Daily Prelims Notes 14 March 2022

March 14, 2022
Posted by: OptimizeIAS Team
Category: DPN

Daily prelims Notes

14 March 2022

Table Of Contents

TOPIC: Economy

Section: Monetary Policy and banking

Context- The sanctions-led withdrawal of card payments networks like Visa and Mastercard from Russia throws light on the dominance of US-based companies in the global payments ecosystem.

Concept-

In India two UPI cost apps — Walmart-owned PhonePe and Google Pay — accounted for over two-thirds of the whole transactions recorded in the course of a month.
Domestic card operator RuPay has emerged as the largest challenger to US majors Visa and Mastercard.
As per the National Payments Corporation of India (NPCI), largest UPI apps include: PhonePe followed by Google Pay , Paytm Payments Bank and Amazon Pay.

About UPI:

Unified Payments Interface is an advanced version of Immediate Payment Service (IMPS)- round–the-clock funds transfer service to make cashless payments faster, easier and smoother.
NPCI launched UPI with 21 member banks in 2016.
UPI is a system that powers multiple bank accounts into a single mobile application (of any participating bank), merging several banking features, seamless fund routing & merchant payments into one hood.
UPI is currently the biggest among the National Payments Corporation of India (NPCI) operated systems including:
- National Automated Clearing House (NACH),
- Immediate Payment Service (IMPS),
- Aadhaar enabled Payment System (AePS),
- Bharat Bill Payment System (BBPS),
- RuPay etc.
The top UPI apps today include PhonePe, Google Pay, PayTm, Amazon Pay and BHIM, the latter being the Government offering.

RuPay Card:

RuPay is the first-of-its-kind domestic Debit and Credit Card payment network of India.
The name is derived from the words ‘Rupee and ‘Payment’, emphasises that it is India’s very own initiative for Debit and Credit Card payments.
The card can also be used for transactions in Singapore, Bhutan, Nepal, UAE, Bahrain and Saudi Arabia.

National Payments Corporation of India:

NPCI, an umbrella organisation for operating retail payments and settlement systems in India.
It is an initiative of Reserve Bank of India (RBI) and Indian Banks’ Association (IBA) under the provisions of the Payment and Settlement Systems Act, 2007.
It is a “Not for Profit” Company under the provisions of Section 8 of Companies Act 2013 with an intention to provide infrastructure to the entire Banking system in India for physical as well as electronic payment and settlement systems.

2. MISSILE TECHNOLOGY CONTROL REGIME

TOPIC: Science & Tech

Section: Defence

Context- The accidental ﬁring of a missile by India into Pakistan could have led to serious, unintended escalation of tensions between the two nuclear armed countries.

Concept-

Pakistan has alleged that the incident “indicates many loopholes and technical lapses of a serious nature in Indian handling of strategic weapons” demanding a joint probe.
It has also sought the involvement of the international community to promote “strategic stability in the region”.
The description by Pakistan — that the missile was travelling at three times the speed of sound, at 40,000 feet, and is a surface-to-surface missile — has led to speculation that the accident involves the BrahMos supersonic cruise missile which is now in the inventory of India’s three Services.
- India became a member of the Missile Technology Control Regime in 2016.
- India is developing more missile systems, including a hypersonic variant.
- The handling and the launch of any such missiles are highly regulated with checks and balances to avoid accidents.

About MTCR:

Missile Technology Control Regime is an informal and voluntary partnership among 35 countries to prevent the proliferation of missile and unmanned aerial vehicle technology capable of carrying greater than 500 kg payload for more than 300 km.
The members are thus prohibited from supplying such missiles and UAV systems that are controlled by the MTCR to non-members.
It was established in April 1987 by G-7 countries – USA, UK, France, Germany, Canada, Italy, and Japan.
In 1992, the focus of the regime extended to on the proliferation of missiles for the delivery of all types of weapons of mass destruction (WMD), i.e., nuclear, chemical and biological weapons.
It is not a legally-binding treaty.
The efforts of non-proliferation of ballistic missile systems had further been strengthened by “The International Code of Conduct against Ballistic Missile Proliferation”, also known as the Hague Code of Conduct (HCOC), which was established on 25 November 2002 as an arrangement to prevent the proliferation of ballistic missiles with 136 UN member countries including India.
India was inducted into the Missile Technology Control Regime in 2016 as the 35th member.

Multilateral Export Control Regimes:

MECR are voluntary and non-binding agreements created by the major supplier countries that have agreed to co-operate in their effort to prevent and regulate the transfer of certain military and dual use technology.
It aims at preventing the proliferation of Weapons of Mass Destruction (WMD).
They are independent of the United Nations.
Their regulations apply only to members and it is not obligatory for a country to join.
India is now a member of three of the four MECRs, except the Nuclear supplier Group.
There are currently four such regimes under MECR
- The Nuclear Suppliers Group (NSG), for the control of nuclear related technology.
- The Australia Group (AG) for control of chemical and biological technology that could be weaponized.
- The Missile Technology Control Regime (MTCR) for the control of rockets and other aerial vehicles capable of delivering weapons of mass destruction.
- The Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies.

**** For further reading refer to https://optimizeias.com/when-a-missile-misfires/

3. EXCISE DUTY ON PETROL/DIESEL

TOPIC: Economy

Section: Fiscal Policy

Context- The government has ruled out cutting central excise duty on petrol and diesel. In the mean time, it is looking to the Russian window for supply of crude, which is expected to cushion the impact of surging prices of Indian basket of crude.

Concept-

Petrol and Diesel Prices:

In the past few months, retail prices of petrol and diesel have consistently increased to all-time high levels.
Public sector Oil Marketing Companies (OMCs) revise the retail prices of petrol and diesel in India on a daily basis, according to changes in the price of global crude oil.
The price charged to dealers includes the base price set by OMCs and the freight price.
The break-up of retail prices of petrol and diesel in Delhi shows that around 54% and 49% of the retail price of petrol & diesel respectively comprises central and states taxes.
The central government taxes the production of petroleum products, while states tax their sale.
The central government levies an excise duty of Rs 32.9 per litre on petrol and Rs 31.8 per litre on diesel. These make up 31% and 34% of the current retail prices of petrol and diesel, respectively.
While excise duty rates are uniform across the country, states levy sales tax/ Value Added Tax (VAT) which varies across states.
- For instance, Odisha levies 32% VAT on petrol, while Uttar Pradesh levies 26.8% VAT or Rs 18.74 per litre, whichever is higher.

Excise Duty:

An excise or excise tax (sometimes called an excise duty) is a type of tax charged on goods produced within the country (as opposed to customs duties, charged on goods from outside the country).
It is a tax on the production or sale of a good.
Excise duty is a form of indirect tax.
Excise duty has been replaced by the Goods and Services Tax(GST) w.e.f. 1 July 2017.

4. COUNTER MAGNETS & SATELLITE TOWNS

TOPIC: Geography

Section: Economic geography

Context- The Government of Himachal Pradesh passed the Shimla Development Plan February 9, 2022, for the construction of a ‘counter-magnet’ and four satellite towns to decongest and transfer urbanisation load from the core Shimla city.

Concept-

A counter-magnet town is proposed to be set up near Shimla airport and four satellite towns will come up near Ghandal, Naldehra, Fagu and Chamiyana.

Counter Magnets & Satellite Towns:

Counter-magnet towns are those that can be developed as alternative hubs of development and have the potential to attract more people / immigrants from a larger city in the area.
Satellite towns are small municipalities that are adjacent to a larger city and serve as part of the larger city and provide housing and other amenities for the people working in the larger city.
Satellite Town is defined as the urban centre which is functionally integrated with mega city and is located on the major transportation line connecting the city and it serves as the secondary settlement to the city.
Eventually the Satellite Town become a part of urban agglomeration and later into the town cities.
Satellite towns are an important part of settlement planning as the satellite town helps to ease the overcrowded burden of the metro city and absorb the economic pressure.
Satellite towns may be new or old which is separated from the metro city by some physical barriers such as a hill, river, etc.
- It is completely or partially free from the dependence from metros city but functionally dependent on the metro city.
Examples of Satellite Town:
- The satellite city of Mumbai is the Navi-Mumbai and Pune.
- Kolkata- Kalyanpur
- Delhi- Faridabad, Noida
- Delhi has many satellite cities such as Meruth, Noida, Gurgaon, and
- Hyderabad- Secunderabad (has now become twin city).
- In the USA, the satellite city of New York city is Allentown.

About Shimla:

Shimla was made the summer capital of India in 1864 during British rule.
At the time of it being made the capital of British India, the city could meet the needs of a population of only 16,000 people.
The population has grown more than 15 times in the last 120 years.
Shimla is situated in a mountainous region of Himachal Pradesh.
Besides, it falls in an earthquake-sensitive Zone IV (High Damage Risk Zone) per the Earthquake hazard zoning of India.
As the summer capital, Shimla hosted many important political meetings including the Simla Accord of 1914 and the Simla Conference of 1945.
Even after independence, the city remained an important political centre, hosting the Simla Agreement of 1972.
Shimla was built on top of seven hills:Inverarm Hill, Observatory Hill, Prospect Hill, Summer Hill, Bantony Hill, Elysium Hill and Jakhu Hill.
The highest point in Shimla is the Jakhu hill, which is at a height of 2,454 metres (8,051 ft).

5. GREAT ANDAMANESE TRIBES

TOPIC: Geography

Section: Economic Geography

Context- Anvita Abbi’s book’ Voices from the Lost Horizon’ encapsulates the worldview of the Great Andamanese tribe through its stories and songs, capturing a culture that is now extinct.

Concept-

About Tribes of Andaman Islands:

The Andamanese are the various indigenous peoples of the Andaman Islands, part of India’s Andaman and Nicobar Islands union territory in the southeastern part of the Bay of Bengal in Southeast Asia.
The Andamanese peoples are among the various groups considered Negrito, owing to their dark skin and diminutive stature.
The Andamanese peoples included
- the Great Andamanese and Jarawas of the Great Andaman archipelago
- the Jangil of Rutland Island,
- the Onge of Little Andaman,
- the Sentinelese of North Sentinel Island.
These tribes are the result of the first human migration out of Africa 70,000 years ago.
Today, only roughly 400–450 Andamanese remain, with the Jangil being extinct.
Only the Jarawa and the Sentinelese maintain a steadfast independence, refusing most attempts at contact by outsiders.
The Andamanese are a designated Scheduled Tribe in India’s constitution.

6. BLOCKCHAIN GAMING

TOPIC: Science & Tech

Section: Computer Related

Context- Many Indian gaming companies have expressed their interest in introducing elements of Blockchain technology into their games in the near future.

Concept-

What are blockchain games?

Blockchain is a decentralised database that stores information. It relies on technology that allows for the storage of identical copies of this information on multiple computers in a network.
Blockchain games are online video games that are developed by integrating blockchain technology into them.
It can be diversified into the following components-
- Non-fungible tokens: NFTs represent in-game virtual assets that can be owned by players, such as maps, armour or land.
- Cryptocurrency: such as tokens based on the Ethereum blockchain, may be used for the purchase of in-game assets. These in-game purchases usually enable gamers to buy items like extra lives, coins and so on directly from the game.
- Gaming coins: such as Axie Infinity (ACS) and Enjin Coin (ENJ), are in-game cryptocurrency which may be acquired and then used for the purchase of in-game assets.

Regulatory aspects in India:

Most of the gaming laws were brought into effect prior to the internet era and, therefore, only contemplate regulation of gaming activities taking place in physical premises.
Since blockchain is merely the underlying technology, there is no express regulation in India.
Most Indian states regulate gaming on the basis of a distinction in law between ‘games of skill’ and ‘games of chance’.
Staking money or property on the outcome of a ‘game of chance’ is prohibited and subjects the guilty parties to criminal sanctions.
However, placing any stakes on the outcome of a ‘game of skill’ is not illegal per se and may be permissible.

Patents & Trademark:

For a blockchain game or any of its elements to be patented in India if it meets the requirements of novelty, involving an inventive step, and industrial application.
In terms of Section 3(k) of the Patent Act, 1970, computer programs are per se not inventions and hence, cannot be patented.
A trademark is used as an identifying mark to determine the source of a particular good or service, and is obtained to protect the goodwill and reputation of the brand.
Any distinguishing mark in a blockchain game or NFT that would allow consumers to identify the source of that particular game or NFT may be trademarked.
Although there is no specific provision in the Copyright Act that deals with video games, copyright protection of video games may be sought under the category of ‘multimedia products’.
Similar to the position with trademarks, the process of obtaining a copyright for a blockchain game would be the same as any other online video game.

7. WIPO REPORT

Topic: IR

Section: International organization

Context: According to a recent report “Patent Landscape Report” on Covid-related vaccines and therapeutics from WIPO, extraordinarily active patent filing activity happened during Pandemic.

Concept:

The report comes amidst international negotiations for a temporary IP waiver on Covid-linked products, including vaccines, to facilitate greater access to these products. E.g., IP waiver proposal initiated by India and South Africa at the WTO in 2020.
The report says, from 1941 to 2011, there were just over 500 patent filings related to active ingredients about the influenza vaccines. (WIPO 2012)
Even during the SARS outbreak, fewer than 1,000 related patents were published, with no vaccine candidate emerging.
However, in the first 21 months of the pandemic, close to 5,300patent applications relating to Covid were filed across 49 patent offices. This included nearly 1,500 filings related to therapeutics and over 400 filings related to vaccines.
The regulatory authorities also paved the way for speedy approvals for patent applications related to Covid as compared to chemistry and bioscience in the same period.
Moreover, greatest number of Covid patent filings were related to conventional vaccine technologies and repurposed drugs, followed by more-novel vaccine technologies like
Universities and research organisations have filed (44%) nearly as many patent applications as corporations (49%) for Covid vaccines.
Among the top 10 applicants for vaccines were China, the US, the Russian Federation, the United Kingdom, Republic of Korea, Germany, India, Austria, Switzerland and Australia.
China, the US and India were the top origins for therapeutics.
India and the Republic of Korea saw higher filing activity for therapeutics than vaccines.

To read more about IP, refer https://optimizeias.com/intellectual-property/

8. STRESSED ASSETS

Topic: Economy

Section: Money and banking

Context: Banks’ plan to transfer 15 stressed assets aggregating about ₹50,000 crore to the National Asset Reconstruction Company Ltd (NARCL) by March end may face delay.

Concept:

Background:

NARCL (also known as bad bank) has been set up by banks, will aggregate and consolidate select stressed assets (above ₹500 crore each) in the financial system for their subsequent resolution.
Along with NARCL, a service company/ operational entity, India Debt Resolution Company Ltd (IDRCL), has also been floated for resolving these stressed assets.
Public sector banks are holding majority stake in the ARC and Private sector banks are holding majority stake in the DRC.
As recovery and resolution of stressed assets is a function of demand in the market, a total of 38 accounts aggregating to ₹82,845 crore have been identified for transfer to NARCL, according to a SBI statement issued on January.
The transfer will happen in a phased manner, with about 15 stressed accounts aggregating to ₹50,335 crore expected to be transferred by March-end 2022 under Phase-I.
NARCL will acquire the identified assets by paying the lenders 15 per cent of the acquisition value in cash and 85 per cent via security receipts (SRs). These SRs will be secured by government guarantee for their face value.

Issues:

Due diligence and valuation of stressed assets, among others, is taking time to resolve. So, it is unlikely that banks will make haste in moving the identified stressed assets to NARCL by March-end 2022, say bankers.
Moreover, NARCL has invited applications for the MD & CEO’s position from eligible candidates on or before March 16, 2022 – to push back the asset transfer process.

To know more about Bad Banks, please refer https://optimizeias.com/bad-banks-4/

To know about Asset Reconstruction Company, please refer https://optimizeias.com/asset-reconstruction-company/.

9. SEMICONDUCTOR AND NEON SHORTAGE

Topic: Science

Section : Computer related

Context: Shortage of semiconductor chips and neon

Concept

Semiconductors are materials which have a conductivity between conductors and insulators. They can be pure elements, silicon or germanium or compounds; gallium, arsenide or cadmium selenide.

They are also known as integrated circuits or more commonly just chips, they may be the tiniest yet most exacting product ever manufactured on a global scale.

It’s an electric circuit with many components such as transistors and wiring formed on a semiconductor wafer. An electronic device comprising numerous of these components is called Integrated Circuit (IC).

They are used to power a wide range of devices – cars, laptops, smartphones, household appliances and gaming consoles. Although they are tiny, they perform a host of functions such as powering displays and transferring data.

Semiconductor manufacturing is led by Taiwan Semiconductor Manufacturing Company (TSMC) in Taiwan and Samsung Electronics in South Korea. Recently, American chipmaker Intel has also planned to build two new chip factories in Chandler, Arizona.

Basic Requirements for manufacturing semiconductor chips

Fabricating semiconductor chips is a task of precision. It requires more than three months and involves giant factories, dust-free rooms, multi-million-dollar machines, for manufacturing.

Raw materials-

99% pure Neon Gas is used in a process called photolithography, which is the most common method for fabricating integrated circuits.
Palladium is used to coat electrodes that help control flow of electricity and inplating of microprocessors and printed circuit boards.
molten tin and lasers
Huge working capital- Plants cost billions of dollars to build and equip, and they have to run flat-out 24/7 to recoup the investment..
Huge infrastructure with uninterrupted and stable power supply.
A clean environment, ie, low air particulate matter, abundant supply of clean. fresh water etc
Quick access to an international airport or seaport.
Close proximity to well-trained technical human capital.

Causes of shortage

The tech war between the U.S. and China and sanctions exacerbated the shortage of advanced chips in China and resultant stockpiling.
Pandemic and lockdowns across the world-
forced shut chip-making facilities in countries including Japan, South Korea ,China and the US.
increased the growth in sales of laptops, tablets and mobile phones to the highest in a decade, as everything from school to office became online due to lock down and shift to work from home.
Disasters-Production plants in the US were affected by the cold and in Japan by wildfire.
Expensive and long process of manufacturing-Fabricating advanced logic chips requires extraordinary precision, along with huge long-term bets in a field subject to rapid change.
False Forecasts by the automakers by underestimating the rebound in the car sales led to rushed-up re-up orders late in 2020, increasing in demand of the medium-level chips used in the car manufacturing, unlike the small and tiny chips used in smartphones or laptops.
Cascading effect-Its shortage causes cascading effects, given that the first one creates pent-up demand that becomes the cause for the follow-up famine.
Ukraine war-Russia supplies over 40% of the world’s supply of palladium and Ukraine produces 70% of the global supply of neon.

Impact

Supply chain disruption as being the building block of various commodities and followed cost push inflation
Chip shortages are expected to wipe out USD 210 billion of sales for carmakers this year, with production of 7.7 million vehicles lost.
Directly affect consumer demand and related large scale unemployment.

India’s Semiconductor Demand and Related Initiatives

India currently imports all chips and the market is estimated to touch $100 billion by 2025 from $24 billion now. However,