Daily Prelims Notes 19 May 2023

May 19, 2023
Posted by: OptimizeIAS Team
Category: DPN

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Daily Prelims Notes

19 May 2023

Table Of Contents

1. RBI regulations on green deposits

Subject : Economy

Section: Monetary Policy

Concept :

Recently, the Reserve Bank of India (RBI) came up with a regulatory framework for banks to accept green deposits from customers.
Under the new framework, banks that accept green deposits will have to disclose more information on how they invest these deposits.

Green Deposits

Green deposits are not very different from the regular deposits that banks accept from their customers.
The only major difference is that banks promise to earmark the money that they receive as green deposits towards environment-friendly projects.
For example, a bank may promise that green deposits will be used towards financing renewable energy projects that fight climate change.
A green deposit is just one product in a wide array of other financial products such as green bonds, green shares, etc., that help investors put money into environmentally sustainable projects.

RBI’s Regulatory Framework for Green Deposits:

It lays down certain conditions that banks must fulfill to accept green deposits from customers.
Firstly, banks will have to come up with a set of rules or policies approved by their respective Boards that need to be followed while investing green deposits from customers.
These rules need to be made public on the banks’ websites.
The banks will also have to disclose regular information about the
Amount of green deposits received,
How these deposits were allocated towards various green projects, and
The impact of such investments on the environment.
A third party will have to verify the claims made by banks regarding the projects in which the banks invest their green deposits.
The RBI has come up with a list of sectors that can be classified as sustainable and thus eligible to receive green deposits.
These include renewable energy, waste management, clean transportation, energy efficiency, and afforestation.
The new rules are aimed at preventing greenwashing, which refers to making misleading claims about the positive environmental impact of an activity.
For example, a bank may advertise that their green deposits will have a huge positive impact on the environment, while the actual impact may be minimal.

Will Green Deposits help Depositors/Investors and the Environment?

Depositors who care about the environment may get some satisfaction from investing their money in environmentally sustainable investment products.
However, there are challenges, since the bank is only able to invest in a certain number of projects with green funds.
When it comes to protecting the environment, green investing enthusiasts believe that putting money into green projects may be one of the best ways to help the environment.
However, critics call green investing “a feel-good scam” that enriches only consultants.
In a complex world, it can be extremely hard to know if a project is really environmentally sustainable.

2. Sovereign Ratings

Subject :Economy

Section: Capital Market

Concept :

Sovereign credit rating is an assessment of a country’s creditworthiness. It shows the level of risk associated with lending to a particular country since it is applied to all bonds issued by the government. Generally within the country treasury bills or bonds issued by the government are considered zero risk investment, but for international creditors, there is a perceived risk as in certain situations even national governments may become insolvent, as was seen recently with Sri Lanka and Pakistan. This may happen because of a lack of forex reserves, unsustainable government debt. Hence Sovereign Ratings become important.

Factors:

Credit rating agencies consider various factors such as the political environment, economic status, and its creditworthiness to assign an appropriate credit rating. Obtaining a good credit rating is important for a country that wants to access funding for development projects in the international bond market. Also, countries with a good credit rating can attract foreign direct investments.

The big three rating agencies are: Moody’s Services, Fitch Ratings, and Standard & Poor’s. Several factors such as following determine a country’s sovereign rating:

Per capita income
GDP growth
Rate of Inflation
External debt
Economic development
History of defaults

The chart below shows the rating system of the three agencies.

S&P has recently maintained ‘BBB-’ (triple B minus) with ‘stable outlook’ rating for India, which means that it is just above BB ie. speculative grade rating.

With regards to factors that influence India’s rating, we see following:

Factors favoring

Challenges

● Fast growing economy

● Strong external balance sheet

● Democratic institutions supporting policy predictability and compromise

● Weak fiscal performance

● High debt

● Low per capita income

Rating Agencies

A rating agency is a company that assesses the financial strength of companies and government entities, especially their ability to meet principal and interest payments on their debts.
The rating assigned to a given debt shows an agency’s level of confidence that the borrower will honour its debt obligations as agreed.
The Big Three Credit Rating Agencies: Fitch Ratings, Moody’s Investors Service and Standard & Poor’s (S&P) are the big three international credit rating agencies controlling approximately 95% of global ratings business.
In India, there are six credit rating agencies registered under SEBI namely, CRISIL, ICRA, CARE, SMERA, Fitch India and Brickwork Ratings.

Role of Rating Agencies in Capital Markets

Rating agencies assess the credit risk of specific debt securities and the borrowing entities. In the bond market, a rating agency provides an independent evaluation of the creditworthiness of debt securities issued by governments and corporations.
Rating agencies also give ratings to sovereign borrowers, who are the largest borrowers in most financial markets.
Sovereign borrowers include national governments, state governments, municipalities, and other sovereign-supported institutions. The sovereign ratings given by a rating agency shows a sovereign’s ability to repay its debt.
The ratings help governments from emerging and developing countries to issue bonds to domestic and international investors.
Governments sell bonds to obtain financing from other governments and Bretton Woods institutions such as the World Bank and the International Monetary Fund.

3. SC upholds validity of Jallikattu

Subject : Polity

Section: Constitution

Concept :

A five-judge Bench of the Supreme Court upheld the amendments made by the legislatures of Tamil Nadu, Maharashtra, and Karnataka to The Prevention of Cruelty to Animals (PCA) Act, 1960.
The amendments allowed bull-taming sports like jallikattu, kambala, and bullock-cart races

Jallikattu

Jallikattu, also known as eruthazhuvuthal, is a bull-taming sport traditionally played in Tamil Nadu as part of the Pongal harvest festival.
The festival is a celebration of nature, and thanksgiving for a bountiful harvest, of which cattle-worship is part.
It is popular in Madurai, Tiruchirappalli, Theni, Pudukkottai and Dindigul districts — known as the Jallikattu belt.
The practice of jallikattu has long been contested, with animal rights groups and the courts expressing concern over:
cruelty to animals and
the bloody and dangerous nature of the sport that sometimes causes death and injuries to both the bulls and human participants.

Background of the case:

2014 judgement of Supreme Court :
In 2014, a two-judge Bench of apex court had essentially outlawed two common sports practised in the States of Tamil Nadu and Maharashtra.
These were referred to as Jallikattu and Bullock Cart Race
The ruling also held that bovine sports were contrary to the provisions of Sections 3, 11(1)(a) and (m) of the Prevention of Cruelty to Animals Act, 1960.
These sections relate to the duties of persons having charge of animals and define animal cruelty
Jallikattu protests in Tamil Nadu :
In 2015, the apex court also dismissed the Tamil Nadu government’s plea calling for a recall of its verdict.
Dismissing the government’s plea, SC brushed aside the state government’s argument that the 3,500-year-old tradition was rooted in religion.
In January 2017, massive protests erupted across Tamil Nadu against the ban, with Chennai city witnessing a 15-day-long Jallikattu uprising.
2016 notification by the Ministry of Environment, Forest and Climate Change (MoEF&CC) allowing Jallikattu :
In January 2016, a notification was issued by the MoEF&CC prohibiting the exhibition or training of bulls as performing animals.
However, an exception was carved in the notification.
The exception specified that bulls might still be trained as performing animals at events such as Jallikattu in Tamil Nadu, according to the customs and culture of different communities.
A batch of petitions were filed challenging the exemption notification, relying on the 2014 ruling.
Tamil Nadu Assembly passes bill in 2017 :
The Tamil Nadu Assembly, in 2017, passed a bill replacing an ordinance for conducting the bull-taming sport.
The “Prevention of Cruelty to Animals (Tamil Nadu Amendment) Act 2017” was passed in this regard.
The act said the “Government of Tamil Nadu has decided to exempt Jallikattu from the provisions of the Prevention of Cruelty to Animals Act”.
Petitions challenging the bill :
The Animal Welfare Board of India (AWBI) and the Compassion Unlimited Plus Action (CUPA) filed some petitions.
These petitions challenged the amendment to the Prevention of Cruelty to Animal Act passed by the Tamil Nadu Assembly.
SC refused to stay the new Jallikattu law passed by the Assembly but slammed the state government for not following the law and order.
Matter transferred to larger bench :
In 2018, a two-judge bench referred the petitions challenging the Prevention of Cruelty to Animals (Tamil Nadu Amendment) Act, 2017 to a larger bench.
The bench framed five questions to be adjudicated upon by the larger bench.
While delivering its verdict for a batch of pleas challenging Tamil Nadu and Maharashtra laws allowing the traditional bull-taming sport Jallikattu, the Supreme Court upheld the validity of the laws.

SC verdict on Jallikattu

Tamil Nadu Amendment Act is not a piece of colourable legislation

The top court held that the Tamil Nadu Amendment Act is not a piece of colourable legislation.
Doctrine of Colourable Legislation means that if a legislature lacks the jurisdiction to enact laws on a specific subject directly, it cannot make laws on it indirectly. In simple words, the doctrine checks if a law has been enacted on a subject indirectly when it is barred to legislate on that topic directly.
It relates to Entry 17 of List III of the Seventh Schedule to the Constitution which relates to the prevention of cruelty to animals.

Observations regarding 2017 amendment

The 2017 amendment “minimises cruelty to animals in the concerned sports”.
Once it is implemented and read with the rules, the sports will not come under the definition of cruelty defined in the 1960 Act.
The amendment has received Presidential assent; hence, there is no flaw in the state action.

Jallikattu has historical context

As per the legislatures of Tamil Nadu, Jallikattu has been going on in Tamil Nadu for the last few centuries and forms a part of its cultural heritage.
In this context, the court clarified that it did not want to disrupt the legislature’s view.

2017 amendment does not violate Fundamental duties and Fundamental Rights

The court also said that the 2017 amendment does not violate Articles 51-A (g) and 51-A (h).
51-A (g) impose duties on Indian citizens to protect the environment.
51-A (h) deals with developing a scientific temper, humanism, spirit of inquiry, and reform.
It also held that the amendment didn’t violate Articles 14 (Right to Equality) and 21 (Right to Life) of the Constitution.

4. Centre pushes vaccine for lumpy skin disease

Subject : Science and technology

Section: Health

Concept :

More than 10,000 cattle have been infected with the Lumpy Skin disease in this wave of the epidemic.
Uttarakhand has reported the bulk of the cases in this wave. While the Kutch region of Gujarat emerged as the epicenter of the Lumpy Skin disease outbreak last year.
Government launched a massive vaccination drive to control the epidemic in cattle.
About nine crore cattle have been vaccinated so far, and the recovery rate is above 94%.

Lumpy Skin Disease

LSD is caused by infection of cattle or water buffalo with the Capri poxvirus Lumpy Skin Disease Virus (LSDV).
It is genetically related to the goatpox and sheeppox virus family.
Lumpy skin disease was first seen as an epidemic in Zambia in 1929. Initially, it was thought to be the result of either poisoning or hypersensitivity to insect bites.
According to the Food and Agriculture Organization (FAO), the mortality rate is less than 10%.
Transmission:
Lumpy skin disease is primarily spread between animals by biting insects (vectors), such as mosquitoes and biting flies.
Symptoms:
It primarily consists of fever, fluid excretion from eyes and nose, dribbling of saliva from the mouth and blisters on the body.
The animal stops eating and faces problems while chewing or eating, resulting in reduced milk production.
Prevention and Treatment:
Vaccination against these diseases is covered under the Livestock Health and Disease Control Programme of India.
There are no specific antiviral drugs available for the treatment of lumpy skin disease. The only treatment available is supportive care of cattle. This can include treatment of skin lesions using wound care sprays and the use of antibiotics to prevent secondary skin infections and pneumonia.
Anti-inflammatory painkillers can be used to keep up the appetite of affected animals.
Lumpi-ProVacInd :
Lumpi-ProVacInd is a live attenuated vaccine developed jointly by ICAR’s National Research Centre on Equines and the Indian Veterinary Research Institute, which is targeted to protect cattle against the LSD virus, and provides 100% protection.

5. Papua New Guinea to sign security pact with US

Subject : International Relations

Section: Places in news

Concept :

Prime Minister of Papua New Guinea James Marape said on Thursday that the country will sign a security pact with the US.
The pact will give US troops access to the Pacific nation’s ports and airports. The development has come amid Washington’s attempts to jostle for influence in this region with China.

About

Papua New Guinea is a country in Oceania that comprises the eastern half of the island of New Guinea and its offshore islands in Melanesia (a region of the southwestern Pacific Ocean north of Australia).
Its capital, located along its southeastern coast, is Port Moresby. The country is the world’s third largest island country,
New Guinea’s island has shores on both sides with world-famous diving spots and beautiful coral and fish.
Divers can also dive and find World War II aviation wreckage and shipwrecks. As a result, it is ranked third out of the top ten largest islands globally.

6. EU -Deforestation Regulation (EU-DR)

Subject :Environment

Section: International convention

Concept :

It is a European Union regulation that aims to counter deforestation by requiring companies registered in the EU that import or export specific items (list of 479 for India) have not been produced on land that was deforested after December 31, 2020. Items include: wood, palm oil, soy, coffee, cocoa, rubber, and leather.

There is criticism that this is just a form of non-tariff barrier to trade, as EU itself has reduced its primary forest cover to increase agricultural output before the said date, and now is not allowing other countries to do the same as they struggle with population pressure on resources.

India’s stand is that it violates Most Favored Nation (MFN) and National Treatment principles. This is the second such measure by the EU after its Cross Border Adjustment Mechanism. It is estimated that both together are likely to adversely affect exports from India to EU worth $9.5 billion.

As a measure to implement the regulation, the EU is likely to require exporters to use a block-chain enabled trace and track system, similar to the one used by Agricultural and Processed Food Products Export Development Authority (APEDA) for grape exports to the EU. This is most likely to impact smaller companies as it will add to compliance burden and operational costs.

7. Block-chain enabled trace and track system

Subject :Science and technology

Section: Awareness in IT

This is a supply chain centered implementation of the block-chain technology, that uses the decentralized, immutability (cannot be changed), real-time, cryptographic security characteristics of the distributed ledger system (i.e. Block Chain) to stream-line supply chains.

With this one can track where the inventory is at a moment, from where it was sourced, and help verify the genuineness of the product. At present this is a challenge for traditional supply chain management because of being: paper based, disjointed data systems, compatibility issues, visibility gaps, counterfeit products.

With block-chain, supply chain companies can document production updates to a single shared ledger, which provides complete data visibility and a single source of truth. Because transactions are always time-stamped and up to date, companies can query a product’s status and location at any point in time. This helps to combat issues like counterfeit goods, compliance violations, delays, and waste.

Use cases:

Food and Agriculture: respond quickly in the event of food safety emergencies, empower customers by providing detailed food supply chain insights. Compensate small farmers quickly and equitably.
Pharmaceuticals: Reduce counterfeit medicines.
Manufacturing: demonstrate authenticity and ethical practices. Track spare auto parts and streamline auto safety recall processes
Mining: Ensure ethical sourcing and authenticity of raw materials. Accurately track environmental impacts of production, revealing new opportunities for sustainability.

8. Freedom of speech the ‘bulwark’ of democracy: Why the Andhra HC struck down order seeking to regulate public assemblies, processions

Subject : Polity

Section: Constitution

Context: The Andhra Pradesh High Court has set aside a Government Order (GO) issued by the Andhra Pradesh government that sought to regulate public meetings, processions, and assemblies on roads, highways, and streets.

What is the government order?

The Andhra Pradesh government sought to regulate public meetings or “assembly on roads, roadsides and margins”.
The state government relied on Sections 30, 30A, and 31 of the Police Act, 1861, to issue directions
Section 30 relates to the regulation of public assemblies and processions and licensing of the same, Section 30-A allows the magistrate, superintendent, or “any other officer” to stop the procession and order dispersal of the assembly if there is a violation of the licence conditions.
Section 31 relates to the police’s duty to keep order on “public roads, public streets, thoroughfares, ghats, and landing places”, and “other places of public resort”, along with the prevention of obstruction during assemblies and processions on such roads, streets, or near places of worship.

Why was it issued?

The government contended that certain fatal accidents that occurred in the past involving loss of life, etc., in a stampede.
The government argued roads is made for smooth movement of vehicular traffic and for transportation” and therefore if there is a hindrance to the same by holding meetings, the state can definitely impose reasonable restrictions.

What did the Andhra Pradesh HC hold?

The basis of the challenge in the present case titled ‘Kaka Ramakrishna vs. The State of Andhra Pradesh’
The court reasoned that the fact that an accident or incident occurred at a particular place cannot be used as an “objective” or “cause” to curtail the right to assemble, to take out processions, etc., on all other roads
Stating that the “cure suggested in the G.O.” will impose a restriction on the individual and his constitutional freedom, the court said that such a restriction on the right of a citizen or a political party to assemble and hold meetings is unreasonable
The court held that the “right to assemble, to protest peacefully, and to express one’s opinion freely” is too precious a freedom to be taken away by an “ipse dixit” (unproven assertion) given by the officer of the state
Stating that freedom of speech is the “bulwark” of democracy and is regarded as the first in the hierarchy of liberties, the court reiterated that it is too precious a freedom to be left to anyone’s unfettered discretion
The power conferred by the G.O. is “arbitrary, excessive, and also fails on the test of proportionality,” the court deemed the same to be an unreasonable restriction
the objective of the state to prevent loss of life could have been a reasonable one but the directions given in the GO ultimately conferred “arbitrary power” on the officer in relation to a fundamental right under Part 3 of the Constitution
The court held that “Any G.O. or executive order which takes away the right of a political party, a citizen, or a group of people to assemble peacefully, to protest peacefully, etc., has to be viewed strictly. This is a right, which is conferred on the citizens by the Constitution
the court said that such a right can only be subject to a ‘reasonable restriction’ citing SC’s 2018 decision in ‘Mazdoor Kisan Shakti Sangathan v Union of India and Another’, which laid down guidelines for peaceful assembly.

Article 19 in the Constitution Of India

Protection of certain rights regarding freedom of speech etc

All citizens shall have the right

to freedom of speech and expression;
to assemble peaceably and without arms;
to form associations or unions;
to move freely throughout the territory of India;
to reside and settle in any part of the territory of India; and
to practise any profession, or to carry on any occupation, trade or business

subject to the reasonable restrictions on the exercise of the right.

9. Bring back Kohinoor from the U.K., parliamentary panel notes in its report

Subject :History

Section: Art and Culture

Context: Nothing prevents India from seeking the return of the Kohinoor diamond, which left Indian shores in the early 1850s and is currently embedded in the crown of the British monarch

Background:

The report on ‘Heritage Theft – The Illegal Trade in Indian Antiquities and the Challenges of Retrieving and Safeguarding Our Tangible Cultural Heritage’ was adopted by the Standing Committee on Transport, Tourism and Culture headed by YSR Congress MP Vijay Sai Reddy.
India does not have legal competence to demand the return of the diamond.
Under the provisions of the Antiquities and Art Treasure Act, 1972 the Archaeological Survey of India takes up the issue of retrieval of only such antiquities that have been illegally exported out of the country.
But the Articles 7 and 15 of the 1970 UNESCO convention indicates that the convention does not prevent state parties from entering special agreements for the restitution of removed cultural properties”

The UNESCO 1970 Convention

The 1970 Convention on the Means of Prohibiting and Preventing the Illicit Import, Export and Transfer of Ownership of Cultural Property urges States Parties to take measures to prohibit and prevent the illicit trafficking of cultural property.
It provides a common framework for the States Parties on the measures to be taken to prohibit and prevent the import, export and transfer of cultural property.
The return and restitution of cultural property is central to the Convention and its duty is not only to remember but to fundamentally safeguard the identity of peoples and promote peaceful societies whereby the spirit of solidarity will be strengthened.

The Koh-i-Noor : Timeline

14th Century AD: in the early 14th century, Alauddin Khilji, second ruler of the Turkic Khilji dynasty of the Delhi Sultanate, and his army began robbery the kingdoms of southern India. Malik Kafur, Khilji’s general, created a victorious raid on Warangal in 1310 when he probably acquired the diamond.
16Th Century AD :It remained within the Khilji family line and later passed to the succeeding dynasties of the Delhi Sultanate, till it came into the possession of Babur.
17th Century AD: Shah Jahan, the fifth Mughal emperor, had the stone placed into his ornate Peacock Throne. In 1658, his son and successor, Aurangzeb, confined the unwell emperor at nearby Agra Fort. Whereas within the possession of Aurangazeb, weight of the stone was reduced from 793 carats (158.6 g) to 186 carats (37.2 g). For this carelessness, Borgia was admonished and punished 10,000rupees.
18th century (1739 AD ): Following the 1739 invasion of Delhi by Nader Shah, the Shah of Persia, the treasury of the Mughal Empire was plundered by his army in AN organized and through the acquisition of the Mughal nobility’s wealth. Besides a bunch of valuable things, together with the Daria-i-Noor, as well as the Peacock Throne, the Shah conjointly carried away the Koh-i-Noor.
18th Century (1747 AD):After the assassination of Nader Shah in 1747 and also the collapse of his empire, the stone came into the hands of one of his generals, Ahmad Shah Durrani, who later became the amir of Islamic State of Afghanistan.
19th Century (1813 AD):After ahmad Shah the Diamond came into possession of Ahmad Shah Durrani’s descendent Shauja Shah Durrani . Shah Shuja Durrani brought the Koh-i-door back to India in 1813 and gave it to Ranjit Singh (the founding father of the Sikh Empire). In exchange, Ranjit Singh helped Shah Shuja retreat to the throne of Islamic State of Afghanistan.
19th Century (1849 AD):On twenty-nine March 1849, following the conclusion of the Second Anglo-Sikh War, the dominion of Punjab was formally annexed to British India, and also the Last treaty of Lahore was signed, formally cession the Koh-i-Noor to Empress and the Maharaja’s other assets to the company