Daily Prelims Notes 24 March 2022

Daily Prelims Notes

24 March 2022

Table Of Contents

1. Dual circulation economic model
2. Challenges w.r.t normalization of the Indian Economy
3. Food Corporation of India
4. What are black boxes and why are they important in a crash investigation?
5. raises minimum support price for jute
6. Priority Sector Lending
7. Bank Credit
8. Green Bond
9. Cryptocurrency
10. New export destinations for GI Agri Products
11. Protection of minorities
12. Microsoft confirms hacking
13. WMO to ensure global early warning systems coverage in 5 years

1. Dual circulation economic model

Subject: Economy

Section:  Economic Growth

Context: China is working towards becoming a more independent economy, by introducing a ‘dual circulation’ model.

Reason for shift from Export led Growth:

• China has unveiled a “dual circulation” strategy to cut its dependence on overseas markets and technology in its long-term development, a shift brought on by a deepening rift with the United States.
• Tension with the United States has exposed China’s vulnerability as it relies heavily on U.S. high-tech products, such as semiconductors.
• China’s economy is increasingly dependent on services and less on manufacturing, which tends to lower the share of trade to GDP. China’s share of trade in goods to GDP has come down from almost 50% in 2008 to a little over 30% now.
• On the demand side, China has been trying for more than a decade to rebalance demand, external versus internal and investment versus consumption. Although consumption as a share of GDP increased from 34% of GDP in 2010 to 39% last year, it is far below that of more advanced countries such as the United States (68%)

What is the dual circulation model?

• Chinese President Xi Jinping first raised the idea in May and later elaborated that China will rely mainly on “internal circulation” – the domestic cycle of production, distribution, and consumption – for its development, supported by innovation and upgrades in the economy. Xi also said “internal circulation” will be supported by “external circulation”.
• The concept of ‘Dual Circulation’ does not imply that China will become a closed economy again, but “Reform and Opening Up”

Focus area for China:

• China needs to boost household incomes and consumption.
• Urbanisation programme to turn millions of migrant workers into city dwellers to expand China’s middle class. About 60% of China’s population live in urban areas.
• Boost tech innovation and push Chinese firms up the global value chain
• Advocate greater market opening to attract more foreign investment in high-end manufacturing to strengthen its supply chain security and deter foreign countries’ from luring firms away from China.

India’s Atmanirbhar Bharat:

Atmanirbhar Bharath or Self-reliant India campaign is the vision of new India with the aim to make the country and its citizens self-reliant in all senses.

2. Challenges w.r.t normalization of the Indian Economy

Subject: Economy

Section: Economic Growth

Context: NSO’s recent release of India’s GDP data for Q3 of 2021-22 along with Second Advanced Estimates (SAE) implies that post covid-19, the normalization of the economy has been disturbed by the ongoing geopolitical uncertainties.

Concept:

• NSO’s GDP data highlights that in 2021-22, the nominal GDP growth at 19.4% is significantly higher than the real GDP growth due to an inordinately high implicit price deflator (IDP) based inflation ratio of 9.6%.

Reasons:

• Sluggish revival in domestic demand – as measured by Private Financial Consumption Expenditure (PFCE) and Gross Fixed Capital Formation (GFCF).
• Contact intensive segments (trade, transport) in the output side is low.
• Waning base effects that shows both GDP and GVA having normalizing growth.
• Crude upsurge has led to reduction in real GDP growth by 27 basis points and an increase in CPI inflation by 40 basis points.

Challenges ahead due to global uncertainties: 

• Rise in fiscal deficit: Higher expenditure for petroleum and fertilizer subsidies
• Worsening of Current account balance– due to higher import bills + rupee depreciation.
• Sectoral supply side bottlenecks and cost escalationr.t fertilizers, iron and steel foundries, transportation, construction and coal (as these rely on petroleum products).
• Trade disruption to and from Russia and Ukraine due to discontinuation of transactions through SWIFT.
• Financial outflows: Net FPI outflows increased and Net FDI inflows declining.

What is Implicit Price Deflator ?

• The Implicit Price Deflator (IPD) is used to calculate inflation at the corporate or governmental level because this index includes all product types, rather than ones typically consumed by individuals.
• The IPD represents the percent change from a base year, which changes every several years.
• Movements in an implicit price deflator reflect both changes in price and changes in the composition of the aggregate for which the deflator is calculated.

How it is Calculated?

• An implicit price deflator (IPD) is obtained by dividing a current price value by its real counterpart (the chain volume measure). When calculated from the major national accounting aggregates such as GDP, IPDs relate to a broader range of goods and services in the economy than that represented by any of the individual price indexes (such as CPIs, PPIs).

Inflation

• Inflation is the rate of increase in prices over a given period of time.
• Inflation is typically a broad measure, such as the overall increase in prices or the increase in the cost of living in a country.
• The most commonly used inflation indexes are the Consumer Price Index (CPI) and the Wholesale Price Index (WPI).

What is base effect?

https://optimizeias.com/base-effect/

3. Food Corporation of India

Subject: Economy

Section: Food security

Context: Not a single grain of paddy has been damaged while being stored by the Food Corporation of India (FCI) since 2004, the Centre told the Lok Sabha on Wednesday.

About FCI:

FCI is a statutory body set up in 1965 under the Food Corporations Act 1964. It was established against the backdrop of major shortage of grains, especially wheat.

FCI has played a significant role in India’s success in transforming the crisis management oriented food security into a stable security system.

Functions of FCI

• To procure foodgrains
• To Maintain operational stock and buffer stock for food security
• Allocation of grains to state
• Selling grains to state at ‘Central Issue Price’
• Distributing and transporting grains to state

Procurement Procedure:

• The Central Government extends price support for procurement of wheat, paddy and coarse grains through the FCI and State Agencies. All the food grains conforming to the prescribed specifications are procured by the public procurement agencies at the Minimum Support Price (MSP) plus incentive bonus announced, if any.
• Under the Decentralized Procurement Scheme (DCP), introduced in 1997-98, food grains are procured and distributed by the State Governments themselves. The designated States procure, store and issue food grains under Targeted Public Distribution System (TPDS) and other welfare schemes of the Government.

For what purposes FCI maintains stock of food grains?

• All countries maintain some backup to tackle any possible food crises due to drought or any other natural calamity.
• At times there can be violent fluctuations in prices of important commodities due to macroeconomic imbalances for e.g. due to short term price rises in production can soon shift from essential food crops to cash crops.
• In the aftermath of LPG reforms, India stuck to its policy of maintaining sufficient physical stocks, in spite of pressure from developed countries in forums such as WTO.
• Another major reason for stocking of food is to serve the world’s largest public distribution system. As already said, passage and implementation of FSA is expected to raise procurement upside, which in turn will raise the need for stock maintenance.
• Last but not least, FCI under an open ended policy has no option but to buy whatever is offered to it by farmers.

 Operational Stock :

• Operational Stocks are defined as the minimum quantities required for running the TPDS/NFSA and ‘Other Welfare Schemes’ until quantities procured from the new crop. These are made out of current year production and are meant to be consumed in following year.
• While maintaining Operational stocks ‘intra-year variations’ are taken care of and in case of buffer stocks, ‘inter year’ variations are considered.

 Buffer stock

• FCI maintains stocks of grains in excess of what is needed for meeting operational needs, and these stocks are called strategic stocks. Buffer stocks are part of strategic stock.
• The government fixes the buffer stock norms, prescribing the minimum quantities of food grains (wheat and rice) to be maintained in the central pool at the beginning of each quarter.

4. What are black boxes, and why are they important in a crash investigation?

Subject: Science

Section: Msc

Context:

China’s aviation authority announced on Wednesday (March 23) that a flight recorder, commonly known as “black box”, “from China Eastern MU5735 was found”, bringing the first hope of understanding what caused the country’s worst airline disaster in years.

• It is also called flight data recorder or cockpit voice recorder and it stores data about planes.
• They reveal information which leads to information about the accidents of flight.
• There are two different flight recorder devices the flight data recorder (FDR) preserves the recent history of the sounds in the cockpit, including the conversation of the pilots.
• These can also be combined into a single unit.
• These boxes are of a size of a shoe.
• It is compulsory on every commercial flight or corporate jet, and are mostly on tail of aircraft.
• The flight data recorder (FDR) records more than 80 different types of information such as altitude, airspeed, flight heading, vertical acceleration, pitch, roll, autopilot status, etc. cockpit voice recorder (CVR) records radio transmissions and other sounds in the cockpit, such as conversations between the pilots, and engine noises.

How are they identified?

• Black boxes are a blazing, high-visibility orange in colour, so that crews looking for them at a crash site have the best chance of finding them. It is not certain how they got their nickname, but recorders are today the holy grail that investigators seek in their quest for answers whenever there is an airline accident.
• The use of black boxes dates back to the early 1950s, when, following plane crashes, investigators were unable to arrive at a conclusive cause for the accidents. An Australian scientist named David Warren is often credited with their invention.

Surviving the crash

• In the initial days of the black box, a limited amount of data were recorded on wire or foil. Thereafter magnetic tape was used, and modern models contain solid state memory chips.
• The recording devices, each weighing about 4.5 kg, are stored inside a unit that is generally made out of strong substances such as steel or titanium, and are insulated from extreme heat, cold or wetness. The FDR is located towards the tail end of the aircraft because that is usually where the impact of a crash is the least.
• To make black boxes discoverable under water, they are equipped with a beacon that sends out ultrasound signals for 30 days.

5. Govt. raises minimum support price for jute

Subject: Economy

Section: Agriculture

Concept:

The Cabinet Committee on Economic Affairs on Tuesday approved the Minimum Support Price (MSP) for raw jute for the 2022-2023 season.

• MSP is the minimum price paid to the farmer for procuring food crops.
• It offers an assurance to farmers that their realisation for the agricultural produce will not fall below the stated price.
• The government uses the MSP as a market intervention tool to incentivise production of a specific food crop which is in short supply.
• It also protects farmers from any sharp fall in the market price of a commodity.
• MSPs are usually announced at the beginning of the sowing season and this helps farmers make informed decisions on the crops they must plant.
• MSP is computed on the basis of the recommendations made by the Commission for Agricultural Costs and Prices (CACP).
• It considers factors such as the cost of production, change in input prices, market price trends, demand and supply, and a reasonable margin for farmers.

Geographical conditions for Jute:

Jute is a kharif crop. It is sown in March-April on lowlands and in May-June on uplands. The geographical and climatic conditions for jute cultivation is given below:

Temperature and Humidity: Jute need a hot and humid climate. Monthly average temperature to the extent of 26 degree Celsius is ideal for growth. The optimum temperature- 34 degree Celsiusand  Average humidity of 80% to 90% is necessary.

Rainfall: Jute requires sufficient rainfall well distributed over the period of growth. The pre-monsoon fall though low (varying from 25 centimeter to 55 centimeter) is necessary as it promotes the growth of the plant until it gets heavy rainwater. An annual average rainfall exceeding 150 centimeter is ideal for Jute cultivation.

Soils: Jute needs new alluvial soils. In absence of new alluvial soils, application of chemical fertilizer is needed. Jute is also grown in clayey soils, but the fibers become sticky. Sandy soils produce coarse fiber.

Water bodies: Water for soaking of plants and washing the striped fiber is needed.

Labor: A large supply of cheap labor is needed.

HYV: In order to increase the yield of Jute fibers, improved seeds such as JRC-212, JRC-7447, JRO-632, JRO-7835, etc. are used.

Producing States: In order of importance, the Jute producing states are West Bengal, Bihar, Assam, Odisha, Uttar Pradesh, Tripura, Meghalaya, Andhra Pradesh, Kerala, and Maharashtra.

6. Priority Sector Lending

Subject: Economy

Section: Economic Growth

Context:

Priority Sector Lending means lending credit by the banks to those sectors which are considered  important for the development of the basic needs of the country by the Government and the RBI.The banks are mandated to encourage the growth of such sectors with adequate and timely credit.

Background:

• At a meeting of the National Credit Council held in July 1968, it was emphasized that commercial banks should increase their involvement in the financing of priority sectors, viz., agriculture and small scale industries.
• The description of the priority sectors was later formalized in 1972 on the basis of the report submitted by the Informal Study Group on Statistics relating to advances to the Priority Sectors constituted by the Reserve Bank in May 1971.
• Although initially there was no specific target fixed in respect of priority sector lending, in November 1974 the banks were advised to raise the share of these sectors in their aggregate advances to the level of 33.3% by March 1979.Later revised to 40% by March 1985.
• Subsequently, on the basis of the recommendations of the Working Group on the Modalities of Implementation of Priority Sector Lending and the Twenty Point Economic Programme by Banks (Chairman: Dr. K. S. Krishnaswamy), all commercial banks were advised to achieve the target of priority sector lending at 40 percent of aggregate bank advances by 1985. Sub-targets were also specified for lending to agriculture and the weaker sections within the priority sector. Since then, there have been several changes in the scope of priority sector lending and the targets and sub-targets applicable to various bank groups.

What are the Different Categories of the Priority Sector?

• Agriculture-It essentially consists of Farm Credit which will include short-term crop loans and medium/long-term credit to farmers, agriculture Infrastructure and ancillary activities,loans to distressed farmers, loans under Kisan Credit Card Scheme,Loans to corporate farmers, farmers’ producer organizations/companies of individual farmers, partnership firms and co-operatives of farmers directly engaged in agriculture and allied activities,etc..
• Micro, Small and Medium Enterprises-This includes loans to Khadi and Village industries, outstanding deposits with Small Industries Development Bank of India (SIDBI) and Micro Units Development Refinance Agency Bank etc
• Export Credit-loans for export subject to a sanctioned limit of up to ₹ 25 crore per borrower to units having turnover of up to ₹ 100 crore
• Education-Loans to individuals for educational purposes, including vocational courses, not exceeding Rs 20 lakh will be considered as eligible for priority sector classification. Loans currently classified as priority sector will continue till maturity.
• Housing-Loans to individuals up to Rs 35 lakh in metropolitan centres (with population of ten lakh and above) and loans up to Rs 25 lakh in other centres for purchase/construction of a dwelling unit per family provided the overall cost of the dwelling unit in the metropolitan centre and at other centres should not exceed Rs 45 lakh and Rs 30 lakh respectively etc
• Social Infrastructure-Bank credit to Micro Finance Institutions (MFIs) extended for on-lending to individuals and also to members of Self Help Group (SHGs)/Joint Liability Groups (JLGs) for water and sanitation facilities etc.
• Renewable Energy-loans up to a limit of ₹ 15 crore to borrowers for purposes like solar based power generators, biomass based power generators, wind mills, micro-hydel plants and for non-conventional energy based public utilities viz. street lighting systems, and remote village electrification. For individual households, the loan limit will be ₹ 10 lakh per borrower.
• Advances to weaker sections
• Others
  • Loans not exceeding Rs 1.00 lakh per borrower provided directly by banks to individuals and individual members of SHG/JLG, provided the individual borrower’s household annual income in rural areas does not exceed ₹1.00 lakh and for non-rural areas it does not exceed Rs 1.60 lakh, and loans not exceeding Rs 2.00 lakh provided directly by banks to SHG/JLG for activities other than agriculture or MSME, viz., loans for meeting social needs, construction or repair of house, construction of toilets or any viable common activity started by the SHGs.
  • Loans to distressed persons not exceeding Rs 1,00,000/- per borrower to prepay their debt to non-institutional lenders.
  • Loans sanctioned to State Sponsored Organisations for Scheduled Castes/ Scheduled Tribes for the specific purpose of purchase and supply of inputs and/or the marketing of the outputs of the beneficiaries of these organisations.

Priority sector loans to the following borrowers are treated under the Weaker Sections category

• Small and Marginal Farmers.
• Artisans, village and cottage industries where individual credit limits do not exceed Rs 1 lakh.
• Beneficiaries under Government Sponsored Schemes such as National Rural Livelihoods Mission (NRLM), National Urban Livelihood Mission (NULM) and Self Employment Scheme for Rehabilitation of Manual Scavengers (SRMS)
• Scheduled Castes and Scheduled Tribes.
• Beneficiaries of the Differential Rate of Interest (DRI) scheme.
• Self Help Groups.
• Distressed farmers are indebted to non-institutional lenders.
• Distressed persons other than farmers, with loan amounts not exceeding Rs 1 lakh per borrower to prepay their debt to non-institutional lenders.
• Individual women beneficiaries up to Rs 1 lakh per borrower.
• Persons with disabilities.
• Minority communities may be notified by the Government of India from time to time
• Overdraft availed by PMJDY account holders as per limits and conditions prescribed by the Department of Financial Services, Ministry of Finance from time to time may be classified under Weaker Sections.
• In States, where one of the minority communities notified is found to be in majority, the above covers only the other notified minorities.
• These States,  Union Territories are Punjab, Meghalaya, Mizoram, Nagaland, Lakshadweep and Jammu & Kashmir.

The targets set under priority sector lending:

Non-compliance

Non-achievement of priority sector targets and sub-targets will be taken into account while granting regulatory clearances/approvals for various purposes.

To the extent of shortfall in the achievement of target, banks may be required to invest

• Rural Infrastructure Development Fund (RIDF) established with National Bank for Agriculture and Rural Development (NABARD)
• Other Funds with NABARD or National Housing Bank (NHB) or Small Industries Development Bank of India (SIDBI) or Micro Units Development Refinance Agency Bank (MUDRA Ltd)., as decided by the Reserve Bank from time to time,
• Purchase priority sector lending certificates (PSLC)-Priority Sector Lending Certificates (PSLCs) are a mechanism to enable banks to achieve the priority sector lending target and sub-targets by purchase of these instruments in the event of a shortfall. This also incentivizes surplus banks as it allows them to sell their excess achievement over targets thereby enhancing lending to the categories under priority sector.

7. Bank Credit

Subject: Economy

Section: Economic Growth

Context:

Domestic banks’ share in the overall commercial credit plunged to a low of 34% in FY21 from 56% in FY11 partly due to the pandemic and more because companies were moving away from banks for funds.

The share of non-banks in commercial credit has more than doubled to 44% while that of foreign banks rose to 22% in FY21 according to a report by BofA Global Research.

Bank Credit?

Bank credit consists of the total amount of combined funds that financial institutions advance to individuals or businesses. It is an agreement between banks and borrowers where banks make loans to borrowers.

The Bank credit in India refers to credit lending by various scheduled commercial banks (SCBs) to various sectors of the economy.

The bank credit is categorized into food credit and non-food credit.

• The food credit indicates the lending made by banks to the Food Corporation of India (FCI) mainly for procuring food grains. It is a small share of the total bank credit.
• The non-food credit-The major portion of the bank credit is the non-food credit which comprises credit to various sectors of the economy (Agriculture, Industry, and Services) and also in the form of personal loans.

The data on bank credit is collected on a monthly basis by the RBI.

The credit market structure in India has evolved over the years. A wide range of financial institutions exist in the country to provide credit to various sectors of the economy. These include commercial banks, regional rural banks (RRBs), cooperatives [comprising urban cooperative banks (UCBs), State co-operative banks (STCBs), district central co-operative banks (DCCBs), primary agricultural credit societies (PACS), state co-operative and agricultural rural development banks (SCARDBs) and primary co-operative and agricultural rural development banks (PCARDBs)], financial institutions (FI) (term-lending institutions, both at the Centre and State level, and refinance institutions) and non-banking financial companies (NBFCs)

Bank credit

• It accounts for 92 per cent of the total non-food credit. Further on a year-on-year (y-o-y) basis, non-food bank credit registered a growth of 8.3 per cent in January 2022 as compared to 5.9 per cent a year ago.
• Credit to agriculture and allied activities registered  an accelerated growth of 10.4 per cent in January 2022 as compared to 8.5 per cent in January 2021.
• Credit growth to industry improved to 6.4 per cent in January 2022 from 0.7 per cent in January 2021.
• Credit growth to services sector stood at 7.3 per cent in January 2022 as compared to 8.1 per cent a year ago, mainly due to significant improvement in credit growth to ‘NBFCs’, along with ‘transport operators’ and ‘tourism, hotels and restaurants’.
• Personal loans segment continued to expand at a robust rate and grew by 11.6 per cent in January 2022 from 8.7 per cent a year ago.

NBFC credit growth

The credit intensity of NBFCs, measured by NBFC credit as a ratio of GDP, has been rising consistently and stood at 13.7 at end March 2021. Industry remained the largest recipient of credit extended by the NBFC sector, followed by retail loans and services.

Sectoral distribution of NBFC Credit

8. Green Bond

Subject: Economy

Section: Economic Growth

Context:

Recently, the Finance Minister in the Budget 2022 announced that the government proposes to issue sovereign green bonds to mobilise resources for green infrastructure.

In 2007, green bonds were launched by few development banks such as the European Investment Bank and the World Bank. Subsequently, in 2013, corporates too started participating, which led to its overall growth.

Concept 

• A green bond is a debt instrument with which capital is being raised by companies, countries and multilateral organisations to exclusively fund projects that have positive environmental or climate benefits and provide investors with fixed income payments.
• These bonds are typically asset-linked and backed by the issuing entity’s balance sheet, so they usually carry the same credit rating as their issuers’ other debt obligations.​
• Green bonds may come with tax incentives to enhance their attractiveness to investors.
• India’s first green bond was launched by Yes Bank Limited in 2015 to raise INR 5 billion to enhance long-term resources for funding infrastructure projects in renewable and clean energy projects such as wind, solar, biomass and hydropower.
• In January 2016, the Securities and Exchange Board (SEBI) of India published its official green bond guidelines and requirements for Indian issuers, placing India amongst a select set of pioneering countries who have developed national level guidelines.

9. Cryptocurrency

Subject: Economy

Section: Monetary policy

Context: Cryptocurrency being taxes

Concept:

A cryptocurrency or crypto, is a virtual currency secured by cryptography. It is designed to work as a medium of exchange, where individual ownership records are stored in a computerised database using blockchain technology.

The pioneer cryptocurrency, Bitcoin, was traded at just $0.0008 in 2010 and commanded a market price of about $65,000 in April 2021.

Many newer coins have also been introduced since Bitcoin’s launch and their cumulative market value touched $2.5 trillion by May 2021.

Defining traits

• No intrinsic value
• Scarce
• Not issued by central banks
• Based on blockchain-a decentralized public ledger

Understanding transaction

Merits of cryptocurrency

• Basic feature of a currency: scarce and acceptability
• Corruption Check: As blocks run on a peer-to-peer network, it helps keep corruption in check by tracking the flow of funds and transactions.
• Time Effective: Cryptocurrencies can help save money and substantial time for the remitter and the receiver, as it is conducted entirely on the Internet, runs on a mechanism that involves very less transaction fees and is almost instantaneous.
• Cost Effective: Intermediaries such as banks, credit card and payment gateways draw almost 3% from the total global economic output of over $100 trillion, as fees for their services.

Integrating blockchain into these sectors could result in hundreds of billions of dollars in savings

• Increase digitalisation
• Difficult to counterfeit: as based on blockchain technology

Concerns

     1.Financial 

• Lack of backing – Such currency don’t have an intrinsic value or legal backing Such digital currency may not be accepted as a medium of exchange, store of value or a unit of account — essentially de-recognising the three key functions of money.
• Sovereign guarantee: Cryptocurrencies pose risks to consumers.  They do not have any sovereign guarantee and hence are not legal tender.
• Market volatility: Their speculative nature also makes them highly volatile.  For instance, the value of Bitcoin fell from USD 20,000 in December 2017 to USD 3,800 in November 2018.
• Money laundering: Cryptocurrencies are more vulnerable to criminal activity and money laundering.  They provide greater anonymity than other payment methods since the public keys engaging in a transaction cannot be directly linked to an individual.
• Regulatory bypass: A central bank cannot regulate the supply of cryptocurrencies in the economy.  This could pose a risk to the financial stability of the country if their use becomes widespread. It will make monetary policy transmission difficult.
• Weaken central bank: disturb the sovereignty of the central bank. When the crypto is introduced, other governmental departments such as IT and telecom will need to be involved for its smooth functioning. This may, initially at least, create coordination and implementation issues.
• A spiral effect in the financial system, because a large amount of wealth in terms of debt funds might have gone into their making. Any calamity can hence wipe out a substantial part of the global wealth.
• Uncertainty in financial markets: Many public sector and private banks have been hit by a huge number of fraudulent transactions. The situation could worsen when there is an increasing shift to digital currencies without having proper regulation.

2. Other-

• Risk in security: A user loses access to their cryptocurrency if they lose their private key (unlike traditional digital banking accounts, this password cannot be reset).
• Malware threats: In some cases, these private keys are stored by technical service providers (cryptocurrency exchanges or wallets), which are prone to malware or hacking.
• Power consumption: Since validating transactions is energy-intensive, it may have adverse consequences for the country’s energy security (the total electricity use of bitcoin mining, in 2018, was equivalent to that of mid-sized economies such as Switzerland)
• Expensive: access to digital currency transactions is expensive because those interested will need to have a computer, tech gadgets and internet connectivity. The Indian diaspora, especially in the Gulf, Australia, Canada and the US, still need to pay a hefty fee for remitting their money home once adoption of digital currency takes effect. This may restrict India receiving huge amounts of remittances from abroad.
• Compromising on privacy. While transacting in cash in a retail store, you may not leave any trial whereas with crypto you will. This could make the ordinary citizens feel uncomfortable.
• In a developing economy like India where access to the internet and digital literacy are still a challenge, coexistence of cash and crypto will be an unrealistic option making it difficult to understand and penetrate. Thus, could increase income inequality.

Stablecoin

A stablecoin is a cryptocurrency pegged to a reserve asset like a fiat currency, commodity, or other cryptocurrencies. It is a tokenized version of the asset and can be introduced subtly into a blockchain ecosystem to facilitate seamless pass transactions, improved arbitrage, and value exchange.

It is sometimes referred to as a utility token because it allows you to quickly buy and sell on decentralized exchanges that do not accept fiat currencies.

Types

Fiat-collateralized stablecoins

This type of stablecoin is linked to the sovereign legal tenders of countries. Some of the most well-known fiat-collateralized stablecoins, for instance, include Tether and TUSD (True USD).

However, these stablecoins are not created by the central authority. A company issues these tokens by depositing an equal amount of fiat in its reserves. Simply put, the stablecoin’s value is based on the belief that the company behind it has the equivalent amount in hand.

Commodity-backed stablecoins

These are stablecoins that are backed by reserved assets other than fiat currencies—by commodities. Real estate, gold, silver, and various other precious metals are examples of commodities. Kitco Gold, for example, is backed by the company’s gold reserves, and the token itself is based on the Ethereum-backed ERC-20 blockchain ecosystem

This type of stablecoins is backed by other cryptocurrencies; it is crypto collateralized.

Due to the volatile nature of cryptocurrencies, these stablecoins must be overcompensated in order to be collateralized. Let’s look at an example to clarify.

Algorithmic stablecoins

These are primarily non-backed stablecoins in which prices, token numbers, and other variables are manipulated with the help of special algorithms, software, and code in order to better manage supply and demand. This strategy allows the company to maintain the reserve peg in the event of price fluctuations.

Limitations of stablecoins

• The value of stablecoins is based on people’s trust in the company holding the collateralized reserve asset, and that trust may waver on occasion.
• Stablecoins may lose value if the company goes bankrupt.
• It is critical for the holders to declare solvency to maintain trust in the coin and its value.
• Unless there is a sense of unrest in the fiat or commodity markets, stablecoins aren’t meant for trading gains.

10. New export destinations for GI Agri Products

Subject: Economy

Section: Agriculture

Context: Of the over 100 niche GI tagged products, 49 have got new export markets.

Concept:

• There are 417 registered GI products and around 150 of them are agricultural and food products.
• Agricultural and Processed Food Products Export Development Authority (APEDA) is making a unique initiative to promote regional and state- specific GI products.
• 13 products sourced directly have got exported to new destinations such as South Korea, UK, US, UAE, Singapore, Bahrain and Japan.

Egs: 1. Suvarnarekha mangoes (AP) shipped to South Korea for the 1^st time

2. Dahanu Gholvad sapota & Marathwada Kesar mango (MH) reached the UK
3. Jalgaon’s Banana (MH) to the UAE
4. Nendran Banana (KE) to Singapore
5. Shahi Litchi &BhagalpuriZardalu mango (Bihar) to the UK

• Besides 36 other niche local products like murmura (puffed rice), moringa, jamun and sitabhog also got new export markets.
• Significance:
  • Provide new markets for these GI products which were earlier exported to other destinations.
  • Some select local products which are of high export potential were shipped to new export destinations.
• Non- GI Products: Some of the below have also been shipped to the new destinations.

To know about GI Tag, refer: https://optimizeias.com/geographical-indication-gi   and

https://optimizeias.com/gi-tag-for-basmati/

11. Protection of minorities

Subject: Polity

Section :Right Issues

Context:

A group of senior journalists from all over India issued a collective appeal to constitutional institutions on Wednesday to step in and discharge their mandate in the wake of “attacks” on India’s religious minorities, especially Muslims.

Who is a minority?

The term “Minority” is not defined in the Indian Constitution. However, the Constitution recognises religious and linguistic minorities.

The basic ground for a community to be nominated as a religious minority is the numerical strength of the community. For example, in India, Hindus are the majority community. As India is a multi-religious country, it becomes important for the government to conserve and protect the religious minorities of the country.

Section 2, clause (c) of the National Commission of Minorities Act, declares six communities as minority communities. They are:

1. Muslims
2. Christians
3. Buddhists
4. Sikhs
5. Jains and
6. Zoroastrians (Parsis)

• Under this act, the government formed the National Commission for Minorities which consist of Chairperson, a Vice-Chairperson and five Members.
• The five Members including the Chairperson shall be from amongst the minority communities.
• The commission monitors the working of the safeguards provided in the Constitution and in laws enacted by Parliament and the State Legislatures.
• It also makes recommendations for the effective implementation of safeguards for the protection of the interests of minorities by the Central Government or the State Governments.

Mechanisms to safeguard minorities in India:

12. Microsoft confirms hacking

Subject: Science and Tech

Section: IT and Computer related

Context: Following the dumping of files that hacking group LAPSUS$ allegedly gathered by hacking Microsoft, Microsoft has now confirmed it was compromised through a single account

Concept:

Who are Lapsus$?

South America-based Lapsus$ is known for publicly posting details about their hacks and sharing screenshots of stolen data on platforms such as Telegram and Twitter.

Lapsus$ has targeted other big names over the past few months including Samsung, Nvidia, and Ubisoft.

13. WMO to ensure global early warning systems coverage in 5 years

Subject: Geography

Section: Climate

Context:  On World Meteorological Day March 23, 2022, António Guterres, United Nations secretary-general said. The World Meteorological Organization (WMO) will lead an effort to ensure every person on Earth is protected by early warning systems within five years

Concept:

An early warning system for floods, droughts, heatwaves or storms, is an integrated system which alerts people to hazardous weather. It also informs how governments, communities and individuals can act to minimise the possible impacts of the weather event.

The report had highlighted 10 climate-related disaster events, each of them costing $1.5 billion or more. The most expensive such event was Hurricane Ida that cost $65 billion. Two of these events occurred in India — Cyclone Tauktae and Cyclone Yaas.

Between 1970 and 2019, a weather, climate or water-related disaster has occurred on average every day — taking the lives of 115 people and causing $202 million in losses daily, according to a 2021 WMO report on disaster statistics.

In June 2020, the Union Ministry of Earth Sciences, in collaboration with the disaster management department, Municipal Corporation of Greater Mumbai, launched the Integrated Flood Warning system for Mumbai, referred to as iFLOWS-MUMBAI.

iFLOWS-MUMBAI:

• It is a joint initiative between the Ministry of Earth Sciences (MoES) and Brihanmumbai Municipal Corporation (BMC)
• The warning system will relay alerts of possible flood-prone areas anywhere between six to 72 hours in advance.
• The system can provide all information regarding possible flood-prone areas, likely height of the floodwater, location-wise problem areas and calculate the vulnerability and risk of elements exposed to flood.
• Mumbai is only the second city in the country after Chennai to get this system. Similar systems are being developed for Bengaluru and Kolkata.

Working method:

• Amount of rainfall, tidal waves and storm tides are the primary source for the system.
• The system includes weather models from the National Centre for Medium Range Weather Forecasting (NCMRWF), India Meteorological Department (IMD), and field data from the rain gauge network of 165 stations.
• In the last two years, researchers have been conducting studies to provide real-time weather information by measuring the city’s rainfall, how much water drained out, topography, land use, infrastructure development, population, lakes, creeks and data on river bathymetry of all rivers namely Mithi, Dahisar, Oshiwara, Poisar and Ulhas.