Daily Prelims Notes 28 June 2024

Daily Prelims Notes

28 June 2024

1. Uttarakhand to study risk posed by 13 glacial lakes during monsoon

Sub: Geography

Sec: Climatology

Vulnerability Study of Glacial Lakes in Uttarakhand:

• The Uttarakhand State Disaster Management Department (USDMA) is initiating a vulnerability study of 13 glacial lakes, with five identified as being in high-risk zones.
• Purpose: The study aims to provide essential data to prevent calamities such as lake outbursts, particularly during the monsoon season.

Identification and Characteristics of High-Risk Glacial Lakes:

• Location: The high-risk lakes are located in Darma, Lasaryanghati, and Kutiyangti valleys in the Pithoragarh district, and Vasudhara Tal Lake in Chamoli district.
• These lakes range from 0.02 to 0.50 sq. km and are situated above 4,000 meters above sea level.

Bathymetry Study and Risk Assessment

• Approach: USDMA teams will conduct a bathymetry study to gather accurate information on lake size, glacier formation, and melting patterns.
• Collaboration: The Indo-Tibetan Border Police has been involved in providing a status report on the high-risk lakes.

Risk Mitigation Strategies:

• USDMA plans to puncture the high-risk lakes and install pipes to manage potential risks.

Historical Context and Recent Incidents

• Uttarakhand has experienced two significant glacial lake outburst floods (GLOFs) in recent years.
• The 2013 Kedarnath Valley GLOF resulted in 6,000 deaths, while the 2021 Rishighanga Valley GLOF claimed 72 lives, highlighting the urgency of preventive measures.

Glacial lake outburst floods (GLOFs):

• A glacial lake outburst flood (GLOF) is a release of meltwater from a moraine– or ice-dam glacial lake due to dam failure.
• GLOFs often result in catastrophic flooding downstream, with major geomorphic and socioeconomic impacts.
• GLOFs have three main features:
  • They involve sudden (and sometimes cyclic) releases of water.
  • They tend to be rapid events, lasting hours to days.
  • They result in large downstream river discharges (which often increase by an order of magnitude).

• The following direct causes of glacial lake outburst floods were documented:
  • Rapid slope movement into the lake
  • Heavy rainfall/snowmelt
  • Cascading processes (flood from a lake situated upstream)
  • Earthquake
  • Melting of ice incorporated in dam/forming the dam (including volcanic activity-triggered jökulhlaups)
  • Blocking of subsurface outflow tunnels (applies only to lakes without surface outflow or lakes with a combination of surface and subsurface outflow)
  • Long-term dam degradation

Source: TH

2. Scientists find first evidence that butterflies crossed the Atlantic Ocean

Sub: Environment

Sec: Species in news

Context:

• Scientists discovered that butterflies made a 2,600-mile journey across the Atlantic Ocean.

Details:

• Gerard Talavera spotted painted lady butterflies in French Guiana in 2013, which was unusual since they are not typically found in South America.
• After a decade of investigation, it was concluded that these butterflies undertook the first recorded transoceanic flight by an insect.

Scientific Investigation and Evidence:

• Researchers sequenced the butterflies’ genomes and found they were closely related to populations in Europe and Africa.
• Pollen DNA on the butterflies indicated origins from tropical Africa.
• Isotopes of hydrogen and strontium on their wings were unique to Western Europe.
• This evidence suggested the butterflies originated in Africa or Europe, not North America.

Details of the Migration Journey:

• The painted lady butterflies likely flew from West Africa to South America, a distance of at least 4,200 km.
• The journey might have been even longer, potentially starting in Europe, totalling up to 7,000 km.
• Painted lady butterflies are known for long migrations, such as the 9,000-mile trip between Europe and Africa.

Mechanism of Long-Distance Flight:

• To reach French Guiana, butterflies would need to fly up to eight days without rest.
• Scientists analyzed wind currents from the Sahara, which could help butterflies glide and conserve energy.
• Alternating between minimal effort gliding and active flight was crucial for the journey.

Implications and Perspectives:

• This discovery reveals insects’ ability to traverse vast distances, potentially impacting ecosystems more than previously thought.
• It suggests that long-distance insect migrations may be more common and significant than currently understood.

Painted Lady (Vanessa cardui):

• Vanessa cardui is the most widespread of all butterfly species. It is commonly called the painted lady, or formerly in North America the cosmopolitan.
• Found on every continent except Antarctica and South America.
• Adult butterflies feed on flower nectar and aphid honeydew.

3. India and U.S. in talks for Stryker infantry vehicles and Javelin missiles

Sub: Science and tech

Sec: Defence

India-U.S. Defence Collaboration:

• India is in early talks with the U.S. about co-producing Stryker infantry vehicles and Javelin Anti-Tank Guided Missiles (ATGM).

Details:

• Deals for MQ-9B Unmanned Aerial Vehicles and GE-414 jet engines are progressing, along with defence collaborations under the Critical and Emerging Technology (iCET) framework.
• The GE-414 engine licence manufacture by Hindustan Aeronautics Limited (HAL) for the Light Combat Aircraft (LCA)-Mk1A is in advanced stages, discussing facility separation from those involved with Russian hardware.

New Strategic Partnerships:

• India and the U.S. are launching a strategic semiconductor partnership between General Atomics and 3rd ITECH to co-develop semiconductor design and manufacturing for precision-guided ammunition and other security electronics.

iCET Framework and Industry Engagement:

• The iCET framework aims to blend government engagements with private sector participation, broadening engagement across societies.
• $90 million for the U.S.-India Global Challenges Institute highlights high-impact university research, indicating India’s growing role in tech supply chains and clean energy.

Defense Equipement	Description
Stryker	The Stryker is a family of eight-wheeled armoured fighting vehicles derived from the Canadian LAV III, itself derived from the Swiss Mowag Piranha. Stryker vehicles are produced by General Dynamics Land Systems-Canada (GDLS-C) for the United States Army in a plant in London, Ontario. It has four-wheel drive (8×4) and can be switched to all-wheel drive (8×8). The Stryker was conceived as a family of vehicles forming the backbone of a new medium-weight brigade combat team (BCT) that was to strike a balance between Armored brigade combat teams (heavy armor) and Infantry brigade combat teams.
Javelin Anti-Tank Guided Missiles (ATGM)	The FGM-148 Javelin, or Advanced Anti-Tank Weapon System-Medium (AAWS-M), is an American-made man-portable anti-tank system in service since 1996 and continuously upgraded. Its fire-and-forget design features automatic infrared guidance, allowing the user to seek cover immediately after launch, in contrast to wire-guided systems, like the system used by the Dragon, which requires a user to guide the weapon throughout the engagement. The Javelin’s high-explosive anti-tank (HEAT) warhead can defeat modern tanks by top-down attack, hitting them from above, where their armour is thinnest, and is also useful against fortifications in a direct attack flight. The javelin uses a tandem charge warhead to circumvent an enemy tank’s explosive reactive armour (ERA) which would normally make HEAT warheads ineffective.
MQ-9B Predator Drone	The MQ-9B drone is a variant of the MQ-9 “Reaper”, an unmanned aerial vehicle (UAV) capable of remotely controlled or autonomous flight operations. These are high-altitude long-endurance drones armed with strike missiles which can take out enemy targets with high accuracy. It was developed by General Atomics Aeronautical Systems (GA-ASI), primarily for the United States Air Force (USAF). The MQ-9B has two variants — SkyGuardian and its sibling SeaGuardian. The Indian Navy has been operating the MQ-9B Sea Guardian since 2020.
GE-414 engine	The turbo engine has been in use by the US Navy for more than 30 years. The engines are in the thrust class of 22,000 lb or 98 kN and feature advanced technology such as Full Authority Digital Electronic Control (FADEC)– the latest aircraft ignition and engine control system that controls engine performance digitally- according to GE. The use of advanced material and cooling techniques improves performance and extends component life. F414-powered jets: Eight nations have F414-powered aircraft in operation. F414-GE-400 engines power the US Navy’s Boeing F/A- 18E/F Super Hornet and EA18G Growler electric attack aircraft. Saab’s Gripen E/F fighters use the F414G, the single-engine variant of the F414-GE-400. As per the company, it can also power emerging platforms like Korean KF-X.

Source: TH

4. Indian Government Bonds in JP Morgan Index

Sub: Economy

Sec: External Sector

Inclusion and Timeline:

• The inclusion of Indian Government Bonds (IGBs) in JP Morgan’s emerging markets bond indices will start on June 28, 2024.
• This inclusion will be phased over 10 months until March 31, 2025.
• Expected to bring in $20-25 billion over this period.

Impact on Indian Economy:

• The inflows will help India manage external finances and boost foreign exchange reserves.
• Reserve Bank of India (RBI) will need to use instruments to manage the resultant inflationary pressures.

JP Morgan’s Announcement:

• Announced in September last year.
• India to be included in the GBI-EM Global index.
• 23 IGBs meet the eligibility criteria.
• India is expected to reach the maximum weight of 10 percent in the GBI-EM Global Diversified Index (GBI-EM GD).
• Analysts expect $2-3 billion flows to India every month.

Eligibility Criteria:

• Eligible instruments require a notional outstanding above $1 billion and at least 2.5 years of remaining maturity.
• FAR-designated IGBs issued during the phase-in period will also be included.

Estimated Inflows:

• Estimates range between $20 billion to $25 billion in the 10-month period.

Market Impact:

• An HSBC report noted $10.4 billion inflows since the inclusion announcement.
• Foreign portfolio investors have purchased $8.06 billion of Indian debt.

Effect on Bond Market:

• Likely to lead to fresh active flows in the debt market.
• Will help India finance its fiscal and current account deficit (CAD).
• Enhance liquidity and ownership base of government securities (G-secs).

Challenges for RBI:

• RBI has tools to manage the impact of inflows.

Additional Inclusions:

• Indian government bonds to be included in the Bloomberg Emerging Market (EM) Local Currency Government Index from January 31, 2025.

JPMorgan Government Bond Index-Emerging Markets (GBI-EM)

• Benchmark Index: Tracks the performance of local-currency-denominated sovereign bonds issued by emerging market countries.
• Purpose: Provides investors with a representative measure of the fixed income market within emerging market economies.
• Inclusion: Comprises government bonds issued by various emerging market countries.
• Dynamic Composition: The composition may change over time based on eligibility criteria.

India’s Inclusion:

• Eligible Bonds: JPMorgan has identified 23 Indian government bonds with a combined nominal value of USD 330 billion for inclusion in the GBI-EM.
• Weight in Index: India’s weight is expected to reach the maximum threshold of 10% in the GBI-EM Global Diversified, and approximately 8.7% in the GBI-EM Global index.
• Benchmark Impact: India’s local bonds will become part of the GBI-EM index and its suite of indices, which serve as benchmarks for approximately USD 236 billion in global funds.

Significance of India’s Inclusion in GBI-EM Index

Enhanced Investment Attractiveness:

• Coveted Destination: Positions India as an attractive investment destination.
• Potential Inflows: Expected to attract substantial inflows of USD 45-50 billion over the next 12-15 months.

Economic Stability and Financing Ease:

• Funding Alternative: Eases financing constraints related to India’s fiscal and current account deficits.
• Lower Risk Premia: Reduces India’s risk premia and funding costs, fostering economic stability.
• Risk Premia: The additional return expected from a risky asset over a risk-free asset.

Fully Accessible Route (FAR)

Brief:

• Introduction: RBI has introduced the Fully Accessible Route (FAR) to enable non-residents to invest in specified government bonds.

Key Features:

• Investment: Eligible investors can invest in specified government securities under FAR without any investment ceilings.
• Existing Routes: Operates alongside the Medium Term Framework (MTF) and the Voluntary Retention Route (VRR).

Benefits:

• Ease of Access: Substantially eases access for non-residents to Indian government securities markets.
• Global Bond Indices Inclusion: Facilitates inclusion, enhancing the visibility of Indian bonds in international markets.
• Stable Foreign Investment: Encourages stable foreign investment inflows into government bonds, promoting financial stability.

Voluntary Retention Route (VRR)

Brief:

• Introduction: RBI introduced the Voluntary Retention Route (VRR) to encourage Foreign Portfolio Investors (FPIs) for long-term investments in Indian debt markets.

Key Features:

• Aggregate Investment Limit: ₹40,000 crores for VRR-Govt and ₹35,000 crores for VRR-Corp.
• Minimum Retention Period: Three years, during which FPIs must maintain a minimum of 75% of the allocated amount in India.
• Operational Flexibility: Greater flexibility in terms of instrument choices and exemptions from certain regulatory requirements for FPIs.

5. CBIC to Launch Automated Currency Exchange Rate Publishing System on July 4

Sub: Economy

Sec: External Sector

Overview:

The Central Board of Indirect Taxes and Customs (CBIC) will introduce the automated Exchange Rate Automation Module (ERAM) system on July 4, replacing the manual process of notifying exchange rates. This new system is part of CBIC’s ongoing efforts to digitize customs processes for better trade facilitation.

Key Features of ERAM: 

• Automated Publishing: ERAM will automatically publish the exchange rates of 22 currencies online, enhancing the ease of access for importers and exporters.
• Publication Schedule: The exchange rates will be updated on the ICEGATE website twice a month, specifically on the evening of the 1st and 3rd Thursdays, and will take effect from midnight the following day.
• Accessibility: A link on the CBIC website will redirect users to the ICEGATE website where the published rates can be viewed. The rates will be stored for future reference, allowing users to check historical rates.

Benefits:

• Trade Facilitation: The automated system is expected to streamline the process of obtaining exchange rates, reducing the administrative burden on importers and exporters.
• Enhanced Digitalization: The move is part of CBIC’s broader initiative to enhance digitalization within customs processes, aiming for greater efficiency and transparency.

The launch of ERAM marks a significant step in this direction, ensuring timely and accurate publication of exchange rates, which are crucial for international trade transactions.

Indian Customs Electronic Gateway (ICEGATE):

• National Portal: ICEGATE is the national portal of Indian Customs, part of the Central Board of Indirect Taxes and Customs (CBIC).
• E-Filing Services: Provides electronic filing services to trade, cargo carriers, and other trading partners.

User Base:

• Registered Users: More than 1.6 lakh users are registered with ICEGATE.
• Service Reach: These users serve over 12.5 lakh importers/exporters.

Key Services Offered:

• E-Filing:
  • Bill of Entry: Electronic filing of import goods declaration.
  • Shipping Bills: Electronic filing of export goods declaration.
  • E-Payment: Payment of Customs Duty electronically.
  • Common Signer Utility: Free web-based utility for signing all Customs documents.
  • E-Sanchit: Online filing of supporting documents.
  • IGST Refund: End-to-end electronic processing of IGST refunds.

Customs Processing:

• EDI System: All electronic documents/messages handled by ICEGATE are processed by the Indian Customs EDI System (ICES).
• Coverage: ICES operates at more than 250 Customs locations.

Benefits:

• Faster Customs Clearance: Integration with partner agencies enables quicker processing and clearance.
• Enhanced Trade Facilitation: Provides comprehensive support to importers/exporters, improving efficiency and reducing delays.

6. SEBI Tightens Norms on Financial Influencers and Eases Delisting Rules

Sub: Economy

Sec: Capital market

Overview: India’s markets regulator, the Securities and Exchange Board of India (SEBI), has introduced new regulations to address the rising influence of unregulated financial influencers who advise on stocks and investments through social media platforms like YouTube and Instagram.

Key Points:

• Ban on Unregulated Financial Influencers: SEBI has mandated brokers and mutual funds to stop using the services of unregulated financial influencers for marketing and advertising campaigns.
• Exemption for Investor Education: Financial influencers engaged in genuine investor education are exempt from the new restrictions.
• Reason for the Regulation: The decision aims to tackle issues related to certain individuals and unregulated entities making inappropriate claims and inducing investors to deal in securities.

Context:

• The popularity of financial influencers has surged with the growth of the Indian stock market.
• The number of trading accounts in India has increased from 36 million in April 2019 to 154 million in April 2023.

Changes to Derivative Trading

New Criteria for Derivative-Linked Stocks:

• SEBI has introduced new criteria to determine which stocks can be linked to derivative products, such as futures and options.
• The total number of stocks eligible for derivative trading will increase slightly.

Easing Delisting Rules

Revised Delisting Mechanism:

1. Fixed Price Offers: Companies can now offer shareholders fixed prices for their shares as an alternative mechanism to delist from stock exchanges.
2. Current Method: Previously, delisting was carried out through a reverse book-building process.

These changes are expected to simplify the process for companies wishing to exit stock exchanges. 

SEBI’s Focus:

• SEBI continues to enhance market integrity and investor protection through regulatory measures.
• The new norms for financial influencers and the eased delisting rules are part of SEBI’s broader efforts to ensure fair practices and market efficiency.

Who are Finfluencers?

Individuals with public social media platforms offering advice and sharing personal experiences about money and investment in stocks.

Content Coverage:

• Budgeting
• Investing
• Property buying
• Cryptocurrency advice
• Financial trend tracking

Need for Regulations:

• Unregistered Advisors:
  • The rise in the number of unregistered investment advisors giving unsolicited stock tips on social media.
• Market Manipulation:
  • Certain companies use social media platforms to inflate their share prices through finfluencers.
• Fraud Risks:
  • Both listed and non-listed companies are vulnerable to fraud, especially with the increase in digital data thefts and technological risks.
• Financial and Ethical Impact:
  • Diversion of funds/assets can lead to shareholder wealth erosion, financial crises, ethical dilemmas, and reputational risks.

7. AAP MP’s suspension revoked, six new members take oath in Rajya Sabha

Sub: Polity

Sec: Parliament and legislation

Context:

• Six newly-elected members of Parliament from Bihar, Jharkhand and Madhya Pradesh took oath as members of the Rajya Sabha on June 27.

More on news:

• Rajya Sabha Chairperson Jagdeep Dhankhar also announced the revocation of suspension of Aam Aadmi Party (AAP) member Sanjay Singh.
• Rajya Sabha Committee on Privileges had presented the 77th and 78th Reports on the pending matters.
• The committee while holding Sanjay Singh guilty of breach of privilege of the Council in all the cases, recommended that the member has already suffered sufficient punishment for the transgression.

Suspension of MP in Rajya Sabha:

• Under Rule 255 (‘Withdrawal of member’) of the General Rules of Procedure of the Rajya Sabha, The Chairman may direct any member whose conduct is in his opinion grossly disorderly to withdraw immediately from the Council and any member so ordered to withdraw shall do so forthwith and shall absent himself during the remainder of the day’s meeting.

Procedure to be followed for suspension of Rajya Sabha MPs:

• The Chairman may name a member who disregards the authority of the Chair or abuses the rules of the Council by persistently and wilfully obstructing business.
• In such a situation, the House may adopt a motion suspending the Member from the service of the House for a period not exceeding the remainder of the session.
• The House may, by another motion, terminate the suspension.
• In 2001, the Lok Sabha rule was amended to give the Speaker one additional power.
• A new rule, 374A, empowers the Speaker to automatically suspend an MP for a maximum of five days for disrupting the business of the House.

Revocation of suspension of MP  in Rajya Sabha:

• The House by motion terminates the suspension.
• Rules 202 and 266 of the Rules of Procedure and Conduct of Business in the Council of States (Rajya Sabha).

Revocation of suspension of MP in Lok Sabha:

• The Speaker has the authority to suspend a Member, but the power to lift this suspension is not within her jurisdiction.
• The House,(if it wishes) decides through a motion to revoke the suspension.