Daily Prelims Notes 21 March 2024

Daily Prelims Notes

21 March 2024

Table Of Contents

1. Right whales may never breed after run-ins with fishing gear
2. NASA craft that diverted space rock also dented it
3. On the mass kidnappings in Nigeria
4. The big promise of small-scale LNG as fuel for India, with first SSLNG plant commissioned
5. Eliminating diseases, one region at a time
6. India’s Pursuit for Lowering Cross-Border Remittance Costs
7. IMF’s bailouts to Pakistan
8. Income and Wealth Inequality in India
9. Australia’s iron ore miners face falling Chinese demand

1. Right whales may never breed after run-ins with fishing gear

Subject: Environment

Section: Species in news

Context:

• In late January 2024, federal regulators discovered a deceased North Atlantic right whale near Martha’s Vineyard, Massachusetts.

Details:

• This incident highlights the grave threat fishing gear entanglement poses to the critically endangered North Atlantic right whale population.
• Entanglement not only physically harms the whales by embedding ropes into their flesh, causing infections and impeding their ability to feed, but also significantly impacts their reproduction capabilities.
• Recent research emphasizes the devastating effects of even “minor” entanglements on female whales’ breeding potential, underscoring the critical need for innovations like ropeless fishing gear to protect this species.

Smaller females having fewer young:

• North Atlantic right whales are experiencing significant reproductive challenges, with a notable decline in the number of calves being born, and many females have not reproduced at all
• This decrease is partly due to the whales’ deteriorating health and physical condition, exacerbated by entanglements in fishing gear which have led to a decrease in adult body size over the decades.
• Smaller female whales are less likely to reproduce, contributing to low calving rates and the species’ decline.

Weak regulations:

• Current regulations aimed at protecting the North Atlantic right whales, such as the U.S. Endangered Species Act, Marine Mammal Protection Act, and Canada’s Species at Risk Act, fall short in effectively preventing all types of entanglements.
• The categorization of entanglement injuries as minor, moderate, or severe is misleading because even “minor” entanglements can significantly impact whales’ ability to reproduce successfully.
• The Marine Mammal Protection Act’s Take Reduction Plans, including measures like using weak links in fishing gear and seasonal closures of fishing areas, are designed to minimize the risk of entanglement. However, the research emphasizes that these measures are insufficient and that the only solution to prevent the extinction of North Atlantic right whales is to eliminate, not just mitigate, entanglements.
• Despite some stabilization in whale population numbers, the critical need remains for females to start and continue producing calves to ensure the species’ survival, underlining the urgency of addressing entanglement issues comprehensively.

About the North Atlantic Right Whale:

• The North Atlantic right whale (Eubalaena glacialis) is a type of baleen whale.
• It belongs to the genus Eubalaena, which includes three right whale species, previously considered one.
• Known for its docile nature, slow surface-skimming feeding behaviours, coastal proximity, and high blubber content, which was valued by whalers for its buoyancy and oil yield.
• Historically targeted by whalers due to their desirable traits for whaling.
• Conservation Status:
  • Among the world’s most endangered whales.
  • Protected under the U.S. Endangered Species Act, Marine Mammal Protection Act, and Canada’s Species at Risk Act.
• Population and Migration:
  • Approximately 356 individuals remain in the western North Atlantic Ocean.
  • Migrate between feeding grounds in the Labrador Sea and winter calving areas off Georgia and Florida, areas with significant shipping traffic.
  • In the eastern North Atlantic, with a total population in the low teens, they may be functionally extinct.
• Threats:
  • Major threats include vessel strikes and entanglement in fixed fishing gear.
  • Nearly half of all North Atlantic right whale mortality since 1970 is attributed to these causes, significantly hindering their recovery efforts.

Source: TH

2. NASA craft that diverted space rock also dented it

Subject: Science and tech

Section: Space

Context:

• NASA’s DART spacecraft successfully altered the trajectory and shape of the asteroid Dimorphos in 2022, demonstrating a potential method to protect Earth from celestial threats.

Details:

• Pre-collision, Dimorphos resembled a plump ball; post-impact, its shape changed to resemble a watermelon or a triaxial ellipsoid.
• Dimorphos is a moonlet of the near-earth asteroid Didymos, though neither poses a threat to Earth.
• The collision occurred on September 26, 2022, with the spacecraft hitting Dimorphos at about 22,530 kph, about 11 million km from Earth.
• Dimorphos is approximately 170 metres wide, while Didymos measures about 780 metres in diameter.
• The impact altered Dimorphos’s orbital path around Didymos to become elliptical and reduced its orbital period by 15 seconds, indicating a faster completion of its orbit post-impact.
• The asteroid’s orbital period has continued to decay slowly due to the leakage of loose debris from the system, carrying angular momentum and contracting the orbit.

DART Mission:

• NASA’s DART mission was a spacecraft designed to test a method of deflecting an asteroid for planetary defense, using the “kinetic impactor” technique (in simplest terms means smashing a thing into another thing).
• DART was the first-ever space mission to demonstrate asteroid deflection by kinetic impactor.
• The target of the spacecraft was a 160-meter-wide asteroid known as Dimorphos, which is a moonlet in orbit around the larger asteroid, Didymos.
• It was launched in November 2021.
• It is the first time humanity intentionally changed the motion of a celestial object in space.

Source: TH

3. On the mass kidnappings in Nigeria

Subject: IR

Section: Places in news

Context:

• Nigeria is grappling with its most severe economic crisis in recent years, compounded by a surge in kidnappings, especially in its northern region.

What is the latest crisis?

• The latest crisis in Nigeria involves a series of mass abductions attributed to suspected Boko Haram militants and other armed groups, primarily targeting the northeastern and northwestern regions:
  • Borno’s Ngala Local Government Area (kidnapping of at least 200 internally displaced persons),
  • Kaduna State (287 students were kidnapped from a government school in Chikun) and
  • Sokoto State (15 children were abducted)
• This series of kidnappings follows a history of similar attacks, notably the 2014 abduction of 276 girls from Chibok by Boko Haram.

What’s fuelling the surge in kidnappings in Nigeria?

• It is attributed to economic, security, and political challenges.
• Key factors include a struggling economy, high unemployment, surging inflation, food insecurity, and instability in the Niger Delta.
• Kidnappings have become a lucrative industry, with ransom payments as the primary motive. Nigeria faces security crises across all regions, with threats from Boko Haram, bandit groups, criminal gangs, sea piracy, and armed separatists.

How has the government responded?

• In response to the surge in kidnappings, Nigerian security forces are endeavoring to secure the victims’ safe release.
• President Bola Tinubu has firmly opposed the payment of ransoms for the nearly 600 people recently abducted, aligning with Nigerian law that penalizes anyone paying a ransom with up to 15 years in prison—a measure enacted in 2022 to combat the rampant kidnapping crises.

Source: TH

4. The big promise of small-scale LNG as fuel for India, with first SSLNG plant commissioned

Subject: Science and tech

Section: Msc

Context:

• Union Minister for Petroleum and Natural Gas Hardeep Singh Puri dedicated to the nation India’s first small-scale liquefied natural gas (SSLNG) unit at GAIL (India) Ltd’s Vijaipur complex in Madhya Pradesh.

Why small-scale LNG?

• The Indian government is promoting the use of natural gas, aiming to increase its share in the primary energy mix to 15% by 2030, up from just over 6% currently.
• However, expanding gas consumption faces challenges, particularly in transporting gas to areas not connected by the natural gas pipeline grid, affecting its use in long-haul transportation.
• To address these challenges and the slow progress of large-scale pipeline projects, small-scale LNG (SSLNG) emerges as a viable solution. SSLNG facilities, like the one at Vijaipur, are expected to significantly alter the natural gas landscape in India. Additionally, GAIL is investing Rs 650 crore in developing dispensing stations along major highways, including the Golden Quadrilateral, to facilitate the use of LNG as an automotive fuel.

What exactly is SSLNG?

• SSLNG, a term with no standard global definition in its nascent stage, refers to the process of liquefying natural gas for transportation in smaller-scale operations, distinct from the large-scale infrastructure typically associated with LNG.
• This involves supplying LNG—natural gas in its liquid or super-chilled form—via specialized trucks and small vessels to industrial and commercial consumers in areas not served by pipelines.
• In cases where the LNG is to be used as compressed natural gas (CNG) for vehicles or piped gas for households and manufacturing, it is regasified using small vaporizers. For direct use in its liquid form, LNG is supplied to end-users without regasification.
• The SSLNG supply chain can originate from large-scale LNG import terminals, where LNG is transported to consumers in cryogenic road tankers or small vessels instead of through pipeline regasification.
• Alternatively, it can start in areas with abundant natural gas supplies or production, where small liquefaction plants are established. An example of this latter approach is the SSLNG unit at Vijaipur, part of GAIL’s largest gas processing facility.

How the SSLNG Unit at GAIL’s Vijaipur Complex Works:

• The SSLNG unit, a Rs 150 crore facility at GAIL’s Vijaipur complex, features SSLNG skids with a total capacity of 36 tonnes per day and associated liquid handling systems.
• It utilizes zeolite pretreatment skids (ZPTS) for removing impurities like nitrogen, water, sulfur, and carbon dioxide from natural gas at about 15 bar pressure.
• The gas is then compressed to around 260 bar in a four-stage compressor and cooled to -60 to -70 degrees Celsius using a propane-based refrigeration system.
• Following expansion, the temperature drops below -140 degrees Celsius, liquefying the gas. The resulting LNG is dispatched via cryogenic tankers for use in city gas distribution networks as CNG and piped gas, and at LNG filling stations for vehicles.
• The unit employs an automated, web-based Supervisory Control and Data Acquisition (SCADA) system for monitoring.

The Business Case for SSLNG:

• GAIL leads the initiative, but most major oil and gas companies in India are exploring this high-growth sector.
• The movement towards SSLNG in India initially gained momentum through Petronet LNG Ltd, the country’s largest LNG importer, which began supplying LNG from its large import terminals in Gujarat and Kerala to small industrial consumers.
• Petronet, backed by GAIL, ONGC, IOC, and BPCL, promotes the use of LNG as automotive and marine fuel, and for city gas distribution networks and industries requiring natural gas.
• The strategy aims to increase LNG consumption nationwide and boost volumes at the Kochi terminal, which has faced challenges due to lack of pipeline connectivity to key consumers.

Using LNG (Liquefied Natural Gas) as a fuel for long-haul trucks and buses is becoming increasingly attractive due to several reasons:

• Environmental Benefits: LNG produces significantly lower carbon dioxide emissions than diesel and emits negligible amounts of particulate matter, nitrogen oxide, and sulfur dioxide, making it a cleaner alternative.
• Economic Efficiency: Vehicles powered by LNG can travel a slightly longer range on similar-sized fuel tanks compared to diesel and benefit from generally lower prices than crude oil, from which diesel is derived. Since India imports only about half of its natural gas needs (as opposed to a much larger proportion of its crude oil), switching to LNG could result in significant foreign exchange savings.
• International Examples: Countries like China have already adopted LNG aggressively in their medium and heavy commercial vehicle sectors, demonstrating its viability.

Challenges in India’s Adoption:

• Lack of availability and higher initial costs of LNG-powered vehicles compared to diesel variants, absence of LNG vehicle financing options, and a nearly non-existent LNG retail infrastructure.
• Efforts to Overcome Challenges: Entities like GAIL and Petronet are actively working to establish a supportive ecosystem for the transition from diesel to LNG.
  • This includes collaborations with commercial vehicle manufacturers for trials, discussions with state roadways and truck fleet operators, and the establishment of LNG dispensing stations along highways.
  • Indian Oil Corporation (IOC) is also involved in setting up LNG stations, aiming to enhance the LNG infrastructure for vehicles.

Source: IE

5. Eliminating diseases, one region at a time

Subject: Science and tech

Section: Health

Context:

• The Carter Center, a leader in the global elimination and eradication of diseases, recently reported that guinea worm disease was close to eradication.
• From 3.5 million cases a year in 21 countries in 1986, the number had come down to 13 in five countries in 2023, a reduction of 99.99%. This would be the second disease after smallpox to be eradicated and the first one with no known medicines or vaccines.

On disease elimination, its focus

Source: TH

6. India’s Pursuit for Lowering Cross-Border Remittance Costs

Subject: Economy

Section: External Sector

• Proposal at WTO’s Ministerial Conference:
  • India proposed lowering the cost of cross-border remittances at the WTO’s 13th Ministerial Conference in Abu Dhabi.
  • The proposal aims to benefit low and middle-income countries, which accounted for 78% of remittances in 2023.
• Request to WTO’s General Council (GC):
  • India has asked the WTO’s General Council to initiate a work programme for recommendations on lowering remittance costs.
  • The National Payments Corporation of India is preparing a presentation for a session on ‘cost of remittances’ at the WTO’s committee on trade in financial services in Geneva on March 25.
• Highlighting the Need for Interoperability:
  • India emphasized promoting interoperability and interlinkages of digital payment infrastructures for cheaper, faster, and more transparent cross-border payments.
  • Global average cost for sending digital remittances is significantly lower at 4.84% compared to non-digital remittances.
• Support and Interest:
  • India’s proposal received support from countries like Sri Lanka, Nepal, and Bangladesh at WTO MC13.
  • The European Union (EU) also showed interest in the proposal.
• Next Steps:
  • Pursuing the matter at the WTO in various bodies, including the WTO General Council.
  • Proposal for the WTO GC to call upon the council for trade in services and committee on trade in financial services for a work programme on remittances.
• Objectives of the Work Programme:
  • Understanding the development impact of cross-border remittances.
  • Reviewing the cost, trends, and developments in remittance services.
  • Analyzing the impact of technology, new market players, providers, channels, and consumer behavior.

India’s efforts aim to make cross-border remittances more efficient, affordable, and accessible, benefiting a large segment of the global population.

India’s Proposal on Remittance Costs:

• India proposed to reduce the cost of cross-border remittances to less than 3%, aligning with the UN Sustainable Development Goals.
• The initiative received support from several World Trade Organization (WTO) members, except the US.

Expected Benefits:

• Lowering remittance costs could potentially boost inflows of remittances into India.
• It aims to reduce reliance on informal channels for remittance transfers.

Implications for Businesses:

• The initiative could be particularly advantageous for Indian businesses, especially those utilizing the Unified Payments Interface (UPI).
• It opens avenues for global expansion and increased competitiveness in the export market.

Remittance Statistics:

• In 2023, India received a substantial $125 billion in remittances.
• The associated costs of these remittances were estimated to be $7-8 billion.

Beneficiaries:

• Lowering remittance costs would directly benefit the Indian diaspora, especially migrant workers abroad.
• It would also support Micro, Small, and Medium Enterprises (MSMEs), potentially aiding their growth and competitiveness.

Understanding the Cost of Remittances:

• Remittances are financial transfers sent by migrant workers to their families or relatives in their home countries.
• The cost of remittances refers to the expenses incurred in sending money across international borders.

Components of Cost:

• These costs can include various elements such as:
• Bank fees,
• Intermediary fees,
• Compliance fees,
• Operational costs, and
• FX (foreign exchange) rate margin.

Technological Innovations:

• Innovative technologies are emerging to reduce the total cost of cross-border transactions.
• These advancements aim to streamline processes, reduce fees, and provide more efficient and cost-effective remittance options.

7. IMF’s bailouts to Pakistan

Subject: IR

Section: Int Organisation

• Amount and Agreement:
  • Pakistan and the International Monetary Fund (IMF) reached a preliminary agreement for the release of $1.1 billion from a $3 billion
  • The bailout was approved by the IMF in July to save Pakistan from defaulting on its debt repayments.
  • Pakistan will receive the final tranche from the bailout under the new agreement.
• Approval Process:
  • The IMF statement mentioned that the agreement is reached.
• Previous Bailout:
  • Pakistan signed a short-term agreement last year to overcome an economic crisis.
  • The $3 billion bailout was signed by former Premier Imran Khan to address economic challenges.
• IMF’s View:
  • The IMF stated that Pakistan’s economic and financial position has improved in recent months.
  • However, it noted that growth is expected to be modest, and inflation remains above target.
  • Ongoing policy and reform efforts are required to address Pakistan’s economic vulnerabilities.
• Future Bailout:
  • Pakistan has expressed interest in receiving a new bailout of up to $8 billion when the current one expires this month.
• IMF Statement:
  • The IMF mentioned that Pakistan faces challenges from elevated external and domestic financing needs and an unsettled external environment.

The agreement between Pakistan and the IMF aims to address Pakistan’s economic challenges and improve its financial stability. The IMF highlighted the need for ongoing reforms and policy efforts to strengthen Pakistan’s economic position.

What are IMF Bailouts?

• IMF bailouts are a form of financial support extended to a country facing a potential threat of bankruptcy.
• Support can take forms such as loans, cash, bonds, or stock purchases.
• It often comes with greater oversight and regulations.
• The IMF provides these packages to countries facing major macroeconomic problems, often currency crises.

Types of IMF Programs:

• Stand-By Arrangements (SBAs):
  • Short- to medium-term programs for financial assistance to address balance of payments problems.
• Extended Fund Facility (EFF):
  • Longer-term programs, usually linked with structural reforms to address deep-seated economic issues.
• Structural Adjustment Programs (SAPs):
  • Comprehensive reform programs focusing on macroeconomic stabilization and structural adjustments.

How is an IMF Bailout Provided?

• Procedure:
• IMF lends money, often in the form of Special Drawing Rights (SDRs).
• SDRs represent a basket of major currencies.
• Conditions:
• Countries may need to implement structural reforms as a condition for receiving IMF loans.
• These reforms aim to address the root causes of the economic crisis.

Advantages of IMF Bailouts:

• Ensure continued survival of the country under difficult economic circumstances.
• Prevent collapse of financial systems and critical industries.
• IMF provides technical assistance for economic reforms and institution strengthening.

Disadvantages of IMF Bailouts:

• May lead to reduced government spending and increased taxes, causing social unrest.
• Seeking an IMF bailout can harm a country’s reputation with investors and lenders.
• Creates a dependency on external funding, discouraging long-term reforms.
• Can be seen as an admission of economic failure, leading to political instability.

8. Income and Wealth Inequality in India

Subject: Economy

Sec: National Income

• Historical Highs:
  • India’s top 1 per cent income share in 2022-23 was 6 per cent.
  • The top 1 per cent wealth share rose to 1 per cent.
  • India’s top 1 percent income share is among the very highest globally, surpassing countries like South Africa, Brazil, and the United States.
• Co-Authored Paper:
  • The paper compares the current “Billionaire Raj” in India to the historical British Raj in terms of inequality.
  • Co-authored by economists Nitin Kumar Bharti, Lucas Chancel, Thomas Piketty, and Anmol Somanchi.
• Tax System and Wealth:
  • The Indian tax system might be considered regressive when viewed from the lens of net wealth.
  • The paper suggests a restructuring of the tax code.
  • A levy of a “supertax” of 2 per cent on the net wealth of the 167 wealthiest families could yield 5 per cent of national income in revenues.
• Public Investments:
  • Calls for broad-based public investments in health, education, and nutrition.
  • These investments are crucial to enable the average Indian to benefit from globalization.
• Analysis of Income Data:
  • Data analyzed from annual tax tabulations by Indian income tax authorities from 1922-2020.
  • The top 10 per cent income share fell from 37 percent in 1951 to 30 per cent by 1982, then began rising steadily.
  • By the most recent years, the top 10 percent share nearly touched 60 per cent.
• Income Disparity:
  • The bottom 50 per cent receives only 15 per cent of India’s national income in 2022-23.
  • The top 1 per cent earns on average Rs 5.3 million, which is 23 times the average Indian income.
  • In contrast, the richest 10,000 individuals earn on average Rs 480 million, which is 2,069 times the average Indian income.
• Distribution of Income:
  • The top 0.1 per cent in India earned nearly 10 per cent of the national income in 2022.
  • The top 0.01 per cent earned 3 per cent share, and the top 0.001 per cent earned 2.1 per cent of the national income.
• Factors Contributing to Inequality:
  • Public and private sector wage growth might have played a role till the late 1990s.
  • Capital incomes likely played a role in subsequent years.
  • Lack of quality broad-based education focused on the masses has kept the shares of the bottom 50 per cent and middle 40 per cent

The paper emphasizes the need for a restructuring of the tax system, increased public investments, and addressing factors contributing to income inequality to enable broader economic benefits for all segments of society.

9. Australia’s iron ore miners face falling Chinese demand

Subject: Geography

Sec: Eco geo

Context: Australia’s vast iron ore mining sector is facing stark choices as its biggest customer China has likely hit a peak in its steel production and global pressures mount to decarbonise one the world’s most polluting industries.

Details:

• Australia is the world’s largest exporter of iron ore, the key raw material used to make steel, and it shipped about 930 million metric tons in 2023, which at current prices would be worth about $93 billion.
• Australia is also the world’s largest exporter of metallurgical coal, used to make steel, ranks second in thermal coal and in liquefied natural gas, while also being the biggest exporter of lithium and largest net exporter of gold.

Why exports falling?

• China’s steel output has flattened in the past five years to around 1 billion ton per annum, and most analysts presenting at this week’s Global Iron Ore and Steel Outlook Conference in Perth predicted that production will gradually decline in the next few years.
• This is partly because China’s infrastructure and housing construction will ease, but also because China will increasingly use scrap steel in electric arc furnaces to produce new steel products

What is the future of Australia Iron Ore industry?

• It’s also likely to change in composition, with higher grades of iron ore preferred as these can be more easily used as a feedstock along with scrap in electric arc furnaces.
• Higher grades of iron ore can also easily be upgraded into direct reduction iron (DRI), which in turn can be turned into steel without using coal.
• Making steel using DRI produced with green hydrogen and renewable energy is one way the industry is thinking of reducing carbon emissions.
• Even using natural gas to make DRI can reduce emissions by up to 75%.
• The problem is DRI is tricky to export given it can be volatile, so it tends to be made at the same location as the steel furnaces.
• So, if Australia’s iron ore miners wish to move up the steel value chain, they would must find ways to produce DRI and turn it into steel in Australia, using renewable energy.

Other Option:

• Another path is upgrading the iron ore into hot briquetted iron (HBI), which is an upgraded form of DRI, whereby the DRI is converted into a compact form using heat.
• HBI can be shipped, and can be used in either an electric arc furnace or a basic oxygen unit.

Challenges

• Need significant investment
• No certainty that the upgraded products will deliver sufficiently higher margins.