Daily Prelims Notes 29 May 2024

Daily Prelims Notes

29 May 2024

1. RBI Unveils Pravaah Portal

Sub: Economy

Sec: Monetary Policy

Tags: PRAVAAH

The PRAVAAH (Platform for Regulatory Application, Validation, and Authorisation) portal is a secure, centralized web-based platform designed for individuals and entities to apply for various regulatory approvals from the RBI online. This portal aims to simplify and expedite the process of seeking authorizations, licenses, and other regulatory approvals by offering a single point of contact for applicants.

Key benefits of the PRAVAAH portal include:

• Online Application: Enables online submission of applications for regulatory approvals.
• User Convenience: Designed to make the approval process more accessible and less cumbersome.
• Streamlined Process: Facilitates a more efficient approval and clearance process by the RBI.
• Centralized Access: Provides a single, secure platform for all regulatory application needs.

Retail Direct Mobile App

The Retail Direct Mobile App is designed to make it easier for retail investors to access and transact on the Retail Direct platform for government securities (G-Secs). The app offers several functionalities aimed at increasing retail investor participation in the G-Secs market, including:

Account Management: Enables retail investors to open Retail Direct Gilt accounts with the RBI.

Primary Auctions: Allows participation in primary auctions for G-Secs.

Secondary Market Transactions: Facilitates buying and selling of G-Secs in the secondary market.

User Accessibility: Available for download on both the Play Store (Android) and the App Store (iOS), ensuring broad accessibility.

FinTech Repository

The FinTech Repository is a comprehensive database that contains detailed information on the Indian fintech sector. This repository serves multiple purposes:

Regulatory Insight: Provides a better understanding of the fintech sector from a regulatory perspective.

Policy Design: Aids in the design of appropriate regulatory policies by the RBI.

Sector Information: Includes data on fintech companies, their products and services, and the applicable regulatory frameworks.

EmTech Repository

In addition to the FinTech Repository, the RBI has launched the EmTech Repository for entities regulated by the RBI, such as banks and non-banking financial companies (NBFCs). This repository focuses on the adoption of emerging technologies by these entities and includes information on:

• Artificial Intelligence (AI)
• Machine Learning (ML)
• Cloud Computing
• Distributed Ledger Technology (DLT)
• Quantum Computing

2. Overview of CRISIL’s Credit Growth Projections for FY25

Sub: Economy

Sec: Monetary Policy

Tags: Credit Growth

CRISIL Ratings has projected that bank credit growth in FY25 will moderate to 14%, down from an estimated 16% in FY24.

This deceleration is attributed to several factors including a high base effect, revisions in risk weights, and a slowdown in GDP growth.

Key Factors Influencing the Slowdown

High Base Effect:

The previous year’s high growth rate of 16% creates a base that makes maintaining similar growth rates challenging.

Revision in Risk Weights:

Changes in risk weights, which affect the amount of capital banks must hold against their assets, can impact lending capacity and, consequently, credit growth.

Slower GDP Growth:

A deceleration in economic growth reduces demand for credit as businesses and consumers scale back on borrowing.

Potential Tailwinds

Revival in Private Corporate Capex:

A revival in capital expenditure by private corporations, particularly in the latter half of the year, could bolster credit growth. This indicates that investment in infrastructure and business expansion could drive credit demand.

Sector-Specific Growth Projections

Corporate Credit:

Corporate credit, which constitutes 45% of bank credit, is expected to grow steadily at 13%. This reflects stable demand from large corporations despite overall economic challenges.

Retail Credit:

The retail segment, making up 28% of bank credit, is projected to grow the fastest at 16%. This suggests strong consumer borrowing, potentially driven by personal loans, mortgages, and credit cards.

Credit to MSMEs:

Growth in credit to Micro, Small, and Medium Enterprises (MSMEs) is expected to slow down due to the high base effect. This indicates that previous high growth rates in this segment are unlikely to be sustained at the same pace.

Deposit Growth Impact

Pace of Deposit Growth:

The rate at which deposits grow can influence credit growth. If deposit growth is slower, it could constrain the ability of banks to extend new credit. However, CRISIL notes that the differential between deposit and credit growth has reduced over the past year, which might mitigate some of the impact.

Conclusion

CRISIL’s projection of a 200 basis points easing in bank credit growth in FY25 reflects the interplay of high base effects, regulatory changes, and economic conditions.

While corporate credit is expected to remain steady, retail credit is poised for robust growth, driven by consumer demand. The moderation in MSME credit growth highlights the challenges of sustaining high growth rates in this segment. Despite these challenges, potential tailwinds such as a revival in private capex could provide support to credit growth in the latter part of the year.

3. Dangers of Landslide

Sub: Geography

Sec: Physical geography

Tags: Landslides

Cyclone Remal impact:

• West Bengal: Six fatalities and damage to 27,000 houses due to Cyclone Remal.
• Northeast India: Cyclone-triggered landslides in Meghalaya, Mizoram, Assam, and Nagaland resulted in at least 30 deaths, including 14 from a stone quarry collapse in Aizawl, Mizoram.
• Cyclone Aila in May 2009 also triggered landslides in the Northeastern region.

Need for Resilience:

• Multi-Hazard Disasters: India faces multiple interconnected disasters such as heavy rainfall causing glacial lake breaches and flash floods, leading to landslides.
  • One event can trigger another and can lead to multiple disasters simultaneously.
• Infrastructure and Services Impact: Resulting in power outages, transport and communication failures, and disruption of health services, complicating rescue and relief efforts.

Landslide Vulnerability in India

• 0.42 million sq km, or 13% of India’s landmass, is landslide-prone, covering 15 states and 4 Union Territories.
• 0.18 million sq km, or 42% of the vulnerable area, is in the Northeast, a hilly and earthquake-prone region.
• The Northeast recorded 378 major landslides during 2015-2022, constituting 10% of all major landslides in India. Kerala witnessed the highest number, largely post-2018 floods.

Risk Management Efforts:

• The Disaster Management Act, of 2005 provides a comprehensive legal and institutional framework for the management of various disasters including landslides.
• The National Landslide Risk Management Strategy (2019) covers all aspects of landslide disaster risk reduction and management, such as hazard mapping, monitoring, and early warning systems.
  • Early Warning Systems: Trial-based systems linked to IMD rainfall forecasts to predict soil displacement. Few systems deployed, with installations in Nagaland, Sikkim, Uttarakhand, and Kerala.
• The National Disaster Management Authority (NDMA) has issued Guidelines on Landslide Hazard Management (2009) that outline the steps that should be taken to reduce the risk of landslides.
• The National Institute of Disaster Management (NIDM) has been providing capacity building and other support to various national and state-level disaster management authorities.
• Efforts have been made towards better prediction of weather. E.g. Ensemble Prediction System. This will help predict disasters like landslides.

What is Landslide?

• A landslide is defined as the movement of a mass of rock, debris, or earth, down a slope due to the action of gravity.
• Areas with steep slopes, for example, mountainous regions, are particularly susceptible to landslide hazards.
• Earth flow, mass movement, mudflow, rotational slip, and avalanches are all examples of landslides.

Causes of Landslide:

Types of Landslides

• Falls: It happens due to the abrupt movements of the mass of geologic materials, such as rocks and boulders, that become detached from steep slopes or cliffs.
• Topples: It happens due to the forward rotation of a unit or units about some pivotal point, under the actions of gravity and forces exerted by adjacent units or by fluids in cracks.
• Slides: In this type, rocks, debris, or soil slide through slope forming material.
• Spread: It usually occurs on very gentle slopes or flat terrain.

4. Why can accused persons in prison contest polls but not vote?

Sub: Polity

Sec: Elections

Tags: Why can accused persons in prison contest polls but not vote, Right to contest , Right to votes

Context:

• The Ongoing Lok Sabha polls highlight the voting rights and Right to contest elections in India.
• A candidate in jail (whether convicted or not) has the ‘Right to be elected to Parliament’ but has no ‘Right to vote’.

Statutory rights:

• In Indira Gandhi v Raj Narain (1975), the Supreme Court stated that free and fair elections are integral to the basic structure of the Constitution.
  • However, the Court also held that neither the right to elect nor the right to be elected holds the same status.
• In Kuldip Nayar v Union of India (2006), a five-judge Constitution Bench affirmed that the right to vote is purely a statutory right, meaning it is not a fundamental right and can be denied.
  • The same applies to the right to be elected.
  • The Court ruled that Parliament could regulate both these statutory rights through laws.

Disqualification rule under the RPA 1951:

• Section 8 of the Representation of the People Act, 1951 (RPA) mandates disqualification from contesting elections to Parliament or state Assemblies upon conviction for certain offences.
  • This disqualification starts from the date of conviction and lasts for six years after the end of the sentence.
  • However, this bar applies only after a person is convicted, not if they are merely charged with criminal offences.
• Section 8 of the RPA has faced challenges in the Supreme Court:
  • In 2011, the Public Interest Foundation petitioned to disqualify persons with framed criminal charges or false affidavits about their criminal history, but the SC ruled that only the legislature could amend the RPA.
  • In 2016, advocate Ashwini Kumar Upadhyay sought permanent disqualification for convicted persons. This case is ongoing, and in November 2023, the SC, noting delays in criminal cases against MPs and MLAs, directed the Chief Justices of all High Courts to expedite these cases.

Exceptions to provision:

• The Election Commission of India (ECI) is authorized under Section 11 of the RPA to “remove” or “reduce” disqualification periods.
  • In 2019, the ECI reduced the disqualification period for Sikkim Chief Minister Prem Singh Tamang, who had served a one-year prison sentence for misappropriating funds. Tamang subsequently won a by-election.
  • Additionally, disqualified MPs or MLAs can contest elections if their conviction is stayed on appeal to a higher court.
• In 2019, the Supreme Court ruled that disqualification ceases to be effective once a conviction is stayed. 
  • Former BSP MP Dhananjay Singh, convicted of kidnapping, sought a stay on his seven-year sentence from the Allahabad High Court to contest the Lok Sabha election.
  • Although granted bail, the court refused to stay his conviction, emphasizing the need for purity in politics.

No voting right for jailed:

• Sub-clause (5) of Section 62 of the RPA stipulates that individuals confined in prison or in lawful police custody cannot vote in elections, with an exception for those in preventive detention.
• This effectively bars individuals with criminal charges from voting unless they are released on bail or acquitted.
  • In 1997, the Supreme Court upheld this provision in Anukul Chandra Pradhan v. Union of India, affirming that voting is a statutory right subject to limitations.
  • The Court reasoned that prisoners, due to their conduct, cannot claim equal freedom and that restricting their voting rights is reasonable to keep individuals with criminal backgrounds away from elections.
  • This ruling has been used by the Supreme Court in 2023 and the Delhi High Court in 2020 to dismiss pleas for prisoner voting rights.

5. India offers $1-million aid to disaster-hit Papua New Guinea

Sub: IR

Sec: Places  in news

Context:

• The Government of India has granted $1 million in immediate assistance to Papua New Guinea, which has experienced devastating floods and a landslip that has killed 2,000 people.

Details:

• The Ministry of External Affairs emphasized India’s solidarity with Papua New Guinea, a partner under the Forum for India-Pacific Islands Cooperation (FIPIC), in its relief, rehabilitation, and reconstruction efforts.
• India has previously supported Papua New Guinea during the 2018 earthquake and volcanic eruptions in 2019 and 2023.

Forum for India-Pacific Islands Cooperation (FIPIC):

• FIPIC is a multinational grouping developed in 2014 for cooperation between the Republic of India and 14 Pacific Islands nations which include Cook Islands, Fiji, Kiribati, Marshall Islands, Federated States of Micronesia, Nauru, Niue, Samoa, Solomon Islands, Palau, Papua New Guinea, Tonga, Tuvalu and Vanuatu.
• All heads of state or heads of government of the above countries met in Suva, Fiji in November 2014 for the first time where the annual summit was conceptualised.
• Objective:
  • Provide necessary information and facilitation regarding prospects of Trade and Investment
  • Facilitate meetings between the concerned businessmen from both sides
  • Exchange of business delegations between India and Pacific Islands Countries
  • Online & Offline Match-Making Services
  • Organising Events / Trade Fairs
• At this moment, total annual trade of about $300 million between the Indian and Pacific Island countries, whereas exports are around $200 million and imports are around $100 million.

6. How an altered protein and fussy neurons conspire to cause microcephaly

Sub: Science and tech

Sec: Health in news

Microcephaly:

• Microcephaly is a condition where a baby’s head and brain are significantly smaller than normal.
• Symptoms include poor motor function, speech, abnormal facial features, and intellectual disability.
• The condition originates during the embryo’s peak brain development phase due to abnormal cell division.
• Diagnostic Methods: Clinicians diagnose microcephaly before birth using fetal ultrasound and magnetic resonance imaging (MRI).

Role of the SASS6 Gene:

• Since 2014, the SASS6 gene and its variants have been linked to microcephaly.
• Researchers at Nantong University, China, found that one functional copy of the SASS6 gene retains some function, while both non-functional copies lead to embryo death.
• Findings confirm SASS6’s crucial role in microcephaly and expand the understanding of its mutation spectrum.
• Recent Studies and Findings:
  • Six more SASS6 gene variants have been identified since the March study.
  • Researchers continue to explore the implications of these variants and their impact on cell division and development.
  • In February 2024, University of Cologne researchers showed that cells without functional SASS6 genes could make abnormal centrioles but failed to develop into neurons.

Impact of Consanguinity:

• Consanguinity, or marriages between closely related individuals, significantly increases the risk of congenital microcephaly.
• Microcephaly can result from mutations in 30 genes, 10 of which are crucial for centriole assembly and function during cell division.

The Ile62Thr Mutation:

• The SASS6 gene, discovered in C. elegans in 2004, encodes a protein essential for centriole assembly.
• In 2014, researchers identified the Ile62Thr mutation in the SASS6 gene in a consanguineous Pakistani family with microcephaly.
• The Ile62Thr mutation impairs centriole function, causing microcephaly but allowing survival into adulthood. When combined with another centriolar protein mutation, it increases replication failure and embryo death.

Variability in Cell Tolerance:

• Different cell types have varying tolerances for centriole defects. Neuron precursor cells are particularly sensitive.
• This sensitivity leads to brain and head deficits and intellectual disability in individuals with defective SASS6 genes.

Source: TH

7. The question of Palestine’s U.N. membership

Sub: IR

Sec: Int Org

Palestine’s U.N. Membership Application:

• Palestine has renewed its application for U.N. membership, facing opposition mainly from the U.S. at the UNSC, which argues membership should follow a negotiated solution to the conflict.
• Earlier, in 2011, Palestine’s request for U.N. membership was also opposed by the U.S., leading to its current non-member observer status.
• In April 2024, the UNGA supported Palestine’s application despite the U.S. veto, adopting a resolution in May affirming Palestine’s eligibility and urging the UNSC to favourably consider its request.

How does a country become a Member of the United Nations?

• Membership in the Organization, in accordance with the Charter of the United Nations, “is open to all peace-loving States that accept the obligations contained in the United Nations Charter and, in the judgment of the Organization, are able to carry out these obligations”.
• States are admitted to membership in the United Nations by a decision of the General Assembly upon the recommendation of the Security Council.
• Membership applications need UNSC recommendation without opposition from any P5 member.
  • Mongolia’s membership application initially stuck at the UNSC, was eventually approved following UNGA intervention, similar to the Palestine situation.
• The procedure is briefly as follows:
  • The State submits an application to the Secretary-General and a letter formally stating that it accepts the obligations under the Charter.
  • The Security Council considers the application. Any recommendation for admission must receive the affirmative votes of 9 of the 15 members of the Council, provided that none of its five permanent members — China, France, the Russian Federation, the United Kingdom of Great Britain and Northern Ireland and the United States of America — have voted against the application.
  • If the Council recommends admission, the recommendation is presented to the General Assembly for consideration. A two-thirds majority vote is necessary in the Assembly for admission of a new State.
  • Membership becomes effective from the date the resolution for admission is adopted.

India’s Stance

• India supported the May 2024 UNGA resolution favouring Palestine’s membership, believing it could enhance prospects for a two-state solution.
• India’s support aligns with its historical stance of non-discrimination in U.N. membership admissions, as seen with Pakistan in 1947 and China in 1971.

Possible Outcomes and Future Steps

• Palestine’s membership cannot bypass the UNSC and the U.S. China and Russia fear this could set a precedent for Taiwan or Kosovo.
• The U.S. might abstain from vetoing as a protest against Israel, allowing Palestine’s membership to proceed, although Israel might quit the U.N. in response.
• If the stalemate continues, the UNGA might exclude Israel from its deliberations, a tactic used previously with South Africa and the Serb Republic of Yugoslavia.

Incremental Steps

• Granting Palestine participatory privileges short of full voting rights and eligibility for principal organs from September would signal a move towards justice without bypassing the UNSC entirely.

Countries that recognise Palestine:

Source: TH