Type: Explained

These Newscards correspond to the explained section of various newspapers. They become immensely important for both prelims and mains and special attention needs to be paid to them

Parliament – Sessions, Procedures, Motions, Committees etc

Anti defection: Related issues

Polity | Mains Paper 2: Parliament & State Legislatures
Note4Students

From UPSC perspective, the following things are important :

Prelims level : Tenth Schedule

Mains level : Paper 2- Exemptions to anti-defection laws

Context

In its verdict in the Goa MLAs case, Bombay High Court has misread the 10th schedule of the Constitution, which was meant to prevent horse trading among legislators.

Understanding the Paragraph (4) of Tenth Schedule

  • Paragraph (4) is an exception to the Tenth Schedule’s main provisions.
  • It operates only when the defectors’ original political party has merged with the party to which they have defected and two-thirds of the members of the legislature belonging to that party have agreed to the merger.
  • Under this provision, the merger of the original political party has to take place first, followed by two-thirds of the MLAs agreeing to that merger.
  • The basic premise of the February 25 judgment is that sub-paragraph (2) is distinct from the parent paragraph, and a factual merger of the original political party is not necessary.
  • This does not square with the content, context and thrust of paragraph (4), which contemplates the factual merger of the original political party — in this case, the INC.
  • The court’s view — the merger of the 10 MLAs of the Congress Legislative Party with the BJP should be regarded as the Congress itself merging with the BJP — goes against the letter and spirit of the Tenth Schedule, paragraph (4) in particular.

Process for the merger: 2 conditions need to be satisfied

  • 1] Merger alone is not enough: The opening words of sub-paragraph (2) — “for the purposes of sub-paragraph (1) of this paragraph” — clearly mean that to exempt a member from disqualification on account of defection, and for considering this member’s claim that he has become a member of the party with which the merger has taken place, a merger of two political parties alone is not enough.
  • 2] Not less than 2/3 members should also agree: Not less than two-thirds of the members should also agree to such a merger.
  • The lawmakers made it tough for potential defectors to defect.
  •  The words “such merger” make it clear beyond any shadow of doubt that the merger of the original political party has to take place before two-thirds of the members agree to such a merger.
  • The members of the legislature cannot agree among themselves to merge as the court has said, but they can agree to a merger after it takes place.

Conclusion

The anti-defection law was designed to eliminate political defection. However, the judgment of the Bombay HC seems to assume that paragraph (4) of the 10th schedule is meant to facilitate defection. This judgment is likely to open the flood gates to defection. The Supreme Court must intervene quickly.

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Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

‘climate smart’ agriculture

Enviro & Biodiversity | Mains Paper 3: Conservation, Environmental Pollution & Degradation, Eia
Note4Students

From UPSC perspective, the following things are important :

Prelims level : GHG from agriculture

Mains level : Paper 3- Moving toward net-zero agriculture

Context

In the backdrop of the 2070 carbon neutrality target set by India at the CoP26 in Glasgow, the Union Budget for 2022-23 has listed “climate action” and “energy transition” as one of the four priorities for the Amrit Kaal.

Climate related announcement in Budget 2022-23

  • An additional allocation of Rs 19,500 crore for solar PV modules has been made.
  • The finance minister also talked of co-firing of 5-7 per cent of biomass pellets in thermal power plants, “sovereign green bonds” and a “battery-swapping policy”.
  • These are positive steps towards making the energy and transport sectors less polluting.

How agriculture impact environement

  • Agriculture contributes 73 per cent of the country’s methane emissions. 
  • Third largest emitter: India has kept away from the recent EU-US pledge to slash methane emissions by 30 per cent by 2030, despite the country being the world’s third largest emitter of methane.
  • As per the national GHG inventory, the agriculture sector emits 408 MMT of carbon-dioxide equivalent and rice cultivation is the third highest source (17.5 per cent) of GHG emissions in Indian agriculture after enteric fermentation (54.6 per cent) and fertiliser use (19 per cent).
  • Paddy fields are anthropogenic sources of atmospheric nitrous oxide and methane, which have been reckoned as 273 and 80-83 times more powerful than carbon dioxide in driving temperature increase in 20 years’ (Sixth Assessment Report IPCC 2021).
  • Moreover, paddy fields require about 4,000 cubic metres of water per tonne of rice for irrigation.
  •  There is scientific evidence that intermittent flooding reduces water and methane emissions but increases nitrous oxide emissions.
  • Thus, lowering of methane emissions through controlled irrigation does not necessarily mean net low emissions. 
  • Role of subsidies and procurement policies: The environmental damage caused by agriculture is largely a result of the various kinds of subsidies — on urea, canal irrigation and power for irrigation — as well as the minimum support prices (MSP) and procurement policies concentrated on a few states and largely on two crops, rice, and wheat.

Excess rice and wheat stock

  • As of January 1, the stocks of wheat and rice in the country’s central pool were four times higher than the buffer stocking requirement.
  • Rice stocks with the Food Corporation of India (FCI) are seven times the buffer norms for rice.
  • The financial value of these excessive grain stocks is Rs 2.14 lakh crore, of which Rs 1.66 lakh crore is because of excess rice stocks — as per the economic cost of rice and wheat given by the FCI.
  • All this does not just reflect inefficient use of scarce capital, the amount of greenhouse gases (GHG) embedded in these stocks is also large.

Way forward

  • Carbon tax: According to the IMF, the world needs a carbon tax of $ 75 per tonne by 2030 to reduce emissions to a level consistent with a 2 degree Celsius warming target.
  • India does not have an explicit carbon-price yet, but many countries have begun to implement carbon pricing.
  • Revisiting policies: The Economic Survey 2021-22 points out that the country is over-exploiting its ground water resource (see map), particularly in the northwest and some parts of south India.
  • This calls for revisiting policies to subsidise power and fertilisers, MSP and procurement and reorient them towards minimising GHG emissions.
  • Farmer groups and the private sector can be mobilised to develop carbon markets in agriculture, both at the national and international levels, which can reward farmers in cash for switching from carbon-intensive crops to lower GHG emissions.

Consider the question “Elaborate on the impact of agriculture on the environment. Suggest the changes needed in Indian agriculture policies to reduce the impact.”

Conclusion

Such a move towards “net-zero” agriculture will give India a “climate smart” agriculture in Amrit Kaal. And, if we can protect productivity levels with a low-carbon footprint, it will help India to access global markets too.

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Judicial Reforms

In news: Law Commission of India

Polity | Mains Paper 2: Statutory, Regulatory & Various Quasi-Judicial Bodies
Note4Students

From UPSC perspective, the following things are important :

Prelims level : Law Commission of India

Mains level : Role of Law Commission in Legal Reforms

The Government has informed the Supreme Court that the appointment of Chairperson and Members of the 22nd Law Commission of India is under consideration.

Why in news?

  • The setting up of the 22nd Law Commission was constituted by the Government on February 21, 2020.
  • However, no progress has been made in the appointments till date.
  • The Government invoked the ‘doctrine of separation of power’, which says that one arm of governance should not encroach into that of another.

Issues over appointment

  • The last chairman of the law commission was retired Supreme Court judge, Justice B.S. Chauhan, who completed his tenure on 31 August 2018.
  • Subsequently, the Commission has not been reconstituted.
  • In February 2020, the Government of India announced its intention to reconstitute the Commission with no visible progress.

About Law Commission

  • Law Commission of India is a currently-defunct executive body established by an order of the Government of India.
  • The Commission’s function is to research and advise the GoI on legal reform, and is composed of legal experts, and headed by a retired judge.
  • The commission is established for a fixed tenure and works as an advisory body to the Ministry of Law and Justice.
  • The last chairman of the Commission retired in August 2018, and since then, it has not been reconstituted.

Colonial Background

  • The first Law Commission was established during colonial rule in India, by the East India Company under the Charter Act of 1833.
  • It was then presided by Lord Macaulay.
  • After that, three more Commissions were established in pre-independent India.

Post-Independence functioning

  • The first Law Commission of independent India was established in 1955 for a three-year term.
  • Since then, twenty-one more Commissions have been established.

Major reforms undertaken

  • The First Law Commission under Macaulay Itsuggested various enactments to the British Government, most of which were passed and enacted and are still in force in India.
  • These include the Indian Penal Code (first submitted in 1837 but enacted in 1860 and still in force), Criminal Procedure Code (enacted in 1898, repealed and succeeded by the Criminal Procedure Code of 1973), etc.
  • Thereafter three more Law Commissions were established which made a number of other recommendations the Indian Evidence Act (1872) and Indian Contract Act (1872), etc. being some of the significant ones.

Role in legal reforms

The Law Commission has been a key to law reform in India.

  • Its role has been both advisory and critical of the government’s policies
  • In a number of decisions, the Supreme Court has referred to the work done by the commission and followed its recommendations.
  • The Commission seeks to simplify procedures to curb delays and improve standards of justice.
  • It also strives to promote an accountable and citizen-friendly government that is transparent and ensures the people’s right to information.

 

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Indian Army Updates

Explained: BSF powers and jurisdiction

Security Issues | Mains Paper 3: Various Security Forces, Agencies & Their Mandates
Note4Students

From UPSC perspective, the following things are important :

Prelims level : BSF

Mains level : India's border security

The Ministry of Home Affairs (MHA) has extended the jurisdiction of the Border Security Force (BSF) up to 50 km inside the international borders in Punjab, West Bengal and Assam.

Do you know?

BSF currently stands as the world’s largest border guarding force. It has been termed as the First Line of Defence of Indian Territories.

About Border Security Force (BSF)

  • The BSF is India’s border guarding organization on its border with Pakistan and Bangladesh.
  • It comes under the Ministry of Home Affairs.
  • It was raised in the wake of the 1965 War on 1 December 1965 for ensuring the security of the borders of India and for matters connected therewith.
  • The BSF has its own cadre of officers but its head, designated as a Director-General (DG), since its raising has been an officer from the Indian Police Service (IPS).

What are the new modifications?

  • The MHA has exercised the powers under the Border Security Force Act of 1968.
  • It has thus outlined the area of BSF’s jurisdiction.
  • While the places marked here are within 50 km of the respective borders, this is not meant to represent the BSF’s jurisdiction.
  • At the same time, the Ministry has reduced BSF’s area of operation in Gujarat from 80 km from the border, to 50 km.

Powers exercised by BSF in its jurisdiction

BSFs jurisdiction has been extended only in respect of the powers it enjoys under:

  1. Criminal Procedure Code (CrPC)
  2. Passport (Entry into India) Act, 1920 and
  3. Passport Act, 1967

Arrest and search

  • BSF currently has powers to arrest and search under these laws.
  • It also has powers to arrest, search and seize under the NDPS Act, Arms Act, Customs Act and certain other laws.

Its powers under these will continue to be only up to 15 km inside the border in Punjab, Assam and West Bengal, and will remain as far as 80 km in Gujarat.

Sanctions behind such powers

  • Scarcely populated borders: At that time, border areas were sparsely populated and there were hardly any police stations for miles.
  • Trans-border crimes: To prevent trans-border crimes, it was felt necessary that BSF is given powers to arrest.
  • Manpower crunch: While police stations have now come up near the border, they continue to be short-staffed.

Various issues at Borders

  1. Encroachment
  2. Illegal incursion
  3. Drug and cattle smuggling

Why has the government extended the jurisdiction?

  • The objective of the move is to bring in uniformity and also to increase operational efficiency. Earlier BSF had different jurisdictions in different states.
  • BSF often gets information relating to crime scenes that may be out of their jurisdiction.
  • The move was also necessitated due to increasing instances of drone-dropping of weapons and drugs.

Impact on State Police jurisdiction

 

  • This move will complement the efforts of the local police. Thus, it is an enabling provision.
  • It’s not that the local police can’t act within the jurisdiction of the BSF.
  • The state police have better knowledge of the ground. Hence BSF and local Police can act in cooperation.

Criticism of the move

  • At a basic level, the states can argue that law and order is a state subject and enhancing BSF’s jurisdiction infringes upon powers of the state government.
  • In 2012, then Gujarat CM and the present PM had opposed a central government moves to expand BSF’s jurisdiction.

 

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Israel’s Iron Dome rocket defence system

Security Issues | Mains Paper 3: Awareness In The Fields Of It, Space, Computers, Robotics, Nano-Technology, Bio-Technology, Pharma Sector & Health Science
Note4Students

From UPSC perspective, the following things are important :

Prelims level : Iron Dome

Mains level : Paper 3- Iron Dome rocket defence system

Context

  • Amid the Israel-Palestine conflict, the night sky over Israel has been ablaze with interceptor missiles from Iron Dome shooting down the incoming rockets in the sky.

What is Iron Dome?

  • Iron Dome is a multi-mission system capable of intercepting rockets, artillery, mortars and Precision Guided Munitions as well as aircraft, helicopters and Unmanned Aerial Vehicles (UAV) over short ranges of up to 70 km.
  • It is an all-weather system and can engage multiple targets simultaneously and can be deployed over land and sea.
  • Iron Dome is jointly manufactured by Rafael Advanced Systems and has been in service with Israeli Air Force since 2011.
  • The radar system was developed by Elta.

Working of Iron Dome

  • An Iron Dome battery consists of a battle management control unit, a detection and tracking radar and a firing unit of three vertical launchers, with 20 interceptor missiles each.
  • The interceptor missile uses a proximity fuse to detonate the target warhead in the air.
  • One of the system’s important advantages is its ability to identify the anticipated point of impact of the threatening rocket, to calculate whether it will fall in a built-up area or not, and to decide on this basis whether or not to engage it.
  • This prevents unnecessary interception of rockets that will fall in open areas and thus not cause damage, the paper states.
  • The system has intercepted thousands of rockets so far and, according to Rafael Advanced Systems, its success rate is over 90%.

Limitations of the system

  • The system can see limitations when it is overwhelmed with a barrage of projectiles.
  • The system has a ‘saturation point’.
  • It is capable of engaging a certain number of targets at the same time, and no more.
  • One of the possible limitations is the system’s inability to cope with very short range threats as estimates put the Iron Dome’s minimum interception range at 5-7 kilometres.

 

Israel-Palestine Clash

International Relations | Mains Paper 2: Effect Of Policies & Politics Of World On India'S Interests
Note4Students

From UPSC perspective, the following things are important :

Prelims level : al-Aqsa mosque

Mains level : Paper 2- Israel-Palestine conflict

Context

On Monday, Israeli police stormed the Al-Aqsa mosque compound in East Jerusalem, leaving a reported 300 people injured. The stand-off came at the end of a week of tensions over the eviction of Palestinian residents from two neighbourhoods of East Jerusalem, Sheikh Jarrah and Silwan, to make way for Jewish settlers.

Cause of the clashes

  • The Al-Aqsa is located on a plaza at Temple Mount, which is known in Islam as Haram-e-Sharif.
  • The Mount is also Judaism’s holiest site.
  • The most imposing structure on the compound is the Dome of the Rock, with its golden dome.
  • The Western Wall, also known as the Wailing Wall sacred to Jews, is one side of the retaining wall of the Al-Aqsa compound.
  • Soon after the 1967 Six-Day War ended, Israel gave back to Jordan the administration and management of the Al-Aqsa compound.
  • While non-Muslims have not been allowed to worship at Al-Aqsa, Jewish individuals and groups have made repeated attempts to gain entry to the Mount Temple plaza.
  • Since the late 1990s, around the time of the first intifada, such attempts began occurring with a regularity as Jewish settlers began claiming land in East Jerusalem and surrounding areas.
  • It has led to repeated clashes and tensions at Al-Aqsa.

Rival claims over Jerusalem

  • Both Israel and Palestine have declared Jerusale their capital.
  • In July 1980, the Israeli Parliament passed the Jerusalem Law declaring it the country’s capital.
  • Palestinians declared Jerusalem the capital of the putative state of Palestine by a law passed by the Palestinian Authority in 2000.
  • The 1988 Palestinian Declaration of Independence also declared Jerusalem as the capital.
  • For the present, the Palestinian Authority has its headquarters in Ramallah.

How the world is reacting

  • The Security Council held a meeting on the situation in Jerusalem, but did not make any statement immediately.
  • Last Friday, the US said it was “extremely concerned” .
  • The UAE, which recently recognised as Israel as a state and sealed a historic peace agreement to normalise relations with it, has “strongly condemned” the clashes and the planned evictions in Jerusalem over the past week.
  • Saudi Arabia said it “rejects Israel’s plans and measures to evict dozens of Palestinians from their homes in Jerusalem”.
  • Pakistan Prime Minister also condemned Israel for violation of international law.

Coronavirus – Health and Governance Issues

What the easing of IP norms on Covid vaccines means for India

International Relations | Mains Paper 2: Bilateral, Regional and Global Groupings and agreements involving India
Note4Students

From UPSC perspective, the following things are important :

Prelims level : TRIPS

Mains level : Paper 2- What IP waiver for Covid vaccine mean to India

Background of waiver proposal

  • U.S. President Joe Biden’s administration announced its support for waiving intellectual property protections for COVID-19 vaccines.
  • Following the onset of the pandemic, the World Health Organisation proposed a COVID-technology access pool as a knowledge sharing initiative to rapidly scale up vaccine output around the world.
  • As vaccine research progressed last year, wealthy and advanced countries, placed huge advance purchase orders for vaccines.
  • This meant that smaller, developing countries would take longer to get vaccines and find resources to pay for them.
  • In October 2020, India and South Africa floated a proposal at the World Trade Organisation’s TRIPS (Trade-Related Aspects of Intellectual Property Rights) Council to waive certain provisions of the WTO’s TRIPS pact till the pandemic subsides.
  • The proposal envisaged facilitating wider access to technologies necessary for the production of vaccines and medicines.
  • While a majority of the least developed countries backed the proposal, some like China, Turkey and Thailand sought more clarity.
  • However, the proposal was nixed with the E.U., the U.S., Switzerland, Norway, Australia, Canada, Japan and the U.K. rejecting it outright, along with Brazil.
  • Among other things, the argument was that such waivers could dampen innovation and research in areas such as pharmaceuticals and diagnostic technologies.

What next

  • The WTO’s TRIPS Council is tentatively expected to hold a meeting on the waiver proposal again later this month.
  • If and when an agreement is reached here, the WTO’s Ministerial Council will also have to sign off.
  • Since WTO decisions are based on consensus, all 164 members need to agree on every single aspect of the negotiated waivers and conditions attached.

Way forward for India

  • The Centre can take two steps immediately in consonance with its stance at the WTO, following the U.S.’ statement of support.
  • The Union government must issue notification under Sections 92 and 100 of the Patents Act to freely licence all patents necessary for vaccine and drug production to treat COVID-19.
  • Issues of the amount of royalties can be decided in due course as laid out in the Patents Act, but that should not come in the way of immediate licensing by the government.
  • The government need to provide full support to companies to scale up vaccine production.
  • Indian industry has a well-respected expertise and capability to rapidly manufacture raw materials, consumables and equipment necessary to produce drugs, vaccines, medical devices and equipment if Intellectual Property barriers are removed.

————————————————-//—————————————

BACK2BASICS

  • COVID-19 Technology Access Pool (C-TAP) will compile, in one place, pledges of commitment made under the Solidarity Call to Action to voluntarily share COVID-19 health technology-related knowledge, intellectual property and data. C-TAP works through its implementing partners, the Medicines Patent Pool, Open COVID Pledge, UN Technology Bank-hosted Technology Access Partnership and Unitaid to facilitate timely, equitable and affordable access to COVID-19 health technologies.

Understand how the story has progressed:

India seeks TRIPS waiver for Vaccines

How IPR served as barrier to the right to access healthcare

Important Judgements In News

Reading Maratha quota verdict

Polity | Mains Paper 2: Executive & Judiciary
Note4Students

From UPSC perspective, the following things are important :

Prelims level : 102nd Amendment

Mains level : Paper 2- Maratha quota judgement

  • A five-judge Constitution Bench of the Supreme Court on Wednesday struck down the Maharashtra law granting reservation to the Maratha community.
  • The court had framed six questions of law on the issue.
  • The court unanimously agreed on three of those issues, while the verdict was split 3:2 on the other three.

Issue 1:  Whether Indra Sawhney judgment needs to be revisited

  • One of the key issues was to examine whether the 1992 landmark ruling by the nine-judge bench in Indra Sawhney v Union of India had to be revisited.
  • First, it said that the criteria for a group to qualify for reservation is “social and educational backwardness”.
  • Second, it reiterated the 50% limit to vertical quotas reasoning that it was needed to ensure “efficiency” in administration.
  • However, the court said that this 50% limit will apply unless in “exceptional circumstances”.
  • The Maratha quota exceeded the 50% ceiling. 
  • The arguments by state governments before the court was that the Indra Sawhney verdict must be referred to a 11-judge Bench for reconsideration since it laid down an arbitrary ceiling which the Constitution does not envisage.
  • The court said that the 50% ceiling, although an arbitrary determination by the court in 1992, is now constitutionally recognized and held that there is no need to revisit the case.

Issue 2 and 3: Does Maratha quota law come under exceptional circumstances

  • The state government’s argument was that since the population of backward class is 85% and reservation limit is only 50%, an increase in reservation limit would qualify as an extraordinary circumstance.
  • All five judges disagreed with this argument.
  • The bench ruled that the above situation is not extraordinary.

Issue 4,5 and 6: Validity of 102nd Amendment

  • The Constitution (One Hundred and Second Amendment) Act, 2018 gives constitutional status to the National Backward Classes Commission.
  • The Amendment also gives the President powers to notify backward classes.
  • The Bench unanimously upheld the constitutional validity of the 102nd Amendment but differed on the question of whether it affected the power of states to identify socially and economically backward classes (SEBCs).
  • Attorney General, appearing for the central government, clarified that this was not the intention of the law.
  • The Attorney General argued that it is inconceivable that no State shall have the power to identify backward class”.
  • The Attorney General explained that the state government will have their separate list of SEBCs for providing reservations in state government jobs and education.
  • The Parliament will only make the central list of SEBCs which would apply for central government jobs.
  • However, the Supreme Court held that “the final say in regard to inclusion or exclusion (or modification of lists) of SEBCs is firstly with the President, and thereafter, in case of modification or exclusion from the lists initially published, with the Parliament”.
  • This raises a question: How does this impact interventions by other states to provide reservations for other communities, for example Jats in Haryana and Kapus in Andhra?
  • The majority opinion essentially says that now the National Backward Classes Commission must publish a fresh list of SEBCs, both for states and the central list.
  • The Supreme Court also issued a direction under Article 142 of the Constitution of India which says that till the publication of the fresh list the existing lists will continue to operate.

————————————————-//————————————-

BACK2BASICS

  • National Commission for Backward Classes is a constitutional body (102nd amendment 2018 in the constitution to make it a constitutional body) (Article 338B of the Indian Constitution).
  • It was constituted pursuant to the provisions of the National Commission for Backward Classes Act, 1993.
  • According to Article 338B, Commission shall consist of a Chairperson, Vice-Chairperson and three other Members and the conditions of service and tenure of office of the Chairperson, Vice-Chairperson and other Members so appointed shall be such as the President may by rule determine. The Chairperson, Vice-Chairperson and other Members of the Commission shall be appointed by the President by warrant under his hand and seal.

Climate Change Impact on India and World – International Reports, Key Observations, etc.

Climate change causing a shift in Earth’s axis, finds new study

Enviro & Biodiversity | Mains Paper 3: Conservation, Environmental Pollution & Degradation, Eia
Note4Students

From UPSC perspective, the following things are important :

Prelims level : Polar shift

Mains level : Paper 3- How climate change causing a shift in the Earth's axis of rotation

About the study

  • A study is published in Geophysical Research Letters of the American Geophysical Union (AGU).
  • The study has added yet another impact of climate change on the earth – marked shifts in the axis along which the Earth rotates.
  • It says that due to the significant melting of glaciers because of global temperature rise, our planet’s axis of rotation has been moving more than usual since the 1990s.

How the earth’s axis shifts

  • The Earth’s axis of rotation is the line along which it spins around itself as it revolves around the Sun.
  • The points on which the axis intersects the planet’s surface are the geographical north and south poles.
  • The location of the poles is not fixed, however, as the axis moves due to changes in how the Earth’s mass is distributed around the planet.
  • Thus, the poles move when the axis moves, and the movement is called “polar motion”.
  • Generally, polar motion is caused by changes in the hydrosphere, atmosphere, oceans, or solid Earth.
  • But now, climate change is adding to the degree with which the poles wander.

What the study says

  • As per the study, the north pole has shifted in a new eastward direction since the 1990s, because of changes in the hydrosphere (meaning the way in which water is stored on Earth).
  • From 1995 to 2020, the average speed of drift was 17 times faster than from 1981 to 1995.
  • The faster ice melting under global warming was the most likely cause of the directional change of the polar drift in the 1990s, the study says.
  • The other possible causes are terrestrial water storage change in non‐glacial regions due to climate change and unsustainable consumption of groundwater.

Coronavirus – Health and Governance Issues

Govt leverage in Covid-19 vaccine pricing

Governance | Mains Paper 2: Health & Education
Note4Students

From UPSC perspective, the following things are important :

Prelims level : DPCO

Mains level : Paper 2- Vaccine pricing issue

How government regulate prices of drugs

  • The Supreme Court flagged the issue of differential pricing for vaccines among States and the Centre and directed the central government to clarify it in an affidavit.
  • To ensure accessibility, the pricing of essential drugs is regulated centrally through The Essential Commodities Act, 1955.
  • Under Section 3 of the Act, the government has enacted the Drugs (Prices Control) Order (DPCO).
  • The DPCO lists over 800 drugs as “essential” in its schedule, and has capped their prices.
  • The capping of prices is done based on a formula that is worked out in each case by the National Pharmaceutical Pricing Authority (NPPA), which was set up in 1997.

So, why the government is not regulating price of vaccines through DPCO

  • This is because the regulation through DPCO is not applicable for patented drugs or fixed-dose combination (FDC) drugs.
  • This is why the price of the antiviral drug remdesivir, which is currently in great demand, is not regulated by the government.
  • To bring vaccines or drugs used in the treatment of Covid-19 such as remdesivir under the DPCO policy, an amendment can be brought.

What other options government can explore to deal with the vaccine price issue

1) Patent Act 1970

  • The Patent Act 1970 has two key provisions that could be potentially invoked to regulate the pricing of the vaccine.
  • Section 100 of the Patents Act gives the central government the power to authorise anyone (a pharma company) to use the invention for the “purposes of the government”.
  • It enables the government to license the patents of the vaccine to specific companies to speed up manufacturing and ensure equitable pricing.
  •  Under Section 92 of the Act, which deals with compulsory licensing, the government can, without the permission of the patent holder, license the patent under specific circumstances prescribed in the Act.
  • Section 92 can be invoked in case of circumstances of national emergency or in circumstances of extreme urgency or in case of public non-commercial use.
  • After the government issues a notification under Section 92, pharma companies can approach the government for a licence to start manufacturing by reverse engineering the product.
  • However, in the case of biological vaccines like Covid-19, even though ingredients and processes are well known, it is difficult to duplicate the process from scratch.
  • The process will also entail new clinical trials to establish safety and efficacy, which makes compulsory licensing less attractive.

2) The Epidemic Diseases Act, 1897

  • Section 2 of this law gives the government “power to take special measures and prescribe regulations as to dangerous epidemic disease”.
  • These broad, undefined powers can be used to take measures to regulate pricing.
  • However, the law lacks the teeth to implement such an important policy framework.
  • Violation of the Act is penalised under Section 188 of the Indian Penal Code, which deals with “disobedience to order duly promulgated by (a) public servant”.

3) Direct procurement by the Centre

  • Apart from these legislative options, experts suggest that the central government procuring directly from the manufacturers could be the most beneficial route to ensure equitable pricing.
  • As the sole purchaser, it will have greater bargaining power.

Major seismic hazard along Assam faultline

Enviro & Biodiversity | Mains Paper 1: Geographical Features & Their Location
Note4Students

From UPSC perspective, the following things are important :

Prelims level : Himalayan Frontal Thrust

Mains level : Paper 1- Major seismic hazards along Assam faultline

Location of epicentre

  • An earthquake of magnitude 6.4 on the Richter scale hit Assam around 8 am on Wednesday.
  • The primary earthquake had its epicentre at latitude 26.690 N and longitude 92.360 E, about 80 km northeast of Guwahati, and a focal depth of 17 km, the National Centre for Seismology (NCS) said.

The faultline

  • The preliminary analysis shows that the events are located near to Kopili Fault closer to Himalayan Frontal Thrust (HFT).
  • The Kopili Fault is a 300-km northwest-southeast trending fault from the Bhutan Himalaya to the Burmese arc.
  • The fault is a fracture along which the blocks of crust on either side have moved relative to one another parallel to the fracture.
  • The area is seismically very active falling in the highest Seismic Hazard zone V associated with collisional tectonics where Indian plate sub-ducts beneath the Eurasian Plate the NCS report said.
  • HFT, also known as the Main Frontal Thrust (MFT), is a geological fault along the boundary of the Indian and Eurasian tectonic plates.

Need for earthquake preparedness

  • The Northeast is located in the highest seismological zone, so we must have constant earthquake preparedness at all levels.
  • Continuous tectonic stress keeps building up particularly along the faultlines.
  • Today’s earthquake was an instance of accumulated stress release — probably, stress was constrained for a fairly long time at this epicentre, and hence the release was of relatively higher intensity.

Coronavirus – Disease, Medical Sciences Involved & Preventive Measures

Understanding the Ct value in a Covid-19 test

Science Tech Art Culture | Mains Paper 3: Awareness In The Fields Of It, Space, Computers, Robotics, Nano-Technology, Bio-Technology, Pharma Sector & Health Science
Note4Students

From UPSC perspective, the following things are important :

Prelims level : RT-PCR Test

Mains level : Paper 2- Ct value in RT-PCR test

Recently, the Maharashtra government sought clarity from the Indian Council of Medical Research (ICMR) on the threshold Ct value to treat a person Covid-negative.

What is Ct value

  • Short for cycle threshold, Ct is a value that emerges during RT-PCR tests.
  • In an RT-PCR test, RNA is extracted from the swab collected from the patient.
  • It is then converted into DNA, which is then amplified.
  • Amplification refers to the process of creating multiple copies of the genetic material — in this case, DNA.
  • Amplification takes place through a series of cycles — one copy becomes two, two becomes four, and so on.
  • Put simply, the Ct value refers to the number of cycles after which the virus can be detected.
  • The lower the Ct value, the higher the viral load — because the virus has been spotted after fewer cycles.

Why Ct value is important

  • According to the ICMR, a patient is considered Covid-positive if the Ct value is below 35.
  • If the benchmark were to be lowered to 24 — the value mentioned in Maharashtra’s letter — it would mean that Ct values in the range 25-34 would not be considered positive.
  • A benchmark of 35, therefore, means that more patients would be considered positive than we would get if the benchmark were 24.
  • The ICMR has said lowering Ct threshold parameter may lead to missing several infectious persons.

Does Ct score indicate the severity of disease

  • A small study published in the Indian Journal of Medical Microbiology in January this year found that there was no correlation between Ct values and severity of disease or mortality in patients with Covid-19 disease.
  • It found that the time since the onset of symptoms has a stronger relationship with Ct values as compared to the severity of the disease.
  • The Ct value tells us about the viral load in the throat and not in the lungs.
  • The Ct value does not correlate with severity – only with infectivity.

Coronavirus – Disease, Medical Sciences Involved & Preventive Measures

Complexities of herd immunity

Governance | Mains Paper 2: Health & Education
Note4Students

From UPSC perspective, the following things are important :

Prelims level : Herd immunity

Mains level : Paper 2- Herd immunity and issues related to it

What is herd immunity

  • The herd immunity concept is based on lowering the number of susceptible individuals.
  • If sufficient individuals in the population are immune either through vaccination or a prior exposure, then the number of susceptible individuals drops.
  • For example, if the immune population is 70%, then the susceptible population is 30%.

Does herd immunity really protect from subsequent waves?

  • The number of daily cases depends on three factors: The number of infectious people in the population, the number of susceptible individuals, and the rate of transmission of the virus.
  • The rate of transmission is dependent on the nature of the virus and the extent of contact between individuals.
  • So, if the rate of transmission increases due to change in social behaviour and increased contact then even with a large percentage of the immune population, a significant number of daily cases can result.
  • The “herd immunity” number is not a static number but it changes depending on the rate of transmission of the virus and the extent of virus present.

Estimating exposures in metro cities

  • Serosurveys indicated that Covid had touched 56% of population in Delhi by January; 75% in some slums Mumbai in November, and about 30% in Bengaluru in November.
  • The population touched by Covid can also be estimated by the Infection Fatality Rate (IFR).
  • This is the total number of deaths divided by the total people infected. In India, the estimate is 0.08%.
  • So this number can be used to back-calculate the number of infections based on the number of deaths in the different cities.
  • The table given below shows the number of people exposed to Covid in some metros until January 31 using the method above.

What are the reasons behind the recent surge

  • The reasons behind the recent surge are not fully understood.
  • The one factor that is not in doubt, however, is that interaction and contact with the population has increased since February.
  • Such increased contact increased the virus in circulation and led to increased cases in the susceptible population.

What the US’s recognition of killings of Armenians as genocide mean

International Relations | Mains Paper 2: Effect Of Policies & Politics Of World On India'S Interests
Note4Students

From UPSC perspective, the following things are important :

Prelims level : Anatolia region

Mains level : Paper 2- Relations between Turkey and the US

What is genocide

  • According to Article II of the UN Convention on Genocide of December 1948, genocide has been described as carrying out acts intended “to destroy, in whole or in part, a national, ethnic, racial or religious group”.

Why Armenians were targeted

  • In a way, the Armenians were victims of the great power contests of the late 19th and early 20th centuries.
  • The resentment started building up after the Russo-Turkish war of 1877-78 in which the Turks lost territories.
  • In the Treaty of Berlin, big powers dictated terms to the Ottomans, including putting pressure on Sultan Abdülhamid II to initiate reforms “in the provinces inhabited by Armenians, and to guarantee their security against the Circassians and Kurds.”
  • The Sultan saw this as a sign of strengthening ties between the Armenians and other rival countries, especially Russia.
  • Post the treaty, there were a series of attacks on Armenians by Turkish and Kurdish militias.
  • In 1908, the Young Turks wrested control from the Sultan and promised to restore imperial glory.
  • Under the Turks, the empire became more and “Turkik” and persecution against the ethnic minorities picked up.
  • In October 1914, Turkey joined the First World War on the side of Germany.
  • In the Caucasus, they fought the Russians, their primary geopolitical rival.
  • But the Ottomans suffered a catastrophic defeat in the Battle of Sarikamish by the Russians in January 1915.
  • The Turks blamed the defeat on Armenian “treachery”.

How the killings took place

  • As the War was still waging, the Ottomans feared that Armenians in eastern Anatolia would join the Russians if they advanced into Ottoman territories.
  • First, Armenians in the Ottoman Army were executed.
  • On April 24, the Ottoman government arrested about 250 Armenian intellectuals and community leaders. Most of them were later executed.
  • The Ottoman government passed legislation to deport anyone who is a security risk.
  • Then they moved Armenians, including children, en masse to the Syrian Desert. That was a march of death.
  • Before the First World War broke out in 1914, there were 2 million Armenians in the Ottoman Empire.
  • According to a study by the University of Minnesota’s Center for Holocaust and Genocide Studies, in 1922, four years after the War, the Armenian population in the region was about 387,800.
  • This has led historians to believe that up to 1.5 million Armenians were killed during the course of the War.

What is Turkey’s response

  • Turkey has acknowledged that atrocities were committed against Armenians, but denies it was a genocide which comes with legal implications.
  • Turkey also challenges the estimates that 1.5 million were killed.
  • The Turkish Foreign Ministry has issued a strong statement to Mr. Biden’s announcement saying it doesn’t not have “a scholarly and legal basis, nor is it supported by any evidence”.
  • Turkey has called on the U.S. President to correct the mistake of recognition as genocide.

Foreign Policy Watch: India-United States

Amid concerns in India and Brazil, the unused vaccine stockpile in US

International Relations | Mains Paper 2: Bilateral, Regional and Global Groupings and agreements involving India
Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 2- Vaccine inequality

Issue of diverting the vaccine stock to India

  • Epidemiologists to industry leaders are urging the Biden administration to release the reserve to countries like India and Brazil, given the assertion that the doses won’t be used in the US.
  • According to Brown University School of Public Health Ashish Jha, the US is “sitting on 35-40 million doses of AstraZeneca vaccine Americans will never use”.
  • In early April, US chief medical adviser Anthony Fauci said the US will likely not need the AstraZeneca shot. 
  • The AstraZeneca vaccine has not been granted Emergency Use Authorization by the US Federal Drug Administration (FDA).
  • With documented cases of blood clots in younger women in Europe correlated with the vaccine, FDA authorisation may be further delayed.

What has the US said in response

  • Co-ordinator of the US Covid-19 taskforce that the Quad partnership and team is providing assistance across government to the country.
  •  He also stated that as their confidence around our supply increases, we will explore the option of exporting the vaccines.

Vaccine inequality

  • According to Bloomberg’s Vaccine Tracker, highest-income countries are vaccinating at a pace 25 times faster than the lowest ones.
  • The US has 22.9% of the world’s vaccines but only 4.3% of the world’s population.
  • China has 21.9% and 18.2% respectively, and India 13.8% and 17.7%, according to the tracker.
  • Almost half of all vaccines have gone to 16% of the world’s population.
  • The Washington Post reported that the world’s poorest 92 countries may not be able to vaccinate even 60% of their population for another three years.
  • India has vaccinated 8% per cent of the population with one dose and 1% with two. Brazil has vaccinated less than 12% with one.

Impact on vaccination in African nations

  • India’s stalled vaccine exports have domino effects on the rollouts in African nations and other developing countries, as Serum’s productions were fuelling efforts globally before India’s second wave.

Coronavirus – Disease, Medical Sciences Involved & Preventive Measures

Understanding infections after Covid-19 vaccination

Governance | Mains Paper 2: Health & Education
Note4Students

From UPSC perspective, the following things are important :

Prelims level : How vaccine works

Mains level : Paper 2- Breakthrough infections

Breakthrough infections

  • There have been several cases of Covid-19 vaccinated people, even those who have received both doses, testing positive for the virus.
  • Such cases are referred to as “breakthrough” infections, indicating that the virus has been able to break through the defences created by the vaccine.
  • Such cases have led to some doubts being expressed about the effectiveness of the vaccine, and contributed to the already prevailing vaccine hesitancy. 
  • However, vaccines protect not against the infection, but against moderate or severe disease and hospitalisation.
  •  It typically takes about two weeks for the body to build immunity after being vaccinated.
  • So, the chances of a person falling sick during this period are as high — or as low — as the chances for any person who has not been vaccinated.
  •  Also, those in the priority list of vaccination, such as healthcare workers and frontline workers, have been prone to getting infected due to prolonged occupational exposure to the virus

Full protection not possible

  • It is very well understood that no vaccine offers 100% protection from any disease.
  • However, according to the Centers for Disease Prevention and Control (CDC) in the United States, vaccinated people are much less likely to get sick, but it is never entirely ruled out.
  • Then there is the emergence of new variants of the virus.
  • Some variants of the virus are able to evade the human immune response, and therefore have a greater chance to break through the defences created through the vaccine.

Breakthrough cases in India

  • Among 10.03 crore people who had taken only the first dose of Covishield vaccina, 17,145 had got infected.
  • That translates into a 0.02% prevalence.
  • Among the 1.57 crore people who received the second dose as well, 5,014, or about 0.03%, had got infected later.
  • About 1.1 crore doses of Covaxin have been administered until now.
  • Of the 93.56 lakh who took only the first dose, so far 4,208 have got the infection.
  • That is about 0.04% of the total.
  • Among the 17.37 lakh who have taken the second shot, only 695 had been infected, again 0.04%.

Challenges

  • “Given the scope of the pandemic, there’s a huge amount of virus in the world right now, meaning a huge opportunity for mutations to develop and spread.
  • That is going to be a challenge for the developers of vaccines.

Coronavirus – Disease, Medical Sciences Involved & Preventive Measures

How & why of oxygen therapy

Science Tech Art Culture | Mains Paper 3: Awareness In The Fields Of It, Space, Computers, Robotics, Nano-Technology, Bio-Technology, Pharma Sector & Health Science
Note4Students

From UPSC perspective, the following things are important :

Prelims level : Epithelial cell

Mains level : Paper 2-Oxygen requirement in covid patients

How Covid-19 leads to shortness of breath?

  • Shortness of breath occurs because of the way Covid-19 affects the patient’s respiratory system.
  • When a person inhales, the tiny air sacs in the lungs — alveoli — expand to capture this oxygen, which is then transferred to blood vessels and transported through the rest of the body.
  • Respiratory epithelial cells line the respiratory tract.
  • Their primary function is to protect the airway tract from pathogens and infections, and also facilitate gas exchange.
  • And the SARS-CoV-2 coronavirus can infect these epithelial cells.
  • To fight such infection, the body’s immune system releases cells that trigger inflammation.
  • When this inflammatory immune response continues, it impedes the regular transfer of oxygen in the lungs.
  • Simultaneously, fluids too build up.
  • Both these factors combined make it difficult to breathe.
  •  Low levels of oxygen triggered by Covid-19 are inflammatory markers, which include elevated white blood cell counts and neutrophil counts.

Does a patient always show Covid symptoms when their oxygen levels drop?

  • No.
  • According to the FAQs on Covid-19 from AIIMS e-ICUS, sudden deaths have been reported at presentation to the emergency department, as well as in hospital.
  • AIIMS has said that the reasons that have been proposed include a sudden cardiac event, preceding “silent hypoxia” that went unnoticed, or due to a thrombotic complication such as pulmonary thromboembolism.
  • In silent hypoxia, patients have extremely low blood oxygen levels, yet do not show signs of breathlessness.

Parliament – Sessions, Procedures, Motions, Committees etc

President’s address in Parliament

Polity | Mains Paper 2: Indian Constitution - historical underpinnings, evolution, features, amendments, significant provisions and basic structure
Note4Students

From UPSC perspective, the following things are important :

Prelims level : President’s address

Mains level : Significance of Presidential address

Many Opposition parties announced their decision to boycott the President’s address to the joint sitting of Parliament at the start of the Budget session in solidarity with the farmers protesting against the three farm laws.

Try this PYQ:

Q. The President’s address is one of the most solemn occasions in the Parliamentary calendar. Discuss. Highlight its importance in Parliamentary Democracy.

President’s address

  • The Constitution gives the President the power to address either House or a joint sitting of the two Houses of Parliament.
  • Article 87 provides two special occasions on which the President addresses a joint sitting. The first is to address the opening session of a new legislature after a general election.
  • The second is to address the first sitting of Parliament each year. A session of a new or continuing legislature cannot begin without fulfilling this requirement.
  • When the Constitution came into force, the President was required to address each session of Parliament.

In the UK, the history of the monarch addressing the Parliament goes back to the 16th century.  In the US, President Gorge Washington addressed Congress for the first time in 1790.

History & precedent

  • In India, the practice of the President addressing Parliament can be traced back to the Government of India Act of 1919.
  • This law gave the Governor-General the right of addressing the Legislative Assembly and the Council of State.
  • The law did not have a provision for a joint address but the Governor-General did address the Assembly and the Council together on multiple occasions.
  • There was no address by him to the Constituent Assembly (Legislative) from 1947 to 1950.
  • And after the Constitution came into force, President Rajendra Prasad addressed members of Lok Sabha and Rajya Sabha for the first time on January 31, 1950.

By the govt, about the govt

  • The President’s speech essentially highlights the government’s policy priorities and plans for the upcoming year. The address provides a broad framework of the government’s agenda and direction.
  • There is no set format for the President’s speech. The Constitution states that the President shall “inform Parliament of the cause of the summons”.

How it is done in India?

  • The speech that the President reads is the viewpoint of the government and is written by it.
  • Usually, in December, the PM’s Office asks the various ministries to start sending in their inputs for the speech.
  • A message also goes out from the Ministry of Parliamentary Affairs asking ministries to send information about any legislative proposals that need to be included in the President’s address.
  • All this information is aggregated and shaped into a speech, which is then sent to the President. The government uses the President’s address to make policy and legislative announcements.

Assembly debates on the matter

  • During the making of the Constitution, Prof K T Shah wanted the President’s address to be more specific.
  • He suggested that the language be changed to specify that the President shall inform Parliament “on the general state of the Union including financial proposals, and other particular issues of policy he deems suitable for such address”.
  • His amendment was inspired by the US Constitution, according to which the President gives to Congress information on the State of the Union, and recommend measures as he shall judge necessary.
  • But Shah’s amendment was rejected by the Constituent Assembly.
  • The address of the President follows a general structure in which it highlights the government’s accomplishments from the previous year and sets the broad governance agenda for the coming year.

Notable addresses till date

  • In 1985 President Giani Zail Singh announced that PM Rajiv Gandhi’s government intended to introduce a new national education policy and the anti-defection law.
  • In 1996, PM Vajpayee’s 13-day government announced its intention of giving statehood to Uttaranchal and Vananchal (Jharkhand) and 33 percent reservation to women in legislatures.
  • During his second stint in 1999, Vajpayee’s government mooted the idea of a fixed term for Lok Sabha and State Vidhan Sabhas.
  • After the devastating tsunami of 2004, PM Manmohan Singh’s government used the President’s Address to announce the creation of a national law for disaster management.

Procedure & tradition

  • In the days following the President’s address, a motion is moved in the two Houses thanking the President for his address.
  • This is an occasion for MPs in the two Houses to have a broad debate on governance in the country.
  • The PM replies to the motion of thanks in both Houses and responds to the issues raised by MPs.
  • The motion is then put to vote and MPs can express their disagreement by moving amendments to the motion.

Role of the opposition

  • Opposition MPs have been successful in getting amendments passed to the motion of thanks in Rajya Sabha on five occasions (1980, 1989, 2001, 2015, 2016).
  • They have been less successful in Lok Sabha. For example in 2018, Lok Sabha MPs tabled 845 amendments of which 375 were moved and negated.

Significance of the address

  • The President’s address is one of the most solemn occasions in the Parliamentary calendar.
  • It is the only occasion in the year when the entire Parliament, i.e. the President, Lok Sabha, and Rajya Sabha come together.
  • The event is associated with ceremony and protocol.
  • The Lok Sabha Secretariat prepares extensively for this annual event.
  • In the past, it used to get 150 yards of red baize cloth from the President’s house for the ceremonial procession.

Economic Indicators and Various Reports On It- GDP, FD, EODB, WIR etc

Comparison between India- Bangladesh per capita GDP

Economics | Mains Paper 3: Issues relating growth and development, employment
Note4Students

From UPSC perspective, the following things are important :

Prelims level : GDP, GNP, GVA etc.

Mains level : India's GDP related issues

In IMF’s latest Economic Outlook, Bangladesh has overtaken India in GDP per capita. This has caught everyone’s attention.

Do you know?

  • In the 2019 edition of Transparency International’s rankings, Bangladesh ranks a low 146 out of 198 countries (India is at 80th rank; a lower rank is worse off).
  • In the latest gender parity rankings, out of 154 countries mapped for it, Bangladesh is in the top 50 while India languishes at 112.

Bangladesh surpasses India

  • Typically, countries are compared on the basis of GDP growth rate, or on absolute GDP.
  • For the most part since Independence, on both these counts, India’s economy has been better than Bangladesh’s.
  • This can be seen from Charts 1 and 2 that map GDP growth rates and absolute GDP — India’s economy has mostly been over 10 times the size of Bangladesh, and grown faster every year.
  • However, per capita income also involves another variable — the overall population — and is arrived at by dividing the total GDP by the total population.

What made India lag behind?

There are three reasons why India’s per capita income has fallen below Bangladesh this year:

  • The first thing to note is that Bangladesh’s economy has been clocking rapid GDP growth rates since 2004.
  • Secondly, over the same 15-year period, India’s population grew faster (around 21%) than Bangladesh’s population (just under 18%).
  • Lastly, the most immediate factor was the relative impact of Covid-19 on the two economies in 2020. While India’s GDP is set to reduce by 10%, Bangladesh’s is expected to grow by almost 4%.

How has Bangladesh managed to grow so fast and so robustly?

  • Freshly start: In the initial years of its independence with Pakistan, Bangladesh struggled to grow fast. However, moving away from Pakistan also gave the country a chance to start afresh on its economic and political identity.
  • Diverse labour participation: As such, its labour laws were not as stringent and its economy increasingly involved women in its labour force. This can be seen in higher female participation in the labour force.
  • Textile boom: A key driver of growth was the garment industry where women workers gave Bangladesh the edge to corner the global export markets from which China retreated.
  • Less dependence on Agriculture: It also helps that the structure of Bangladesh’s economy is such that its GDP is led by the industrial sector, followed by the services sector. Both of these sectors create a lot of jobs and are more remunerative than agriculture.
  • Better social capital: Bangladesh improved a lot on several social and political metrics such as health, sanitation, financial inclusion, and women’s political representation.

Retaining the lead

  • The IMF’s projections show that India is likely to grow faster next year and in all likelihood again surge ahead.
  • But, given Bangladesh’s lower population growth and faster economic growth, India and Bangladesh are likely to be neck and neck for the foreseeable future in terms of per capita income.

Nobel and other Prizes

Explained: Auction theory

Economics | Mains Paper 3: issues relating to planning, mobilization of resources
Note4Students

From UPSC perspective, the following things are important :

Prelims level : Auction Theory, Nobel Prizes

Mains level : Auction theory and its utility

This year, the Nobel Prize for Economics was awarded to Paul R Milgrom and Robert B Wilson for “improvements to auction theory and inventions of new auction formats”.

Do you remember the 2G spectrum scam, Coalgate scam etc. that rocked the nation? Can you relate this auction theory for bidding public assets to private entities?

What is Auction?

  • Essentially, it is about how auctions lead to the discovery of the price of a commodity.
  • Auction theory studies how auctions are designed, what rules govern them, how bidders behave and what outcomes are achieved.
  • When one thinks of auctions, one typically imagines the auction of a bankrupt person’s property to pay off his creditors.
  • Indeed, this is the oldest form of auction. This simple design of such an auction — the highest open bidder getting the property (or the commodity in question) — is intuitively appealing as well.

Evolving definitions of auction

  • Over time, and especially over the last three decades, more and more goods and services have been brought under auction.
  • The nature of these commodities differs sharply. For instance, a bankrupt person’s property is starkly different from the spectrum for radio or telecom use.
  • Similarly, carbon dioxide emission credits are quite different from the spot market for buying electricity, which, in turn, is quite different from choosing which company should get the right to collect the local garbage.
  • In other words, no one auction design fits all types of commodities or seller.

The Auction Theory

Three key variables need to be understood before we move to actual propositions.

(1) Rules of the auction

  • Imagine participating in an auction. Your bidding behaviour is likely to differ if the rules stipulate open bids as against closed/sealed bids.
  • The same applies to single bids versus multiple bids, or whether bids are made one after another or everyone bids at the same time.

(2) Commodity or service

  • The second variable is the commodity or service being put up for auction. In essence, the question is how each bidder values an item.
  • This is not always easy to ascertain. In terms of telecom spectrum, it might be easier to peg the right value for each bidder because most bidders are likely to put the spectrum to the same use.
  • This is called the “common” value of an object.

(3) Uncertainty

  • The third variable is uncertainty.
  • For instance, which bidder has what information about the object, or even the value another bidder associates with the object.

The theory

  • Wilson developed the theory for auctions of objects with a common value — a value which is uncertain beforehand but, in the end, is the same for everyone”.
  • Wilson showed what the “winner’s curse” is in an auction and how it affects bidding.
  • As shown in the illustration, it is possible to overbid — $50 when the real value is closer to $25. In doing so, one wins the auction but loses out in reality.
  • Milgrom “formulated a more general theory of auctions that not only allows common values but also private values that vary from bidder to bidder”.
  • He analysed the bidding strategies in a number of well-known auction formats, demonstrating that a format will give the seller higher expected revenue when bidders learn more about each other’s estimated values.

Significance of Auction theory

  • Throughout history, countries have tried to allocate resources in various ways.
  • Some have tried to do it through political markets, but this has often led to biased outcomes. For Ex: The rationing of essential goods worked in State-controlled economies. People who were close to the bureaucracy and the political class came out ahead of others.
  • Lotteries are another way to allocate resources, but they do not ensure that scarce resources are allocated to people who value it the most.
  • Auctions, for a good reason, have been the most common tool for thousands of years used by societies to allocate scarce resources.
  • When potential buyers compete to purchase goods in an auction, it helps sellers discover those buyers who value the goods the most.
  • Further, selling goods to the highest bidder also helps the seller maximise his or her revenues. So, both buyers and sellers benefit from auctions.
  • Whether it is the auction of spectrum waves or the sale of fruits and vegetables, auctions are at the core of allocation of scarce resources in a market economy.

What are the criticisms levelled against auctions and what are the economists contribution?

1.Issue of Winner’s Curse

  • The most common one is that auctions can lead buyers to overpay for resources whose value is uncertain to them.
  • This criticism, popularly known as the ‘winner’s curse’, is based on a study that showed how buyers who overpaid for U.S. oil leases in the 1970s earned low returns. Dr. Wilson was the first to study this matter.
  • The rational bidders may decide to underpay for resources in order to avoid the ‘winner’s curse’, and Dr. Wilson argued that sellers can get better bids for their goods if they share more information about it with potential buyers

2.Auction formats

  • Economists traditionally working on auction theory believed that all auctions are the same when it comes to the revenues that they managed to bring in for sellers. The auction format, in other words, did not matter.
  • This is known as the ‘revenue equivalence theorem’.
  • But Dr. Milgrom showed that the auction format can actually have a huge impact on the revenues earned by sellers.
  • The most famous case of an auction gone wrong for the seller was the spectrum auction in New Zealand in 1990.
  • In what is called a ‘Vickrey auction’, where the winner of the auction is mandated to pay only the second-best bid, a company that bid NZ$1,00,000 eventually paid just NZ$6 and another that bid NZ$70,00,000 only paid NZ$5,000.
  • In particular, Dr. Milgrom showed how Dutch auctions, in which the auctioneer lowers the price of the product until a buyer bids for it, can help sellers earn more revenues than English auctions.
  • In the case of English auctions, the price rises based on higher bids submitted by competing buyers. But as soon as some of the bidders drop out of the auction as the price rises, the remaining bidders become more cautious about bidding higher prices.

Conclusion

  • The contributions of Dr. Milgrom and Dr. Wilson have helped governments and private companies design their auctions better.
  • This has, in turn, helped in the better allocation of scarce resources and offered more incentives for sellers to produce complex goods.