Daily Prelims Notes 15 March 2024

Daily Prelims Notes

15 March 2024

Table Of Contents

1. Review of NBFC Categorisation by RBI: Potential Impact and Significance
2. Topic no. 26 – India’s Rankings in Human Development and Gender Inequality
3. What it will take to have simultaneous elections in India
4. Lead-acid batteries most successful example of circular economy
5. Ministry of Minority Affairs approves ‘Centre of Jain Manuscriptology’ (GUCJM) at Gujarat University
6. Dahej: Major reason for large semiconductor investments in Gujarat
7. President appoints former IAS officers Gyanesh Kumar, Sukhbir Singh Sandhu as new Election Commissioners
8. China lithium boom slows as sagging prices batter high-cost miners
9. What is the Darien Gap? And why are more migrants risking this Latin American route to get to the US?

1. Review of NBFC Categorisation by RBI: Potential Impact and Significance

Subject: Economy

Section: Monetary Policy

The Reserve Bank of India (RBI) is set to review the categorisation of Non-Banking Finance Companies (NBFCs) in 2024, nearly two years after introducing a revised regulatory framework.

This review has become necessary due to the growth of NBFCs, changes in their business models, and their evolving operations since the implementation of scale-based regulations.

Purpose of the Review:

• Evaluation of NBFC Growth: The review aims to assess the growth trajectory of NBFCs, especially those backed by large corporate houses and conglomerates.
• Adaptation to Changes: Given the significant changes in NBFC operations, the review seeks to ensure that regulatory categorisations align with current market dynamics.

Potential Implications:

1. Focus on Large NBFCs: The review might specifically focus on NBFCs backed by large corporate entities, considering them for potential re-categorisation.
2. Precursor to Bank Licences: There is speculation that the review could serve as a preliminary step towards granting bank licences to select NBFCs.

Potential Candidates for Upgradation:

• NBFCs such as Tata Capital, M&M Finance, L&T Finance, and Bajaj Finance are among the names speculated for upgradation to the top layer.
• Currently, 16 NBFCs are in the upper layer, with nine of them led by large business houses.

Basis of Upgradation:

• Nuanced Approach: The RBI is expected to adopt a nuanced approach, considering various parameters for upgradation.
• Key Parameters: Factors such as customer grievance handling, technology capabilities, asset quality, in-house operations, management quality, asset-liability management, and liability diversification may be assessed.
• Case-by-Case Review: The review process is likely to be case-specific rather than a blanket approach, evaluating each NBFC individually.

Significance of the Review:

• Alignment with Bank-like Operations: The review aims to address the perception among some NBFCs in the upper layer that they already function like banks.
• Regulatory Clarity: RBI Deputy Governor highlighted the existing differences between regulations for banks and NBFCs, suggesting the need for clarity in the categorization.

Current Regulatory Framework:

• Scale-Based Regulations: Implemented in October 2021 and fully enforced a year later.
• Four Layers: The regulatory framework includes four layers—base, middle, upper, and top.
• Asset Composition: As of September 30, 2023, NBFCs in the base, middle, and upper layers constituted 6%, 71%, and 23% of total NBFC assets, respectively.
• No NBFC in Top Layer: Presently, no NBFC is listed in the top layer of the regulatory framework.

The review of NBFC categorisation by the RBI signals a proactive approach to adapt regulatory frameworks to the evolving financial landscape.

By evaluating key parameters and potentially considering certain NBFCs for upgradation, the RBI aims to ensure a more effective and aligned regulatory environment for the non-banking finance sector in India. This move also underscores the RBI’s focus on maintaining the stability and integrity of the financial system amid changing market dynamics.

Non-Banking Financial Company (NBFC): Overview and Features

An NBFC is a company registered under the Companies Act, 1956 or 2013, engaged primarily in financial activities such as:

• Providing loans and advances
• Acquiring shares, stocks, bonds, debentures, and other securities issued by the government, local authorities, or other entities
• Engaging in leasing and hire-purchase activities
• Conducting insurance and chit fund businesses

Exclusions:

• An institution is not considered an NBFC if its primary business involves:
  • Agricultural activities
  • Industrial activities
  • Purchase or sale of goods (other than securities)
  • Providing specific services
  • Sale, purchase, or construction of immovable property

Types of NBFCs:

1. Asset Finance Company (AFC):
   • Mainly finances the purchase of machinery, equipment, and other assets
   • Leasing and hire-purchase activities are common
2. Investment Company (IC):
   • Primarily deals with acquiring securities
   • Invests in shares, stocks, bonds, debentures, etc.
3. Loan Company (LC):
   • Focuses on providing loans and advances
   • Often provides personal loans, business loans, and other forms of credit
4. Infrastructure Finance Company (IFC):
   • Specializes in financing infrastructure projects
   • Funds construction of roads, bridges, power plants, etc.
5. Systematically Important Core Investment Company (CIC-ND-SI):
   • A category of NBFCs that plays a crucial role in the financial system
   • Has a significant impact on the financial stability of the economy

Features of NBFCs:

1. No Demand Deposits:
   • Unlike banks, NBFCs cannot accept demand deposits from the public.
   • Demand deposits refer to funds that customers can withdraw on demand, like savings and current accounts.
2. Non-Participation in Payment System:
   • NBFCs are not part of the payment and settlement system.
   • They cannot issue checks drawn on themselves, unlike banks that facilitate check-based transactions.
3. No Deposit Insurance:
   • Depositors in NBFCs do not have the benefit of deposit insurance provided by institutions like the Deposit Insurance and Credit Guarantee Corporation (DICGC).
   • Deposit insurance protects depositors’ funds up to a certain limit in case of the institution’s failure.
4. Focus on Financial Services:
   • NBFCs primarily focus on providing financial services such as lending, leasing, investment, and insurance.
   • They often cater to specific segments of the market, offering tailored financial products.
5. Regulated by RBI:
   • The Reserve Bank of India (RBI) regulates and supervises NBFCs to ensure stability in the financial system.
   • NBFCs must comply with regulatory guidelines, capital adequacy norms, and reporting requirements set by the RBI.
6. Diverse Business Models:
   • NBFCs can have diverse business models, ranging from consumer finance to infrastructure financing.
   • They often fill gaps in credit availability, especially for small and medium-sized enterprises (SMEs) and individuals.

Classification of Non-Banking Financial Companies (NBFCs)

The regulatory and supervisory framework for Non-Banking Financial Companies (NBFCs) is based on a four-tiered structure. This classification aims to differentiate between NBFCs based on their systemic importance, potential risks, and impact on financial stability.

1. Base Layer: NBFC-Base Layer (NBFC-BL)

• NBFCs in the lower layer fall under the category of NBFC-Base Layer (NBFC-BL).
• Least regulatory intervention is warranted for NBFCs in this layer.
• These NBFCs are considered to have lower systemic risks and minimal impact on financial stability.

2. Middle Layer: NBFC-Middle Layer (NBFC-ML)

• NBFCs in the middle layer are designated as NBFC-Middle Layer (NBFC-ML).
• The regulatory regime for this layer is stricter compared to the base layer.
• Measures can be implemented to address adverse regulatory arbitrage compared to banks.
• This layer aims to mitigate systemic risk spill-overs from NBFCs falling within this category.

3. Upper Layer: NBFC-Upper Layer (NBFC-UL)

• NBFCs in the Upper Layer are known as the NBFC-Upper Layer (NBFC-UL) and will have a new regulatory superstructure.
• This layer includes NBFCs with a large potential for systemic risks and the ability to impact financial stability.
• The regulatory framework for NBFCs in this layer will be more akin to that of banks, with suitable modifications.
• NBFCs identified in the Upper Layer need to meet specific criteria to remain classified as such.
  • If an NBFC-UL does not meet the classification criteria for four consecutive years, it will move out of the enhanced regulatory framework.

4. Top Layer:

• Ideally, the Top Layer is supposed to remain empty.
• This layer serves as a buffer, where certain NBFCs from the Upper Layer can be placed if they pose extreme risks.
• If NBFCs in the Upper Layer are deemed to pose significant risks according to supervisory judgment, they can be subject to higher and tailored regulatory requirements.
• This Top Layer of the classification is intended to be a contingency for extreme risk scenarios and not a standard classification for NBFCs.

The four-tiered classification of NBFCs aims to create a structured and responsive regulatory framework that aligns with the varying degrees of systemic importance and risk posed by these financial institutions.

2. Topic no. 26 – India’s Rankings in Human Development and Gender Inequality

Subject: IR

Section: Reports

Human Development Index (HDI):

• 2022 Ranking: India ranked 134 out of 193 countries.
  • HDI Value: 0.644
• 2021 Ranking: India ranked 135 out of 191 countries.
  • HDI Value: 0.633

Trend: India’s HDI value increased to 0.644 in 2022, showing an improvement compared to 2021. This places India in the medium human development category.

Progress:

• Life Expectancy: Increased from 67.2 to 67.7 years.
• Expected Years of Schooling: Reached 12.6 years.
• Mean Years of Schooling: Increased to 6.57 years.
• Gross National Income (GNI) per Capita: Increased from $6,542 to $6,951.

Overall Change (1990-2022):

• HDI Value Increase: 48.4%
  • From 0.434 in 1990 to 0.644 in 2022.

Gender Inequality Index (GII):

• 2022 Ranking: India ranked 108 out of 193 countries.
  • GII Score: 0.437
• 2021 Ranking: India ranked 122 out of 191 countries.
  • GII Score: 0.490

Improvement: India showed significant progress in reducing gender inequality, jumping 14 ranks in the GII-2022 compared to GII-2021.

Gender Gaps:

• Labour Force Participation: 8% difference between women (28.3%) and men (76.1%).

Key Points:

1. Human Development Progress:
   • India has demonstrated improvements in all HDI indicators, including life expectancy, education, and GNI per capita.
   • The country’s GNI per capita has seen substantial growth, increasing by approximately 287% since 1990.
   • Life expectancy, expected years of schooling, and mean years of schooling have also shown positive trends.
2. Gender Inequality Reduction:
   • India’s GII value of 0.437 is better than the global and South Asian averages.
   • The country has made strides in reducing gender inequality, as reflected in its improved GII ranking.
   • However, there remains a significant gender gap in the labour force participation rate.
3. Medium Human Development Category:
   • With an HDI value of 0.644, India remains in the medium human development
   • The country’s progress in various HDI indicators reflects a positive trend in overall development.
4. Global and Regional Context:
   • The report emphasizes that while some countries have seen record human development, half of the poorest nations remain below their pre-crisis levels of progress.
   • India’s progress, especially in reducing gender inequality, is notable compared to global and South Asian averages.

India’s rankings in the HDI and GII highlight both progress and areas for further improvement in human development and gender equality.

Human Development Report (HDR)

The Human Development Report (HDR) is an annual publication released by the United Nations Development Programme (UNDP) since 1990.

The HDI is a composite index that measures the average achievements in human development across countries. It considers four key indicators:

1. Life Expectancy at Birth: This indicator reflects the average number of years a newborn is expected to live, providing insights into the overall health and well-being of a population.
2. Expected Years of Schooling: This indicator estimates the number of years of education a child entering school is expected to receive, providing insights into educational opportunities.
3. Mean Years of Schooling: This indicator measures the average number of years of education received by adults aged 25 years and older, offering insights into the overall educational attainment of a population.
4. Gross National Income (GNI) per Capita: This indicator reflects the average income of a country’s citizens, adjusted for purchasing power parity (PPP). It provides insights into the economic well-being and standard of living.

By combining these indicators into a single index, the HDI offers a comprehensive snapshot of a country’s overall level of human development. Countries are ranked based on their HDI scores, allowing for comparisons and assessments of progress over time.

Theme in 2021-2022: “Uncertain Times, Unsettled Lives: Shaping our Future in a World in Transformation” – The Human Development Report 2021-22 focuses on the theme of uncertainty and change in a rapidly evolving world. It explores the impacts of global trends such as technological advancements, climate change, demographic shifts, and the COVID-19 pandemic on human development.

Theme in 2023 – UNDP Report “Breaking the Gridlock”: The data was published in the United Nations Development Programme’s report titled “Breaking the Gridlock: Reimagining Cooperation in a Polarized World”. This report builds on the 2021–2022 Human Development Report findings, highlighting global trends and challenges in human development.

About Gender Inequality Index (GII)

The Gender Inequality Index (GII) is a composite measure developed by the United Nations Development Programme (UNDP) to assess gender disparities in various aspects of life within countries. It provides a comprehensive overview of gender gaps in health, empowerment, and economic opportunities. The GII aims to highlight areas where women face relative disadvantages compared to men and where progress is needed to achieve gender equality.

Components of the Gender Inequality Index:

1. Reproductive Health: This dimension measures maternal mortality rates and adolescent birth rates. High maternal mortality rates and early adolescent pregnancies are indicators of limited access to reproductive health services and education.
2. Empowerment: The empowerment dimension includes two indicators:
   • Proportion of parliamentary seats held by women: This reflects the representation of women in national parliaments, indicating their political participation and influence.
   • Proportion of women aged 25 years and older with at least some secondary education: Education plays a crucial role in empowering women and expanding their opportunities.
3. Labor Market Participation: This dimension considers the labor force participation rate for women aged 15 and older compared to men. A significant gap in labor force participation indicates disparities in economic opportunities and access to employment.

Interpretation of the Gender Inequality Index:

The GII is expressed as a value between 0 and 1, with higher values indicating greater gender inequality within a country.

• A GII value close to 0 indicates lower gender inequality, where women and men have more equal opportunities and outcomes.
• A GII value closer to 1 indicates higher gender inequality, where women face greater disparities compared to men in various aspects of life.

3. What it will take to have simultaneous elections in India

Subject: Polity

Section: Elections

Context:

• The High Level Committee on One Nation, One Election headed by former President Ram Nath Kovind has recommended that elections to Lok Sabha and state Assemblies should be held at the same time.

More on news:

• The committee recommended that the  elections to local bodies (municipalities and panchayats) too should be “synchronized” so that they are held within 100 days of the simultaneous state and national elections.
• To give effect to its recommendation, the committee has suggested 15 amendments to the Constitution of India  in the form of both new provisions and changes to existing provisions to be carried out through two Constitution Amendment Bills.

About two Constitution Amendment Bills.:

• The first Bill will deal with the transition to a simultaneous election system, and the procedure for fresh elections to Lok Sabha or a state Assembly before the expiration of their stipulated five-year term.
• According to the Kovind committee, this Bill can be passed by Parliament without the requirement for consultation with state governments or ratification by state Assemblies.
• The second Bill will deal with municipal and panchayat elections, as well as the creation of a Single Electoral Roll by the Election Commission of India (ECI), with details of every voter and the seat for which they are eligible to vote.
• The Kovind committee has acknowledged that this Bill deals with subjects on which states have the primary power to enact laws — and it would, therefore, require the approval or ratification of more than half of India’s states before it can be enacted.

Transition to simultaneous polls; Parliament’s power to make laws

• The first Bill recommended by the Kovind committee would begin by inserting a new article— 82A —into the Constitution. Article 82A will establish the process by which the country will move to a system of simultaneous elections for Lok Sabha and state Assemblies.
• Article 82A(1) will state that “on the date of the first sitting of the House of the People after a general election”
• Article 82A(2) will state that “all the Legislative Assemblies constituted in any general election held after the appointed date shall come to an end on the expiry of the full term of the House of the People”.
• The proposed Article 82A(3) requires the ECI to hold “General elections to the House of the People and the Legislative Assemblies simultaneously”.
• Article 82A(4): If the ECI believes that elections to any legislative assembly cannot be conducted simultaneously, “it may make a recommendation to the President, to declare by an Order, that the election to that Legislative Assembly may be conducted at a later date”. 
• Article 82A(5) states  “the full term of the Legislative Assembly shall end on the same date as the end of the full term of the House of the People constituted in the General Election”.
• The proposed Bill also recommends amending Article 327, which gives Parliament the power to make laws relating to elections to Lok Sabha, Rajya Sabha, and state legislatures, including the preparation of electoral rolls and delimitation of constituencies.
• The Kovind committee has recommended that the power of Parliament under Article 327 should be expanded to include “conduct of simultaneous elections” as well.

When Lok Sabha or state Assembly is dissolved before ‘full term’ ends

• Lok Sabha and state Assemblies are constituted for a period of five years after each election.
• The committee has recommended that this five-year period be referred to as “the full term” by amending Sub-clause 2 of Article 83 (“Duration of Houses of Parliament”) and Sub-clause 1 of Article 172 (“Duration of the State Legislatures”).
• If Lok Sabha or a state Assembly is dissolved before the expiry of the full term, the remaining period will be referred to as the “unexpired term”.
• The recommended Articles 83(4) and 172(4) state that the Lok Sabha or state Assembly that replaces the previous one will serve only for the remaining “unexpired term” before being dissolved again once simultaneous elections are conducted as scheduled.
• These amendments are also a part of the first Constitution Amendment Bill proposed by the Kovind committee, which it says will not require ratification by states.

Amendment of certain laws relating to legislative Assemblies in Union Territories:

• The report has also recommended the amendment of certain laws relating to legislative Assemblies in Union Territories such as The Government of National Capital Territory of Delhi Act, 1991, The Government of Union Territories Act, 1963, and the Jammu and Kashmir Reorganisation Act, 2019. 

The amendment does not require States ratification:

• The elections to the House of the People and the State Legislative Assemblies are held by the Election Commission of India under the Constitution of India, The Representation of People Act, 1950, The Representation of People Act, 1951, and the rules and orders made thereunder.
• The amendments required for simultaneous elections to the House of the People and the State Legislative Assemblies do not fall under the purview of the provisions to Article 368(2) and hence, do not warrant a ratification by the States.

About Article 328:

• The Kovind panel has stated that states under Article 328 of the Constitution only have residual powers on conducting Assembly elections; the power is mainly entrusted to Parliament through Article 327.
• The article deals with Power of Legislature of a State to make provision with respect to elections to such Legislature

Simultaneous local body elections, preparation of single electoral roll

• The second Constitution Amendment Bill recommended by the Kovind committee contains amendments that would require ratification by the states.
• Under Article 368(2), any constitutional amendment that deals with subjects in the State List (where states have the power to enact laws) would have to be ratified by at least half of the state legislatures in the country before it can be passed.
• Amendments suggested in the second Bill relate to municipal and panchayat elections, which fall under Entry 5 of the State List titled “Local government” and would require ratification by the states.
• The committee has suggested the inclusion of a new Article 324A in the Constitution.
• This new article would empower Parliament to make laws to ensure that municipality and panchayat elections are held simultaneously with the General Elections (to Lok Sabha and state Assemblies).
• The Kovind committee has also recommended that new sub-clauses should be added to Article 325 of the Constitution. 
• The new Article 325(2) proposed by the committee will create a “Single Electoral Roll for every territorial constituency for election in the House of the People, Legislature of a State or to a Municipality or a Panchayat”.
• This electoral roll “shall be made by the Election Commission in consultation with the State Election Commissions”

Amendment to the Constitution:

• Article 368 of the Constitution deals with the power and procedure to amend the Constitution. 
• While several provisions can be amended by a simple majority like in passing any ordinary legislation, a special majority of not less than two-thirds of the members present and voting is required for other provisions.
• For a third category of “entrenched provisions” that impact the federal structure of the Constitution or the powers of the state Assemblies, an amendment requires to be ratified by legislatures of at least half of the states.
• Article 368(2)(d) lists the representation of states in Parliament as one of the issues that would require ratification.

4. Lead-acid batteries most successful example of circular economy

Subject: Science and tech

Section: Msc

Context:

Amara Raja Energy & Mobility Limited is among the largest lead-acid battery manufacturers in India, clocking in a revenue of over Rs 10,000 crore in FY23.

What is a lead acid battery?

•  A lead acid battery is a rechargeable battery that uses lead and sulphuric acid to function.
• The lead is submerged into the sulphuric acid to allow a controlled chemical reaction. 
• This chemical reaction is what causes the battery to produce electricity. 
• Then, this reaction is reversed to recharge the battery.
• The main benefit of the lithium-ion technology is its far superior energy density. 
• The lead-acid battery and its ecosystem is the most successful example of a circular economy– 99 per cent of a lead-acid battery is recyclable and can be brought back in as raw materials. 

Lead-Acid vs Lithium-Ion Batteries

Cost

• Lead-acid batteries are cheaper and are easier to install when compared to Lithium-ion batteries.
• The price of a lithium-ion battery is two times higher than a lead-acid battery with the same capacity.

Cycle life

• A lead-acid battery lasts for 300 to 500 cycles.
• The complete discharge of the battery significantly affects its life cycle.
• Usually, lithium-ion batteries possess a cycle life of 5000, and complete discharge does not affect the life cycle.

Battery Capacity

• Battery capacity is the amount of energy stored in a battery per unit volume.
• It is a direct indicator of the active material stored inside the battery. 
• Lithium batteries have higher battery capacity when compared to lead-acid batteries. 

Energy Density or Specific Energy

• Energy density is a significant factor in determining the type of battery needed for a specific application.
• It indicates the relation between battery capacity and the weight of the battery.
• Energy Density = (Nominal Battery Voltage (V) x Rated Battery Capacity (Ah)) ÷ Weight of Battery.
• Lithium batteries have high specific energy when compared to lead-acid batteries.
• Hence, Li-ion batteries are used in EV applications.

Charging time:

• If a lead-acid battery takes eight hours to charge, a lithium-ion battery would probably take less than two hours to charge, provided they both have the same capacity. 

Weight and Size

• The energy density and battery capacity value of lithium batteries are high when compared to lead-acid batteries. 
• Therefore, the weight and size of lithium batteries are much lower in comparison to lead-acid batteries with the same capacity. 

Depth of Discharge (DOD)

• The depth of discharge is 50% for lead-acid batteries, and 80% for lithium batteries, respectively.
• This means you can use the lithium-ion battery for a longer period without recharging.
• The modern li-ion battery that is manufactured today is even more efficient, with a DOD of 100%.

5. Ministry of Minority Affairs approves ‘Centre of Jain Manuscriptology’ (GUCJM) at Gujarat University

Subject: History

Section: Art and culture

Context:

• In the spirit of ‘Virasat Se Vikas’ and ‘Virasat Se Samvardhan’, The Ministry of Minority Affairs inspired by ‘Panch Pran’ of Honorable Prime Minister, has approved the ‘Centre of Jain Manuscriptology (GUCJM) at Gujarat University amounting to Rs. 40 Crore.

More on news:

• Centre aims at academic support for development of Apbhransh and Prakrit language of Jainism in the University under PMJVK scheme
• Centre facilitates collaboration between the University and the Ministry to enhance educational opportunities for minority communities in India to carry out research in the field of Jain Studies.
• The initiative will promote education and research in the field of Jain Studies and empowerment of minority communities through education and research.

About Pradhan Mantri Jan Vikas Karyakram (PMJVK) scheme:

• Pradhan Mantri Jan Vikas Karyakram (PMJVK), a Centrally Sponsored Scheme (CSS).
• The scheme functions under the Ministry of Minority Affairs.
• It is an area development programme under which community infrastructure and basic amenities are being created in the identified areas.
• The scheme is being implemented under the aegis of the State Governments/ Union Territory (UT) Administrations on a fund sharing pattern and the projects are implemented and managed by the concerned State/ UT Government.
• The scheme was restructured and implemented with effect from May, 2018 as Pradhan Mantri Jan Vikas Karyakram (PMJVK), so as to reduce gaps, if any, in the socio-economic parameters in 1300 identified areas of the country.

About Jain Minorities:

• This made the Jain community, which makes for 9.5 million or 0.72 percent of the population as per 2011 census.
• It is the sixth community to be designated this status as a “national minority”, after Muslims, Christians, Sikhs, Buddhists, and Parsis.

About Apabhramsha language

• It is a literary language of the final phase of the Middle Indo-Aryan languages. 
• When the Prakrit languages were formalized by literary use, their variations came to be known as Apabhramsha. 
• Despite this close relationship, scholars generally treat Apabhramsha and the nonliterary Prakrits separately.

About Prakrit language:

• Prakrit is a group of vernacular Middle Indo-Aryan languages that were used in the Indian subcontinent from around the 3rd century BCE to the 8th century CE.

The term Prakrit is usually applied to the middle period of Middle Indo-Aryan languages, excluding earlier inscriptions and Pali.

6. Dahej: Major reason for large semiconductor investments in Gujarat

Subject: Geography

Section: Economy geography

Context:

• Ashwini Vaishnaw, the Union Minister of Railways, Communications, and Electronics & Information Technology, highlighted the significant influence of Dahej’s large chemical cluster on attracting major semiconductor investments to Gujarat’s South-west coast.

Details:

• The Union Cabinet sanctioned the creation of three semiconductor units as part of the initiative to develop the semiconductor and display manufacturing ecosystems in India, with construction set to commence within 100 days of approval.
• In June 2023, Micron received approval to establish a semiconductor unit in Sanand, Gujarat.
• Tata Electronics, in collaboration with Powerchip Semiconductor Manufacturing Corp (PSMC) from Taiwan, plans to build a semiconductor fab in Dholera, Gujarat, investing ₹91,000 crore. Additionally, CG Power will collaborate with Renesas Electronics Corporation from Japan and Stars Microelectronics from Thailand to create a semiconductor facility in Sanand, Gujarat, with a ₹7,600 crore investment. Tata Semiconductor Assembly and Test Pvt Ltd is also set to establish a semiconductor unit in Morigaon, Assam, with an investment of ₹27,000 crore.

Semiconductor manufacturing:

• The semiconductor manufacturing process requires nearly 250 speciality gases and chemicals, which the Dahej chemical cluster can provide, making it an attractive location for semiconductor investments.
• This has led to a strategic gravitation towards areas with established chemical industries. The expectations are for the addition of more fabrication plants and assembly, testing, marking, and packaging (ATMP) units within the next five years.
• The government’s Semiconductor Mission aims to establish a comprehensive semiconductor value chain in India, encompassing design, fabrication, ATMP, and leveraging the country’s talent pool and resources.
• The inauguration of Qualcomm’s Chennai Design Centre marks a significant step in completing the semiconductor ecosystem and value chain in India.
• Emphasizing the importance of advancing beyond 2G to lead in 5G and 6G technologies, the role of Tamil Nadu as a talent hub and the Qualcomm Design Centre’s contribution to semiconductor design is immense.

Dahej industrial cluster:

• Located in the Bharuch district of Gujarat and spread over 76.30 sq. km., Dahej has potential for new MSMEs for sectors like agro, livestock, forest and demand-based industries.
• The major exportable items include dyes intermediate and chemicals, bulk drugs and pharmaceuticals. Lignite, silica and ball clay are the major minerals and black trap, sand, hard murrum and gravel are the minor minerals found in Dahej.

Initiatives related to semiconductor

Source: TH

7. President appoints former IAS officers Gyanesh Kumar, Sukhbir Singh Sandhu as new Election Commissioners

Subject: Polity

Section: National Body

Context:

• President Droupadi Murmu appointed retired IAS officers Gyanesh Kumar and Sukhbir Singh Sandhu as new Election Commissioners, based on the recommendations of a selection panel led by Prime Minister Narendra Modi.

Details:

• These appointments filled vacancies left by the retirement of Anup Chandra Pandey and the resignation of Arun Goel.
• Gyanesh Kumar is set to become the Chief Election Commissioner in February 2025.
  • Gyanesh Kumar, a 1988 Kerala cadre IAS officer, has previously worked with Union Home Minister Amit Shah and retired as the Secretary of the Ministry of Cooperation.
  • Sukhbir Singh Sandhu, from the 1998 Uttarakhand cadre, has served as Uttarakhand’s Chief Secretary under Chief Minister Pushkar Singh Dhami.
• The selection process involved a search committee led by the Union Law Minister and a final selection panel including the Prime Minister, the Leader of the Opposition in Lok Sabha, and a Union Minister.

Election Commission of India (ECI)

• The Election Commission of India is an autonomous constitutional authority responsible for administering Union and State election processes in India. The body administers elections to the Lok Sabha, Rajya Sabha, State Legislative Assemblies in India, and the offices of the President and Vice President in the country.
• Election Commission of India is a permanent Constitutional Body. The Election Commission was established in accordance with the Constitution on 25th January 1950. The Commission celebrated its Golden Jubilee in 2001.
• Originally the commission had only a Chief Election Commissioner. It currently consists of Chief Election Commissioner and two Election Commissioners.
• For the first time two additional Commissioners were appointed on 16th October 1989 but they had a very short tenure till 1st January 1990. Later, on 1st October 1993 two additional Election Commissioners were appointed. The concept of multi-member Commission has been in operation since then, with decision making power by majority vote.

Source: TH

8. China lithium boom slows as sagging prices batter high-cost miners

Subject: Geography

Section: Eco geography

Context:

• The decline in lithium prices, essential for electric vehicle (EV) batteries, is negatively affecting China’s lithium mining industry, particularly the mining of lepidolite, a type of hard rock ore costly to process into lithium.
• Lithium is mined from ores of petalite (LiAl(Si2O5)2, lepidolite K(Li,Al)3(Al,Si,Rb)4O10(F,OH)2, spodumene LiAl(SiO3)2 and also subsurface brines.

Decreased lithium mining in China:

• This trend is due to decreased EV demand globally, causing lithium prices to drop significantly—over 80% in the past year according to Benchmark Mineral Intelligence.
  • Benchmark Mineral Intelligence also known as Benchmark Minerals, founded by Simon Moores in 2014, is a London-based IOSCO-regulated Price Reporting Agency (PRA) and specialist information provider for the lithium-ion battery to electric vehicle (EV) supply chain.
• China, responsible for about a quarter of global lithium production in 2023, is expected to see a substantial impact on its lepidolite mining operations due to these lower prices and the high cost of extraction.
• Rystad Energy has significantly reduced its growth forecast for China’s mined lithium output in 2024 to 12% from an initial 54%, mainly because of the challenges facing lepidolite mining.
• The cost of processing lithium from lepidolite in China is significantly higher than from other sources like brine deposits and spodumene, making lepidolite mining economically unfeasible in the current price environment.

Lithium mines in China:

• China, ranking fourth globally in lithium reserves, has been actively promoting investment to increase its lithium mining capacity, aiming to fulfil the battery sector’s demands and reduce import dependency.
• A significant focus has been on the southern province of Jiangxi, known for its recent lepidolite projects.
• These projects, such as CATL’s Jianxiawo mine and Yongxing’s Huashan mine, have been challenged by the lower lithium content in kaolinite, a clay mineral, making production costly at about 1,20,000 yuan per ton of lithium carbonate equivalent (LCE).
• CATL acquired exploration rights for the Jianxiawo mine with an 865 million yuan bid.

Lithium Production in the World:

• According to the US Geological Survey (USGS), global lithium production in 2019 stood at 77,000 tonnes.
• Australia, Chile, China and Argentina are the world’s top four lithium-producing countries.
• Australia is by far the world’s top producer of lithium, with an output of 42,000 tonnes in 2019.

About lithium

• Lithium is a non-ferrous metal and is one of the key components in EV batteries.
• It has the symbol Li and is a chemical element.
• It’s a silvery-white metal with a delicate texture.
• It is the lightest metal and the lightest solid element under normal circumstances.
• It must be kept in mineral oil since it is very reactive and combustible.
• It is both an alkali and a rare metal.

Lepidolite:

• Lepidolite is a lilac-gray or rose-colored member of the mica group of minerals with the chemical formula K(Li,Al)3(Al,Si,Rb)4O10(F,OH)2.
• It is the most abundant lithium-bearing mineral and is a secondary source of this metal. It is the major source of the alkali metal rubidium.
• Lepidolite is found with other lithium-bearing minerals, such as spodumene, in pegmatite bodies.
• It has also been found in high-temperature quartz veins, greisens and granite.

Source: TH

9. What is the Darien Gap? And why are more migrants risking this Latin American route to get to the US?

Subject: IR

Section: Places in  news

Darien Gap:

• The Darien Gap is a dangerous, dense jungle stretching across northern Colombia and southern Panama.
• Lacking paved roads, it spans approximately 60 miles (97 kilometres) and is characterized by difficult terrain including mountains, rivers, and swamps.
• It has become a significant route for global human migration, requiring migrants to traverse challenging conditions for four to ten days.

Increased Crossings and Dangers:

• Originally, around 10,000 people annually navigated this route, but numbers surged to 133,000 in 2021 and over half a million in 2023.
• Controlled by criminal organizations, the journey is perilous, involving extortion, kidnapping, and even mass sexual assaults.
• The journey’s physical challenges are immense, with reports of deaths, injuries, and diseases common among migrants.

Causes of Migration Surge:

• Factors driving this surge include violence, insecurity, and instability in migrants’ home countries.
• Legal immigration options being limited, particularly for individuals from low-income countries, has pushed many towards irregular migration paths like the Darien Gap.
• Policy changes, such as Mexico’s visa requirement for Venezuelans in 2021, have redirected migrants towards this perilous route.

Demographics:

• In 2023, Venezuelans comprised over half of the migrants, with significant numbers also from Haiti, China, Afghanistan, Nepal, Cameroon, and Angola.
• The migration demographic is diverse, with over half being adult men, 26% adult women, and 20% children, including infants and toddlers.

Government and Humanitarian Responses:

• Visa restrictions and governmental ambivalence towards humanitarian aid have exacerbated the dangers.
• The Panamanian government’s decision to prohibit Doctors Without Borders from providing medical support in the Darien Gap in 2024 is expected to increase the risks for migrants.
• The Los Angeles Declaration on Migration and Protection, announced in May 2022, aims to improve regional coordination and introduce legal programs for resettlement, humanitarian parole, and family reunification.
• However, these programs are limited by nationality and often require official documents, excluding many migrants traversing the Darien Gap.

Source: DTE