Daily Prelims Notes 4 July 2023

Daily Prelims Notes

4 July 2023

Table Of Contents

1. Indian refiners making yuan payments for Russian Dollar
2. Power ministry working on Reconductoring
3. Byju’s promoters have sold shares worth $408.53 m in secondary deals wince FY16
4. CIBIL score must for bank job
5. Lessons from Twin Balance sheet problem
6. This tool can help companies track digital carbon footprint of stored data
7. Orchids are blooming earlier than usual in the northeast — and it’s not good news
8. Why detecting carbon molecules in space matters
9. Deep sea mining permits may be coming soon. What are they and what might happen?
10. Centre announces scheme to support minor rape victims
11. Greedflation and its counter arguments
12. The legality of the Delhi Ordinance
13. NCP lurches as Ajit Pawar claims party and symbol
14. A stocktake before the Global Stocktake
15. France riots ‘echo’ in Switzerland
16. China to stay out of Sri Lanka’s creditors’ platform

1. Indian refiners making yuan payments for Russian Dollar

Subject: Economy

Section: External Sector

Context: Indian refiners have begun paying for some oil imports from Russia in Chinese yuan

Key Points:

• Western sanctions decided by the G7 countries prohibit purchase of Russian oil above $60 per barrel. With the price for Russian crude rising above the $60 limit, it is likely to face payment problems.
• Russia and its customers need to find alternatives to the dollar for settling payments. For India payment is Rupee is not agreeable to Russia as it is already struggling with over $2 billion in INR reserves received on its export of defence purchases to India.
• In this situation it is being reported that IOC and other companies are making payments in Yuan. It is noteworthy that India has not endorsed the sanctions by western countries, but Indian banks are not comfortable in undertaking any trade related payments to sanctioned entities.

2. Power ministry working on Reconductoring

Subject :Economy

Section: Infrastructure Sector

Key Points:

• Reconductoring is a process of stringing of new conductors on existing towers using the same right of way (RoW) to increase the thermal capacity of transmission lines.
• India has installed power generation capacity of 417,688 MW (as of May 31, 2023), which is expected to double by 2030. So, there is a need to upgrade the transmission system so that it is able to carry that much more energy.
• Transmission capacity can be increased either by laying new transmission lines, or the by “reconductoring” — doing up the existing lines so that more energy could be put through akin to broadening an existing highway. Ministry of Power is working on both approaches.
• Laying of new lines poses the issue of a securing ‘right of way’ (ROW); hence ‘reconductoring’ is being prioritized in the effort of improving the country’s transmission capacity.
• A recent ‘Draft paper on Reconductoring of Transmission lines’ produced by the Central Electricity Authority notes that a key issue in reconductoring would be the choice of tariff mechanism – regulated tariff mechanism (RTM) or tariff derived by a competitive bidding process (TBCB).
• RTM (regulated tariff mechanism)
  • RTM is a cost-plus model where projects are executed under the supervision of state-run Power Grid Corporation of India
  • This would involve allocating reconductoring works to the licensee of the original line
  • There is a concern of higher implementation cost and lack of transparency in RTM
• TBCB (tariff-based competitive bidding)
  • Under this model private companies can also bid, with contracts awarded to the lowest bidders under a build, own, operate and maintain (BOOM)
  • The National committee on transmission (NCT) was constituted by the power ministry to identify inter-state transmission projects to be developed through competitive bidding
  • For competitive bidding, first the question of ownership of the asset needs to be resolved. Disputes may arise on sharing of tariff as towers are owned by one licensee, and the conductor by another licensee.

3. Byju’s promoters have sold shares worth $408.53 m in secondary deals wince FY16

Subject :Economy

Section: Capital Market

Context:  Byju’s promoters – Byju Raveendran, Divya Gokulnath and Riju Ravindran have been reported to have sold shares worth around $408.53 million in the secondary market since 2015.

Key Points:

• Raveendran’s brother and a member of Byju’s board Riju Ravindran sold shares worth $375.83 million since 2015, whereas Raveendran’s wife and co-founder Gokulnath sold shares worth $29.40 million.
• Meanwhile, Raveendran sold shares worth $3.28 million since 2015, while also purchasing shares from multiple sellers including members of his family and employees of the company since 2012
• Raveendran, in a recent mail to employees, also said that he has reinvested all the money received from the secondary sale of shares.

4. CIBIL score must for bank job

Subject :Economy

Section: Monetary Policy and Banking sector

Context:

• The Institute of Banking Personnel Selection (IBPS), the common recruitment agency for participating public sector banks (excluding State Bank of India), has a new credit history clause for applicants.
• The candidate applying shall ensure that they maintain a healthy Credit history and shall have a minimum Cibil score of 650. Candidates with no bank account shall not be required to produce their CIBIL status.

5. Lessons from Twin Balance sheet problem

Subject :Economy

Section: Monetary Policy

What is the twin balance sheet problem

• A twin balance sheet is a scenario where banks are under severe stress and the corporates are overleveraged to the extent that they cannot repay.
• This generally happens in a boom cycle when the banking system provides easy credit flow to the corporate sector which too keeps taking loan (debt increase relative to equity = leverage increase).

India’s TBS story:

• As a result of excess credit expansion from 2000-2008 the Public Sector banks (PSBs) were pushed into severe stress due to high levels of non-performing assets (NPAs), high provision requirements, low profits, and low capital adequacy ratios (CAR).
• The corporates were equally under stress due to over-leveraged balance sheets to the extent that they could not repay their loans.
• PSBs had to resort to the restructuring of loans and evergreening of NPAs (giving of a new loan to take care of the earlier bad loan). This was more pronounced beginning 2008-09 following the global financial crisis.
• RBI intervention- detection to peak:
  • introduced the Central Repository of Information on Large Credits (CRILC) to enable banks to share information on loans of Rs.5 crores and above.
    • Data of Special mention Accounts (SMA -0/1/2) where overdue loans of up to 30/60/90 days were to be captured, reported, and monitored by banks.
    • These sets of information played a big role to curb the further pile-up of NPAs with proactive intervention and follow-up of loans.
  • RBI brought in stricter norms on restructuring of loans to remove the tendency of evergreening of loans.
  • For independent assessment of NPA’s RBI implemented an asset quality review (AQR) – a special audit of NPA classification in September 2015. AQR classification of NPAs as per prudential norms, found the total gross NPAs in the banking system at Rs. 10.3 trillion working out to 11.5 percent by FY18.
  • The combination of PSBs loaded with high NPAs and over leveraged balance sheets of corporates posed further challenge.
• RBI intervention- resolution and recovery:
  • The solution was infusion of large capital in PSBs. A set of bank reforms was set as the precondition for this infusion
  • Another measure was the ‘Enhanced Access to Service Excellence’ (EASE) reforms in PSBs in collaboration with BCG in January 2018. The format of EASE reforms got modified from year ago to moving the model from EASE 1.0 to EASE 5.0 now in use.
  • During 2017-21, there were large-scale mergers among PSBs bringing them down from 27 to 12 and turning them into stronger entities with potential higher risk appetite.
  • National Asset Reconstruction Company Ltd (NARCL) – Bad bank also had to be formed to tackle toxic assets.
  • The measures were helped by the Insolvency and Bankruptcy Code.

Lessons from TBS:

• Addressing the twin balance sheet problem in an appropriate manner has now helped India achieve a Twin balance sheet advantage for growth.
  • provision coverage ratio (PCR) from 40.1 percent in June 2016 to 74 percent in March 2023
  • gross non-performing assets (GNPAs) of banks sharply fell from 11.5 percent in FY18 to 3.9 percent in FY23
• The stakeholders need to learn from the TBS and avoid excess risk taking.
• The tools of risk governance, such as a sub-committee of the board on risk management along with systemic controls and monitoring mechanisms are essential to avoid such a trap again.

6. This tool can help companies track digital carbon footprint of stored data

Subject :Environment

Section: Climate change

Context:

• Scientists have come up with a new tool that can calculate carbon emissions caused by digital data, especially by companies that want to offset their carbon footprint.

Data carbon ladder:

• Researchers from Loughborough University, the United Kingdom created and launched the tool named ‘Data carbon ladder’.
• A data carbon ladder can help businesses measure the carbon dioxide output of their digital data.
• The inclusion of the data CO2 footprint is a crucial factor missing from global decarbonisation policies.
• How will it help in measuring the carbon emission?
  • By using the tool, believed to be the first of its kind, companies can make data-driven decisions that benefit the environment and save money by reducing the need for carbon offsetting.
  • The tool can also help businesses and organisations improve their data projects’ sustainability by reducing their environmental impact and creating a more efficient and sustainable solution.
  • It is the first publicly available tool to calculate the data CO2 footprint across the data journey, from the origin of a dataset through to its end use — for example, AI analytics.
  • The tool enables organisations to see the environmental impact of data at key stages along the data journey, providing stage-by-stage CO2 output as well as an overall CO2 footprint for new data projects.
  • It helps determine the appropriate size of the dataset(s) required, the optimal frequency for updates, the most suitable storage location, and the analytics necessary for projects.

Data and carbon emission:

• Data centres are responsible for 2.5 per cent to 3.7 per cent of all human-induced carbon dioxide — more than the aviation industry (2.1 per cent).
• By 2025, it is estimated that the global data will surpass 180 zettabytes and the amount of digital data is doubling every two years.
• A typical data-driven business employing 100 full-time employees will generate approximately 2,203 tonnes of CO2 emissions annually due to new data.

7. Orchids are blooming earlier than usual in the northeast — and it’s not good news

Subject :Environment

Section: Species in news

Context:

• Changing climatic conditions in Assam have disrupted the blooming cycle of the foxtail orchid, traditionally associated with the Assamese new year, causing premature flowering and wilting.

Climate and orchids migration:

• Orchids are good bioindicators of the health of an ecosystem.
• They are usually not widely spread, found only over a smaller geographical area.
• They do not tolerate pollution or change in their environment well.
• It is for this reason that the kopou phool is now blooming and wilting away almost 10 days before Bihu in April.
• Assam has 411 recorded orchid species. In addition to the foxtail orchid (Rhynchostylis retusa) other species such as the Dendrobium aphyllum, D. moschatum, and D. lituiflorum are also flowering early.
• Other changes that orchids are exhibiting include changes in flower colour, abnormal growth and shift to higher altitudes.
• Orchids are mainly of three kinds:

1. Those that grow on the ground, or terrestrial;
2. Those that grow on trees, or epiphytic; and
3. Those that derive nutrients from mycorrhizal fungi, or myco-heterotrophical.

• Almost 60% of all orchids found in India are epiphytic.
• The issue of survival, especially for epiphytic orchids, is of concern.
• Orchids (usually terrestrial ones) are perennial herbs, they may begin to shift up easily. But the epiphytic ones may not be able to find a suitable habitat, so there are chances many will perish.
• Though the host trees will also tend to shift, it will take years before they become mature enough to be able to host orchids.
• If there is no pollinator, then there will be no new recruitment through seed germination and gradually the plants will vanish too.
• Not all orchids are pollinator-dependent so those species may survive longer than others.
• A shrinking forest cover is a major challenge when it comes to orchid conservation. Orchids don’t inhabit all trees. The indiscriminate cutting down of trees is posing a threat to these plants.
• The illegal orchid trade:
  • In India, 11 species of orchids are protected under the Wildlife (Protection) Act 1972.
  • Orchids are high in demand for ornamental purposes, for medicinal purposes, and for research.

Assam’s vulnerability to climate change:

• Assam is the most vulnerable to climate change among 12 states and union territories in the Indian Himalayan Region.
• Between 1951-2010, the annual mean temperature in the state increased by 0.59 degrees Celsius, while rainfall has reduced by 2.96 mm per year.
• Continued warming of the atmosphere and the ensuing change in precipitation pattern is impacting the state’s water resources, agriculture, forests, its unique biodiversity and the habitats of people.
• The erratic rainfall or evaporation rate will misbalance the soil moisture, vegetation and microclimate of forest areas or grassland. It will likely impact the terrestrial orchid population.

Changes observed in other areas:

• Changes in orchid flowering patterns are being observed in Arunachal Pradesh too.
• This is considered the orchid state of India with 40% of the total orchid species found in India.
• India has 1,256 recorded orchid species of which 307 are endemic to our country.

Resilience and evolution of orchids:

• Orchids are also known for their resilience.
• Orchids are the first ones to inhabit a new habitat.
• Although climate change is impacting the phenology of some orchids,  globally scientists are not considering it a serious problem because similar changes have happened earlier, about 100 years earlier, and orchids have evolved.

8. Why detecting carbon molecules in space matters

Subject :Science and Technology

Section: Space technology

Context:

• The CH3+ molecule, which is also known as methyl cation, has been detected in space for the first time by the James Webb Space Telescope (JWST).

Life as we know it is carbon-based:

• One of the most important unsolved problems of modern science is: How did life arise from non-living matter?
• We still don’t know but we have a good idea of what the required steps are, for instance, the formation of complex organic molecules, like amino acids, from simpler ones, like CH3+, or methylium.
• CH3+ is a very simple organic molecule, just one carbon atom and 3 hydrogen atoms. But it reacts with other molecules to form more complex ones. Its presence in space tells us that basic building blocks for life are out there.
• Organic molecules are carbon-based. They contain carbon atoms bonded to hydrogen atoms but can also bond to other elements, such as oxygen, nitrogen or phosphorus.
• Everything that makes us and all life on Earth is carbon-based.

Looking for molecular fingerprints in space:

• Scientists found the fingerprints of the CH3+ molecule in the light coming from a swirling disk of dust and gas around a young star.
• The disk is in the Orion Nebula, 1,350 light years from Earth.
  • The Orion Nebula is visible to the naked eye although you may only see a dot on Orion’s sword slightly below the belt.
• Visible light is just a fraction of the whole picture. But every atom and molecule absorbs or emits light uniquely, with its own specific colour palette.
  • For example, hydrogen, the simplest of atoms, when excited, emits a red glow, and if you view it through a prism, you will see four characteristic lines that make up its spectrum.
• Scientists call this technique spectroscopy and in space, they use the James Webb Space Telescope to do it.

An unexpected discovery:

• When astronomers captured the spectrum of this planet-forming disk, they took the help of Schlemmer’s lab.
• The lab had been studying the fingerprint of molecules and analyzed CH3+ in detail. And that enabled scientists to match the unknown fingerprint detected by the JWST to this specific, life-giving molecule.

About James Webb Space Telescope (JWST):

• The telescope is the result of an international collaboration between NASA, the European Space Agency (ESA) and the Canadian Space Agency which was launched in December 2021.
• It is currently at a point in space known as the Sun-Earth L2 Lagrange point, approximately 1.5 million km beyond Earth’s orbit around the Sun.
  • The Lagrange Point 2 is one of the five points in the orbital plane of the Earth-Sun system.
  • Named after Italian-French mathematician Josephy-Louis Lagrange, the points are in any revolving two-body system like Earth and Sun, marking where the gravitational forces of the two large bodies cancel each other out.
  • Objects placed at these positions are relatively stable and require minimal external energy or fuel to keep themselves there, and so many instruments are positioned here.
• It’s the largest, most powerful infrared space telescope ever built.
• It’s the successor to Hubble Telescope.
• It can see backwards in time to just after the Big Bang by looking for galaxies that are so far away that the light has taken many billions of years to get from those galaxies to our telescopes

Objectives:

• It will examine every phase of cosmic history: from the Big Bang to the formation of galaxies, stars, and planets to the evolution of our own Solar System.
• The goals for the Webb can be grouped into four themes.
  • The first is to look back around 13.5 billion years to see the first stars and galaxies forming out of the darkness of the early universe.
  • Second, to compare the faintest, earliest galaxies to today’s grand spirals and understand how galaxies assemble over billions of years.
  • Third, to see where stars and planetary systems are being born.
  • Fourth, to observe the atmospheres of extrasolar planets (beyond our solar system), and perhaps find the building blocks of life elsewhere in the universe.

9. Deep sea mining permits may be coming soon. What are they and what might happen?

Subject :Geography

Section: Economic geography

Context:

• The International Seabed Authority — the United Nations body that regulates the world’s ocean floor — is preparing to resume negotiations that could open the international seabed for mining, including for materials critical for the green energy transition.

WHAT IS DEEP SEA MINING?

• Deep-sea mining involves removing mineral deposits and metals from the ocean’s seabed.
• There are three types of such mining:
  • Taking deposit-rich polymetallic nodules off the ocean floor,
  • Mining massive seafloor sulphide deposits and
  • Stripping cobalt crusts from rock.
• These nodules, deposits and crusts contain materials, such as nickel, rare earths, cobalt and more, that are needed for batteries and other materials used in tapping renewable energy and also for everyday technology like cellphones and computers.

Technology involved:

• Engineering and technology used for deep sea mining are still evolving. Some techniques considered by the companies are:
  • Vacuuming the materials from the seafloor using massive pumps.
  • Developing artificial intelligence-based technology that would teach deep sea robots how to pluck nodules from the floor.
  • Using advanced machines that could mine materials off the side of huge underwater mountains and volcanoes.

HOW IS DEEP-SEA MINING REGULATED NOW?

• Countries manage their own maritime territory and exclusive economic zones, while the high seas and the international ocean floor are governed by the United Nations Convention on the Law of the Seas.
• It is considered to apply to states regardless of whether or not they have signed or ratified it.
  • Under the treaty, the seabed and its mineral resources are considered the “common heritage of mankind” that must be managed in a way that protects the interests of humanity through the sharing of economic benefits, support for marine scientific research, and protecting marine environments.
• Mining companies interested in deep sea exploitation are partnering with countries to help them get exploration licenses.
• More than 30 exploration licenses have been issued so far, with activity mostly focused in an area called the Clarion-Clipperton Fracture Zone, which spans 1.7 million square miles (4.5 million square kilometers) between Hawaii and Mexico.

WHY IS THERE PRESSURE ON THE ISA TO ESTABLISH REGULATIONS NOW?

• In 2021 the Pacific island nation of Nauru — in partnership with mining company Nauru Ocean Resources Inc, a wholly-owned subsidiary of Canada-based The Metals Company — applied to the ISA to exploit minerals in a specified deep sea area.
• That triggered a clause of the UN treaty that requires the ISA to complete regulations governing deep sea exploitation by July 2023.
• If no regulations are finalized, Nauru can submit an application to conduct the mining without any governing regulations.
• Other countries and private companies can start applying for provisional licenses if the UN body fails to approve a set of rules and regulations by July 9.

WHAT ARE THE ENVIRONMENTAL CONCERNS?

• Only a small part of the deep seabed has been explored and conservationists worry that ecosystems will be damaged by mining, especially without any environmental protocols.
• Damage from mining can include noise, vibration and light pollution, as well as possible leaks and spills of fuels and other chemicals used in the mining process.
• Sediment plumes from some mining processes are a major concern.
  • Once valuable materials are taken extracted, slurry sediment plumes are sometimes pumped back into the sea.
  • That can harm filter-feeding species like corals and sponges and could smother or otherwise interfere with some creatures.
• Scientists have warned that biodiversity loss is inevitable and potentially irreversible.

WHAT’S NEXT?

• The ISA’s Legal and Technical Commission, which oversees the development of deep-sea mining regulations, will meet in early July to discuss the yet-to-be-mining code draft.
• In the meantime, some companies — such as Google, Samsung, BMW and others — have backed the World Wildlife Fund’s call to pledge to avoid using minerals that have been mined from the planet’s oceans.
• More than a dozen countries—including France, Germany and several Pacific Island nations— have officially called for a ban, pause or moratorium on deep sea mining at least until environmental safeguards are in place.
• Other countries, such as Norway, are proposing opening their waters to mining.

About International Seabed Authority:

• It is an autonomous international organization established under the 1982 United Nations Convention on the Law of the Sea (UNCLOS).
• Mandate: It has the mandate to ensure the effective protection of the marine environment from harmful effects that may arise from deep-seabed-related activities.
• It has its headquarters in Kingston, Jamaica
• Its primary function is to regulate the exploration of poly-metallic nodules.

What are poly-metallic nodules?

• Polymetallic nodules are rounded accretions of manganese and iron hydroxides that cover vast areas of the seafloor.
• These are most abundant on abyssal plains at water depths of 4000-6500 metres.
• They are mainly found in the north-central Pacific Ocean, the southeastern Pacific Ocean, and the northern Indian Ocean.

10. Centre announces scheme to support minor rape victims

Subject : Schemes

Concept :

• The “Scheme for critical care and support for accessing justice to rape/gang-rape survivors and minor girls who get pregnant” was announced under the Nirbhaya fund.

Aims:

• to provide integrated support and assistance to girl child victims under one roof;
• to facilitate immediate, emergency and non-emergency access to a range of services including access to education, police assistance, medical (also comprising maternity, neo-natal and infant care), psychological and mental counselling legal support,
• insurance cover for the girl child victim and her new-born under one roof to enable access to justice and rehabilitation of such girl child victims.
• providing shelter, food, daily needs, and safe transportation for attending court hearings and legal aid to the minor girls who have been abandoned by their families.

Assistance to POCSO victim:

• If she doesn’t want to keep the child, she can give the child up for adoption.
• Medical assistance can be provided as desired by the victim.
• The person in charge of the Home shall provide a separate safe space for the girl child as her needs are different from other children residing in the Home.
• Four thousand rupees monthly will be given to those victims who have been abandoned by their families.

Eligibility:

• Any girl below the age of 18 years, who is a victim of Penetrative Sexual Assault.
• Any girl who becomes pregnant due to such assault or rape is covered under the Scheme.
• Such a girl child victim should be:
• an orphan,
• abandoned by the family, or
• does not wish to live with the family.
• It is not mandatory for the girl child victim to have a copy of the FIR for availing of the benefits under the scheme.

Nirbhaya Fund

• The Government of India established the Nirbhaya Fund in response to the Nirbhaya Case in 2013.
• It is aimed specifically at projects for improving women’s safety and security and is managed by the Ministry of Women and Child Development (MWCD).
• The Empowered Committee (EC), which is composed of officials from several ministries and is chaired by the Secretary of the MWCD, recommends programmes/schemes for funding under Nirbhaya Fund.
• Some of the major projects under the fund are Central Victim Compensation Fund (CVCF), One Stop Centers (OSCs), Universalization of Women Helpline (WHL), Mahila Police Volunteer (MPV), etc.
• Since Nirbhaya Fund’s founding, the EC has approved programmes worth ~Rs. 9800 crores.

11. Greedflation and its counter arguments

Subject : Economy

Section: Inflation and Unemployment

Concept :

• During a recent surge in inflation, the prices of tomatoes have experienced a significant increase within a month, affecting multiple cities in India the most.
• Although there is a reasonable explanation for this price surge, some speculate that it could be attributed to a phenomenon known as ‘greedflation’.

Greedflation

• Greedflation is currently on the rise in the United States and is one of the primary reasons why prices are being driven up in the country.
• In basic terms, is the inflation and hike in prices not driven by economic flow, but by corporate greed.
• It is termed as the inflation in prices of basic commodities which is driven by the companies to increase their profit margins.
• Greedflation simply means big corporations squeezing out money from customers by jacking up the prices of their products, only to increase their profit margins.

Is greedflation same as cost push inflation?

Greedflation has been compared to other theories of “cost­push” inflation which attribute inflation to a rise in input costs. For example, in the past, a rise in the wages demanded by workers has been blamed for the rise in the prices of goods and services. In the case of greedflation, it is the rise in the corporate thirst for profits that is seen as a cost that is driving up prices.

 A criticism of the cost-push theory of inflation has been that it ignores the fact that the cost of producing any good is itself determined indirectly, but ultimately, by consumers. It should be noted that the cost of inputs, which can be used towards different alternative ends of society, is determined by competitive bidding in the market.

Cost-Push Inflation:

Cost push inflation is inflation caused by an increase in prices of inputs like labour, raw material, etc. The increased price of the factors of production leads to a decreased supply of these goods. While the demand remains constant, the prices of commodities increase causing a rise in the overall price level.

Apart from rise in prices of inputs, there could be other factors leading to supply side inflation such as :

• Natural disasters or depletion of natural resources,
• Monopoly-single seller selling limited goods at comparatively higher price.
• Government regulation or taxation- especially indirect tax that raises price of of commodity
• Change in exchange rates-currency devaluation or depreciation making imports expensive
• Imported inflation-rise in price of imported goods

Generally, cost push inflation may occur in case of an inelastic demand curve where the demand cannot be easily adjusted according to rising prices.

Cost-Push vs. Demand-Pull Inflation:

Cost-push is one of the two causes of inflation. The other is demand-pull inflation. Demand-pull inflation is the primary cause of inflation. It occurs when the aggregate demand for a good or service outstrips aggregate supply, and it starts with an increase in consumer demand. Sellers try to meet the higher demand with more supply. If they can’t, then they raise their prices.

Is greedflation happening in India?

• Greedflation is on the rise in the United Kingdom and the US, but has not taken a fast pace in India yet.
• However, due to the increasing privatization of industries in India, it is likely that greedflation will make its entry into the country soon if the government doesn’t regulate the prices to prevent the gouging out of customers.

Shrinkflation

• It refers to a reduction in the quantity or quality of a product while the price remains the same.
• Production costs increase to a lesser extent while e-commerce businesses maintain the same retail price.
• The main advantage is that users generally don’t spot these changes.
• However, they do notice that prices remain unchanged despite inflation. This strategy is less likely to damage the brand or retailer’s corporate image.

12. The legality of the Delhi Ordinance

Subject : Polity

Section: Constitution

Concept :

• The Government of National Capital Territory of Delhi (Amendment) Ordinance, 2023 was promulgated by the President in May 2023 to provide for a comprehensive scheme of administration of services in Delhi.
• The ordinance came after the Supreme Court handed over the control of services in Delhi, excluding police, public order and land, to the elected government.
• The ordinance seeks to set up a National Capital Civil Service Authority (NCCSA) for the transfer of and disciplinary proceedings against Group-A officers from services in the National Capital Territory (NCT) of Delhi.
• The issuance of the Ordinance empowers the Lieutenant Governor of Delhi with control over services, thereby challenging the elected government’s authority in matters of officials’ transfer and posting.
• This development raises significant constitutional apprehensions regarding the delicate balance of power between the elected government and the Lieutenant Governor.

Supreme Court’s Verdict and Broad Interpretation of Article 239AA(3)(a)

• Article 239AA(3)(a)
• Article 239 AA was inserted in the Indian Constitution by the 69thConstitutional Amendment Act, 1991, based on the recommendations of S Balakrishnan Committee and gave special status to Delhi.
• It says that the NCTD will have an Administrator and a Legislative Assembly.
• The Legislative Assembly “shall have power to make laws for the whole or any part of the NCT w.r.t. any of the matters in the State List or Concurrent List in so far as any such matter is applicable to Union Territories.”
• However, Article 239AA(3)(a) provides that the legislative assembly of Delhi cannot legislate on the following three subjects – Police, Public Order, and Land.
• Broad Interpretation of Article 239AA(3)(a)
• The Union of India has executive power only over three entries[public order (entry 1), police (entry 2) and land (entry 18)]in List II (the State list) over which the NCTD does not have legislative competence.
• Consequently, executive power over “services” can be exercised exclusively by the Government of the NCTD.
• This interpretation of the Court is consistent with the wordings in Article 239AA(3)(a).

The National Capital Territory of Delhi (Amendment) Ordinance, 2023

• Key Highlights of the Ordinance
• Creation of National Capital Civil Service Authority (NCCSA)
• NCCSA will be headed by the Chief Minister of Delhi, with the Chief Secretary and Principal Home Secretary of Delhi being the other two members.
• The NCCSA will make recommendations to the LG regarding transfer, posting, vigilance and other incidental matters.
• All matters required to be decided by the NCCSA shall be decided by majority of votes of the members present and voting.
• This means, that in effect, the decision of the elected CM can be overruled by the two senior bureaucrats.
• Role of Lieutenant Governor (L-G)
• The ordinance stated that the L-G will pass orders to give effect to the recommendations passed by the NCCSA.
• However, L-G can ask for the relevant material about officers belonging to All India Services and DANICS serving the Delhi government.
• In case the L-G differs with the recommendation made, he/she may return the recommendation to the Authority for reconsideration by the Authority.
• For this, reasons will have to be recorded in writing.
• However, as per the ordinance, the final decision will lie with the L-G of Delhi.

Arguments challenging the Constitutional Validity of the Recent Ordinance

Parliament cannot amend Article 239AA(3)(a) of the Constitution

• The ordinance inserted entry 41 of List II (Services) into Article 239AA(3)(a), thereby expanding the scope of excepted matter from three (1, 2, 18) to four (1, 2, 18, 41).
• This could not have been done without amending Article 239AA(3)(a) of the Constitution.
• The power conferred on Parliament under Article 239AA(3)(b) is to make fresh laws — not to amend Article 239AA(3)(a) of the Constitution.
• Similarly, power conferred on Parliament under Article 239AA(7)(a) is to make laws for giving effect to or supplementing the provisions contained in various clauses of Article 239AA and for all matters incidental or consequential.
• Such a power cannot be pressed into action to amend Article 239AA(3)(a) of the Constitution.

Article 123 cannot be used as a substitute for Article 368

• Article 239AA(7)(b) stipulates that Parliament’s law making under Article 239AA(7)(a) shall not be deemed to be an amendment of the Constitution for the purposes of Article 368.
• No such clause has been stipulated in Article 239AA(3)(a).
• Therefore, altering the scope of Article 239AA(3)(a) requires constitutional amendment under Article 368.
• Article 123 cannot act as a substitute for Article 368 (Amendment of the Constitution) in Part XX.

The ordinance overrides Articles 141 and 144 by Article 123 without a constitutional amendment

• When a Constitution Bench (five judges) of the SC declares/interprets the law (Article 239AA(3)(a)), the same is binding on all courts and authorities in India in terms of Articles 141 and 144, respectively.
• Articles 123, 141, 144 are in Part V (The Union) of the Constitution. None has a non-obstante clause – added to a provision in order to uphold its enforceability over another provision that is contradictory to it.
• The aid and advice of the Union Council of Ministers to the President under Article 74 could not have overridden Article 144.
• The basis of the Court judgment is Article 239AA(3)(a).To alter this basis, a constitutional amendment is necessary.

For further notes on Ordinance , refer – https://optimizeias.com/ordinance-2/

13. NCP lurches as Ajit Pawar claims party and symbol

Subject: Polity

Section: Elections

Concept :

• A day after the split in the Nationalist Congress Party (NCP), party supremo Sharad Pawar on Monday announced the expulsion of Praful Patel and Sunil Tatkare, MPs, for “anti­party activities”.
• Ajit Pawar said the majority of MLAs were with him, after the split.

Anti Defection Law

• The anti-defection law punishes individual Members of Parliament (MPs)/MLAs for leaving one party for another.
• Parliament added it to the Constitution as the Tenth Schedule in 1985. Its purpose was to bring stability to governments by discouraging legislators from changing parties.
• The Tenth Schedule – popularly known as the Anti-Defection Act – was included in the Constitution via the 52nd Amendment Act, 1985.
• It sets the provisions for disqualification of elected members on the grounds of defection to another political party.
• It was a response to the toppling of multiple state governments by party-hopping MLAs after the general elections of 1967.
• However, it allows a group of MP/MLAs to join (i.e., merge with) another political party without inviting the penalty for defection. And it does not penalize political parties for encouraging or accepting defecting legislators.
• As per the 1985 Act, a ‘defection’ by one-third of the elected members of a political party was considered a ‘merger‘.
• But the 91st Constitutional Amendment Act, 2003, changed this and now at least two-thirds of the members of a party must be in Favour of a “merger” for it to have validity in the eyes of the law.
• The members disqualified under the law can stand for elections from any political party for a seat in the same House.
• The decision on questions as to disqualification on ground of defection are referred to the Chairman or the Speaker of such House, which is subject to ‘Judicial review’.
• However, the law does not provide a timeframe within which the presiding officer has to decide a defection case.

Grounds for Defection

• Voluntary Give Up:
• If an elected member voluntarily gives up his membership of a political party.
• Violation of Instructions:
• If he votes or abstains from voting in such House contrary to any direction issued by his political party or anyone authorized to do so, without obtaining prior permission.
• As a pre-condition for his disqualification, his abstention from voting should not be condoned by his party or the authorized person within 15 days of such incident.
• Elected Member:
• If any independently elected member joins any political party.
• Nominated Member:
• If any nominated member joins any political party after the expiry of six months.

14. A stocktake before the Global Stocktake

Subject : Environment

Section: International conventions

Concept :

• The Bonn Climate Change Conference served as a significant milestone in climate negotiations before the first Global Stocktake under the Paris Agreement.
• The Global Stocktake is mandated to assess collective progress towards long-term global climate goals, including greenhouse gas reduction, resilience building, and securing finance.

Just Transition Pathways

• Climate change negotiators reached a compromise on “just transition pathways” during the conference.
• India’s climate policy emphasised the need for financing a “just transition” in sectors like energy and transport to achieve net-zero emissions by 2070.
• Just transition pathways aim to ensure a fair and inclusive transformation towards low-carbon development.
• Aligned with Paris Agreement Principles
• The adoption of just transition pathways aligns with the Paris Agreement’s self-differentiation principle.
• Developing countries were able to strengthen just transition pathways, while developed countries focused more on mitigation efforts.
• Just transition also respects soft obligations from the UN Sustainable Development Goals and the ILO’s guidelines on just transition.

Mobilising Climate Finance

• Climate finance flows are not aligned with countries’ identified priorities in their nationally determined contributions.
• The $100 billion annual climate finance goal has not been fully realized, and adaptation finance lags behind mitigation finance.
• The Environmental Integrity Group suggested that the Mitigation Work Programme should contribute to financing, deviating from major international public finance transfers.

Integrating the World Bank and Ensuring Equity

• Efforts to align climate finance with the Paris Agreement’s temperature goals require integrating the World Bank in climate change negotiations and holding it accountable for investments in fossil fuels.
• The pursuit of the Global Stocktake should comply with principles of equity, justice, and fairness.

Article 14 of Paris Agreement

• Global Stocktake – A “global stocktake”, to take place in 2023 and every 5 years thereafter, will assess collective progress toward achieving the purpose of the Agreement in a comprehensive and facilitative manner.
• It will be based on the best available science and its long-term global goal.
• Its outcome will inform Parties in updating and enhancing their actions and support and enhancing international cooperation on climate action.

Article 4 of Paris Agreement

• Mitigation – The Paris Agreement establishes binding commitments by all Parties to prepare, communicate and maintain a nationally determined contribution (NDC) and to pursue domestic measures to achieve them.
• It also prescribes that Parties shall communicate their NDCs every 5 years and provide information necessary for clarity and transparency.
• To set a firm foundation for higher ambition, each successive NDC will represent a progression beyond the previous one and reflect the highest possible ambition.
• Developed countries should continue to take the lead by undertaking absolute economy-wide reduction targets, while developing countries should continue enhancing their mitigation efforts, and are encouraged to move toward economy-wide targets over time in the light of different national circumstances.

Environmental Integrity Group (EIG)

• The Environmental Integrity Group (EIG), formed in 2000, comprises Mexico, Liechtenstein, Monaco, the Republic of Korea, Switzerland and Georgia.
• The Environmental Integrity Group was initiated by Switzerland during the negotiations of the Kyoto Protocol, where only party groups were allowed to negotiate.
• Switzerland was not part of any group and they did not want to join the Umbrella Group. So Switzerland declared to form the EIG and invited other independent parties to join.

15. France riots ‘echo’ in Switzerland

Subject: International Relations

Section: Places in news

Concept:

• Several shop windows and a shop door were smashed in the city of Lausanne in Switzerland over the weekend in what police said was an “echo” of the riots in next-door France, media reports said.
• Lausanne is in western Switzerland, which is adjacent to eastern France — in a part of the country known as Romandy, where more than a fifth of the Swiss population lives, and French is spoken.

About Switzerland

• Switzerland, officially the Swiss Confederation, is a landlocked country at the confluence of Western, Central and Southern Europe.
• Switzerland is bordered by Italy to the south, France to the west, Germany to the north and Austria and Liechtenstein to the east.
• Divisions: It contains three basic topographical areas: the Swiss Alps to the south, the Swiss Plateau or Central Plateau, and the Jura mountains on the west. The Alps are a high mountain range running across the central and south of the country, constituting about 60% of the country’s total area.
• Mountains: Switzerland’s highest point is Dufourspitze (Monte Rosa), in the Pennine Alps. Also located within the Pennine Alps is the infamous Matterhorn whose summit is 4,690 ft.
• Rivers and Lakes: The main rivers that flow through Switzerland are: River Rhine, River Rhône , River Po, River Danube, River Adige.
• The waterways of Switzerland drain out in four different directions, flowing into the North Sea, the Mediterranean Sea, the Adriatic Sea and the Black Sea. Lakes, include Lake Constance (Bodensee), Lake Geneva and Lake Maggiore. Lake Neuchatel – the largest lake entirely within the country’s borders.

16. China to stay out of Sri Lanka’s creditors’ platform

Subject : International Relations

Section: Groupings

Concept :

• China “will not join” the official creditors’ platform negotiating a common debt treatment plan with Sri Lanka, but Colombo is “very confident” of Beijing’s bilateral support to the island’s economic recovery, Foreign Minister Ali Sabry said.
• China has attended the committee’s meetings as an observer, but its decision to stay out of the official creditors’ committee complicates the exercise for Sri Lanka, especially with other creditors repeatedly underscoring creditor equitability.
• While private creditors holding International Sovereign Bonds (ISBs) have the largest share of Sri Lanka’s forreign debt, China is the is_land’s bilateral lender, followed by Japan, and India.

Background

Common platform – India, Japan and France

• Japan, India and France have announced a common platform for talks among bilateral creditors to coordinate restructuring of Sri Lanka’s debt.
• The move is expected to serve as a model for solving the debt woes of middle-income economies.
• Japanese Finance Minister Shunichi Suzuki told a briefing that to be able to launch this negotiation process with such a broad-based group of creditors is a historical outcome. He said this committee is open to all creditors.
• French Director General of the Treasury Emmanuel Moulin told the briefing that the group is ready to hold the first round of talks as soon as possible.

Paris Club

• The Paris Club is a group of mostly western creditor countries that grew from a 1956 meeting in which Argentina agreed to meet its public creditors in Paris.
• It describes itself as a forum where official creditors meet to solve payment difficulties faced by debtor countries.
• Their objective is to find sustainable debt-relief solutions for countries that are unable to repay their bilateral loans.
• Members:
• The members are: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Israel, Japan, Netherlands, Norway, Russia, South Korea, Spain, Sweden, Switzerland, the United Kingdom and the United States.
• All 22 are members of the group called Organisation for Economic Co-operation and Development (OECD).