Daily Prelims Notes 1 July 2022

Daily Prelims Notes

1 July 2022

Table Of Contents

1. Coral Triangle
2. Oceans Great Dying 2.0
3. Modified PSLV places three foreign satellites into orbit
4. A road safety quartet and the road ahead
5. Earth’s top asteroid defences
6. Free fall of rupee
7. Project Bandhan
8. Anti-defection law
9. Capital Buffers 
10. External debt
11. Ease of Doing Business ranking of states and union territories

1. Coral Triangle

Subject: Environment

Section: Biodiversity

Context:As per a study, the impact of global temperatures exceeding 2°C for around 60 years between 2040 and 2100 would affect over 30,000 species that live on land and in the sea.

Concept:

Coral Triangle

• The Coral Triangle is a marine area located in the western Pacific Ocean.
• It includes the waters of Indonesia, Malaysia, the Philippines, Papua New Guinea, Timor-Leste and Solomon Islands.
• Named for its staggering number of corals,Seventy-five percent of the world’s coral species are found here—nearly 600 different species of reef-building corals alone.
• The region nurtures six of the world’s seven marine turtle species, mangrove forests and more than 2000 species of reef fish.
• Other species include: Whales, Tuna, Dugong, Hump head wrasse, Dolphins, Porpoises.
• The Coral Triangle also supports large populations of commercially important tuna, fuelling a multi-billion-dollar global tuna industry.
• Over 120 million people live in the Coral Triangle and rely on its coral reefs for food, income and protection from storms.
• There are over 2,000 languages spoken across these waters and cultures share a strong connection to the sea.

Threats:

• Overfishing: Global demand for tuna drives the fishing industry to harvest at unsustainable levels and has led to an alarming decline of tuna stocks in the Coral Triangle. Similarly, Live reef fish which have long been traded around Southeast Asia as a luxury food item once has expanded rapidly.
• Destructive Fishing methods: such as cyanide poisoning, dynamite fishing, and Blasting are still widely practiced.
• Bycatch: Non-target fish species are caught in gillnets, on longlines and in trawls, and then discarded back into the sea. In the Coral Triangle, the impacts of such bycatch affect endangered marine turtles, sharks, and juvenile fish.
• Climate Change:Warming, rising seas and ocean acidification led to widespread coral reef bleaching, sea level rise, seawater acidification, destruction of mangroves which endanger marine animals like reef fish and marine turtles, negatively impact local livelihoods such as fishing and tourism and remove a natural barrier protecting coastal towns and villages from rising seas and worsening storms.

To know about Coral Reefs, refer: https://optimizeias.com/coral-reefs-3/

2. Oceans Great Dying 2.0

Subject: Environment

Section: Climate Change

Context: Scientists have found the warming up of the oceans fundamentally disrupts the climate cycle.

Concept:

Marine Heatwaves

• The term marine heatwaves were coined for the first time only in 2011. This was after certain pockets of Western Australia experienced abnormally high sea surface temperatures, exceeding 3°C above average.
• These heat waves often accompany El Niño events in the Pacific Ocean. Other factors such as increased warming and weak winds also contribute to its formation.
• They seem to have picked up the pace by 15 per cent per decade from 1990 to 2013 due to human-driven activities.
• The impacts are more pronounced in the tropical oceansdue to surface winds that have intensified since the 1900s.
• At the same time, by reaching deep into the ocean, the acceleration could boost the storage of heat in the depths, helping slow the warming on land.
• The Indian Ocean, in particular, has emerged as the biggest victim of climate change than the Atlantic or Pacific as Indian Ocean holds warmer waters.
• From 1901 to 2012, the western Indian Ocean warmed up by 1.28°C against an increase of 0.78°C recorded in other parts of the Indian Ocean. The surface waters of the Bay of Bengal stay largely above 28°C.
• High Ocean temperatures are changing ocean currents and Scientists suspect that they could be fuelling cyclones, too.
• Between 2001 and 2019, the Arabian Sea recorded a 52 per cent increase in the number of cyclones. Very severe cyclones have increased by 150 per cent. The recent example isthe unusual behaviour of the 2020 Amphan super cyclone.

To know about Marine Heatwaves, refer: https://optimizeias.com/marine-heatwave-fuelled-super-cyclone-amphan/  and https://optimizeias.com/frequent-marine-heatwaves-in-indian-ocean-disrupt-indias-monsoon-patterns/

3. Modified PSLV places three foreign satellites into orbit

Subject :Science and Technology

Section :Space

Context:

The Indian Space Research Organisation’s (ISRO) workhorse launch vehicle on its 55th mission, the PSLV-C53

What is PSLV-C53 mission?

The mission injected three Singaporean satellites into their intended orbits.

The mission also served an additional purpose for ISRO, which decided to use the fourth stage, the PS4, as a stationary platform in orbit to conduct scientific experiments

What is PSLV Orbital Experimental Module (POEM)?

• The PSLV Orbital Experimental Module is a platform that will help perform in-orbit experiments using the final, and otherwise discarded, stage of ISRO’s workhorse rocket, the Polar Satellite Launch Vehicle (PSLV)
• The PSLV is a four-stage rocket where the first three spent stages fall back into the ocean, and the final stage (PS4) after launching the satellite into orbit ends up as space junk
• However, in PSLV-C53 mission, the spent final stage will be utilised as a “stabilised platform” to perform experiments
• POEM has a dedicated Navigation Guidance and Control (NGC) system for attitude stabilisation, which stands for controlling the orientation of any aerospace vehicle within permitted limits
• The NGC will act as the platform’s brain to stabilize it with specified accuracy.
• POEM will derive its power from solar panels mounted around the PS4 tank, and a Li-Ion battery. It will navigate using “four sun sensors, a magnetometer, gyros &NavIC”
• It carries dedicated control thrusters using Helium gas storage. It is enabled with a telecommand feature

PSLV:

It is the third generation launch vehicle of India. It is the first Indian launch vehicle to be equipped with liquid stages. It consists of four stages.

• First Stage: PS1

PSLV uses the solid rocket motor that is augmented by 6 solid strap on boosters.

• Second Stage: PS2

PSLV uses an Earth storable liquid rocket engine for its second stage, know as he Vikas engine, developed by Liquid Propulsion Systems centre

• Third Stage: PS3

The third stage of PSLV is a solid rocket motor that provides the upper stages high thrust after the atmospheric phase of the launch.

• Fourth Stage: PS4

It is the uppermost stage of PSLV, comprising of two Earth storable liquid engines

4. A road safety quartet and the road ahead

Subject :Polity

Section :National body

Context: The United Nations is holding a high-level meeting on Global Road Safety on June 30 and July 1, 2022 to review the progress and challenges.

Issues around road safety:

• Globally, about 14 lakh people die in traffic accidents annually, and nearly five crore are injured; over half of those killed are pedestrians, cyclists and motorcyclists
• Low and Middle Income Countries (LMIC) bear the maximum burden of road fatalities and injuries, with high economic costs an average of three to five per cent of GDP
• India and other countries could cut accident-related deaths by 25 to 40% based on evidence that preventive interventions produce good outcomes when applied to four well-known risk factors
  • high speed,
  • driving under the influence of alcohol,
  • not using proper helmets
  • not wearing seat-belts and not using child restraints
• Lowemphasis is placed on structural change such as raising engineering standards for roads, signages, signals, training for scientific accident investigation, raising policing skills
• Low emphasis giving to fixing responsibility on government departments for design, creation and maintenance of road infrastructure

Factors to improve road safety outcomes:

• Positive user behaviour — slower travel, wearing of helmets, seat belts and so on — could save thousands of lives
• The structural problems linked to unplanned motorisation and urbanization
• Speedy highway construction without reconciling fast and slow-moving traffic, presence of ramshackle vehicles, rampant wrong-side driving, absence of adequate police forces to monitor vehicles and curb drunk driving
• Poor trauma care in non-urban centres contribute to high death and disability rates.
• better engineering and enforcement can easily cut fatalities

The Motor Vehicle (Amendment) Act, 2019

It makes amendments to the Motor Vehicle Act, 1988 and introduces certain new traffic rules for road safety

Compensation for road accident victims:

• The central government will develop a scheme for cashless treatment of road accident victims during golden hour.
• The Act defines golden hour as the time period of up to one hour following a traumatic injury, during which the likelihood of preventing death through prompt medical care is the highest.
• The Act increases the minimum compensation for hit and run cases as follows: (i) in case of death, from Rs 25,000 to two lakh rupees, and (ii) in case of grievous injury, from Rs 12,500 to Rs 50,000

Compulsory insurance:

• The Act requires the central government to constitute a Motor Vehicle Accident Fund, to provide compulsory insurance cover to all road users in India.

Good samaritans: 

• The Act defines a good samaritan as a person who renders emergency medical or non-medical assistance to a victim at the scene of an accident

Recall of vehicles: 

• The Act allows the central government to order for recall of motor vehicles if a defect in the vehicle may cause damage to the environment, or the driver, or other road users.

National Transportation Policy: 

• The central government may develop a National Transportation Policy, in consultation with state governments.

Road Safety Board:

• The Act provides for a National Road Safety Board, to be created by the central government through a notification.  The Board will advise the central and state governments on all aspects of road safety and traffic management

5. Earth’s top asteroid defences

Subject :Science and Tech

Section :Space

Context:

• If an asteroid threat emerged, Earth would need to be ready. Scientists are continually working to give the planet the best range of defensive strategies.

Asteroid defence

Four strategies are most likely, but many others are being explored to give us the best chance of deflecting a fast-travelling visitor from space.

• Hide in the basement :For asteroids less than 20 metres in diameter, people could evacuate the affected area and then hunker down and take cover.The impact of a larger asteroid would be a catastrophe to a region, a continent or the entire world depending on its size.
• Send in the nukes:Instead of burying the device near the centre of the threatening object, nuclear deflection scenarios involve stand-off bursts: The blast energy vaporises part of the asteroid and propels the space rock onto a new and safer path, far enough away from Earth that radiation and fallout wouldn’t be a problem.
• Ram it with a spaceship: The kinetic impactor (KI) technique could provide a third option — and it can be (and is being) tested. The KI technique is very simple: ram a spacecraft into the asteroid of concern and use the spacecraft’s momentum to change the momentum (and orbit) of the asteroid.
• Let gravity do the work:The technique would involve operating a spacecraft of very large mass very near the asteroid of concern, and using the mass of the spacecraft to attract the asteroid. Because the spacecraft position could be controlled it could tug the asteroid in any direction and change its orbit so it misses the Earth.

Asteroids

• Asteroids are also known as minor planets.
• They are rocky remnants left over from the early formation of our solar system about 4.6 billion years ago.
• Most asteroids are irregularly shaped, though a few are nearly spherical and are known to have a small companion moon (some have two moons).

Classification of Asteroids:

• Main Asteroid Belt: The majority of known asteroids orbit within the asteroid belt between Mars and Jupiter.
• Trojans: These asteroids share an orbit with a larger planet, but do not collide with it because they gather around two special places in the orbit (called the L4 and L5 Lagrangian points). There, the gravitational pull from the sun and the planet are balanced.

6. Free fall of rupee

Subject :Economy

Section: External sector

Why in the news?

The Indian rupee hit an all-time low against the U.S. dollar this week weakening past the 79 rupees to a dollar mark and selling as low as 79.05 against the dollar on Wednesday

Details: 

• The Indian rupee has been witnessing a steady decline this year, losing more than 6% against the U.S. dollar since the beginning of 2022.
• The International Monetary Fund (IMF) expects the rupee to weaken past the 94 rupees to a dollar mark by FY29.
• India’s forex reserves have also dropped below $600 billion, plunging by more than $50 billion since September 3, 2021, when forex reserves stood at an all-time high of $642 billion.

Causes of depreciation:

• Rise in US rate of interest-The Federal Reserve has been raising its benchmark interest rate causing investors seeking higher returns to pull capital away from emerging markets such as India and back into the U.S.
• Rise in Current account Deficit-This means that India’s import demand amid rising global oil prices is likely to negatively affect the rupee unless foreign investors pour sufficient capital into the country to fund the deficit. But foreign investors are unlikely to invest capital into India when investment yields are rising in the U.S.
• Inflation– Higher inflation in India suggests that the RBI has been creating rupees at a faster rate than the U.S. Federal Reserve has been creating dollars. Thus, higher supply of rupee

Causes of decline in forex:

• Fall in the dollar value of assets held as reserves by the RBI-For instance, if a portion of the reserves are in euros and the euro depreciates against the dollar, this would cause a drop in the value of forex reserves.
• RBI Policy to correct currency Depreciation-

1. The aim of the RBI’s policy is to allow the rupee to find its natural value in the market but without undue volatility or causing unnecessary panic among investors.
2. State-run banks are usually instructed by the RBI to sell dollars in order to offer some support to the rupee.
3. By thus selling dollars in return in the open market in exchange for rupees, the RBI can improve demand for the rupee and cushion its fall.

What determines the rupee’s value?

• The value of any currency is determined by demand for the currency as well as its supply.
  • When the supply of a currency increases, its value drops (depreciation). 
  • When the demand for a currency increases, its value rises (appreciation)
• Determinants of supply of currency: 
  • In the wider economy, central banks determine the supply of currencies
  • In the forex market, the supply of rupees is determined by the demand for imports and various foreign assets. So, if there is high demand to import oil (imported by India) , it can lead to an increase in the supply of rupees (dollar is paid for imports thus, relative supply of rupee rises) in the forex market and cause the rupee’s value to drop.

• Determinants of demand of currency:
  • The amount of goods and services produced in the economy
  • The demand for rupees in the forex market, on the other hand, depends on foreign demand for Indian exports and other domestic assets. So, for instance, when there is great enthusiasm among foreign investors to invest in India, it can lead to an increase in the supply of dollars in the forex market which in turn causes (relative supply of rupee falls) the rupee’s value to rise against the dollar.

7. Project Bandhan

Subject :Agriculture

Context:

• Project Bandhan launched to tackle pink bollworm menace in cotton.
• Pheromone trap, mating disruption being used to restrict the pest population

Project Bandhan and Innovative technique :

• As the pink bollworm infestation spreads in cotton plants in North India, stakeholders including the Central Institute of Cotton Re- search (CICR), State agricultural universities and private players including the South Asia Biotech- nology Centre (SABC) are taking up large-scale demonstration of the use of technologies such as mating disruption and pheromone traps to tackle the dreaded pest.
• The idea is to arrange for the protection throughout the season — from the flowering stage to harvest.
• Mating disruption is an innovative pheromone-based technique that interferes with the reproductive cycle of pink bollworm (PBW) in such a way that the population is significantly reduced and crop dam- age is minimised.
• The Central Insecticide Board and Registration Committee (CIBRC) had approved the technology in the integrated pest management (IPM) strategies for controlling PBW in India for the first time in 2019-20.
• As part of this, CICR and the other players have come out with PBKnot, a solid metric dispenser rope which can be easily tagged to the cotton plants.
  • The PBKnot charges the surrounding air with Gossyplure, a pheromone scent that confuses the male adults
• SABC-trained farm labour tagging PBKnot tech at Sirsa (Haryana) preventing them from finding and mating with female adults and reducing the number of eggs laid and controlling the PBW population.
• “The mating disruption has emerged as a powerful tool to manage pests such as PBW,” said Bhagirath Choudhary, Director, South Asia Biotechnology Centre (SABC), Jodhpur, which is implementing a large-scale “Project Bandhan” to control the spread of PBW across 16 districts of seven major cotton-growing States this kharif.
• Project Bandhan will be implemented in some 19 clusters across the country in partnership with Ambuja Cement Foundation, PI Foundations, Agrovision Foundation, State Agriculture Universities, KVKs and local organisations under the technical guidance of ICAR-CICR, Nagpur.

Pink bollworm (PBW):

• The PBW, which surfaces early in the kharif season of North, typically has a short life cycle and can multiply 4-5 generations in a crop cycle, potentially threatening cotton from early stage, flower, green bolls and cotton locules, affecting cotton lint quality.
• It is an insect known for being a pest in cotton farming.
• The pink bollworm is native to Asia, but has become an invasive species in most of the world’s cotton-growing regions.
• The female moth lays eggs in a cotton boll, and when the larvae emerge from the eggs, they inflict damage through feeding.
• Since cotton is used for both fiber and seed oil, the damage is twofold.
• Their disruption of the protective tissue around the boll is a portal of entry for other insects and fungi.
• Infestation on susceptible cotton is generally controlled with insecticides.
• Populations of bollworms are also controlled with mating disruption, chemicals, and releases of sterile males which mate with the females but fail to fertilize their eggs.

8. Anti-defection law

Subject :Polity

Section :Parliament

Context:

• The crisis in Maharashtra and even earlier instances are grim reminders of what the Tenth Schedule can and cannot do.

Law on defections, ‘mergers’:

• Instances of floor crossing have long gone unchecked and unpunished. In part, this can be attributed to the exemption given to mergers between political parties which facilitate bulk defections.
  • In 2019, MLAs in the Goa Legislative Assembly from the Indian Nation- al Congress (INC) and the MaharashtrawadiGomantak Party (MGP), crossed over to the Bharatiya Janata Party (BJP).
  • The Speaker of the Assembly as well as the Goa Bench of the Bombay High Court dismissed the pleas seeking dis-qualification of these MLAs.
  • As  MLAs formed two-thirds of their respective legislature parties, disqualification under the Tenth Schedule was not possible.
  • In other words, there was a “deemed merger” of the INC and the MGP with the BJP.
• The second paragraph of the Tenth Schedule allows for disqualification of an elected member of a House if such member belonging to any political party has voluntarily given up membership of their party, or if they vote in the House against such party’s whip. 

Paragraph 4 of Tenth Schedule 

• Paragraph 4 creates an exception for mergers between political parties by introducing three crucial concepts
  • — that of the “original political party”, the “legislature party”, and “deemed merger”.
  • A “legislature party” means the group consisting of all elected members of a House for the time being belonging to one political party,
  • whereas an “original political party” means the political party to which a member belongs (this can refer to the party generally, outside of the House).
• Interestingly, Paragraph 4 does not clarify whether the original political party refers to the party at the national level or the regional level, despite the fact that, that is how, the Election Commission of India recognises political parties.

9. Capital Buffers

Subject :Economy

Section: Banking and monetary policy

Context:

India’s scheduled commercial banks (SCBs) as well as non banking financial companies have sufficient capital buffers to withstand any shock that may emanate from the pandemic or the ongoing geopolitical tensions in Europe, the Reserve Bank of India said in its biannual Financial Stability Report (FSR) released on Thursday.

According to the report, Stagflation risks are mounting,as tightening financial conditions threaten to restrain the pace of growth

Details:

• SCBs maintained robust capital positions, with the capital to risk weighted assets ratio (CRAR) rising to a new high of 16.7%.
• The gross non-performing assets (GNPA) ratio slipped to a six-year low of 5.9% and net non-performing assets (NNPA) ratio fell to 1.7% in March 2022.
• The provisioning coverage ratio (PCR) increased to 70.9% in March 2022, from 67.6% in March 2021

Concept:

Capital requirements as per Basel Norms:

• The Basel Committee on Banking Supervision (BCBS) issues Basel Norms for international banking regulations.
• The goal of these norms is to strengthen the international banking system by coordinating banking regulations around the world.
• The Basel Committee has currently issued three guidelines to achieve its goal: Basel I, II, and III.

Basel I

• It was introduced in 1988.
• It was almost entirely concerned with credit risk.
• It established the capital and risk-weighting structure for banks.
• The required minimum capital was set at 8% of risk-weighted assets (RWA).
• RWA refers to assets with varying risk profiles. For example, an asset backed by collateral would be less risky than a personal loan with no collateral.
• Capital is divided into two categories: Tier 1 capital and Tier 2 capital.
  • Tier 1 capital is the bank’s core capital because it is the primary measure of the bank’s financial strength. The majority of core capital is made up of disclosed reserves (also known as retained earnings) and paid-up capital. It also includes non-cumulative and non-redeemable preferred stock.
  • Tier 2 capital – It is used as supplemental funding since it is less reliable than the first tier.It consists of undisclosed reserves, preference shares, and subordinate debt.
• In 1999, India adopted the Basel 1 guidelines.

Basel II

• In 2004, Basel II guidelines were published by BCBS.
• These were the refined and reformed versions of Basel I accord.
• The guidelines were based on three parameters, which the committee calls it as pillars.
  • Capital Adequacy Requirements: Banks should maintain a minimum capital adequacy requirement of 8% of risk assets
  • Supervisory Review: According to this, banks were needed to develop and use better risk management techniques in monitoring and managing all the three types of risks that a bank faces, viz. credit, market and operational risks.
  • Market Discipline: This needs increased disclosure requirements. Banks need to mandatorily disclose their CAR, risk exposure, etc to the central bank.
• Basel II norms in India and overseas are yet to be fully implemented though India follows these norms.

Basel III

• In 2010, Basel III guidelines were released.
• These guidelines were introduced in response to the financial crisis of 2008.
• The guidelines aim to promote a more resilient banking system by focusing on four vital banking parameters viz. capital, leverage, funding and liquidity.
  • Capital: The capital adequacy ratio is to be maintained at 12.9%. The minimum Tier 1 capital ratio and the minimum Tier 2 capital ratio have to be maintained at 10.5% and 2% of risk-weighted assets respectively.In addition, banks have to maintain a capital conservation buffer of 2.5%. Counter-cyclical buffer is also to be maintained at 0-2.5%.
  • Leverage: The leverage rate has to be at least 3 %. The leverage rate is the ratio of a bank’s tier-1 capital to average total consolidated assets.
  • Funding and Liquidity: Basel-III created two liquidity ratios: LCR and NSFR. The liquidity coverage ratio (LCR) will require banks to hold a buffer of high-quality liquid assets sufficient to deal with the cash outflows encountered in an acute short term stress scenario as specified by supervisors. The goal is to ensure that banks have enough liquidity for a 30-days stress scenario if it were to happen. The Net Stable Funds Rate (NSFR) requires banks to maintain a stable funding profile in relation to their off-balance-sheet assets and activities. NSFR requires banks to fund their activities with stable sources of finance (reliable over the one-year horizon). The minimum NSFR requirement is 100%.

Therefore, LCR measures short-term (30 days) resilience, and NSFR measures medium-term (1 year) resilience.

• The deadline for the implementation of Basel-III was March 2019 in India. It was postponed to March 2020. In light of the coronavirus pandemic, the RBI decided to defer the implementation of Basel norms.

10. External debt

Subject :Economy

Section: External sector

Why in the news?

India’s external debt rose to $620.7 billion at end-March 2022, recording an increase of $47.1 billion over the year earlier period, Reserve Bank of India (RBI) data showed.

Details:

• The external debt to GDP ratio declined to 19.9% at end-March 2022, from 21.2% a year earlier.
• Excluding the valuation effect, external debt would have increased by $58.8 billion instead of $47.1 billion at end-March 2022 over end March 2021
• Valuation gains on account of the appreciation of the U.S. dollar vis-à-vis the Indian rupee and major currencies including the Japanese yen and euro was estimated at $11.7 billion.
• India’s long-term debt (with original maturity of above one year) rose to $499.1 billion, recording an increase of $26.5 billion over its level at end-March 2021.
• The share of short-term debt in total external debt increased to 19.6% from 17.6%.
• The ratio of short-term debt to foreign exchange reserves increased to 20%.
• U.S. dollar-denominated debt remained the largest component of external debt, with a share of 53.2%.
• Net claims of non-residents in India increased by $5.6 billion, due to a larger decline in the Indian residents’ overseas financial assets, when compared to the decline in foreign-owned assets in India.

Concept:

External debt: It refers to money borrowed from a source outside the country. External debt has to be paid back in the currency in which it is borrowed. External debt can be obtained from foreign commercial banks, international financial institutions like IMF, World Bank, ADB etc and from the government of foreign nations. Normally these types of debts are in the form of tied loans, meaning that these have to be used for a predefined purpose as determined by a consensus of the borrower and the lender.

Governments and corporations are eligible to raise loans from abroad. These are in the form of external commercial borrowings. The interest rate on foreign loans is linked to LIBOR (London Interbank Offer rate) and the actual rate will be LIBOR plus applicable spread, depending upon the credit rating of the borrower.

Debt Profile – External debt is classified as ‘External Commercial Borrowing’, ‘Currency Convertible Bonds’ and ‘Government Borrowings’.

Composition of India’s external debt

• Multilateral -Multilateral institutions such as the International Development Association (IDA), International Bank for Reconstruction and Development (IBRD), Asian Development Bank (ADB) etc are regarded as multilateral creditors.
• Bilateral – nations that engage in sovereign and non-sovereign arrangements such as one-to-one loan arrangements are bilateral creditors. India’s bilateral creditors are Japan, Germany, the United States, France, etc.
• International Monetary Fund –loans from IMF in form of SDR
• Trade Credit -It is when the loans and credits are extended for imports by overseas suppliers, banks and financial institutions to sovereign and non-sovereign entities.
• Commercial Borrowings -It includes borrowings from commercial banks, financial institutions, money that is raised through issuing securitized instruments such as bonds, floating rate notes (FRN), securitized borrowing of commercial banks etc.
• NRI Deposits (above one-year)
• Rupee Debt 
• Total Long-Term Debt– is debt with an original maturity of more than one year
• Short-term Debt– is defined as debt repayments on-demand or either with an original maturity of one year or even less.

Composition in terms of government and non government external debt:

• Government Debt 
  •  External Debt on Government Account under External Assistance           
  •  Other Government External Debt-includes defence debt, investment in Treasury Bills/government securities by FPIs, foreign central banks and international institutions and IMF.
•  Non-government Debt   
  • Central Bank
  • Deposit-taking Corporations, except the Central Bank
  • Other Financial Corporations
  • Non-financial Corporations
  • Households and nonprofit institutions serving households (NPISHs)
  • Direct Investment: Inter company Lending

The External Debt-to-GDP ratio

It is the ratio between the debt to the gross domestic product (GDP) of a country. The ratio indicates the capability of a country in repaying its external debts. A country with a low external debt-to-GDP ratio indicates that it is capable of producing and selling goods and repaying its debts without incurring further debt. Various economic and geopolitical factors such as recessions, interest rates, war, etc influence the debt account of a country

11. Ease of Doing Business ranking of states and union territories

Subject: Economy

Section: Regulation

Context:

Seven states among top achievers in ‘ease of doing business’ ranking of states and UTs

Details:

• Seven states – Andhra Pradesh, Gujarat, Haryana, Karnataka, Punjab, Telangana and Tamil Nadu – were categorised as ‘top achievers’.
• Himachal Pradesh, Uttar Pradesh, Odisha, and Madhya Pradesh are the other states categorised as “achievers”.
• Manipur, Meghalaya, Nagaland, Tripura, Puducherry and Jammu and Kashmir – were ’emerging business ecosystems’.
• Seven states – Goa, Assam, Kerala, Rajasthan, Jharkhand, Chhattisgarh and Bengal – were categorised as ‘Aspirers’.
• Feedback could not be obtained for Sikkim, Mizoram, Arunachal Pradesh, Lakshadweep and Ladakh due to insufficient User Data.

Concept:

• It is a joint initiative by the Department for Promotion of Industry and Internal Trade (DPIIT) and the World Bank to improve the overall business environment in the States.
• Ranking of all the States and Union Territories is done, based on the implementation of Business Reforms Action Plan (BRAP) by them.
• DPIIT since 2014 has been assessing States/UTs based on their performance in implementation of prescribed reforms in Business Reforms Action Plan (BRAP) exercise. Till date, assessments of States/UTs have been released for the years 2015, 2016, 2017-18 and 2019.
• BRAP 2019 contains a list of 80 reforms (187 reform action points) to be implemented by 19 State departments. These reforms cover 12 business regulatory areas such as Access to Information, Single Window System, Labour, Environment, etc.
• The broader aim is to boost investor confidence, foster business friendly climate and augment Ease of Doing Business across the country by introducing an element of healthy competition through a system of assessing states based on their performance in the implementation of Business Reforms Action Plan.
• Thelatest Ease of Doing Business ranking of states and union territories, based on the Business Reforms Action Plan (BRAP) 2020 report, was released by the Union finance minister.
• The BRAP 2020 includes 301 reform points covering 15 business regulatory areas such as Access to Information, Single Window System, Labour, Environment, Land Administration & Transfer of Land and Property, Utility Permits and others.
  • 118 new reforms were included to further augment the reform process. Sectoral reforms with 72 action points spread across 9 sectors namely Trade License, Healthcare, Legal Metrology, Cinema Halls, Hospitality, Fire NOC, Telecom, Movie Shooting and Tourism were introduced for the first time to expand the scope of the reform agenda.
• This year states have been placed under the four categories viz. Top Achievers, Achievers, Aspirers and Emerging Business Ecosystems.
• The assessment gives full weightage to the feedback obtained from actual users/respondents at the ground level, who provided their feedback about the effective implementation of reforms.