, and Zomato.
    • Ripple effect: This could lead to a cash crunch for many companies, which may be forced to cut costs, delay projects, or lay off employees.
    • Reduce global footprints: SVB has also been instrumental in helping Indian startups expand into the US market, by providing them with the necessary infrastructure and support to set up operations in Silicon Valley.

    India’s resilience

    • The risk remains quite low: as Indian banks are well-capitalised. RBI’s Financial Stability Report noted that even under a severe stress scenario, the capital adequacy ratio of banks is likely to remain within the mandated range.
    • Improve with time: Some Indian startups with exposure to SVB may face difficulty in funding day-to-day operations as their funds remain locked. FDIC will facilitate withdrawals, but it may take time.
    • Government lending support: Indian Government has indicated that it will meet Indian startups this week to understand the impact of SVB Financial’s collapse on them and how the government can help during the crisis.

    Learnings from this bank’s failure

    • Question the Trump-era deregulation of banks: The crisis brings into question the Trump-era deregulation of banks such as the decision to roll back Dodd-Frank’s ‘too big to fail’ rules, reducing both oversight and capital requirements. Both seem to have contributed to SVB’s collapse. It appears that the deregulation has allowed banks such as Silicon Valley Bank to take reckless risks. Now there needs to be a serious conversation about reversing the law to shore up confidence and avoid further collapses.
    • Pause on its rate hike programme: It is now doubtful that the Fed will continue with its plan for aggressive interest rate hikes. The next hike was widely expected on 22 March following robust jobs data in January and February. The stress in the banking sector, and the wider impact on confidence, will now give the central bank cause for pause on its rate hike programme.
    • Praise for RBI: The Reserve Bank of India (RBI) deserves credit for how it handles the Indian banking system. Time and again and in each global crisis, it gets proven that Indian banks are tightly regulated, which ensures that there are no major shocks.
    • To be fair, most Indian banks are safe, at most times. And the reason is that the RBI monitors them very closely and forces them to take corrective actions proactively if there is something amiss. But still, all banks are not the same.

    Conclusion

    • When an ecosystem collapses, like the crypto, start-ups and PEs, some casualties are bound to happen. The meltdown could be in its final leg and collateral damage has hit market sentiments.
    • But this will not last long and may be closer to a panic bottom in the markets.

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  • Electricity Discoms: Public Hearings And Public Participation in Decision Making

    Public Hearings

    Central Idea

    • The scale of operations of electricity distribution companies is clear from the fact that their annual revenue requirement is 20% of the Union Budget. The article discusses the importance of public participation in the decision-making process of electricity distribution companies and the role of public hearings conducted by Electricity Regulatory Commissions (ERCs) in this regard. The central ERC recently issued a public notice where it announced that hearings would resume through in-person mode.

    All you need to know about Electricity Regulatory Commissions (ERCs)

    • Independent body: ERCs are independent statutory bodies established by the government to regulate the generation, transmission, distribution, and trading of electricity in a particular state or region.
    • Role: The primary role of ERCs is to protect the interests of electricity consumers by ensuring that electricity is supplied to them at reasonable and affordable rates while ensuring the financial viability of the electricity sector.
    • Powers: ERCs also have the power to issue licenses to power generation and distribution companies, set tariffs, and adjudicate disputes between stakeholders in the electricity sector.
    • To ensure transparent framework: ERCs are an essential part of the electricity sector, ensuring that there is a fair and transparent regulatory framework that promotes competition, efficiency, and innovation.

    Importance of Public Participation in the decision-making process of electricity distribution companies

    • Transparency: Public participation promotes transparency in the decision-making process, It ensures that stakeholders are informed about the decisions being made, the rationale behind them, and the potential impact on the community.
    • Accountability: It creates a system of checks and balances that helps ensure that decisions made are in the best interest of the public.
    • Improved Decision Making: Public participation can provide DISCOMs with valuable insights and perspectives from the community. This can help improve decision-making by ensuring that decisions are made based on a comprehensive understanding of the issues and the needs of the community.
    • Increased Trust: When the public is involved in the decision-making process, it helps build trust between the community and the DISCOM. This can lead to increased support for the decisions made, greater acceptance of the outcomes, and reduced potential for conflict or opposition.
    • Community Empowerment: Public participation can empower the community to have a voice in the decisions that affect their daily lives. This can lead to a greater sense of ownership and responsibility for the outcomes, as well as increased engagement and participation in future decision-making processes.

    In-person Public Hearings

    1. Pros of In-person Public Hearings
    • Greater sense of community: In-person hearings provide a greater sense of community and allow for face-to-face interactions, which can help build trust and foster dialogue.
    • Physical presence: In-person hearings allow participants to physically be present in the room, which can make it easier for them to be heard and have their concerns addressed.
    • Better understanding: In-person hearings may be more effective at conveying complex information and data, as participants can ask questions and seek clarification in real-time.
    • Increased transparency: In-person hearings can increase transparency as they allow the public to see and hear the proceedings first-hand, and hold regulators and utilities accountable.
    1. Cons of In-person Public Hearings
    • Accessibility: In-person hearings may not be accessible to all members of the public, especially those who are physically unable to attend, live far away, or have other commitments.
    • Time-consuming and expensive: In-person hearings can be time-consuming and expensive to organize and attend, which can deter participation and limit the diversity of voices represented.
    • Limited participation: In-person hearings may limit participation to those who are comfortable with public speaking or who have the means to travel and attend the hearing, potentially excluding some marginalized groups.

    Online Public Hearings

    1. Pros of Online Public Hearings
    • Accessibility: Online hearings are more accessible to a wider audience, as participants can attend from anywhere with an internet connection.
    • Convenience and flexibility: Online hearings provide more convenience and flexibility for participants as they can attend from the comfort of their own homes and at their own pace.
    • Increased participation: Online hearings may increase participation from diverse groups and those who may not be comfortable with public speaking or traveling to attend an in-person hearing.
    • Cost-effective: Online hearings can be less expensive to organize and attend, which can allow for more resources to be dedicated to other aspects of the regulatory process.
    1. Cons of Online Public Hearings
    • Technical difficulties: Online hearings may be subject to technical difficulties, such as poor internet connection or difficulties with the online platform, which can hinder participation and the effectiveness of the hearing.
    • Limited sense of community: Online hearings may lack the sense of community that in-person hearings provide, potentially limiting the opportunity for dialogue and relationship building.
    • Digital divide: Online hearings may be inaccessible to those who do not have reliable internet access or the necessary technology to participate.
    • Privacy concerns: Online hearings may raise privacy concerns, as participants may be uncomfortable sharing personal information or speaking out in a public forum.

    What could be the best option?

    • A hybrid mode with both in-person and online options is the best approach to ensure quality public participation.
    • Moving back to the pre-pandemic practice of only in-person hearings takes away a convenient avenue for consumer engagement and impacts meaningful interactions that are possible in the in-person platform.
    • The provision of online mode in addition to in-person hearings would strengthen public participation and plug access gaps, provide flexibility of participation to the citizen, and enable a robust avenue for public participation.

    Conclusion

    • Public hearings conducted in hybrid mode, with the choice of mode being left to the citizen, are best suited to improving access and ensuring quality public participation. There is a need for institutions to continue to build infrastructure and experience toward online hearings and make improvements in how online hearings are conducted.

    Mains Question

    Q. What is the role of Electricity Regulatory Commissions (ERCs) in the electricity sector, and why is public participation important in the decision-making process of electricity distribution companies?

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  • Why are India’s garbage landfill burning?

    landfill

    The Kochi landfill site has caught fire. This is a stark reminder that Indian cities need to be prepared for more such incidents as summer approaches.

    What are Landfills?

    • Garbage landfills, also known as waste disposal sites or dumps, are areas where waste materials are disposed of by burying them in the ground.
    • They are designed to contain and isolate the waste from the surrounding environment, preventing the spread of pollutants and contamination of soil and water sources.
    • Garbage landfills are commonly used for the disposal of non-hazardous municipal solid waste, such as household trash, construction debris, and yard waste.
    • However, they can also be used for the disposal of hazardous waste and other types of industrial waste, depending on the regulations and restrictions in place.

    Is landfilling best way for waste management?

    • Landfilling is not considered the best way for garbage disposal, as it can have negative environmental impacts.
    1. Landfills take up space
    2. Release harmful gases such as methane and carbon dioxide, and
    3. Contaminate groundwater and soil if not properly managed
    • Landfills can emit odours and create noise pollution, which can impact nearby communities.

    Alternative methods for garbage disposal

    • Recycling: This involves the separation of waste materials such as plastics, glass, metals, and paper from the general waste stream, and processing them into new products.
    • Composting: This is the process of breaking down organic waste materials such as food scraps, yard waste, and paper into a nutrient-rich soil amendment.
    • Waste-to-energy: This involves the conversion of waste into energy through incineration, gasification, or pyrolysis. The energy produced can be used to generate electricity or heat.
    • Landfill gas recovery: This involves the collection and use of methane gas produced by decomposing waste in landfills to generate electricity or heat.
    • Mechanical biological treatment: This is a process that combines mechanical and biological processes to separate and treat waste materials, producing compost and recyclable materials.
    • Anaerobic digestion: This is a biological process that breaks down organic waste in the absence of oxygen, producing biogas and fertilizer.

    Landfills in India

    landfill

    • Indian municipalities collect more than 95% of the waste generated in cities.
    • The efficiency of waste processing is 30-40% at best.
    • Indian municipal solid waste consists of about 60% biodegradable material, 25% non-biodegradable material, and 15% inert materials.
    • Municipalities are expected to process wet and dry waste separately and have recovered by-products recycled.

    Why do Indian landfills often catch fire in summers?

    • The rate of processing in India’s cities is far lower than the rate of waste generation.
    • Unprocessed waste remains in open landfills for long periods.
    • Openly disposed waste includes flammable material like low-quality plastics and rags and clothes.
    • In summer, the biodegradable fraction composts much faster, increasing the temperature of the heap.
    • Higher temperature and flammable material increase the chance for the landfill to catch fire.
    • Some fires have been known to go on for months.

    Is there a permanent solution?

    There are two possible permanent solutions to manage landfill fires.

    1. Completely cap the material using soil and close landfills in a scientific manner: This solution is unsuitable in the Indian context as the land can’t be used again for other purposes. Closed landfills have specific standard operating procedures, including managing methane emissions.
    2. Clear the piles of waste through bioremediation: Excavate old waste and use automated sieving machines to segregate the flammable refuse-derived fuel (RDF), such as plastics, rags, clothes, etc., from biodegradable material. The recovered RDF can be sent to cement kilns as fuel, while the bio-soil can be distributed to farmers to enrich soil. The inert fraction will have to be landfilled.

    Some immediate measures to manage landfill fires

    • Divide the site into blocks: Based on the nature of waste, separate fresh waste from flammable material and capping portions with soil to reduce the chance of fire spreading across blocks.
    • Cap the most vulnerable part of the landfill: That contains lots of plastics and cloth, with soil.
    • Provide enough moisture to the fresh-waste block: By sprinkling water and regularly turn the material for aeration to cool the waste heap.
    • Classify incoming waste: On arrival and dispose of it in designated blocks rather than dumping mixed fractions.
    • Send to kilns on time: Send already segregated and baled non-recyclable and non-biodegradable waste to cement kilns instead of allowing it to accumulate at the site.

    Way forward

    • Sites should be equipped with water tankers with sprinklers for immediate action.
    • The municipality should work with the nearest fire department and have a plan of action in advance.
    • Waste-processing workers (plant operators, segregators, etc.) should have basic fire safety and response training.
    • People around landfill sites should also be trained and equipped to safeguard themselves during fires.
    • The municipality should have routine round-the-clock video surveillance of the most flammable portion of the landfill.
    • Flammable material like chemical waste, match sticks, and lighters should not enter the site.
    • Machines at the site, like sieves and balers, should be cleaned and moved away from the flammable material.
    • On-site staff and security personnel should be housed away from the flammable portion.
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  • Australia to buy US nuclear submarines under AUKUS

    aukus

    Australia will buy up to 5 US nuclear-powered submarines and build a new model with US and British technology under the AUKUS.

    AUKUS: A Backgrounder

    • This new partnership is known as AUKUS and the major highlight of this arrangement is the sharing of US nuclear submarine technology with Australia.
    • The first major initiative of AUKUS would be to deliver a nuclear-powered submarine fleet for Australia thereby giving it a nuclear heft in the Pacific where China has been particularly aggressive.
    • Apart from this AUKUS will also involve the sharing of cyber capabilities and other undersea technologies.
    • This alliance is considered to be most significant security arrangement between these three nations.

    Ripples created by AUKUS

    (A) US shift of focus

    • AUKUS is both an acknowledgment of and a concession to the loss of US strategic primacy.
    • It gives justification for the hasty withdrawal from Afghanistan — to be able to better focus on the strategic rivalry and trade competition with China.

    (B) Resentment in the EU and France

    • The deal has complicated the relations between France and Australia, and also France and the US. France is upset as it has been kept out of the loop.
    • France has even ordered the recall of its ambassadors to Washington and Canberra.

    (C) Chinese offensive reception

    • China, expectedly, has strongly criticised AUKUS and the submarine deal as promoting instability and stoking an arms race.

    (D) Confusion among the SE nations

    • The new great power contestation might actually generate much room for the Southeast Asian states to manoeuvre, as they are wooed simultaneously by China, AUKUS, and the Quad.
    • They realise that AUKUS is a challenge to the hallowed notion of “ASEAN centrality”, a totemic rhetorical device which seeks to have others acknowledge its relevance.

    Why such an alliance?

    (A) Deteriorating China-AU relations

    • Tensions have been high between Australia and an increasingly assertive China, its largest trade partner.
    • Australia banned Chinese telecom giant Huawei in 2108 and its PM called for an investigation into the origins of COVID-19 last year.
    • China retaliated by imposing tariffs on or capping Australian exports.

    (B) US act of counterbalancing

    • China has nuclear-powered submarines, as well as submarines that can launch nuclear missiles.
    • The three signatories to the AUKUS deal have made it clear though, that their aim is not to arm the new subs with nuclear weapons.

    (C) Bringing Australia at the centrestage of Indo-Pacific

    • In the context of the AUKUS agreement, nuclear-powered submarines will give the Royal Australian Navy the capability to go into the South China Sea.
    • This is primarily because a nuclear-powered submarine gives a navy the capability to reach far out into the ocean and launch attacks.
    • A nuclear-powered submarine offers long distances dives, at a higher speed, without being detected gives a nation the ability to protect its interests far from its shores.

    Exactly, How?

    • To go from a diesel-electric fleet to a nuclear fleet is thus a change of strategy, not just of propulsion.
    • It provides a way to project power from the shipping lanes which feed the all-important Malacca Strait to the waters off Taiwan.
    • Add on the capacity to launch much longer-range missiles—a submarine could deliver missiles to China’s mainland while sitting to the east of the Philippines—and the country has a greatly expanded offensive capacity.

    AU: Another US Base

    • If Australia’s strategic stance is changed by the deal, so is America’s.
    • Since the Second World War the US has projected power across the region called as an archipelago of empire.
    • There are the island bases from Hawaii in the east to Guam, Okinawa in Japan and, in the Indian Ocean, Diego Garcia, leased from Britain without the consent of its natives.
    • In Australia, America has now, in effect, a beefed-up continent-sized base for its own operations as well as a reinvigorated ally.

    Outcomes of AUKUS

    (A) Offensive front against China

    • There is no gainsaying the fact that rapid accretion in China’s economic and military capacities, but more particularly its belligerence, has led to a tectonic shift in regional security paradigms.
    • Several countries have been obliged to review their defence preparedness in response to China’s rising military power and its adverse impact on regional stability.

    (B) India as a bridge in Anglosphere

    • The transatlantic fissure has also pointed to something inconceivable—that India could emerge as a potential bridge between different parts of the West.
    • Our PM was on the phone with French President Emmanuel Macron reaffirming India’s strong commitment to the Indo-Pacific partnership with France.
    • India’s solidarity with France at a difficult moment is rooted in New Delhi’s conviction that preserving the West’s unity is critical in shaping the strategic future of the Indo-Pacific.

    (C) Exposed Chinese double standards

    • China has the world’s fastest-growing fleet of sub-surface combatants.
    • This includes the Type 093 Shang-class nuclear-powered attack submarine (SSN) and the Type 094 nuclear-powered Jin-class ballistic missile submarine (SSBN).
    • Its nuclear submarines are on the prowl in the Indo-Pacific.
    • Yet, China denies Australia and others the sovereign right to decide on their defence requirements.

    Implications on QUAD

    • Not superseding: This alliance does not and will not supersede or outrank existing arrangements in the Indo-Pacific region such as the Quad, which the US and Australia form with India and Japan, and ASEAN.
    • Complimentary to QUAD: AUKUS will complement these groups and others.

    Opportunities for India

    While the Quad and Washington’s Indo-Pacific pivot generate much interest and anxiety, it is easy to forget that the two ideas are, in essence, about India.

    • India’s role has enhanced: Balancing China is the challenge confronting the United States, and Washington has recognized that India is an indispensable part of the answer.
    • Just another alliance: New Delhi has no reason to complain if Australia, Britain, and the United States raise the military capabilities of their coalition. The submarine deal is an undiluted example of strategic defence collaboration.
    • Intimidating China: The introduction of nuclear-powered submarine through AUKUS has a complicating impact on the Chinese maritime calculus. Anything that maintains a balance of power in the region is desirable.
    • Focusing inside on land border: AUKUS also leaves India with a less of a headache in securing its maritime flank from Chinese aggression and New Delhi may focus more fully on the threat emanating from the land border with China.

     

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