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Type: Explained

  • Capital Markets: Challenges and Developments

    On the allegations against the SEBI chief      

    Explained | Governance | Mains Paper 2: Statutory, Regulatory & Various Quasi-Judicial Bodies

    Note4Students

    From UPSC perspective, the following things are important:

    Mains level: Applicability of Office of Profit on SEBI Chairperson;

    Why in the News?

    Hindenburg Research has alleged SEBI Chairperson Madhabi Puri Buch and her husband held stakes in Adani-linked offshore funds, implying bias in SEBI’s Adani investigation.

    Accusations Against SEBI Chairman Madhabi Puri Buch 

    • Hindenburg Research has accused SEBI Chairman Madhabi Puri Buch of conflicts of interest related to offshore funds tied to the Adani Group, financial opacity regarding a consulting firm transferred to her husband, and potential favoritism towards Blackstone, where her husband is a senior advisor. 

    Status of the Ongoing Investigation by SEBI

    • Supreme Court Oversight: The Supreme Court has directed SEBI to investigate the allegations made by Hindenburg Research.
    • Show Cause Notice by SEBI: In June 2024, SEBI issued a show cause notice to Hindenburg Research, indicating that the regulator is actively pursuing the matter.

    About SEBI’s Code on Conflict of Interest:

    According to SEBI’s Code on Conflict of Interest, board members, including the Chairperson, are prohibited from holding any other office of profit or engaging in professional activities that involve receiving a salary or professional fees.It can constitute a number of different things that need to be disclosed by the concerned board member:

    • Certain transactions in shares: The Code says that a member must disclose their, and their family’s (spouse, dependent children below 18 years of age) holdings within 15 days of the assumption of Office, and annually update this disclosure.
    • Outside private activities: SEBI board members are not allowed to hold any other ‘office of profit’.
    • Acceptance of gifts: Board members are not allowed to accept “any gift (whose value exceeds Rs 1,000) by whatever name called, to the extent possible, from a regulated entity”. If they do, they have to hand it over to the General Services Department of the SEBI.
    • Miscellaneous: Members are bound to disclose “any post, other employment or fiduciary position” which they hold or have held in the past five years, in connection with any regulated entity.

    Way forward: 

    • Enhance stricter disclosure requirements:  SEBI should implement stricter disclosure requirements for all board members, including the Chairperson, ensuring transparency about their financial interests, past affiliations, and potential conflicts.
    • Establishing an Independent Ethics Committee: An independent ethics committee should be created to oversee and review any potential conflicts of interest involving SEBI board members.

    Mains PYQ: 

    Q In the light of Satyam Scandal (2009), discuss the changes brought in the corporate governance to ensure transparency and accountability. (2015)

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  • Digital India Initiatives

    What is the Google ‘monopoly’ antitrust case and how does it affect consumers?     

    Explained | Economics | Mains Paper 3: Effects Of Liberalization On The Economy, Changes In Industrial Policy and their effects on Industrial Growth

    Note4Students

    From UPSC perspective, the following things are important:

    Mains level: Impact of monopoly in the market

    Why in the news?

    US Federal court ruled Google’s $26 billion payments to default on smartphone browsers violated US antitrust law, blocking competitors and benefiting the Justice Department.

    About Google’s Antitrust Case

    • The U.S. Department of Justice (DOJ) brought an antitrust case against Google, accusing it of maintaining a monopoly in the online search and advertising sectors.
    • The DOJ argued that Google’s dominance was achieved through exclusive distribution agreements, which prevented competitors from succeeding in the market.

    What Did the Ruling State?

    • Google Monopolistic Practices: Google broke antitrust laws to keep its monopoly on “general search services” and “general search text ads.”
    • Note: The Sherman Antitrust Act is a landmark U.S. federal law enacted in 1890 to promote competition and prevent monopolistic practices.
    • Advantageous position due to the “default” search engine: The Google company has an unseen advantage over its competitors where it’s search engine processes an estimated 8.5 billion queries per day worldwide.
      • The present judgment by US District of Colombia limits itself to the relevant geographic market of the US.
    • Paying billions to smartphone makers: Google was accused of paying billions to smartphone makers like Apple and Samsung to ensure Google was the default search engine on their devices and browsers.

    How Do Monopolistic Practices Harm Consumer Experience?

    • Impact on Competition: Monopolistic practices, like those exhibited by Google, stifle competition by preventing rivals from entering the market and can lead to higher prices and reduced innovation.
    • Unfair Platform for Start-ups: The new start-ups would have to surmount the entry barriers to create a GSE of comparable quality to Google. These barriers would cost high capital, access to distribution channels, and brand recognition.
    • Quality Degradation: A monopolist may lose the incentive to improve the quality of its products, as there is little risk of losing customers to competitors.
      • The ruling highlighted that Google conducted a study in 2020 that showed it would not lose search revenue even if it significantly reduced the quality of its search product.
    • Limites the choices of consumer: When a company holds a monopoly, consumers are often left with few alternatives, allowing the monopolist to exploit its position.

    Government Initiatives taken in India for similar line:

    The Draft Competition Bill 2024: The Ministry of Corporate Affairs’ Bill prevents giant tech companies/ Systemically Significant Digital Enterprises (SSDEs) from participating in anti-competitive practices.

    • The Bill imposes restrictions on SSDEs, barring them from favouring their own products and services, and from using or sharing users’ personal data without their consent.
    • Big tech companies have objected to the Bill because the compliance burdens would shift focus from innovation and research.

    Way forward: 

    • Encouraging Innovation: Governments and regulatory bodies should support the development of alternative search engines and platforms through incentives, grants, and support for startups.
    • Banning Exclusive Agreements: Prohibit exclusive distribution agreements that make one product or service the default, ensuring that consumers have a choice and that competitors can fairly compete.

    Mains question for practice: 

    Q Discuss the significance of India’s Competition Act, 2002 in regulating anti-competitive practices and promoting a fair market environment. 10M

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  • Health Sector – UHC, National Health Policy, Family Planning, Health Insurance, etc.

    Hidden dangers of irrational use of antibiotics on microbiome    

    Explained | Science Tech | Mains Paper 3: Awareness in various sc and tech fields

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Antibiotics resistance;

    Mains level: Concerning aspects of Antibiotic use;

    Why in the news?

    While vital for treating infections, antibiotics can disrupt the microbiome by indiscriminately killing both harmful pathogens and beneficial gut bacteria, especially broad-spectrum types.

    Various roles played by Antibiotics (Applications):  

     

    Treatment of Infections

    Antibiotics are essential for treating bacterial infections, significantly reducing mortality rates associated with infectious diseases

    For example, penicillin and other antibiotics, the mortality rate from strep throat dropped dramatically from 1% to less than 0.1%.

    Preventing Disease Spread 

    Treating bacterial infections, antibiotics can prevent the spread of disease to other individuals

    For instance, during the 2009 H1N1 influenza pandemic, antibiotics were used to treat secondary bacterial pneumonia, which was a major cause of death.

    Reducing Complications

    Antibiotics can reduce the risk of serious complications from bacterial infections.

    For instance, In the case of urinary tract infections (UTIs), untreated infections can lead to kidney damage or life-threatening conditions like sepsis. However, with prompt antibiotic treatment, the risk of complications is greatly reduced

    Supporting Medical Procedures

    Antibiotics are used prophylactically to prevent infections before certain medical procedures

    For example in surgery

    Concerning Aspects of Antibiotic Use

    • Dysbiosis: The disruption of the microbiome, known as dysbiosis, can lead to severe health issues, including inflammatory bowel disease (IBD) and irritable bowel syndrome (IBS). 
    • Increased Infection Risk: Antibiotics can reduce colonization resistance, which is the microbiome’s ability to prevent pathogenic microorganisms from establishing infections. This reduction increases the risk of infections by harmful bacteria, such as Clostridioides difficile.
    • Antimicrobial Resistance (AMR): Overuse of antibiotics contributes to the development of antimicrobial resistance, making it more challenging to treat infections. The global crisis of antibiotic resistance is exacerbated by the enrichment of antibiotic resistance genes within the gut microbiota due to antibiotic exposure.
    • Long-term Health Consequences: Repeated antibiotic use can prevent full recovery of the microbiome, leading to chronic health issues. Research shows that children who receive multiple courses of antibiotics are at higher risk for developing conditions like IBD later in life.
    • Impact on Other Organ Systems: Dysbiosis can affect various organ systems through gut-organ axes, influencing conditions such as mental health disorders (via the gut-brain axis), liver diseases (via the gut-liver axis), and skin conditions (via the gut-skin axis) due to altered immune responses and increased permeability.

    Government initiatives: 

    1. The Indian Council of Medical Research (ICMR) has initiated an antibiotic stewardship program (AMSP) on a pilot basis in 20 tertiary care hospitals across India to control the misuse and overuse of antibiotics in hospital wards and ICUs.
    2. ICMR collaborated with the Indian Council of Agriculture Research, Department of Animal Husbandry, Dairy and Fisheries, and the Drugs Controller General of India (DCGI) to ban the use of Colistin as a growth promoter in animal feed in poultry.
    3. The Government of India launched the National Action Plan on Antimicrobial Resistance (NAP-AMR) in April 2017, focusing on a One Health approach.

    Way forward: 

    • Antibiotic Stewardship Programs: Implement and promote antibiotic stewardship programs in healthcare settings to ensure antibiotics are prescribed only when necessary and with the appropriate dosage and duration.
    • Probiotic Supplementation: Encourage the use of probiotics alongside antibiotic treatments to help maintain a healthy microbiome and mitigate the risks of dysbiosis and related health issues.

    Mains PYQ: 

    Q Can overuse and free availability of antibiotics without Doctor’s prescription, be contributors to the emergence of drug-resistant diseases in India? What are the available mechanisms for monitoring and control? Critically discuss the various issues involved. (2014)

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

    Cold War nuke tests light up a bug in present-day climate models  

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

    Note4Students

    From UPSC perspective, the following things are important:

    Mains level: Couse of CO2 emission and carbon sequestration;

    Why in the News?

    A new calculation suggests that climate models might be overestimating how long plants keep carbon before releasing it as per the recent study published in Science by an international research team.

    Study by an International Team of Researchers:

    • A recent study published in Science by an international research team suggests that plants absorb more CO2 from the atmosphere than previously thought but release it back into their surroundings sooner than expected.
    • Researchers utilized climate models to analyze the impact of radiocarbon (carbon-14) from nuclear bomb tests on the carbon cycle. They tracked changes in radiocarbon levels in the atmosphere and how it was absorbed by plants during photosynthesis.
    • The study estimates that plants store around 80 billion tonnes of carbon per year, primarily in leaves and finer roots, which is higher than previous estimates of 43-76 billion tonnes. This indicates that plants may be cycling carbon through the atmosphere and soil more rapidly than previously thought.

    Study from the Relics of the Cold War:

    • The nuclear bomb tests conducted during the Cold War inadvertently provided scientists with valuable data for climate research.
      • The tests released significant amounts of radiocarbon into the atmosphere, allowing researchers to study its movement and absorption by vegetation.
    • The presence of radiocarbon in the atmosphere serves as a marker for understanding carbon dynamics.
      • The study analyzed the radiocarbon levels before and after the 1963 Limited Test Ban Treaty, which halted atmospheric nuclear testing, providing insights into how carbon is cycled between the atmosphere and vegetation.
    • The study highlights that many climate models have not incorporated radiocarbon data, which could lead to inaccuracies in predicting carbon cycling and its impact on climate change.
      • Only one model, the Community Earth System Model 2, has accounted for radiocarbon, but it predicted lower absorption levels than the study found.

    How the Whole System is Cycling Faster?

    • Accelerated Carbon Exchange: The researchers concluded that the entire carbon cycle is operating faster than previously understood.
      • This means that while plants absorb more CO2, they also release it back into the atmosphere more quickly, leading to a more dynamic and less stable carbon storage system.
    • Implications for Climate Mitigation: The findings suggest that strategies relying on plant carbon sequestration to offset fossil fuel emissions may need to be reevaluated.
      • If plants are releasing carbon sooner than expected, the potential for mitigating climate change through natural carbon sinks could be less effective than previously thought.

    Way forward: 

    • Incorporate Radiocarbon Data: Integrate radiocarbon data into existing and future climate models to more accurately predict carbon cycling and the role of vegetation in carbon sequestration. This will lead to more reliable forecasts of climate change impacts and inform better policy decisions.
    • Develop Dynamic Carbon Cycle Models: Improve models to account for the faster carbon cycling observed, ensuring they reflect the actual pace at which carbon is absorbed and released by plants. This will help in refining strategies for climate mitigation.

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  • No population Census — in the dark without vital data 

    Explained | Governance | Mains Paper 2: Governance, Transparency & Accountability, Citizens Charters

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Census of India

    Mains level: Significance of Calculating Census;

    Why in the News?

    Despite growing concerns, India’s decadal Census has been delayed by over three years. In fact, there is an overwhelming misconception among officials about substituting the Census with alternative ways and means of counting the population.

    Significance of Calculating Census

    • Comprehensive Population Data: The Census provides a detailed population count, which includes locational, familial, and individual information.
      • For instance, the Census can reveal insights into population density, age distribution, educational attainment, and employment status.
    • Foundation for Surveys and Indicators: The Census acts as a foundational frame for large-scale surveys like the National Family Health Survey (NFHS) and Periodic Labour Force Survey (PLFS). 
    • Support for SDG Monitoring: In the context of Sustainable Development Goals (SDGs), Census data is crucial for generating accurate indicators, particularly those requiring disaggregated data below the sub-national level.
      • For instance, to monitor progress on goals related to poverty reduction, gender equality, and health, precise demographic data is necessary to identify disparities and target interventions effectively.
    • Demographic Transition Insights: The Census is vital for capturing changes in population composition, familial structures, and occupational distribution, especially during periods of rapid demographic transition.
    • Global Implications: Given India’s significant influence on global population trends, accurate Census data is crucial for global demographic studies and projections.
      • For example Global Health Security Index and Multidimensional Poverty Indices.

    Changes to understand before taking Census Count

    • Population Dynamics: Since the last Census, significant changes in population count and composition must be understood, including shifts due to migration, fertility, and mortality rates.
      • For example: In India, the average annual growth rate of the population has slowed from 2.2% in 1971 to 1.1% in 2021, with projections indicating further declines to 0.58% by 2036.
    • Impact of COVID-19: The pandemic has had a profound impact on health, employment, and livelihoods, which need to be accurately captured in the Census.
      • For example, The Indian government reported over 500,000 COVID-19 related deaths, which have affected overall mortality statistics and health indicators.
    • Socio-economic Transformations: Changes in education, occupation, and employment patterns over the last decade are crucial to understanding current societal trends.
      • For example, The literacy rate in India has improved significantly, rising from 64.8% in 2001 to 77.7% in 2011, with further increases expected.
    • Infrastructure and Development Changes: The transformation in physical and digital infrastructure, as well as regional development patterns, must be considered to accurately reflect the current state of the nation.
      • For example, the COVID-19 pandemic accelerated the adoption of digital technologies, with a reported increase in internet users from 560 million in 2019 to over 800 million in 2022. This digital transformation has reshaped how people work and access services.

    Demand for Caste Census in India

    • Political Motivations: The demand for a caste Census is largely driven by political interests, aiming to establish differential entitlements based on perceived representation and deprivation.
      • For instance, leaders from the Indian National Developmental Inclusive Alliance (INDIA) have emphasized the need for a caste Census
    • Historical Context: Caste auditing was part of earlier Census exercises but was discontinued for specific reasons.
      • For example, Caste auditing was part of earlier Census exercises, with the British-era Censuses from 1881 to 1931 enumerating all castes. However, after independence, the Government of India decided not to enumerate castes in the 1951 Census, except for Scheduled Castes (SC) and Scheduled Tribes (ST).
    • Assessment of Mobility: There is a lack of systematic assessment of social mobility in education and occupation across caste lines, despite decades of affirmative action. A caste Census could potentially address this gap but is viewed with skepticism.
      • For instance, while reservations exist for OBCs and SCs, the actual impact on social mobility remains unclear due to insufficient data.

    Way forward: 

    1. Incorporation of Caste Data: Need to amend the Census Act of 1948 to mandate the enumeration of caste data alongside other demographic information. This would provide a legal framework for collecting comprehensive caste-wise data.
    2. Independent Studies and Pilot Surveys: The government should conduct independent studies at district and state levels to gather data on castes and sub-castes.

    Mains PYQ: 

    Q Has caste lost its relevance in understanding the multi-cultural Indian Society? Elaborate your answer with illustrations. (2020)

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  • Urban Floods

    Why Himalayan towns need a different kind of development    

    Explained | Governance | Mains Paper 2: Governance, Transparency & Accountability, Citizens Charters

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Challenges in the Himalayan region;

    Why in the News?

    The Teesta dam breach and Himachal floods highlight the urgent need to evaluate development projects based on their environmental impact, especially in fragile mountain regions.

    What are the underlying issues in the cities of IHR? 

    1. Inadequate Planning Models: Planning institutions in the IHR often use models from the plains, which are ill-suited to the region’s unique conditions, leading to ineffective implementation and failures.
    2. Human Resource Deficit: City governments in the IHR face a severe shortage of human resources, with staffing levels falling short by nearly 75%, hampering effective urban management.
    3. Uncontrolled Urban Expansion: Cities are expanding into village peripheries, encroaching on common lands and natural resources, as seen in Srinagar, where built-up areas increased by 75.58% from 2000 to 2020, while water bodies shrank by 25%.
    4. Environmental Strain: Urbanization, high-intensity tourism, and unsustainable infrastructure development are exacerbating environmental pressures in the IHR, further worsened by changing precipitation patterns and rising temperatures.
    5. Financial Constraints: The IHR cities lack the capacity to generate capital for infrastructure needs, highlighting the need for the Finance Commission to address urban financing in this region, given the high costs and absence of industrial corridors.

    What can be done?

    1. Every town needs to be mapped, with layers identifying vulnerabilities from geological and hydrological perspectives. The planning process should involve locals and follow a bottom-up approach.
    2. Consultant-driven urban planning processes should be shelved for Himalayan towns, with the urban design based on climate resilience.
    3. Current intergovernmental transfers from the centre to urban local bodies constitute a mere 0.5% of GDP. This should be increased to at least 1% of GDP.
    4. Himalayan towns must engage in wider conversations about sustainability, with the focus on urban futures being through robust, eco-centric planning processes involving public participation.

    Case Study 

    Nainital: Integrated Development Plan

    1. Nainital district in Uttarakhand implemented an Integrated Development Plan that aimed to balance urban growth with environmental conservation.
    2. The plan involved mapping vulnerable areas, restricting construction in ecologically sensitive zones, and promoting sustainable tourism practices.
    3. Community participation and awareness programs were also part of the initiative to ensure long-term sustainability.

    Dharamshala: Green Building Norms

    1. The Dharamshala Municipal Corporation in Himachal Pradesh has adopted green building norms for new constructions, focusing on energy efficiency, water conservation, and waste management.
    2. The city has also invested in public transportation and pedestrian-friendly infrastructure to reduce vehicular emissions and promote sustainable mobility

    Mains PYQ:

    Q How can the mountain ecosystem be restored from the negative impact of development initiatives and tourism?  (UPSC IAS/2019)

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  • Animal Husbandry, Dairy & Fisheries Sector – Pashudhan Sanjivani, E- Pashudhan Haat, etc

    Court shifts the tide on stray dog policy  

    Explained | Governance | Mains Paper 2: Health & Education

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Prevention of Cruelty to Animals (PCA) Act, 1960, and the Animal Birth Control (ABC) Rules;

    Mains level: Supreme Court judgement on stray dogs;

    Why in the news?

    The Supreme Court ended the 15-year-old (Animal Welfare Board of India & Anr Versus People for Elimination of Stray Troubles & Ors) AWBI vs. PEST case on July 12, after the final hearing on May 9, sparking mixed reactions.

    The Prevention of Cruelty to Animals (PCA) Act, 1960, and the Animal Birth Control (ABC) Rules are:

    • The PCA Act, 1960 was enacted by the Parliament of India to prevent the infliction of unnecessary pain or suffering on animals and to amend the laws relating to the prevention of cruelty to animals.
      • The PCA Act, 1960 and ABC Rules, 2001 prohibit the killing of stray dogs and mandate sterilization as the only scientific and humane method of controlling stray dog populations.
      • The new ABC Rules, 2023 notified under the PCA Act, 1960 also prohibit wanton killing of stray dogs by municipalities and require them to follow sterilization.
    • The Act defines “animal” as any living creature other than a human being. It establishes the Animal Welfare Board of India to promote animal welfare.
    • Chapter III of the Act lists different forms of cruelty to animals that are banned, including those related to work animals, captivity, ownership, abuse, mutilation or killing.
    • Chapter IV deals with experiments on animals. While it does not make experiments unlawful for the advancement of knowledge, it allows the Board to advise the government to create a committee to control and supervise such experiments.
    • Chapter V outlines restrictions, procedures and offences related to performing animals. The Central Government can prohibit any animal from exhibition or training through notification.

    Note: In 2022, the Ministry of Fisheries, Animal Husbandry and Dairying submitted a draft Prevention of Cruelty to Animals (Amendment) Bill 2022 for public comment. The draft includes 61 amendments to further clarify the law and make punishments more stringent.

    The Supreme Court stated that the Central law (PCA Act 1960 and ABC Rules, 2023) which prohibits killing of stray dogs by local authorities remains the governing law of the land.

    What the Supreme Court said on the ‘Duty of every Citizen’:

    • The Supreme Court capped off the judgment with the lines: “Compassion to all living beings, is the enshrined Constitutional value and mandate, and cast obligation on the authorities to maintain.”
      • This refers to Article 51A(g) of the Constitution of India which states: “It shall be the duty of every citizen of India to protect and improve the natural environment including forests, lakes, rivers, and wildlife and to have compassion for living creatures.”
    • The court emphasized that Citizens should avoid unscientific and cruel methods like killing stray dogs and instead choose the scientific and humane method of sterilization.

    Issues due to stray dogs in India: 

    • Population: India has an estimated 60 million stray dogs, making it the country with the highest number of stray dogs globally.
    • Rabies Incidence: India accounts for 36% of global rabies deaths and 65% of rabies deaths in the South-East Asia region.
      • Between 2012 and 2022, the National Rabies Control Program reported 6,644 clinically suspected cases of rabies in humans.
    • Dog Bite Cases: Reports indicate that major cities have seen alarming numbers of dog bite incidents. For example, Delhi’s Safdarjung Hospital and Ram Manohar Lohia Hospital recorded nearly 48,000 dog bite cases in just six months. In Kerala alone, there were over 1.9 lakh dog bite cases last year, with 21 deaths attributed to rabies.

    Way forward:

    • Enhanced Public Awareness and Education: Need to implement nationwide campaigns to educate the public on responsible pet ownership, the importance of sterilization, and the humane treatment of stray dogs.
    • Strengthening Enforcement of Existing Laws: Need to ensure that municipalities and local authorities are adequately trained and funded to implement the ABC Rules effectively.

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  • Corruption Challenges – Lokpal, POCA, etc

    Supreme Court to review PMLA verdict     

    Explained | Polity | Mains Paper 2: Ministries & Departments Of The Government

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Prevention of Money Laundering Act, 2002 (PMLA);

    Mains level: Review power of Supreme Court;

    Why in the news?

    The Supreme Court has postponed its review of the decision to uphold key provisions of the Prevention of Money Laundering Act, 2002 (PMLA) to August 28.

    Prevention of Money Laundering Act, 2002 (PMLA)

    • The Prevention of Money Laundering Act, 2002 (PMLA) is a crucial legislative framework in India aimed at combating money laundering and related financial crimes.
    • The PMLA was enacted by the Parliament of India and came into force on July 1, 2005. It was introduced to prevent money laundering and provide for the confiscation of property derived from or involved in money laundering.
    • The main objectives of the PMLA are:
      • To prevent and control money laundering.
      • To confiscate and seize property obtained from laundered money.
      • To address issues connected with money laundering in India.

    What is the Case?

    •  On July 27, 2022, the Supreme Court upheld key provisions of the Prevention of Money Laundering Act, 2002 (PMLA) in the case of “Vijay Madanlal Choudhary v. Union of India”.
      • The 540-page ruling accepted the government’s arguments on all challenged aspects, including reversing the presumption of innocence for bail, passing amendments as a Money Bill, and defining the Enforcement Directorate’s (ED) powers.
    • On August 25, 2022, a different three-judge bench agreed to hear a review petition filed by Congress MP Karti Chidambaram. The petition raised concerns about at least two issues from the Madanlal decision.

    What are the Grounds for Review?

    • The Supreme Court’s verdict in Madanlal upheld stringent bail conditions for economic offences, imposing a reverse burden of proof on the accused.
    • Petitioners argue that, without essential documents like an FIR, charge sheet, case diary, and prosecution documents, an accused cannot adequately present their case.
    • The Madanlal verdict upheld Section 50 of the PMLA, allowing ED officials to record statements under oath, admissible in court. It distinguished ED officers from police officers, classifying their investigations as “inquiries.” Petitioners argue that the verdict overlooked provisions granting penal powers to the ED.

    How is a Judgment Reviewed?

    • The Supreme Court can review its judgments or orders under Article 137 of the Constitution.
    • A review petition must be filed within 30 days of the judgment. Typically, review petitions are heard through written submissions (“circulation”) by the same judges who passed the original verdict, rather than in open court.
    • Reviews are granted on narrow grounds to correct grave errors causing a miscarriage of justice. One common ground is “a mistake apparent on the face of the record,” which must be glaring and obvious, such as reliance on invalid case law.

    Way forward: 

    • Enhanced Transparency and Documentation: To address concerns about the adequacy of case presentation by the accused, there should be a mandate for providing all essential documents such as FIRs, charge sheets, case diaries, and prosecution documents to ensure a fair trial process.
    • Clarification of ED’s Powers and Procedures: Amendments to the PMLA should clearly define the scope and limits of the Enforcement Directorate’s powers, ensuring that ED officers are given appropriate procedural guidelines and oversight mechanisms to prevent misuse of penal powers and uphold due process.

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  • Terrorism and Challenges Related To It

    A closer look at beefng up Jammu’s counter-terror grid    

    Explained | Security Issues | Mains Paper 3: Organized Crime & Terrorism

    Note4Students

    From UPSC perspective, the following things are important:

    Mains level: Grid System in Vulnerable Areas;

    Why in the news?

    The Jammu region has faced severe security issues recently, exacerbated by troop redeployment to the LAC. To address this, around 3,500 additional troops and Special Forces were deployed.

    Present Context of J&K

    • Security Concerns: The Jammu region has seen a resurgence in terrorist activities, with security forces suffering significant losses. The situation has deteriorated, particularly following the redeployment of troops to the Line of Actual Control (LAC) after the Galwan incident in June 2020.
    • Increased Military Presence: In response to the rising threats, additional troops, including Special Forces and Assam Rifles, have been inducted into the region to bolster counter-terrorism operations.
      • Following the abrogation of Article 370 in 2019, there has been a strategic shift in militancy from Kashmir to Jammu, with militants adapting their tactics and increasing their operational activities in districts like Reasi, Rajouri, and Poonch.

    Need to Establish the Grid System in Vulnerable Areas

    • Establishing a counter-terrorism grid involves deploying military units strategically in vulnerable areas to dominate potential terrorist movements. This requires thorough threat assessments based on terrain, local population inclinations, and historical data.
    • The grid system emphasizes the importance of winning the trust of the local population through community engagement, which is crucial for gathering intelligence on terrorist activities.

    Challenges

    • Integration of New Troops: Newly inducted troops face the challenge of quickly orienting themselves to the local terrain and population dynamics.
    • Divided Local Population: The local population is divided into subsets that either support the state, support terrorists, or remain neutral. 
      • Gaining the support of the neutral majority is critical for the success of counter-terrorism efforts.
    • Operational Control: Recent trends show a shift in operational control from battalion-level commanders to higher command levels, which can hinder effective and timely responses to emerging threats.

    About Operation Dudhi

    • Historical Context: Operation Dudhi, conducted in May 1991 by the 7 Assam Rifles, is remembered as a successful counter-terrorism operation in the Chowkibal area. It showcased the effectiveness of battalion-level command in conducting operations.
    • Lessons Learned: The operation highlighted the importance of allowing commanding officers to maintain control over their units.
      • Recent trends of centralizing control may undermine operational effectiveness and responsiveness.
    • Need for Integrated Deployment: The success of future operations requires that newly inducted troops be deployed as integral units under existing command structures, rather than in a fragmented manner, to enhance operational coherence and effectiveness.

    Way forward: 

    • Enhance Human Intelligence Networks: It is crucial to build robust human intelligence networks by integrating local informants and community members into counter-terrorism efforts.
    • Integrated Deployment of Forces: Newly inducted troops should be strategically integrated with existing units to create a cohesive counter-terrorism grid. This approach will facilitate knowledge sharing and operational synergy, allowing new troops to quickly acclimatize to the local environment and build relationships with the community.

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  • Trade Sector Updates – Falling Exports, TIES, MEIS, Foreign Trade Policy, etc.

    What is the Yen Carry Trade? Why is it unwinding right now?

    Explained | Economics | Mains Paper 3: Effects Of Liberalization On The Economy, Changes In Industrial Policy and their effects on Industrial Growth

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: What is Yen carry trade?

    Mains level: Why is it unwinding right now?

    Why in the news?

    The global stock and bond markets, especially Japan’s, are experiencing turmoil due to the unwinding of the immensely popular yen carry trade.

    What is Yen carry trade?

    • The yen carry trade is a popular currency trading strategy that involves borrowing Japanese yen at low interest rates and using the funds to invest in higher-yielding assets denominated in other currencies, with the goal of profiting from the interest rate differential.

    Why is it unwinding right now?

    • Strengthening Yen: The Japanese yen has appreciated significantly, rising over 3% against the dollar after the Bank of Japan (BoJ) raised interest rates to 0.25% and announced a reduction in bond purchases. This strengthening of the yen diminishes the profitability of the carry trade, which relies on a weaker yen to remain viable.
    • Interest Rate Changes: Expectations of imminent interest rate cuts by the U.S. Federal Reserve have contributed to the dollar’s weakness, further impacting the carry trade. As the interest rate differential narrows, the incentive to maintain yen carry positions decreases.

    How does it work?

    • Mechanism: The yen carry trade involves borrowing yen at low interest rates and converting it into higher-yielding currencies. Investors use the borrowed yen to purchase assets in currencies that offer better returns, such as U.S. dollars or Australian dollars.
    • Investors typically aim for annualized returns of around 5% to 6% on dollar-yen carry trades, which is the difference between U.S. and Japanese interest rates. The strategy can be lucrative as long as the yen does not appreciate significantly against the currencies in which the investments are made.

    How did it begin?

    • The yen carry trade can be traced back to 1999 when Japan lowered its policy rates to zero following an asset price bubble burst. This led Japanese investors to seek better returns in international markets, effectively turning Japan into the world’s largest creditor nation.
    • The contemporary form of the carry trade gained prominence in 2013 under Prime Minister Shinzo Abe’s quantitative easing policies, coinciding with rising U.S. rates and a depreciating yen. This trend intensified in 2022 and 2023 as the Federal Reserve raised rates rapidly while the Bank of Japan maintained negative short-term rates.

    How large Is It?

    • The estimated size is about $350 billion in short-term external loans by Japanese banks attributed to yen-funded carry trades. However, this figure may not fully capture the extent of the trades, as it could include commercial transactions or loans to foreign businesses.
    • The actual size of yen carry trades could be larger due to the leverage used by hedge funds and computer-driven funds.

    Is it coming to an end?

    • The Bank of Japan has recently started raising rates, which has led to a stronger yen. As a result, the yield gap between Japanese and other currencies has narrowed, diminishing the profitability of carry trades.
    • The appreciation of the yen (by about 13% in a month) has prompted leveraged investors to unwind their positions, leading to a sell-off in global stock and bond markets. This unwinding is driven by the need to repay yen loans as the currency strengthens, causing further declines in asset prices internationally.

    Conclusion: The yen carry trade is unwinding due to the strengthening yen and narrowing interest rate differentials. As the yen appreciates, profitability decreases, prompting investors to exit positions, leading to global market sell-offs. This trend signifies a shift in monetary policies and changing economic conditions affecting currency trading strategies.

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