Daily Prelims Notes 10 November 2022

November 10, 2022
Posted by: OptimizeIAS Team
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Daily Prelims Notes

10 November 2022

Table Of Contents

1. All you need to know about Vikram S and why it is a big deal

Subject: Science and Technology

Context-

India’s first privately developed launch vehicle is set to make its maiden flight from Indian Space Research Organisation’s (ISRO) launchpad at Sriharikota.

Mission Prarambh-

Under this mission, Vikram-S will carry 3 customer satellites in a sub-orbital flight.
Sub-orbital flights travel slower than orbital velocity — they are fast enough to reach outer space but not fast enough to stay in orbit around the Earth.
Also, Spacekidz, a Chennai-based aerospace startup, will fly ‘Fun-Sat’, a 2.5 kg payload developed by students from India, the US, Singapore and Indonesia, on Vikram-S.

Features of Vikram-S launch vehicle-

Skyrootwas the first startup to sign a memorandum of understanding with ISRO for launching its rockets.
Its launch vehicles have been crafted especially for the small satellite market.
They come in three forms, Vikram I, II, and III.
More than 20,000 small satellites are estimated to be launched in the coming decade, and the Vikram series is designed to enable this through unprecedented mass production and affordability.
Vikram-S offers many services like multi-orbit insertion, and interplanetary missions; while providing customised, dedicated and ride-share options covering a wide spectrum of small satellite customer needs.
Skyroot claims a Vikam rocket can be assembled and launched within 24 hours from any launch site and has the “lowest cost in the payload segment”.

The need for satellite launch vehicles like Vikram-

Demand for the launch of small satellites ( anything weighing between 5 and 1,000 kg) has increased rapidly in the last 8-10 years.
Major customers of small satellite launches are- businesses, government agencies, and even universities and laboratories due to the ever-growing need for space-based data, communication, surveillance, imageries, space technology, commerce, weather, agriculture, transport and urban development.

Need for participation of private sector-

Currently, only ISRO is providing the satellite launch facility, but the increasing demand is outrunning its capacity.
So, the sector is being opened up to private players, with ISRO helping them with facilities and knowledge.
Recently the Vikram Sarabhai Space Centre (VSSC), ISRO’s lead centre for the development of launch vehicles, facilitated the hot testing of a rocket engine developed by Indian space startup Agnikul Cosmos.

2. Sovereign Green Bond Framework

Subject: Economy

Context:

The Centre has released the framework for its proposed sovereign Green Bonds.

Details:

An independent and Norway-based second-party opinion (SPO) provider CICERO has rated India’s green bonds framework as ‘Medium Green’ with a “Good” governance score.
The payment of principal and interest on the Green Bonds will not depend on the performance of the eligible projects.
Green Finance Working Committee (GFWC) wil be constituted to validate key decisions on the issuance of sovereign green bonds.
The projects eligible to be financed or re-financed by the proceeds of Green Bond issuances fall under the following nine categories: renewable energy, energy efficiency, clean transportation, climate change adaptation, sustainable water and waste management, pollution prevention and control, green buildings, sustainable management of living natural resources and land use, and terrestrial and aquatic biodiversity conservation.
- Green expenditure can be in the form of equity only in the case of metro projects under the ‘Clean Transportation’ category.
- Expenditures directly related to fossil fuel are excluded.
- The Compressed Natural Gas (CNG) is allowed as an ‘eligible expenditure’ but only when it is used in public transportation projects i.e. subsidy/incentive for private transportation using CNG is excluded.
- Other excluded projects include hydropower plants larger than 25 MW, Nuclear power generation, direct waste incineration, alcohol, weapons, tobacco, gaming, palm oil industries, renewable energy projects generating energy from biomass using feedstock originating from protected areas, and landfill projects.
All eligible Green Expenditures will include public expenditure undertaken by the Government in the form of investment, subsidies, grant-in-aids, or tax foregone (or a combination of all or some of these) or select operational expenditures, R&D expenditures in public sector projects that help in reducing the carbon intensity of the economy and enable country to meet its Sustainable Development Goals (SDGs).
It will be endeavored that all the proceeds get allocated to projects within 24 months following issuance.

Issuance process:

Green Bonds:

Green bonds can be issued by countries, companies and multilateral organisations to only fund projects that have positive impacts on the climate and environment and provide investors with fixed income payments.
The government issues sovereign green bonds to allocate to fund projects associated with climate adaptation and climate mitigation.
Proceeds from these bonds are earmarked for green projects. This is unlike standard bonds, the proceeds of which can be utilised for various purposes at the discretion of the issuer.
The first green bond was issued in 2007 by the European Investment Bank, the EU’s lending arm. This was followed a year later by the World Bank. Since then, many governments and corporations have entered the market to finance green projects.
These bonds are typically asset-linked and backed by the issuing entity’s balance sheet, so they usually carry the same credit rating as their issuers’ other debt obligations.
They are designated bonds intended to encourage sustainability and to support climate-related or other types of special environmental projects.
Aims and Objectives:
- They are aimed at energy efficiency, pollution prevention, sustainable agriculture, fishery and forestry, the protection of aquatic and terrestrial ecosystems, clean transportation, clean water, and sustainable water management.
- They also finance the cultivation of environmentally friendly technologies and the mitigation of climate change.

Countries that have issued sovereign green bonds:

Belgium, Chile, Denmark, Egypt, Fiji, France, Germany, Hong Kong, Hungary, Indonesia, Ireland, Italy, Lithuania, Mexico, Netherlands, Nigeria, Philippines, Poland, Serbia, Seychelles, South Korea, Spain, Sweden and UK

A Sustainability-linked bond (SLB)

It is a fixed income instrument (Bond) where its financial and/or structural characteristics are tied to predefined Sustainability/ESG objectives.
- The objectives are measured through predefined Key Performance Indicators (KPIs) and evaluated against predefined Sustainability Performance Targets (SPTs).
SLBs can be used to finance any corporate activity and their proceeds do not need to be allocated to specific projects. Yet, the issuer commits to reaching ambitious, science-based and measurable Sustainability Performance Targets (SPTs) around pre-determined KPIs, and to having these reviewed by an external party.
Bonds where the proceeds are used to finance or refinance green projects, social projects or a combination of both are called Green, social and Sustainability bonds respectively, and should not be confused with SLBs.

SLBs are bonds whereby the proceeds from the issuance are not ring-fenced to green or sustainable purposes (unlike “use of proceeds” green bonds or sustainable bonds) and may be used for general corporate purposes or other purposes.

3. Compulsory convertible preferred shares (CCPS) & equity shares

Subject: Economy

Context:

IRDAI has rejected a proposal to convert a company’s holdings in compulsory convertible preferred shares (CCPS) into equity shares.

Details:

In June 2022, Digit Insurance and Fairfax Financial Holdings applied to the IRDAI for approval to convert the company’s holdings in compulsory convertible preferred shares issued by Go Digit Infoworks into equity shares of Go Digit Infoworks.
The conversion of the Digit CCPS would result in Digit (currently classified as an Indian promoter of Digit Insurance) becoming a subsidiary of the company, which is currently prohibited for Indian promoters.

Compulsory convertible preferred shares (CCPS)

These are types of Preference Shares being issued by the Company
- Preference shares (preferred stock) are company stock with dividends that are paid to shareholders before common stock dividends are paid out.
- There are four types of preferred stock – cumulative (guaranteed), non-cumulative, participating and convertible.
CCPS offer fixed income to the investors and compulsorily convert into Equity Shares of the issuing company after a predetermined period. The terms of conversion are also pre-decided at the time of issue.
These offer investors the opportunity to participate in the growth of companies while mitigating the risk of lower valuation of companies that underachieve the targets.
Issuing CCPS further benefits the Company’s promoters to raise funds without diluting the ownership at the initial period.
Following are the steps required to followed for the Conversion of Compulsory Convertible Preference Shares into Equity Shares:
- Call Board Meeting of the Board of Directors of the Company
- Hold the Board Meeting and pass Board Resolution f
- E-forms Filing with the Registrar of the Companies-for intimation of redemption of preference shares which are converted into equity shares
- Issue of Share Certificates-To all allottees within a period of 2 months from the date of allotment of Equity Shares
- Maintenance of Statutory Registers
It is crucial not only for the start-up founders but also for the investors to find the best way to become a part of the company so that not only both benefit out of it but also safeguard their interests.

4. Market infrastructure institutions (MIIs)

Subject: Economy

Context:

The Securities and Exchange Board of India sought public comments on a report submitted by one of its working committees on strengthening the governance of market infrastructure institutions (MIIs).

Details:

In April, the market regulator formed a committee under G. Mahalingam to strengthen governance norms at the MIIs.
Functional classification, board independence, widening the definition of key managerial person and capping their compensation, and tightening the net worth criteria are some of the key proposals put forth by the 13-member committee formed by SEBI.

Market Infrastructure Institutes:

MIIs are institutions providing infrastructure of trading, settlement and record keeping and include stock exchanges, clearing corporations and depositories.
Stock exchanges, depositories and clearing houses are all Market Infrastructure Institutions and constitute a key part of the nation’s vital economic infrastructure.
MIIs helps in optimal use of money in the economy and fostered economic development.
They constitute the nucleus of the capital allocation system and are indispensable for economic growth and have a net positive effect on society like any other infrastructure institution.
That MIIs are systemically important in India is clear from the phenomenal growth of these institutions in terms of market capitalization of listed companies, capital raised and the number of investor accounts with brokers and depositories and the value of assets held in the depositories’ account.
Currently, MIIs are required to have a minimum net worth of not less than Rs 100 crore on a continuous basis.
What are the specific institutions in India that qualify as MIIs?
- Among stock exchanges, the SEBI lists seven, including the BSE, the NSE, the Multi Commodity Exchange of India and the Metropolitan Stock Exchange of India.
- There are two depositories — charged with the safekeeping of securities and enabling their trading and transfer — that are tagged MIIs: the Central Depository Services Ltd. and the National Securities Depository Ltd.
- The regulator also lists seven clearing houses including the Multi Commodity Exchange Clearing Corporation.
  - Clearing houses, for their part, help validate and finalise securities trades and ensure that both buyers and sellers honour their obligations.

5. European Market Infrastructure Regulation (EMIR)

Subject: Economy

Context:

The European Securities and Markets Authority (ESMA) proposes to derecognize six Indian counterparty clearing corporations CCPs due to non-compliance with certain provisions of the European Market Infrastructure Regulation.

Details:

It means that European banks will not be able to clear or settle trades in foreign exchange, gilts, currency and interest rate derivatives done on Indian exchanges.
ESMA wants to revise the pact under EMIR 2.0, which includes additional conditions including supervisory powers to inspect Indian clearing corporations, which is not agreeable to Indian regulators.

European Market Infrastructure Regulation (EMIR)

It was adopted by the EU in August 2012 as implementation of the G20 commitment to reduce systemic, counterparty and operational risk, and increase transparency in the OTC derivatives market.
It was also designed as a preventative measure to avoid fallout during possible future financial crises similar to the collapse that followed the Lehman Brothers bankruptcy in 2008.
Its focus is regulation of over-the-counter (OTC) derivatives, central counterparties and trade repositories.
- It provides guidance on reporting of derivative contracts, implementation of risk management standards and common rules for central counterparties and trade repositories.
- It establishes common rules for central counterparties, which interpose themselves between involved parties in a contract to serve as the focal point of each trade, and trade repositories, which collect and maintain all records of trades.
It also outlines three sets of obligations, including the clearing, reporting and risk mitigation of applicable products
- It requires mandatory clearing obligations for specific OTC derivative contracts -The obligations require that over-the-counter derivatives trades are cleared through central counterparties.
- EMIR requires that all entities entering into derivative contracts must submit reports to their corresponding trade repositories, outlining each over-the-counter trade.
  - EMIR covers entities that qualify for derivative contracts in regards to interest rate, equity, foreign exchange, or credit and commodity derivatives.
- The risk mitigation standards outlined in EMIR’s Article 11 impose risk management regulation on bilateral derivatives, as these derivatives are not appropriate for standard central counterparty clearing
Article 25 of EMIR requires CCPs in other global jurisdictions providing services to European banks to be approved by ESMA.
- India signed the pact in 2017, which lapsed in March 2022.

6. Export transaction in rupee eligible for sops

Subject: Economy

Context:

Exporters settling trade in rupee terms will now be able to access export incentives or duty rebates.

Details:

Earlier incentives to exporters like– duty drawbacks, export promotion capital goods (EPCG) incentives, and advance authorization scheme were available only if payments or export realization came in freely convertible currencies—the US dollar, British pound, euro and Japanese yen.
The mechanism is aimed at facilitating trade with countries under sanctions, like Iran and Russia and help eliminate depreciation of rupee .

Concept:

The RBI in July introduced a rupee settlement system for international trade, where the invoicing, payment and settlement of exports and imports to all countries, if approved by RBI, can be in the Indian rupee through special Vostro account linked to the correspondent bank of the partner country for receipts and payments denominated in rupees.
Benefits given:
- Duty drawback is the refund of Customs duties, taxes and fees paid on imported items that are matched with subsequently exported or destroyed items.
  - Essentially, duty drawback is an export promotion program intended to eliminate or recover the costs of duties, taxes and fees on merchandise sold on international markets.
  - It is one of the few export incentive programs acceptable under World Trade Organization rules.
- Export promotion capital goods (EPCG) incentives
  - It allows importation of capital goods required for the manufacturing of export-oriented products specified in the Export Promotion Capital Goods Authorization at concessional/nil rate of duty.
  - The Export Promotion Capital Goods Scheme allows exporters to import capital goods, such as spares for pre-production, manufacturing, and post-production, for zero Customs tax. IGST on capital goods imports under EPCG is also free till March 31, 2022.
  - However, the scheme is subject to an export value equivalent to 6 times of duty saved on the importation of such capital goods within 6 years
  - In cases where the license holder under the EPCG scheme fails to fulfil the stipulated export obligation then the licensee shall be liable to pay the customs dues along with 15% interest per annum to the customs authority.
  - Where the exporter as per his export obligation meets the deadline then only this business can sell the goods in the Domestic Tariff Area.
- The Advance Authorization Scheme
  - It is a scheme where the import of inputs will be allowed to be made duty-free (after making normal allowance for wastage) if they are physically incorporated in a product which is going to be exported. An export obligation is usually set as a condition for issuing Advance Authorization.
  - The inputs imported are exempt from duties like Basic Customs Duty, Additional Customs Duty, Education Cess, Anti-dumping duty, Safeguard Duty and Transition Product-Specific Safeguard duty, Integrated tax, and Compensation Cess, wherever applicable, subject to certain conditions.

7. Why India buying Russian oil?

Subject: Economy

Context:

In FY22, India bought around 2.4% of its overall oil imports in volume terms from Russia which was just 1.7% in FY21.

Causes:

Rise in oil prices post Ukraine War
- With oil prices going up, more dollars are needed to buy oil. This increases the demand for the dollar and leads to rupee depreciation and widening current account deficit.
- Higher Inflation-A weaker rupee, along with higher prices for petroleum products (imported inflation)–feeds into retail inflation.

Concept:

The Ukraine conflict and the consequent economic sanctions on Russia by the West have improved trade prospects between India and Russia.
India’s imports from Russia in April-September period surged 410 per cent to $21.34 billion and its exports declined 18.8 per cent to $1.3 billion.
- This a big hurdle for trade in rupee between India and Russia-With such a large trade deficit, Russia may be left with a huge rupee surplus that it receives for its exports.
Russia, which is now India’s third largest import partner when it comes to crude oil, behind Saudi Arabia and Iraq, has displaced the UAE from the third position.

G7 price cap:

The G7 wealthy nations – the United States, Japan, Germany, Britain, France, Italy and Canada – and the EU are hammering out details of the plan.
Russian crude is priced at a discount to the international Brent benchmark and the G7 wants to keep that spread wide, to keep down Russian oil revenue.
G7 and EU countries will decide a ‘price’ for Russian Oil and petroleum buyers would make “attestations” to providers saying they bought Russian petroleum at or below the cap. If they don’t adhere to it, they will be denied services including insurance, finance, brokering and navigation to oil cargoes priced above the cap.
- London-based International Group of Protection & Indemnity Clubs provides marine liability cover for about 95% of the global oil shipping fleet
- The G7 is a group of wealthy nations – the United States, Japan, Germany, Britain, France, Italy and Canada.

8. ATI bond case-SAT

Subject: Economy

Context:

The Securities Appellate Tribunal (SAT) has granted the Securities and Exchange Board of India (Sebi) three weeks to file its response in a case related to its order on mis-selling additional tier-1 (AT1) bonds.

Concept

AT1 bonds

AT-1 bonds are a type of unsecured, perpetual bonds that banks issue to shore up their core capital base to meet the Basel-III norms.
These bonds were introduced by the Basel accord after the global financial crisis to protect depositors.
There are two routes through which these bonds can be acquired:
- Initial private placement offers of AT-1 bonds by banks seeking to raise money.
- Secondary market buys of already-traded AT-1 bonds.
These bonds are also listed and traded on the exchanges. So, if an AT-1 bondholder needs money, he can sell it in the secondary market.
Investors cannot return these bonds to the issuing bank and get the money. i.e there is no put option available to its holders.
The issuing banks have the option to recall AT-1 bonds issued by them (termed call options that allow banks to redeem them after 5 or 10 years).
Banks issuing AT-1 bonds can skip interest payouts for a particular year or even reduce the bonds’ face value.
These bonds are perpetual in nature — they do not carry any maturity date.
They offer higher returns to investors but compared with other vanilla debt products, these instruments carry a higher risk as well.
These bonds are subordinate to all other debt and senior only to equity.
Basel-III-compliant AT 1 bonds come with a built-in ‘loss absorbency’ clause which means that in case of stress, banks can write off such investments or convert them into equity.
- The principal loss absorption (through write-down or conversion into equity shares) can be triggered by pre-specified trigger of CET1 falling below 5.5 per cent before March 2019 and 6.125 per cent thereafter.
At the instance of the RBI, bonds can also be written down upon a point of non-viability (PONV) event happening.
- The PONV trigger event is the earlier of a) decision that a conversion or write-off, without which the firm would become non-viable, is necessary, b) decision to make a public sector injection of capital, or equivalent support, without which the firm would have become non-viable.
- The norms also state that if the authorities decide to reconstitute a bank or amalgamate a bank with any other bank under Section 45 of BR Act, 1949, then such a bank will be deemed as non-viable or approaching non-viability.
- If the bank reaches the point of non-viability, AT1 bonds are the first part of debt that will be written down.

Securities Appellate Tribunal (SAT)

It is a statutory body created under the provisions of the SEBI Act, 1992.
The Securities Appellate Tribunal has only one bench which sits in Mumbai.
Jurisdiction: It has jurisdiction over the whole of India.
Composition of the SAT: It consists of a Presiding Officer and two other members.
- Appointment of the Presiding Officer: by the Central Government in consultation with the Chief Justice of India or his nominee.
Powers: SAT has powers similar to a civil court. Appeals from its orders can be challenged in the Supreme Court.
Key Functions:
- To hear and dispose of appeals against orders passed by the Securities and Exchange Board of India (SEBI) or by an adjudicating authority under the Act.
- To exercise jurisdiction, authority and powers conferred on the SAT by or under this Act or any other law for the time being in force.
- To hear and dispose of appeals against orders passed by the Pension Fund Regulatory and Development Authority (PFRDA).
- To hear and dispose of appeals against orders passed by the Insurance Regulatory Development Authority of India (IRDAI).

9. Market infrastructure institutions (MIIs)

Subject: Economy

Context:

The Securities and Exchange Board of India sought public comments on a report submitted by one of its working committees on strengthening the governance of market infrastructure institutions (MIIs).

Details:

In April, the market regulator formed a committee under G. Mahalingam to strengthen governance norms at the MIIs.
Functional classification, board independence, widening the definition of key managerial person and capping their compensation, and tightening the net worth criteria are some of the key proposals put forth by the 13-member committee formed by SEBI.

Market Infrastructure Institutes:

MIIs are institutions providing infrastructure of trading, settlement and record keeping and include stock exchanges, clearing corporations and depositories.
Stock exchanges, depositories and clearing houses are all Market Infrastructure Institutions and constitute a key part of the nation’s vital economic infrastructure.
MIIs helps in optimal use of money in the economy and fostered economic development.
They constitute the nucleus of the capital allocation system and are indispensable for economic growth and have a net positive effect on society like any other infrastructure institution.
That MIIs are systemically important in India is clear from the phenomenal growth of these institutions in terms of market capitalization of listed companies, capital raised and the number of investor accounts with brokers and depositories and the value of assets held in the depositories’ account.
Currently, MIIs are required to have a minimum net worth of not less than Rs 100 crore on a continuous basis.
What are the specific institutions in India that qualify as MIIs?
- Among stock exchanges, the SEBI lists seven, including the BSE, the NSE, the Multi Commodity Exchange of India and the Metropolitan Stock Exchange of India.
- There are two depositories — charged with the safekeeping of securities and enabling their trading and transfer — that are tagged MIIs: the Central Depository Services Ltd. and the National Securities Depository Ltd.
- The regulator also lists seven clearing houses including the Multi Commodity Exchange Clearing Corporation.
  - Clearing houses, for their part, help validate and finalise securities trades and ensure that both buyers and sellers honour their obligations.

10. Our choking cities: How we can improve air and water quality in urban spaces

Subject: Environment

Miyawaki Technique-

Miyawaki is a technique pioneered by Japanese botanist Akira Miyawaki, that helps build dense, native forests in a short time.
In the Miyawaki technique, various native species of plants are planted close to each other so that the greens receive sunlight only from the top and grow upwards rather than sideways.
As a result, the plantation becomes approximately 30 times denser, grows 10 times faster and becomes maintenance-free after a span of 3 years.

Process:

The native trees of the region are identified and divided into four layers — shrub, sub-tree, tree, and canopy.
The quality of soil is analyzed and biomass which would help enhance the perforation capacity, water retention capacity, and nutrients in it, is mixed with it.
A mound is built with the soil and the seeds are planted at a very high density — three to five saplings per square meter.
The ground is covered with a thick layer of mulch.

Benefits of the Miyawaki method-

They help lower temperatures in concrete heat islands, reduce air and noise pollution, attract local birds and insects, and create carbon sinks.
The Miyawaki afforestation method requires quite a small space, at least 20 square feet.
It has revolutionised the concept of urban afforestation by turning backyards into mini-forests.

How can the Miyawaki method transform Indian cities?

Miyawaki projects have been buoyed by India’s promise, under the Paris Agreement, to improve its green cover from 25 to 33 per cent.
A rough count reveals that there are over a hundred Miyawaki forests in India, but no one has kept track.
In Ahmedabad, over 20,000 trees have been planted using the Miyawaki technique in 7,625 sq metres.
Chandigarh has about 1,800 parks.
In Chennai, the NGO Thuvakkam has been able to grow 25 Miyawaki forests, raising over 65,000 trees.
Such plantations are now being replicated in other cities including Tuticorin, Vellore and Kanchipuram.

Airshed management-

Focus on understanding meteorological, seasonal and geographic patterns for air quality across a large region.

Water pollution–

72 per cent of urban sewage is untreated in India’s urban freshwater bodies.
The Central Pollution Control Board reckons that more than 50 per cent of 351 river stretches (on 323 rivers) are polluted.
The problem of untreated waste and sewer water from unauthorised colonies can be solved by investing in a sewerage network.
There is also the threat of climate change.
As of May 2021, only 16 Indian cities had disclosed their plans to tackle climate change to international institutions, with only eight having actual sustainability-related targets in their urban master plans.

What is Blue-Green Infrastructure?

Blue-Green Infrastructure refers to a network that provides the “ingredients” for solving urban and climatic challenges through a combination of infrastructure, ecological restoration and urban design to connect people with nature.
- Blue indicates water bodies such as rivers and tanks
- Green indicates trees, parks, and gardens.

What are the Advantages of Blue-Green Infrastructure?

Utilising blue-green infrastructure in sectors such as transportation, water, and housing can improve ecosystem health, thereby improving human health and the environment.
Green streetscapes and landscapes enhance aesthetic and ethical qualities
Blue-green infrastructure can provide shelter in public spaces and reduce the urban temperature and increase outdoor activities.
Due to low temperatures on building surfaces, diminishes the cooling demand which results in decreasing energy needs.
The life expectancy of the building increases as green infrastructure will protect it from high temperatures, and help in lowering maintenance costs.

Spong cities concept-

A sponge city is a city that is designed to passively absorb, clean and use rainfall in an ecologically friendly way that reduces dangerous and polluted runoff.
Associated techniques include permeable roads, rooftop gardens, rainwater harvesting, rain gardens, green space and blue space such as ponds and lakes.

Water (Prevention and Control of Pollution) Act of 1974

The Water (Prevention and Control of Pollution) Act was enacted in 1974 to provide for the prevention and control of water pollution, and for the maintaining or restoring of the wholesomeness of water in the country.
The Act was amended in 1988.
The Water (Prevention and Control of Pollution) Cess Act was enacted in 1977, to provide for the levy and collection of a cess on water consumed by persons operating and carrying on certain types of industrial activities.
The Act vests regulatory authority in State Pollution Control Boards to establish and enforce effluent standards for factories.
A Central Pollution Control Board performs the same functions for Union Territories and formulates policies and coordinates activities of different State Boards.
The Act grants power to SPCB and CPCB to test equipment and to take the sample for the purpose of analysis.
Prior to its amendment in 1988, enforcement under the Act was achieved through criminal prosecutions initiated by the Boards.
The 1988 amendment act empowered SPCB and CPCB to close a defaulting industrial plant.

Water (Prevention and Control of Pollution) Cess Act of 1977

The Water Cess Act was passed to generate financial resources to meet the expenses of the Central and State Pollution Boards.
The Act creates economic incentives for pollution control and requires local authorities and certain designated industries to pay a cess (tax) for water effluent discharge.
The Central Government, after deducting the expenses of collection, pays the central and state boards such sums, as it seems necessary.
To encourage capital investment in pollution control, the Act gives a polluter a 70% rebate of the applicable cess upon installing effluent treatment equipment.

Central Pollution Control Board (CPCB)-

The Central Pollution Control Board (CPCB), the statutory organization, was constituted in September 1974 under the Water (Prevention and Control of Pollution) Act, 1974.
Further, CPCB was entrusted with the powers and functions under the Air (Prevention and Control of Pollution) Act, 1981.
The board is led by its chairman, who is nominated by the Central Government.

Functions

It serves as a field formation and also provides technical services to the Ministry of Environment and Forests of the provisions of the Environment (Protection) Act, 1986.
Principal Functions of the CPCB, as spelled out in the Water (Prevention and Control of Pollution) Act, 1974, and the Air (Prevention and Control of Pollution) Act, 1981,
to promote the cleanliness of streams and wells in different areas of the States by prevention, control, and abatement of water pollution, and
to improve the quality of air and to prevent, control, or abate air pollution in the country.

11. ‘Measles deaths’: Health ministry sends team to Mumbai

Subject: Environment

Context-

After reports of an increase in suspected measles cases and three deaths in children, the Union Health Ministry on Wednesday rushed a multi-disciplinary team to Mumbai.

What are measles and rubella?

Measles-
- Measles (also called rubeola) is a very contagious respiratory viral infection that causes a total-body skin rash and flu-like symptoms.
- It is transmitted person-to-person via droplets when infected people sneeze or cough.
- Initial symptoms usually occur 10–12 days after infection and comprise high fever, runny nose, bloodshot eyes and Koplik’s spots (tiny white spots on the inside of the mouth).
- Several days later, a rash develops and the most severe complication includes blindness, encephalitis (an infection that causes brain swelling), severe diarrhoea and pneumonia.
- There is no specific medical treatment.

Rubella–
- Rubella is a viral disease caused by the rubella virus that mostly affects the skin and lymph nodes.
- In kids, rubella (commonly called German measles or 3-day measles) is usually a mild illness.
- But the infection is dangerous for pregnant women because it can cause serious health problems in their babies.
- Rubella is transmitted in airborne droplets from the nose, mouth or throat of infected people.

Cases in India-

India has seen an increase in the number of measles cases – 11,156 cases of measles have been reported in 2022 till September, according to data from the World Health Organization.
To compare, there were 6,078 recorded in 2021, 5,598 cases in 2020, and 10,708 cases in 2019.

What about the vaccination?

The MR vaccine is a combined product, targeting two diseases in one shot.
Two doses of MR vaccine should be given at 9-12 months and 16-24 months of age.
However, if a child misses the scheduled dose, the MR vaccine can be given till 5 years of age.
For epidemiological reasons, rubella vaccination had to cover children up to 15 years.
The same vaccine is being given in the routine Universal Immunisation Programme (UIP) of India.

12. COP27: Developing countries need $2 trillion annually to tackle climate change, says report

Subject: Environment

Context-

Developing and emerging economies, except China, will need $2 trillion per year by 2030 for energy transition, adaptation resilience, loss and damage and sustainable agriculture, according to a new report.

About the Report-

Title
- Finance for climate action: Scaling up investment for climate and development

Released at COP27.
The report was prepared by a new independent high-level expert group on climate finance.
The group was launched in July 2021 by the presidencies of COP26 and COP27 and the UN Climate Change High-Level Champions.
Aim
The report analysed the financial structures required to deliver the Paris Agreement’s goal of limiting global warming.
- The report covered three broad areas — energy transition, adaptation resilience and sustainable agriculture — that restore damage inflicted by human activity to natural capital and biodiversity.
Natural capital covers the world’s stocks of natural assets such as geology, soil, air and water.

Report analysis-

One trillion of the required finance should originate from domestic sources.
The remaining one trillion should come from external sources — developed countries or multilateral development banks.
Developed countries pledged to provide $100 billion in climate finance to developing countries by 2020. But they are yet to meet the commitment.
Emerging markets and developing economies, except China, require a total annual investment of $1trillion by 2025 and $2.4 trillion by 2030.
China was exempted because it does not need external climate finance.
The report also called for revamping the role of Multilateral development banks (MDBs)
The flow of finance from these institutions should triple from about $60 billion annually to around $180 billion annually within the next five years.
Low-cost finance through innovative ways — including special drawing rights (SDR), voluntary carbon markets, philanthropy and guarantees.
- SDR is an international reserve created to supplement the official reserves of the International Monetary Fund member countries.

13. COP27: Developing & developed blocks lock horns over new climate finance roadmap

Subject: Environment

About New Collective Quantified Goal (NCQG)-

The New Collective Quantified Goal (NCQG) on climate finance is expected to be finalised by 2024.
It will replace the current climate finance goal of $100 billion annually from developed countries.

The issue between developed and developing countries-

Preliminary discussions on a new climate finance goal at the 27th Conference of Parties (COP27) to the United Nations Framework Convention on Climate Change began on a contentious note.
The developed and developing countries disagreed on finance and who should foot the bill for mitigation and adaptation.
The current climate finance goal enables the flow of funds from the developed to the developing world.
Developed countries stand-
- But wealthy nations want to expand the donor base with NCQG.
- This would facilitate global contributions.
- The European Union is calling for global efforts instead of contributions merely coming from developed countries.
- The Environmental Integrity Group (EIG), a negotiation group comprising six nations including Switzerland, said other elements framed as “technical” by developing countries are highly political.
Developing countries stand-
- Negotiators from Antigua and Barbuda said that technical negotiators don’t have the mandate to “expand donor base”.
- Alliance of Small Island States, an intergovernmental organisation of low-lying coastal and small island countries, said broadening the donor base is a political topic.
- South Africa, on behalf of the African Group of Negotiators also opposed the expansion of the donor base.

14. Loss and damage: Who is responsible when climate change harms world’s poorest countries?

Subject: Environment

Loss and Damage-

It refers to the costs, both economic and physical, that developing countries are facing from climate change impacts.
When climate disasters strike, countries also need more financial help to cover relief efforts, infrastructure repairs and recovery. This is loss and damage.

Discussions on Financial Mechanisms-

The question of payments for loss and damage has been a long-standing point of negotiation at United Nations climate conferences, held nearly every year since 1995, but there has been little progress toward including a financial mechanism for these payments in international climate agreements.
Focus on institutional arrangements for the Santiago Network for Loss and Damage, which focuses on providing technical assistance to help developing countries minimize loss and damage.
The Glasgow Dialogue, is a formal process developed in 2021 to bring countries together to discuss funding for loss and damage.
The V20 group of finance ministers, representing 58 countries highly vulnerable to climate change, and the G-7 group of wealthy nations also reached an agreement in October 2022 on a financial mechanism called the Global Shield Against Climate Risks.
- The Global Shield is focused on providing risk insurance and rapid financial assistance to countries after disasters.
At COP26, held in 2021 in Glasgow, Scotland, negotiators made progress on some key issues, such as stronger emissions targets and pledges to double adaptation finance for developing countries.
But COP26 failed to establish a financial mechanism for wealthier nations to provide finance for loss and damage in developing countries.

Constraints in establishing the financial mechanism-

Two elements of developed countries’ reluctance to formalize a loss and damage mechanism involve

How to determine which countries or communities are eligible for compensation and
What the limitations of such a mechanism would be?

Limiting countries or communities from receiving compensation for loss and damage based on their current emissions or gross domestic product could become a problematic and complicated process.
Most experts recommend determining eligibility based on climate vulnerability, but this can also prove difficult.

Climate injustice and loss and damage-

A major concern is why should countries that have done little to cause global warming to be responsible for the damage resulting from the emissions of wealthy countries.
It may lead to further discussions about financial compensation for historical injustices, such as slavery in the United States or colonial exploitation by European powers.

Africa’s climate vulnerability-

Countries in Africa have some of the lowest national greenhouse gas emissions and yet the continent is home to many of the world’s most climate-vulnerable countries.
To deal with climate change, these countries – many of them among the world’s poorest – will have to invest in adaptation measures, such as seawalls, climate-smart agriculture and infrastructure that’s more resilient to high heat and extreme storms.
The UN Environment Program’s Adaptation Gap Report found that developing countries need five to 10 times more international adaptation finance than wealthier countries are providing.

15. EU plan new pledge targeting oil and gas methane emissions

Subject: Environment

Context-

SHARM EL SHEIKH(COP-27)– The United States and European Union plan to unveil a joint agreement to step up efforts to reduce emissions of the potent greenhouse gas methane from the fossil fuel sector, and are hoping other nations will sign up.

Methane emission-

Methane is the simplest hydrocarbon, consisting of one carbon atom and four hydrogen atoms (CH4). Methane is a powerful greenhouse gas.
Methane is produced by the breakdown or decay of organic material and can be introduced into the atmosphere by either natural processes – such as the decay of plant material in wetlands, the seepage of gas from underground deposits or the digestion of food by cattle – or human activities – such as oil and gas production, rice farming or waste management.
Methane is 84 times more potent than carbon and doesn’t last as long in the atmosphere before it breaks down.
It is responsible for creating ground-level ozone, a dangerous air pollutant.

Status of methane emission globally-

The 27-country EU is the world’s biggest buyer of gas, while the United States is the world’s biggest oil and gas producer.
Agriculture is the top source of methane emissions worldwide, but experts say the energy sector can cut emissions faster and often at low cost.
Methane is the main component of natural gas and leaches into the atmosphere from oil wells and leaky gas pipelines.
Despite that incentive to capture emissions, atmospheric concentrations of methane surged last year by the highest amount since records began in the 1980s.

Global energy-related methane emissions by region

About Global Methane Pledge-

It is introduced by the United States and EU in 2021 to slash methane emissions by 30% by 2030 from 2020 levels.
It have since been signed by 119 countries, among them 13 of the world’s top 20 methane emitters including Brazil, Indonesia, Mexico and Nigeria.
Forty countries are expected to publish plans at the COP27 summit detailing how they will meet the Global Methane Pledge – which is voluntary but aims to trigger more binding policies.
The Pledge does not include China, the world’s biggest methane emitter and Russia, which was Europe’s biggest gas supplier before it invaded Ukraine in February.

Top methane emitting countries-

The world’s five largest methane emitters (from all sources) are China, India, the United States, Russia and Brazil.
Together, they are responsible for close to half of all methane emissions globally.
Of these, only the United States and Brazil are part of the Global Methane Pledge.
Looking only at energy-related emissions, the five largest emitting countries are China, Russia, the United States, Iran and India.
Of these, only the United States is part of the Pledge.

16. Kerala government proposes Ordinance to strip Governor of Chancellor’s role

Subject: Polity

Context:

Kerala Cabinet on Wednesday decided to bring in an ordinance to strip the Governor of university Chancellor’s role.

What is the issue:

Kerala Governor Arif Mohammed Khan and the State government have major differences over multiple issues.
The latest controversy has arisen after he sought the resignation of several vice-chancellors following a Supreme Court judgment setting aside the appointment of the Vice-Chancellor of a technology university.
The governor withdrew 15 of his nominees from the senate of Kerala University in his capacity as the chancellor of the university.
The whip on the Senate members was issued after they kept away from a meeting of the university body which should have proposed its nominee for the search-cum-selection committee for the next V-C of the university.
Earlier, Arif Mohammed Khan had formed a search committee without the Senate nominee.
Since the University Act mandates that the committee should have a nominee of the Senate and there was no recommendation for the nominee from the CPI(M)-dominated Senate, Khan notified only a two-member committee.

What State Cabinet has decided:

Kerala Cabinet had decided to bring in an ordinance to strip the Governor of university Chancellor’s role. In Kerala, the Governor is, by virtue of his office, the chancellor of all universities in the state.
The Cabinet had decided to recommend to the Governor to promulgate an ordinance toappoint eminent academicians to the post of Chancellor.

What are the constitutional power of the Governor:

Article 163: There shall be a council of ministers with the chief minister as the head to aid and advise the governor in the exercise of his functions, except in so far as he is required to exercise his functions in his discretion.
Article 164: The chief Minister shall be appointed by the Governor and the other Ministers shall be appointed by the Governor on the advice of the Chief Minister, and the Ministers shall hold office during the pleasure of the Governor.
Article 174: The Governor can also summon, prorogue, and dissolve the Legislative Assembly. By convention, he does this on the advice of the Council of Ministers while they enjoy the confidence of the Assembly.
Article 200: Every Bill passed in an Assembly has to be sent to the Governor, after which he has four options
To assent to the Bill,
Withhold assent,
Reserve the Bill for the consideration of the
Return the Bill to the legislature, asking it to reconsider the Bill or an aspect of it. The Governor can also suggest an amendment to the Bill.

What is ordinance:

An ordinance is any law promulgated by the President or Governor when the Indian parliament or state legislature is not in session.
These ordinances have the same legal force and effect as an Act of Parliament or state legislature, but they are only temporary in nature.

What is the Ordinance Making Power of Governor:

Article 213 states that the Governor of the state may issue ordinances when the state legislative assembly or either of the two Houses in states with bicameral legislatures is not in session.

What are the properties of the Ordinance:

An ordinance can be retrospective, which means that it can be enacted prior to its approval.
An ordinance passed while Parliament or state legislative assembly is in session is deemed null and void.
To stay a law, the Ordinance must be approved byParliament or state legislative assembly within six weeks of its reassembly. Its existence is terminated if the Parliament or state legislative assembly does not act within six weeks of its reassembly.
Acts, laws, and events that occurred as a result of the ordinance remain in effect until it expires.
Ordinance promulgation cannot be regarded as a substitute for the President’s or Governor’s legislative authority.
Ordinances cannot be used to revoke the fundamental rights of the citizens guaranteed by the Indian Constitution.

17. Guidelines for Uplinking and Downlinking of Television Channels in India, 2022

Subject: Polity

Context:

Recently, the Union Cabinet has approved the new guidelines for the up-linking and downlinking of television channels in India.

What is the highlights of the Order:

It has been directed to all the Telecast stations holding permission to broadcast content on issues of national importance and social relevance for at least 30 minutes every day.
The provision has been introduced as ‘airwaves/frequencies’ are public property and need to be used in the best interest of society.
The eight listed themes include;
Education and spread of literacy,
Agriculture and rural development,
Health and family welfare,
Science and technology,
The welfare of women,
The welfare of the weaker sections of society,
Protection of the environment and of cultural heritage,
National integration.

What are the exceptions:

For the foreign channels,
The channels include those related to sports, where it would not be feasible to broadcast such content.

Who will be the Decision-making Authority:

As and when required, the Centre would issue general advisories to the channels in this regard.

What does Uplinking-downlinking mean:

In satellite telecommunication, a downlink is a link from a satellite down to one or more ground stations or receivers, and an uplink is a link from a ground station up to a satellite.

18. Why has ESMA derecognised six Indian central counterparties

Subject: Polity

Context:

The EU’s financial markets regulator and supervisor, the European Securities and Markets Authority (ESMA), had de-recognised six of India’s central counterparties (CCPs) in accordance with the European Market Infrastructure Regulation.

Who are the six of India’s central counterparties (CCPs):

Clearing Corporation of India (CCIL)
Indian Clearing Corporation Ltd (ICCL)
NSE Clearing Ltd (NSCCL)
Multi Commodity Exchange Clearing (MCXCCL)
India International Clearing Corporation (IFSC) Ltd (IICC)
NSE IFSC Clearing Corporation(NICCL)

What’s the role of CCP:

CCPs perform two main functions as the intermediary in a market transaction

Clearing and settlement
Guarantee the terms of a trade.

CCP is a system provider, who by way of novation interposes between system participants in the transactions admitted for settlement, thereby becoming the buyer to every seller and the seller to every buyer, for the purpose of effecting settlement of their transactions.
A CCP is authorised by the RBI to operate in India under Payment and Settlement Systems Act, 2007.

What’s the reason for derecognition:

The decision to derecognise Indian CCPs came due to ‘no cooperation arrangements’ between the ESMA and Indian regulators e. the Reserve Bank of India (RBI), the Securities and Exchange Board of India (SEBI) and the International Financial Services Centres Authority (IFSCA).
As per the European Market Infrastructure Regulations (EMIR), a CCP in a third country can provide clearing services to European banks only if it is recognized by the ESMA.
The ESMA wants to supervise these CCPs, which the Indian regulators are not in favour.

What timeline has ESMA given:

The EU regulator will defer the application of the withdrawal decisions until April 30, 2023 to mitigate the adverse impact of the move on EU market participants.

How will the derecognition impact European banks:

Third country CCPs(TC-CCPs) will no longer be able to provide services to clearing members and trading venues established in the EU.
Some of the major European banks dealing in the domestic forex, forward, swap and equities and commodities markets include Societe Generale, Deutsche Bank and BNP Paribas will not be able to provide clearing and settlement facilities to their clients.

They will also have to set aside additional capital to trade in the domestic market. Of the total foreign portfolio investors (FPI) registered in India, close to 20 per cent are from Europe.