Daily Prelims Notes 16 March 2022

March 16, 2022
Posted by: OptimizeIAS Team
Category: DPN

Daily Prelims Notes

16 March 2022

Table Of Contents

Subject: Economy

Section: Monetary Policy

RBI (Regulatory Framework for Microfinance Loans) Directions, 2022– framework for regulated lenders, including scheduled commercial banks, small finance banks, NBFC-MFIs and NBFC-Investment and Credit Companies. The guidelines will take effect 1st April 2022.

All collateral-free loans, provided to low income households (with annual income up to ₹3 lakh) shall be considered microfinance loans. Earlier, the upper limits were Rs.1.2 lakh for rural borrowers and Rs.2 lakh for urban borrowers.
Lending to the microfinance segment shall be collateral free and not linked to the borrowers deposit account
Interest rates and other charges/fees on these loans should be subject to supervisory scrutiny by the RBI
Any change in interest rate or any other charge shall be informed to the borrower well in advance and applied prospectively.
The RE or its agent shall not engage in any harsh methods towards loan recovery
Regulated Entities (REs) should put in place a board-approved policy regarding pricing of microfinance loans, flexibility in repayment, a ceiling on interest rate and all other charges applicable to microfinance loans.
The margin cap (not exceeding 10 per cent for large MFIs with loan portfolios exceeding ₹100 crore and 12 per cent for the others) is no longer applicable to NBFC-MFIs.
Repayment cap-outflows capped at 50 per cent of the monthly household income, shall include repayments (including both principal as well as interest component) towards all existing as well as under-consideration loans.
There shall be no prepayment penalty on microfinance loans. Penalty, if any, for delayed payment shall be applied on the overdue amount and not on the entire loan amount.
RE would have to put in place a mechanism for identification of the borrowers facing repayment-related difficulties, engagement with such borrowers and providing them necessary guidance about the recourse available.
Each RE has to provide a loan card to the borrower incorporating information related to the borrower and pricing of the loan.
Non credit products shall be provided with the consent of the borrower along with complete information on pricing.

About micro- finance framework

Microfinance is a form of financial service which provides small loans and other financial services to poor and low-income households by various microfinance institutions.

Microfinance Institution-MFI is an organisation that offers financial services to low income populations. These services include microloans, micro savings and micro Insurance. In most cases the so-called interest rates are lower than those charged by normal banks

Different types of financial services providers for poor people have emerged – Non-Government Organisations (NGOs), cooperatives, community-based development institutions like self-help groups and credit unions, commercial and state banks, insurance and credit card companies, telecommunications and wire services, post offices, and other points of sale – offering new possibilities.

Microfinance models:

The Grameen Model: The Grameen model has been a case of exceptional success in Bangladesh. It turns out that many organizations in India have adopted the Grameen Bank model with little variations. Some of the notable examples are SHARE Microfinance Limited, Activists for Social Alternatives (ASA) and CASHPOR Financial and Technical Services Limited.
Self Help Groups (SHGs): An SHG is a group of five to 20 people from the same income category formed on principle of lending their own savings. This model was popularized by NABARD’s SHG-Bank linkage programme.
Federated Self Help Groups (SHG federations):The Federation of SHGs brings together several SHGs. Compared to a single SHG; the federation of SHGs has more than 1000 members. Examples of Federated Self Help Group models in India are PRADAN, Chaitanya, SEWA and Dan Foundation.
Cooperative banks
Rotating Savings and Credit Associations (ROSCAS). E.g.: Chit funds
Scheduled commercial banks (SCBs) (including small finance banks (SFBs) and regional rural banks (RRBs))
Non-banking financial companies (NBFCs)
Microfinance institutions (MFIs) registered as NBFCs

The difference between an NBFC-MFI and other NBFC is that while other NBFCs can operate at a very high level, MFIs cater to only the smaller level of social strata, with need of smaller amounts as loans.

2. Fertilizer position in India

Subject: Agriculture

Section: Fertilizer

Context: Fertilizer availability is in a comfortable position

Concept:

As India’s dependence on imported fertilisers is quite high and muriate of potash (MOP) is a nutrient that is fully imported, high global prices will have a direct impact. As of now, fertilizer availability is in a comfortable position.

However, the ongoing geopolitical tension scans have an adverse impact on fertiliser availability as India is highly dependent on Russia and Belarus for fertiliser / raw material Imports.

Russia and Belarus are the world’s No.2 and No.3 producers of MOP fertiliser, at 13.8 mt and 12.2 mt in2020, respectively. Out of the total 5.09 mt that was imported in India in 2020-21, nearly a third came from Belarus (0.92 mt) and Russia (0.71 mt). International prices of other fertilisers (urea, di-ammonium phosphate and complexes) and their raw materials / intermediates, have also gone up sharply in recent weeks.

3. Hijab ban

Subject: Polity

Section: Fundamental rights

Context:

The Karnataka High Court on Tuesday (March 15) upheld the restriction on Muslim women wearing a hijab in educational institutions. A three-judge bench comprising Chief Justice Ritu Raj Awasthi and Justices Krishna S Dixit and Khazi M Jaibunnisa, held that the right to wear a hijab is not constitutionally protected.

Concept:

According to the HC wearing HIJAB is not essential to Islam , therefore not protected under the Fundamental Rights.The HC has used the doctrine of essentiality to reach this conclusion.

What is doctrine of essentiality?

The doctrine of “essentiality” was invented by a seven-judge Bench of the Supreme Court in the ‘Shirur Mutt’ case in 1954.
The court held that the term “religion” will cover all rituals and practices “integral” to a religion, and took upon itself the responsibility of determining the essential and non-essential practices of a religion.

Following principles which had to be followed to determine whether any particular practice is an Essential Religious Practice (ERP):

That practice has to be fundamental in nature for the religion.
If not followed, the religion would change.
Not every activity associated with religion can be characterised as an essential religious practice – when it comes to food or dress this has to be conclusively demonstrated to the court.
The practice in question should be something which has been part of the religion from the start, it should not be a subsequently developed practice.
The binding nature of the practice – is it optional or compulsory, and will a person face consequences for not following it.
According to the state of Karnataka, if these principles were applied to the wearing of hijabs, then it was clear that the practice was not an ERP, as, according to them, it was not expressly prescribed in the Quran, and the religion of Islam was not fundamentally affected by not practicing it.

Whether wearing hijab is essential?

The court held that there is no “Quranic injunction” on wearing the hijab and that wearing the hijab is not “religion-specific”. The court’s inquiry, it said, was to ascertain whether wearing the hijab is so essential that if not followed, one could not practise the religion.

Few Important cases on doctrine of essentiality:

Shirur Matt case (1954): The ruling of the Supreme Court has been considered as one of the most important decisions in Indian jurisprudence with regard to the definition of religion. The Court invented a doctrine of “essentiality. The court held that the term “religion” will cover all rituals and practices “integral” to a religion, and took upon itself the responsibility of determining the essential and non-essential practices of a religion. It further ruled that there is no doubt that religion finds its basis in the system of doctrines regarded by those who profess that religion, but it will not be correct to say religion is nothing but a doctrine or belief.
M Ismail Faruqi v. Union of India (1994): The Supreme Court in this case held that the mosque is not an essential part of Islam. Namaz (Prayer) can be offered by the Muslims anywhere, in the open as well and it is not necessary to be offered only in a mosque.
• Church of God v. K.K.R. Majestic Colony Welfare Association: The Supreme Court held that nowhere in any religion, it is mentioned that prayers should be performed through the beating of drums or through voice amplifiers which disturbs the peace and tranquility of others. If there is any such practice, it should be done without adversely affecting the rights of others as well as that of not being disturbed in their activities.
In re, Noise Pollution case: The Supreme Court has given certain directions to be followed to control noise pollution in the name of religion:

Firecrackers: A complete ban on sound-emitting firecrackers from 10 pm to 6 am
Loudspeakers: Restriction on the beating of drums, tom-tom, blowing of trumpets, or any use of any sound amplifier between 10 pm to 6 am except in public emergencies. Generally: A provision shall be made by the State to confiscate and seize loudspeakers and such other sound amplifiers or equipment that create noise beyond the limit prescribed.

Sabarimala case: Indian Young Lawyers Association vs. the State of Kerala

The petitioners argued that the ban enforced on menstruating women from entering the Sabarimala shrine does not constitute a core foundation of the religion. In its judgment, SC stated that ‘devotion cannot be subjected to gender discrimination’. It said that exclusion on grounds of biological and physiological features like menstruation was unconstitutional. It amounted to discrimination based on a biological factor exclusive to gender. It was violative of the right to equality and dignity of women. SC said that prohibition founded on the notion that menstruating women are “polluted and impure” is a form of untouchability and the notions of purity and pollution stigmatized women

4. GST Compensation

Subject: Economy

Section: Fiscal policy

The introduction of the Goods & Services Tax (GST) required States and Union Territories (with Legislature) to subsume their sovereignty in a GST Council, raising the issue of loss on account of migration from Value Added Tax/Sales Tax to GST.

The GST Compensation Act, 2017 guaranteed states that they would be compensated for any revenue shortfall below 14% growth (base year 2015-16) for the first five years ending 2022.

A GST compensation fund is created from which the state would be paid the shortfall every two months by the Centre.

This corpus is funded through a compensation cess that is levied on so-called ‘demerit’ goods.

The items are pan masala, cigarettes and tobacco products, aerated water, caffeinated beverages, coal and certain passenger motor vehicles.

Issue:

The economic slowdown had reduced both GST and cess collections in FY 2019-20, resulting in a 40% gap (shortfall) between the compensation paid and cess collected.
The pandemic worsened the GST compensation gap due to increased fiscal spending of both centre and states
The provision for GST compensation is going to end in June 2022.
Decreasing Centre Devolution-Most states are of the view that the Centre’s share in centrally-sponsored schemes has gradually reduced and states’ share has increased

Steps taken:

Centre had borrowed from the market under a special window and passed it onto the States as back-to-back loans. This was meant to help States meet the resource gap due to short-release of compensation on account of inadequate balance in the compensation fund.

Way forward:

Extending the GST compensation system beyond the current deadline.
Inclusion of excluded items- land, electricity and petroleum products such as petrol, diesel and aviation turbine fuel etc in the GST regime to increase revenue of the states.

5. Fiscal consolidation

Subject :Economy

Section: Fiscal policy

Fiscal consolidation refers to the ways and means of narrowing the fiscal deficit.

The seeds for fiscal consolidation were sown in the Union Budget of 1994 which highlighted the need for fiscal discipline and pronounced a policy to end monetising the deficit.

Before 1994 deficit financed by creating money, through unlimited recourse to the Reserve Bank, by issuing ad hoc treasury bills. This weakened the Reserve Bank’s ability to direct effective monetary policy.

Later, in 2003 The Fiscal Responsibility and Budget Management (FRBM) Act gave the targets for fiscal consolidation in India.

The Fiscal Responsibility and Budget Management (FRBM) Act

The FRBM act also provided for certain documents to be tabled in the Parliament of India, along with Budget, annually with regards to the country’s fiscal policy. This included the

Medium-term Fiscal Policy Statement,
Fiscal Policy Strategy Statement,
Macro-economic Framework Statement, and
Medium-term Expenditure Framework Statement.

The FRBM rules mandate four fiscal indicators to be projected in the medium-term fiscal policy statement. These are:

revenue deficit as a percentage of GDP
fiscal deficit as a percentage of GDP.
tax revenue as a percentage of GDP.
total outstanding liabilities as a percentage of GDP.

Initial targets:

Revenue Deficit Target – revenue deficit should be completely eliminated by March 31, 2009. The minimum annual reduction target was 0.5% of GDP.
Fiscal Deficit Target – fiscal deficit should be reduced to 3% of GDP by March 31, 2009. The minimum annual reduction target was 0.3% of GDP.
Contingent Liabilities – The Central Government shall not give incremental guarantees aggregating an amount exceeding 0.5 per cent of GDP in any financial year beginning 2004-05.
Additional Liabilities – Additional liabilities (including external debt at current exchange rate) should be reduced to 9% of the GDP by 2004-05. The minimum annual reduction target in each subsequent year to be 1% of GDP.
RBI purchase of government bonds – to cease from 1 April 2006. This indicates the government not to borrow directly from the RBI.

Major amendments

FRBM Targets after Amendment to FRBM Act in 2012 (to be achieved by 2015)
- Revenue Deficit Target – revenue deficit should be completely eliminated by March 31, 2015. The minimum annual reduction target was 0.5% of GDP.
- Fiscal Deficit Target – fiscal deficit should be reduced to 3% of GDP by March 31, 2015. The minimum annual reduction target was 0.3% of GDP.
FRBM Targets after Amendment to FRBM Act in 2015 (to be achieved by 2018)
- Revenue Deficit Target – revenue deficit should be completely eliminated by March 31, 2018. The minimum annual reduction target was 0.5% of GDP.
- Fiscal Deficit Target – fiscal deficit should be reduced to 3% of GDP by March 31, 2018. The minimum annual reduction target was 0.3% of GDP.

In May 2016, the government set up a committee under NK Singh to review the FRBM Act.

Debt to GDP ratio: The review committee advocated for a Debt to GDP ratio of 60% to be targeted with a 40% limit for the centre and 20% limit for the states.
Revenue Deficit Target – revenue deficit should be reduced to 0.8% of GDP by March 31, 2023. The minimum annual reduction target was 0.5% of GDP.
Fiscal Deficit Target – fiscal deficit should be reduced to 2.5% of GDP by March 31, 2023. The minimum annual reduction target was 0.3% of GDP.

Escape clause refers to the situation under which the central government can flexibly follow fiscal deficit targets during special circumstances. This terminology was innovated by the NK Singh Committee on FRBM.

Setting up of an autonomous fiscal council that deals with the preparation of multi-year fiscal forecasts, improves fiscal data quality, could advise the government on fiscal matters.

In 2018, the FRBM Act was further amended. The clause allows the government to relax the fiscal deficit target for up to 50 basis points or 0.5 per cent, if the escape clause is triggered to allow for a breach of fiscal deficit target, the RBI is then allowed to participate directly in the primary auction of government bonds.

The original fiscal deficit target for 2020-21 was 3.5%. However, in reality, the deficit has shot up to a high of 9.5% of the GDP due to:

The impact of the COVID-19 pandemic.
Low revenue flows due to the lockdown.
Negative economic growth clubbed with high government spending to provide relief to vulnerable sections of society.

Thus, the targets revised- the fiscal deficit for 2021-22 at 6.8% of the GDP and aims to bring it back below the 4.5% mark by 2025-26.

Challenges in current fiscal consolidation:

Covid pandemic and need for social spending – health and education and related countercyclical fiscal policy measures.
Rising unemployment
Current Ukraine war and risk of supply chain shortages and rise in import bill due to higher crude oil prices.
Food security – food subsidies remain the major source of revenue expenditure.
Interest payments on debts -India’s debt to GDP ratio increased from 74 percent to 90 percent during the pandemic.
This fiscal consolidation in times of crisis delays the inclusive recovery process.

Way forward:

Increase capital expenditure– as it has a multiplier and crowd in effect- help increasing investment and country’s GDP.
Link fiscal cycle to credit cycle i.e linking of fiscal policy and monetary policy.
A committee for looking into the feasibility of subsuming all subsidies into a lump-sum direct benefit transfer.
Increase revenue of government- agri taxation, reducing discounts and remissions etc.
An autonomous fiscal council -Given the deteriorating state of fiscal health, the N.K. Singh committee in 2017, has suggested establishing an independent fiscal council.

Similar recommendations were mooted by the 13th and 14th finance commissions.

Multiplier is the ratio of change in national income arising from any autonomous change in spending (including private investment spending, consumer spending, government spending, or spending by foreigners on the country’s exports).The existence of a multiplier effect was initially proposed by Keynes student Richard Kahn in 1930 and published in 1931 and later it was elaborated by J M Keynes as the ‘Investment Multiplier’

In simple words, the multiplier measures the increase in national income due the increase in autonomous spending, depending on the propensity to consume. Suppose autonomous spending (spending that doesn’t depend on income – government spending, investment, consumption, net exports) rises, national income would rise to the multiple of autonomous expenditure. Thus,

Multiplier = 1/1-mpc

For example- the government would spend £3bn on multi-modal connectivity-roads, rails, bridges etc. This involves employing workers (previously unemployed) and paying suppliers for raw materials. Initially, GDP rises £3bn

-In the next period, workers spend part of this extra income – in shops and for transport. The suppliers also employ more workers – creating more employment. This creates an additional economic output of £1bn.

-Therefore the final increase in GDP is £4bn

In this case, the multiplier effect is 1.33

Crowding-in effect is a phenomenon that occurs when higher government spending leads to an increase in economic growth and therefore encourages firms to invest due to the presence of more profitable investment opportunities. The crowding-in effect is observed when there is an increase in private investment due to increased public investment, for example, through the construction or improvement of physical infrastructures such as roads, highways, water and sanitation, ports, airports, railways, etc.

6. Production linked incentives

Subject: Economy

Section: Fiscal policy

PLI Schemes launched in March 2020, are a cornerstone of the Government’s push for achieving an AtmaNirbhar Bharat. The idea is to provide support to the sectors, regain dominance in global trade and be more prepared for the volatilities and shocks in global supply chains as opposed to the protectionist approach of the pre-1991 era.

The objective of the scheme is to

boost domestic manufacturing in sunrise and strategic sectors,
improve cost competitiveness of domestically manufactured goods,
enhance domestic capacity and economies of scale.
to attract investments in sectors of core competency and cutting-edge technology
generate direct and indirect employment by reaching global scales
increasing competitiveness to ensure penetration of Indian companies in the global value chains.

This scheme is expected to make domestic manufacturing globally competitive and will create

global champions in manufacturing.

The Government has committed Rs.1.97 lakh crores, over 5 years starting from 2021-22 in 13 sectors. Recently, PLI in the 14th sector – drones and drone components has been included with an additional layout of Rs. 120 crores.

The initial 13 sectors are Electronic/Technology Products, Medical devices, Drug intermediaries and APIs, Mobile Manufacturing and Specified Electronic Components, Pharmaceuticals drugs, Telecom & Networking Products, Telecommunications, Food Products, White Goods (ACs & LED), High Efficiency Solar PV Modules, Automobiles & Auto Components, Advance Chemistry Cell (ACC) Battery, Textile Products: Man Made Fabrics segment and technical textiles and Specialty Steel.

Production linked incentive for large scale electronics manufacturing

The PLI Scheme for the automobile and auto components industry,

It has two components

the Champion OEM incentive scheme and
the Component Champion incentive scheme.

The Champion OEM Incentive scheme is a ‘sales value linked’ scheme, applicable on Battery Electric Vehicles and Hydrogen Fuel Cell Vehicles of all segments. The Component Champion Incentive scheme is a ‘sales value linked’ scheme, applicable on Advanced Automotive Technology components of vehicles, Completely Knocked Down (CKD)/ Semi Knocked Down (SKD) kits, Vehicle aggregates of 2-Wheelers, 3-Wheelers, passenger vehicles, commercial vehicles and tractors, etc.

7. Warehousing Development and Regulatory Authority

Subject: Polity

Section: National organisation

Warehouses are scientific storage structures especially constructed for the protection of the quantity and quality of stored products.

Warehousing In India

Central warehousing corporation (CWC): Central Warehouse Corporation was established as a statutory body in New Delhi on 2nd March 1957. The Central Warehousing Corporation provides safe and reliable storage facilities for about 120 agricultural and industrial commodities.

State Warehousing Corporations (SWCs): Separate warehousing corporations were also set up in different States of the Indian Union. The areas of operation of the State Warehousing Corporations are centers of district importance. The total share capital of the State Warehousing Corporations is contributed equally by the concerned State Govt. and the Central Warehousing Corporation.

Food Corporation of India (FCI): Apart from CWC and SWCs, the Food Corporation of India has also created storage facilities. The Food Corporation of India is the single largest agency which has a capacity of 26.62 million tonnes.

The Warehousing Development and Regulatory Authority (WDRA): WDRA was set up by the Government of India on 26.10.2010 to ensure implementation of the provisions of the Warehousing (Development & Regulation) Act, 2007.

It is a statutory authority under the Department of Food and Public Distribution, Government of India.

The main objective of WDRA is to implement Negotiable Warehouse Receipt (NWR) System in the country, which would help farmers to store their produce in scientific storage go downs near by their farms and to seek loan from banks against their NWR. Thus, It implements and regulates the Negotiable Warehouse Receipt (NWR) /electronic-NWR (e-NWR) System in the country.

The main the powers and functions of the Authority shall include the following, namely: –

to issue to the applicants fulfilling the requirements for warehousemen a certificate of registration in respect of warehouses, or renew, modify, withdraw, suspend or cancel such registration;
to regulate the registration and functioning of accreditation agency, renew, modify, withdraw, suspend or cancel such registration, and specify the code of conduct for officials of accreditation agencies for accreditation of the warehouses;
to specify the qualifications, code of conduct and practical training for warehousemen and staff engaged in warehousing business;
to regulate the process of pledge, creation of charges and enforcement thereof in respect of goods deposited with the warehouse;
to promote efficiency in conduct of warehouse business;
to make regulations laying down the standards for approval of certifying agencies for grading of goods;
to promote professional organizations connected with the warehousing business;
to determine the rate of, and levy, the fees and other charges for carrying out the provisions of this Act;
to call for information from, undertaking inspection of, conducting enquiries and investigation including audit of the warehouses, accreditation agencies and other organizations connected with the warehousing business;
to regulate the rates, advantages, terms and conditions that may be offered by warehousemen in respect of warehousing business;
to specify, by regulations, the form and manner in which books of account shall be maintained and statement of accounts shall be rendered by warehousemen;
to maintain a panel of arbitrators and to nominate arbitrators from such panel in disputes between warehouses and warehouse receipt holders;
to regulate and develop electronic system of holding and transfer of credit balances of fungible goods deposited in the warehouses;
to determine the minimum percentage of space to be kept reserved for storage of agricultural commodities in a registered warehouse;
to specify the duties and responsibilities of the warehouseman;
to exercise such other powers and perform such other functions as may be prescribed.

Negotiable Warehouse Receipt (NWR) System

It was launched in 2011 by the Ministry of Consumer Affairs, Food & Public Distribution.

Farmers can seek loans from banks against the warehouse receipts issued to them against their storage.

These receipts issued by the warehouses registered with the WDRA would become a fully negotiable instrument backed by a Central legislation.

The Electronic Negotiable Warehouse Receipt (e-NWR) System was launched in 2017.

8. Cryptocurrency vs Currency

Subject: Economy

Section: Monetary policy and banking

Context:. The RBI Deputy Governor T Rabi Sankar said recently that banning cryptocurrencies is the most advisable choice for India as they are akin to Ponzi schemes and “may even be worse.

Concept:

A crypto does not possess the characteristics of a currency — namely, durability, portability and divisibility — and there is no sovereign guarantee for its value. Also, a crypto does not have any underlying asset to fall back upon .Therefore; the Deputy Governor is right when he says that it is akin to Ponzi scheme.

Characteristics of good money

General Acceptability

An important quality of money is its acceptance. Good money requires acceptance to all without any hesitation. Since the law declares Money as the legal tender, it has an inherent quality of general acceptability.

Portability

Apart from its acceptance, good money also requires portability. If people can carry or transfer money from one place to another, then it is good money.

Durability: Acceptance and portability aside, the material used to make money must last for a long time without losing its value. For example, ice and fruits are not good money since they lose their value quickly with the passage of time. After all, ice melts and fruits perish. Therefore, durability is an essential quality of good money.

Divisibility: If someone wants to buy a smaller unit of a commodity, then divisibility of money can make it possible. For example, goats cannot function as good money. This is because you cannot divide a cow without making it lose its value.

Homogeneity: Nobody can distinguish between two currency notes right out of the mint. If money is not homogeneous, then transactions will become uncertain as people would be unsure of what they are receiving.

Cognizability: The ability to recognize money is critically important. Today, we can look at a currency note and tell its value. If money is not cognizable, then people can find it difficult to determine if they are dealing with money or some inferior asset.

Stability: Of all the qualities of good money, stability is probably the most essential one. The value of money cannot change for a long period of time and hence remain stable. If the value of money keeps changing, then it will fail to function as a measure of value and as a standard of deferred payment.

Backed by government: The last but not least important feature of currency is that it is backed by sovereign government.

9. India’s draft medical devices policy

Subject: Government Schemes

Section: Science

Context- The government is proposing a new policy to reduce India’s dependence on import of high-end medical devices.

Concept-

Key Provisions:

The proposed National Medical Devices Policy 2022 aims to put in place a comprehensive set of measures for ensuring sustained growth and development of the sector and addressing the challenges of the industry such as regulatory streamlining, skilling of human resources and lack of technology for high-end equipment and lack of appropriate infrastructure, through a coherent policy framework.
It also plans to facilitate an orderly growth of the sector, lifting local manufacturing and reducing imports to half over the next decade.
- Currently, nearly 80% of the medical devices used in the country are imported products, particularly high-end devices and medical equipment.
The draft policy envisages that by 2047, India will be one of the top five global manufacturing hubs in terms of value and technology for medical devices.

About Medical Devices and their Regulation in India:

The Medical Device Regulation Act of 2020 serves as the regulatory framework for medical devices.
Medical devices and IVDs are controlled by the Drug Controller General of India (DCGI), which is part of the Ministry of Health and Family Welfare’s Central Drugs Standard Control Organization (CDSCO).
The Drugs and Cosmetics Act, 1940 (“DCA”) governs the quality and safety of medical devices in India.
Only “notified medical devices” that are periodically notified by the government as “drugs” are covered by the DCA. These consists of 37 devices which Include:
- All devices, including an instrument, apparatus, appliance, implant, material, or other article, whether used alone or in combination, including software or an accessory, intended by their manufacturer to be used specially for human beings or animals.

10. Permafrost Peatlands

Subject: Environment

Section: Climate Change

Context- Permafrost peatlands in Europe and western Siberia might be approaching their tipping point faster than expected, a new study warned.

Concept-

More about the Study:

According to the study published in Nature Climate Change, Frozen wetlands in Europe and western Siberia store up to 39 billion tonnes of carbon.
By 2040, northern Europe might become too wet and warm to support permafrost peatlands, the study added.

About Peatlands:

Peatlands are a class of wetlands, which are ecosystems flooded with water.
Waterlogged conditions limit microbial decay of dead plant materials rich in carbon dioxide.
This prevents the reintroduction of the gas into the atmosphere.
Peatlands occupy only 3 per cent of the global land surface, store twice as much carbon as all the world’s forests, according to the United Nations Environment Programme.
Permafrost Peatlands: Some peatlands are buried under frozen ground or permafrost and exist as permafrost peatlands.
- They are found in the northern parts of Alaska, Canada, Russia and parts of northern Europe.
- Frozen wetlands in Europe and western Siberia store up to 39 billion tonnes of carbon. This is equivalent to twice that is held by the whole of European forests.
- By 2060, these areas could lose 75 per cent under moderate efforts to mitigate climate change.
- Sweden, Alaska and Canada in the Arctic are already witnessing warmer temperatures, according to the UNEP.

Peatlands and climate change:

Peatlands are a type of wetland which are critical for preventing and mitigating the effects of climate change, preserving biodiversity, minimising flood risk, and ensuring safe drinking water.
Peatlands are the largest natural terrestrial carbon store. They store more carbon than all other vegetation types in the world combined.
Damaged peatlands are a major source of greenhouse gas emissions, responsible for almost 5% of global anthropogenic CO2 emissions.
- Peatland restoration can reduce emissions significantly.
Countries should include peatland conservation and restoration in their commitments to international agreements, including the Paris Agreement on climate change.

What is the Global Peatlands Initiative?

The Global Peatlands Initiative is an effort by leading experts and institutions formed by 13 founding members at the UNFCCC COP in Marrakech, Morocco in 2016 to save peatlands as the world’s largest terrestrial organic carbon stock and to prevent it being emitted into the atmosphere.
Partners to the Initiative are working together within their respective areas of expertise to improve the conservation, restoration and sustainable management of peatlands.
One of the first outputs of the Global Peatlands Initiative will be an assessment, which will focus on the status of peatlands and their importance in the global carbon cycle.
It will also examine the importance of peatlands for national economies.

Impact of thawing of permafrost: Thawing Permafrost – Optimize IAS

11. Technology Critical Elements (TCEs)

Subject: Science & Tech

Section: Technology

Context- Climate-positive, high-tech metals are polluting Earth.

Concept-

Green energy technology growth (especially wind, solar and hydropower, along with electric vehicles) rely on technology-critical elements (TCEs), whose production and disposal can be environmentally harmful.
Mining and processing of TCEs requires huge amounts of energy.
Mines use gigantic quantities of fresh water; can drive large-scale land-use change; and pollute air, soil and water — threatening biodiversity.
TCEs may also become pollutants themselves when they are disposed of as waste.
The mining of TCEs can also exacerbate climate change.
Mining activities and leaching of TCEs can pose significant hazards to human health.

About Technology Critical Elements (TCEs):

A technology-critical element (TCE) is a chemical element that is critical to emerging technologies.
Many advanced engineering applications, such as clean-energy production, communications and computing, use emergent technologies that utilize numerous chemical elements.
The set of elements usually considered as TCEs vary depending on the source, but they usually include:
- Seventeen rare-earth elements
  - cerium, dysprosium, erbium, europium, gadolinium, holmium, lanthanum, lutetium, neodymium, praseodymium, promethium, samarium, scandium, terbium, thulium, ytterbium, yttrium
- Six platinum-group elements
  - iridium, osmium, palladium, platinum, rhodium, ruthenium
- Twelve assorted elements
  - antimony, beryllium, caesium, cobalt, gallium, germanium, indium, lithium, niobium, tantalum, tellurium, tungsten.

12. Unusual Heal Waves in Mumbai

Subject: Environment

Section: Climate change

Context- The Konkan region, including Mumbai, has been experiencing sweltering heat in the recent days, with the maximum temperatures touching the 40 degrees mark.

Concept-

What is a heatwave?

A region or locality is considered to be under the influence of heatwave if the maximum temperature reaches or exceeds 40 degrees Celsius in the plains, or 30 degrees Celsius in hilly regions.
Over the coastal regions, the threshold for the maximum temperature is 37 degrees.
When the maximum temperature departure ranges between 4.5 and 6 degrees, the India Meteorological Department (IMD) declares heatwave.
Likewise, severe heatwave is declared when the recorded maximum temperature of a locality departure from normal is over 6.4 degrees.
In India, heatwaves occur from March to June, occasionally in July. The peak heatwave events have been reported in the month of May.
As per the IMD, the most heatwave prone states are Punjab, Haryana, Delhi, Uttar Pradesh, Bihar, Jharkhand, West Bengal, Odisha, Madhya Pradesh, Rajasthan, Gujarat, Vidarbha, and parts of Karnataka, Andhra Pradesh, Telangana, and occasionally over Tamil Nadu and Kerala.

So, why is Konkan experiencing heatwave conditions?

The ongoing heatwave in Konkan, including Mumbai, is because it is under the direct influence of the prevailing heatwave in the adjacent Saurashtra-Kutch regions of Gujarat.
The hot and dry winds from northwest India are reaching parts of Konkan.
In addition, the slow movement of sea breeze along the Maharashtra coast and the overall clear sky conditions have together resulted in such hot conditions.
The IMD has issued an ‘orange’ alert, warning that severe heat wave is likely to prevail over Mumbai, Thane, Raigad, Ratnagiri, Palghar, Ratnagiri and Sindhudurg districts.

Colour Coded Weather Warnings:

It is issued by the IMD whose objective is to alert people ahead of severe or hazardous weather which has the potential to cause damage, widespread disruption or danger to life.
Warnings are updated daily.
The IMD uses 4 colour codes are:

Green (All is well)	No advisory is issued.
Yellow (Be Aware)	Yellow indicates severely bad weather spanning across several days. It also suggests that the weather could change for the worse, causing disruption in day-to-day activities.
Orange/Amber (Be prepared)	The orange alert is issued as a warning of extremely bad weather with the potential of disruption in commute with road and rail closures, and interruption of power supply.
Red (Take Action)	When the extremely bad weather conditions are certainly going to disrupt travel and power and have significant risk to life, the red alert is issued.

About IMD:

It is the principal agency responsible for meteorological observations, weather forecasting and seismology
IMD was established in 1875.
It is an agency of the Ministry of Earth Sciences of the Government of India.

**** For Further reading refer to Optimize IAS https://optimizeias.com/mumbai-climate-action-plan-2/.

13. Phosphorus Bombs & War Crimes

Subject: Science & Tech

Section: International Conventions

Context- Amid escalating tensions, a senior Ukrainian police officer has accused Russian forces of launching phosphorous bomb attacks in the eastern region of Lugansk.

Concept-

What is a phosphorus bomb?

Phosphorus is a chemical that ignites when exposed to air, burning above 800 degrees Celsius.
Similar to the napalm used in the Vietnam War, white phosphorus self-oxidizes.
When white phosphorus comes in contact with human skin, it can cause both thermal and chemical burns.
It is almost impossible to put out once it touches the skin, leading to extreme injuries and sometimes death.
It can produce several chemicals when it comes in contact with the skin, such as phosphorus pentoxide.
Phosphorus pentoxide reacts with water in the skin and produces phosphoric acid that is highly corrosive.
The burn injuries caused by white phosphorus can damage underlying tissues that delay the healing process.
White phosphorus can be systematically absorbed by the body and cause damage to the internal organs.
The particles of white phosphorus may remain in the wound and reignite when in contact with the air.

What law says about the use of phosphorus bombs?

International law prohibits use of white phosphorus shells in heavily populated areas but allows in open spaces to be used as cover for troops.
The bombing of a civilian city with phosphorus bombs is a war crime and a crime against humanity, according to the Rome Convention.
Additional Protocols to the 1977 Geneva Convention prohibited the use of white phosphorus munitions if they pose a threat to civilians.
Phosphorus bombs can be used on battlefields to make smoke screens, generate illumination, mark targets or burn bunkers and buildings.
If phosphorus munitions are used against people, they are then classed as a chemical weapon which is prohibited under Chemical weapons Convention 1997.
White phosphorus has not been categorised as an incendiary or chemical weapon by international agencies but United Nation considers it so.

**** For further reading refer to Optimize IAS https://optimizeias.com/what-constitutes-a-war-crime/ & https://optimizeias.com/geneva-convention/.

14. Rupee Sterilization

Subject: Economy

Section: External Sector

Context- The rupee is unlikely to be majorly impacted as the recent episodes of rupee volatility has been much less. Also the lower forex volatility in India have diminished the depreciation risks, a research report from State Bank of India (SBI) said.

Concept-

What Is Sterilization?

Sterilization is a form of monetary action in which a central bank seeks to limit the effect of inflows and outflows of capital on the money supply.
Classical sterilization involves central banks conducting buy and sell operations in open markets.
Sterilization most frequently involves the purchase or sale of financial assets by a central bank and is designed to offset the effect of foreign exchange intervention.
The sterilization process is used to manipulate the value of one domestic currency relative to another and is initiated in the foreign exchange market.

Example of Sterilization

A U.S. investor looking to invest in India must use dollars to purchase rupees.
If a lot of U.S. investors start buying up rupees, the rupee exchange rate will increase.
At this point, the Indian central bank can either let the fluctuation continue, which can drive up the price of Indian exports, or it can buy foreign currency with its reserves in order to drive down the exchange rate.
If the central bank decides to buy foreign currency, it can attempt to offset the increase of rupees in the market by selling rupee-denominated government bonds.

15. Strategic Forces Command

Subject: Defence & Security

Section: national organisation

Context- A missile accidentally misfired from Indian soil landed in Pakistan.

Concept-

About Strategic Forces Command:

The Strategic Forces Command (SFC), sometimes called Strategic Nuclear Command, forms part of India’s Nuclear Command Authority (NCA).
It is responsible for the management and administration of the country’s tactical and strategic nuclear weapons stockpile.
It was created on 4 January 2003 by the Vajpayee Government.
Air Marshal Teja Mohan Asthana became its first commander-in-chief.
It is the responsibility of the Strategic Forces Command to operationalize the directives of the NCA under the leadership of a Commander-in-Chief who is a three-star rank officer.
It will have the sole responsibility of initiating the process of delivering nuclear weapons and warheads, after acquiring explicit approval from the NCA.
The SFC manages and administers all strategic forces by exercising complete command and control over nuclear assets, and producing all contingency plans as needed to fulfil the required tasks.