Daily Prelims Notes 3 February 2023
- February 3, 2023
- Posted by: OptimizeIAS Team
- Category: DPN
Daily Prelims Notes
3 February 2023
Table Of Contents
- Paris Club likely to provide financial assurances to IMF on Sri Lanka debt
- Sweden and Finland vow joint entry
- Canada commits to taking in 10000 Uyghur refugees from 2024
- UNEP-managed CITES database reveals red sanders smuggling
- World Wetlands Day: In Andhra Pradesh, efforts on to save a unique wetland near Visakhapatnam
- Asiatic black bears
- Soil organic carbon
- The union budget’s environmental hits and misses
- Study Mussoorie’s specific carrying capacity, govt told
- Upper Bhadra project
- Aero India 2023: LCA Tejas will be the star attraction at the India Pavilion
- Important Budget Terms
- Govt can seek rethink on collegium recommendations
- Deep Ocean Mission gets Rs 600 crore
- Angel Tax extended to foreign investors
- Deer could be reservoir of old coronavirus variants
- Additional Surveillance Mechanism
- SC Allows Adoption of Child of 20-Year-old Student who Sought Abortion of 29-Week Pregnancy
- SC junks plea seeking bar on twin candidature in polls
1. Paris Club likely to provide financial assurances to IMF on Sri Lanka debt
Subject :International relations
What the News?
The Paris Club, an informal group of creditor nations, will provide financial assurances to the International Monetary Fund on Sri Lanka’s debt, Reuters has reported quoting two unnamed sources.
An assurance from the Paris Club, as well as other bilateral creditors, is one of the conditions that Sri Lanka has to fulfil for the IMF to begin disbursing a $2.9 bn bailout package to the beleaguered nation that all but collapsed last year under a severe economic crisis.
What is ‘Paris Club’ in Economics?
- It is an informal group of officials from major creditor countries whose role is to find co-ordinated and sustainable solutions to the payment difficulties experienced by debtor countries.
- Paris Club creditors provide debt treatments to debtor countries in the form of rescheduling, which is debt relief by postponement or, in the case of concessional rescheduling, reduction in debt service obligations during a defined period (flow treatment) or as of a set date (stock treatment).
- The Paris Club is a group of mostly western creditor countries that grew from a 1956 meeting in which Argentina agreed to meet its public creditors in Paris. Their objective is to find sustainable debt-relief solutions for countries that are unable to repay their bilateral loans.
- It describes itself as a forum where official creditors meet to solve payment difficulties faced by debtor countries. All 22 are members of the group called Organisation for Economic Co-operation and Development (OECD).
- The Paris Club was created gradually from 1956, when the first negotiation between Argentina and its public creditors took place in Paris.
- The Paris Club treats public claims (that is to say, those due by governments of debtor countries and by the private sector), guaranteed by the public sector to Paris Club members.
- It is similar to the London club, which is a group of commercial bankers formed in 1976 to deal with the financial problems of Zaire, and is focussed on providing various forms of debt relief to countries that face financial distress due to their heavy debt load.
- There are currently 22 Permanent Members of the Paris Club–
- The members are: Australia, Australia, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Israel, Japan, Netherlands, Norway, Russia, South Korea, Spain, Sweden, Switzerland, the United Kingdom and the United States.
- Unlike China and India, Japan is a member of the Paris Club.
How has Paris Club been involved in debt agreements?
- According to the information on its website, since its beginnings, the Paris Club has reached 478 agreements with 102 different debtor countries. Since 1956, the debt treated in the framework of Paris Club agreements amounts to $ 614 billion.
- It operates on the principles of consensus and solidarity. Any agreement reached with the debtor country will apply equally to all its Paris Club creditors.
- A debtor country that signs an agreement with its Paris Club creditors, should not then accept from its non-Paris Club commercial and bilateral creditors such terms of treatment of its debt that are less favourable to the debtor than those agreed with the Paris Club.
- The role of the Paris Club over time
- The Paris group countries dominated bilateral lending in the last century, but their importance has receded over the last two decades or so with the emergence of China as the world’s biggest bilateral lender.
2. Sweden and Finland vow joint entry
Subject :International relations
NATO membership — Process
- NATO has what it calls an “open door policy” on new members — any European country can request to join, so long as they meet certain criteria and all existing members agree.
- A country does not technically “apply” to join; Article 10 of its founding treaty states that, once a nation has expressed interest, the existing member states “may, by unanimous agreement, invite any other European State in a position to further the principles of this Treaty … to accede.”
- Ratification of new members could take a year, as the legislatures of all 30 current members must approve new applicants.
- Both Finland and Sweden already meet many of the requirements for membership, which include
- having a functioning democratic political system based on a market economy;
- treating minority populations fairly;
- committing to resolve conflicts peacefully;
- the ability and willingness to make a military contribution to NATO operations; and
- Committing to democratic civil-military relations and institutions.
What does NATO membership entail?
- The reason most countries join NATO is because of Article 5 of the North Atlantic Treaty, which stipulates that all signatories consider an attack on one an attack against all.
- Article 5 has been a cornerstone of the alliance since NATO was founded in 1949 as a counterweight to the Soviet Union.
- The point of the treaty, and Article 5 specifically, was to deter the Soviets from attacking liberal democracies that lacked military strength.
- Article 5 guarantees that the resources of the whole alliance — including the massive US military — can be used to protect any single member nation, such as smaller countries who would be defenseless without their allies. Iceland, for example, has no standing army.
3. Canada commits to taking in 10000 Uyghur refugees from 2024
Subject :International relations
Canada’s Parliament passed a motion unanimously on Wednesday to take in 10,000 Uyghur refugees who fled China but are now facing pressure to return.
The decision builds on a February 2021 move by Canadian lawmakers to label Beijing’s treatment of Uyghurs and other Turkic Muslims in its north western Xinjiang territory as genocide.
Rights groups believe at least 1 million Uyghurs and other mostly Muslim minorities have been incarcerated in internment camps in the region, where China is also accused of forcibly sterilizing women and imposing forced labour
- The Uighurs are Muslim ethnic community which speak a language close to Turkish, and are culturally and ethnically closer to Central Asia than the rest of China live in Xinjiang, the largest and most western of China’s administrative regions.
- Till recently, they were the majority in Xinjiang, but massive registered and unregistered settlements of Han Chinese and heavy troop deployments have likely changed that situation.
- Besides ethnicity and cultural dissonance, tensions are seen as rooted also in economic factors — as China’s development has lifted cities like Kashgar and Urumqi, young, qualified Han Chinese from eastern regions have come to Xinjiang, taking the most lucrative jobs and triggering resentment among the indigenous population.
- In Beijing’s official narrative, much of the Uighur terrorist violence is carried out by the East Turkestan Islamic Movement, a group that seeks to establish an independent East Turkestan state in China.
- China has been criticized at different forums for violation of Human rights of Uighur population.
4. UNEP-managed CITES database reveals red sanders smuggling
Section :International conventions
Context: The CITES trade database has recorded 28 incidents of Red Sanders confiscation, seizure, and specimen from the wild being exported from India, a factsheet prepared by TRAFFIC, a global wildlife trade monitoring organisation has revealed.
- Pterocarpus santalinus, or red sandalwood, is an endemic tree species with distribution restricted to the Eastern Ghats of India.
- They are found in Tropical Dry Deciduous forest of the Palakonda and Seshachalam hill ranges of Andhra Pradesh and also found in Tamil Nadu and Karnataka.
- The species found growing up to a height of 10 to 15 metres.
- Red Sanders is a very slow-growing tree species that attains maturity in natural forests after 25-40 years.
- Red Sanders usually grow in the rocky, degraded and fallow lands with Red Soil and hot and dry climate.
- Under the foreign trade policy of India, the import of Red Sanders is prohibited, while export is restricted.
- Red sanders is reported to be one of India’s most exploited tree species, and is under severe pressure from illegal logging and harvesting.
- Its heartwood is in demand in both domestic and international markets and is used to make furniture and handicrafts, while the red dye obtained from the wood is used as a colouring agent in textiles and medicines.
- Conservation status
- Listed under Schedule IV of The Wildlife Protection Act
- Endangered as per IUCN Red List
- Falls in Appendix II of CITES.
Convention on International Trade in Endangered Species of Wild Fauna and Flora
- CITES is an international agreement to which States and regional economic integration organizations adhere voluntarily.
- Aim: Ensure that international trade in specimens of wild animals and plants does not threaten their survival.
- It was drafted as a result of a resolution adopted in 1963 at a meeting of members of the International Union for Conservation of Nature (IUCN).
- It provides public, private and non-governmental organisations with the knowledge and tools that enable human progress, economic development and nature conservation to take place together.
- The CITES Secretariat is administered by UNEP (The United Nations Environment Programme) and is located at Geneva, Switzerland.
- It plays a coordinating, advisory and servicing role in the working of the Convention (CITES).
- The Conference of the Parties to CITES, is the supreme decision-making body of the Convention and comprises all its Parties.
- Although CITES is legally binding on the Parties, it does not take the place of national laws. Rather, it provides a framework to be respected by each Party, which has to adopt its own domestic legislation to ensure that CITES is implemented at the national level.
- The CITES works by subjecting international trade in specimens of selected species to certain controls.
- All import, export, re-export and introduction from the sea of species covered by the Convention has to be authorized through a licensing system.
- Each Party to the Convention must designate one or more Management Authorities in charge of administering that licensing system and one or more Scientific Authorities to advise them on the effects of trade on the status of the species.
- Appendices I, II and III to the Convention are lists of species afforded different levels or types of protection from over-exploitation.
- Appendix I
- It lists species that are the most endangered among CITES-listed animals and plants.
- They are threatened with extinction and CITES prohibits international trade in specimens of these species except when the purpose of the import is not commercial, for instance for scientific research.
- In these exceptional cases, trade may take place provided it is authorized by the granting of both an import permit and an export permit (or re-export certificate).
- Appendix II
- It lists species that are not necessarily now threatened with extinction but that may become so unless trade is closely controlled.
- International trade in specimens of Appendix-II species may be authorized by the granting of an export permit or re-export certificate.
- No import permit is necessary for these species under CITES (although a permit is needed in some countries that have taken stricter measures than CITES requires).
- Appendix III
- It is a list of species included at the request of a Party that already regulates trade in the species and that needs the cooperation of other countries to prevent unsustainable or illegal exploitation.
- International trade in specimens of species listed in this Appendix is allowed only on presentation of the appropriate permits or certificates.
TRAFFIC (Trade Records Analysis of Flora and Fauna in Commerce)
- TRAFFIC is a leading non-governmental organisation working globally on trade in wild animals and plants in the context of both biodiversity conservation and sustainable development.
- It is a joint program of WWF and IUCN.
- TRAFFIC works to ensure that trade in wild plants and animals is not a threat to the conservation of nature.
- TRAFFIC has gained its greatest reputation from supporting CITES, the Convention on International Trade in Endangered Species.
- TRAFFIC focuses on leveraging resources, expertise and awareness of the latest globally urgent species trade issues such as tiger parts, elephant ivory and rhino horn.
- Large scale commercial trade in commodities like timber and fisheries products are also addressed and linked to work on developing rapid results and policy improvements.
5. World Wetlands Day: In Andhra Pradesh, efforts on to save a unique wetland near Visakhapatnam
Section :Places in news
Context: The State Forest Department, in association with environmental groups, are taking steps to preserve Kondakarlava wetland, the second largest freshwater lake of Andhra Pradesh.
More on the News:
- A group of environmentalists documented four smooth-coated otters in the Kondakarlava wetland in 2021.
- This was the first documented record of the smooth-coated otters.
World Wetlands Day
- World Wetlands Day is celebrated on 2nd February annually to mark the adoption of the Convention on Wetlands on February 2nd 1971.
- It is celebrated to raise awareness among all sections of the society about values and functions of wetlands, utilization of their resources and their environmental importance.
- The theme for 2023 is ‘Wetland restoration’ – This year’s theme highlights the urgent need to prioritize wetland restoration, and calls on an entire generation to take steps to revive and restore degraded wetlands. The theme builds on – and contributes to the efforts to heal the planet as championed by the UN Decade on Ecosystem Restoration.
Kondakarla Ava lake
- Kondakarlava is located about 48 kilometres from
- It is the second largest freshwater wetland of Andhra Pradesh, yet to be declared as a protected site.
- Spread across 750 acres, it is host to over 150 species of birds and has a rich biodiversity with a range of fish, aquatic, animal and plant species.
- The Sanctuary comprises a unique and endangered forest type and the wet evergreen forests. It is recognized as an Eco Tourism destination.
- The smooth-coated otter is an otter species occurring in most of the Indian subcontinent and Southeast Asia, with a disjunct population in Iraq.
- It is listed as Vulnerable on the IUCN Red List.
- Smooth-coated otter is characterized by a very smooth, sleek pelage.
- These otters have generally been described as fish specialist. They are strong swimmers and hunt in groups. When fishing they travel in a V-formation going upstream.
- Their numbers are said to be declining with few breeding populations reported from Corbett and Dudhwa Tiger Reserves and Katerniaghat Wildlife Sanctuary in the north, Kaziranga National Park in the northeast, Sunderbans, Bhitarkanika and Coringa in the eastern coast; and Periyar Tiger Reserve and the Nagarhole National Park in the south.
- Major threats to Asian otter population are loss of wetland habitats due to construction of largescale hydroelectric projects, conversion of wetlands for settlements and agriculture, reduction in prey biomass, poaching and contamination of waterways by pesticides.
Section :Species in news
Context: The Kashmir Valley has bucked the trend of Asiatic black bear ( Ursus thibetanus) attacks on humans rarely reported throughout the animal’s global range.
More on the News:
- The conversion of the bear’s natural habitat to orchards and farmlands is the primary reason for the ursine attacks over the past 30 years.
- Other reasons include the India-Pakistan border fencing which blocks the movement of the animal and a new generation of people who are not familiar with co-existing with large predators.
- Study recorded 2,357 Asiatic black bear attacks in the Valley between 2000 and 2020. A total of 2,243 attacks or 95.2% of the cases resulted in injury and 114 attacks or 4.8% of cases in death.
Asiatic Black Bears
- The Asiatic black bear is one of eight extant species of the bear family.
- It is a medium-sized bear species native to Asia that is largely adapted to an arboreal lifestyle.
- It is spread across Asia, from the Himalayas to the Russian Far East.
- It has been categorised as Vulnerable under the International Union for Conservation of Nature’s Red List of Threatened Species and is also listed under Appendix I of CITES and Schedule I of the Wildlife (Protection) Act, 1972.
- The bears are found in 83 protected areas of India, spread across five states and 2 Union Territories in the Himalayas
- It is one of the large carnivore species having negative interactions with humans in the Indian Himalayas.
- Till now, methods used to determine the population status of Asiatic black bears in India have been limited to questionnaires, sign surveys and genetic sampling using hair samples.
Section : Climate change
Context: Soil Organic Carbon (SOC) as an indicator for land and soil degradation, is becoming central to climate change mitigation attempts.
More on the News:
- The UN climate conference of 2022 also witnessed calls for integrating soil health and specifically soil organic carbon (SOC) in the Nationally Determined Contributions (NDCs).
- This gains significance, in the background that several IPCC reports have demonstrated the potential of land-based mitigations in the NDCs under the Paris Agreement.
- SOC pool is one of the most important carbon stocks on the earth which contains approximately twice as much carbon as in the atmosphere.
- SOC stock is also proposed as a globally relevant indicator within the monitoring framework for land and soil degradation in the UN Sustainable Development Goals (SDGs).
- SOC management on croplands and grasslands are estimated to have the greatest mitigation potential at USD20 tCO2-eq-1
- India with 162 million hectares (Mha) of arable land and 8 Mha of permanent crop land which is about 12% and 6% of the respective global figures, has a huge potential for integrating SOC in its national mitigation strategies.
- In this context, it is important to investigate the relevance of making SOC, as a central indicator in soil health measurements.
- Soil microbial load is a relatively stable measure of soil health. Soil microbe species diversity and activity are responsible for various ecosystem services. The higher the microbial load in the soil, higher is the aerobic activity and better the soil health and SOC.
Soil Organic Carbon
- Soil organic carbon (SOC) comes from plants, animals, microbes, leaves and wood, mostly found in the first metre or so.
- Soil organic carbon is a measureable component of soil organic matter. Organic matter makes up just 2–10% of most soil’s mass and has an important role in the physical, chemical and biological function of agricultural soils.
- Organic matter contributes to nutrient retention and turnover, soil structure, moisture retention and availability, degradation of pollutants, and carbon sequestration.
- Soil organic matter is composed mainly of carbon, hydrogen and oxygen, and has small amounts of other elements, such as nitrogen, phosphorous, sulfur, potassium, calcium and magnesium contained in organic residues.
- It is divided into ‘living’ and ‘dead’ components and can range from very recent inputs, such as stubble, to largely decayed materials that might be many hundreds of years old. About 10% of below-ground SOM, such as roots, fauna and microorganisms, is ‘living’.
8. The union budget’s environmental hits and misses
Section: Government schemes
Context: Union Minister of Finance reiterated ‘green’ 23 times and ‘sustainable’ nine times in her budget speech on February 1. FM pegged ‘green growth’ as one among four opportunities that can be transformative during Amrit Kaal.
More on the Environment Budget:
- Green growth, which is economic growth that is environmentally sustainable, was announced as one of seven priorities for the government in the 2023-24 union budget released yesterday.
- One of the major announcements the finance minister made was a capital investment of Rs. 35,000 crores (Rs. 350 billion) towards energy transition. The funds, though, would go to the Ministry of Petroleum and Natural Gas. Of this, Rs 30,000 crores (Rs. 300 billion) will go to oil-marketing companies (OMCs), and the remaining Rs. 5,000 crores (Rs. 50 billion), will be spent on strategic petroleum reserves.
- The minister’s other big announcements related to the environment were the viability funding gap for battery energy storage system, inter-state transmission system for evacuation and grid integration of renewable energy from Ladakh, 500 new ‘waste-to-wealth’ plants, and Rs. 19,700 crores (Rs. 197 billion) for the National Green Hydrogen Mission.
- The union minister also announced the extension of customs duty exemption on the import of capital goods and equipment needed to produce lithium-ion cells for use in electric vehicle batteries.
- The finance minister announced a Green Credit Programme to incentivise environmentally sustainable and responsive actions by companies, individuals, and local bodies.
- The union minister said that the government would promote wetland conservation with the help of local communities through Amrit Dharohar, a scheme to protect vital wetlands through optimal use for sustaining aquatic biodiversity.
- Similarly, FM announced a new scheme named Mangrove Initiative for Shoreline Habitats & Tangible Incomes (MISHTI), for mangrove plantation along the coastline and on salt pans.
- FM announced a scheme named PM PRANAM (Programme for Restoration, Awareness, Nourishment, and Amelioration of Mother Earth) which will incentivise states and Union Territories to promote alternative fertilisers and balanced use of chemical fertilisers.
About Green Hydrogen Mission https://optimizeias.com/green-hydrogen-mission-gets-cabinet-nod-initial-outlay-rs-19744-crore/
9. Study Mussoorie’s specific carrying capacity, govt told
- Taking suo motu cognizance of a newspaper report that has warned of a Joshimath like situation in Mussoorie town, the National Green Tribunal (NGT) has issued directions to the Uttarakhand government to conduct a study of the specific carrying capacity of the hill station.
- The green court has also formed a nine member committee to suggest remedial measures for preventing environmental damage to the town, one of the most visited tourist destinations in the State.
What is Carrying Capacity?
- Carrying capacity is the maximum population size that an ecosystem can sustainably support without degrading the ecosystem.
- In the broader sense, carrying capacity also means that all plants and animals which an area of the Earth can support at once.
- Change in carrying capacity for one species affects other populations in the area.
- Deaths and long-term damage to an ecosystem occurs when a population exceeds the carrying capacity of its ecosystem.
- Disease, competition, predator-prey interaction, resource use and the number of populations in an ecosystem all affect carrying capacity.
Carrying Capacity and Sustainable Development
- Our Common Future, also known as the Brundtland Report,1987 defines Sustainable Development as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”
- The idea of sustainability presupposes development within the confines of carrying capacity of ecosystems.
Section :Indian Geography
- Finance Minister recently announced a grant of ₹5300 crore for the Upper Bhadra Irrigation Project.
Upper Bhadra project
- It is a major lift irrigation Scheme under implementation in the central region of Karnataka State.
- Major objective is to provide sustainable irrigation facility in kharif season.
- It also proposes to recharge ground water tables and provide drinking water by filling 367 tanks with six tmcft water in drought-prone taluks.
- It is planned to irrigate an extent of 2,25,515 hectares by micro irrigation in drought-prone districts of Chikkamagalur, Chitradurga, Tumkur and Davangere.
- It envisages lifting upto17.40 TMC of water in first stage from Tunga river to existing Bhadra reservoir and lifting 29.90 TMC of water in second stage from Bhadra reservoir to Tunnel near Ajjampura, in Tungabhadra sub-basin of Krishna basin.
- In 2022, Central government gave national project status to “Upper Bhadra Project”.
- It is a sacred river in southern India that flows through the states of Karnataka, Andhra Pradesh and Telangana.
- The ancient name of the river was Pampa.
- It is formed by the confluence of two rivers, the Tunga River and the Bhadra
- Both Tunga & Bhadra Rivers are originated on the eastern slopes of the Western Ghats.
National Project Status
- Eligibility criteria for inclusion of a project under National Projects (NP) scheme being serviced by this Ministry, are as below:
- International projects, where usage of water in India is required by a treaty or where planning and early completion of the project is necessary in the interest of the country.
- Inter-State projects which are dragging on due to non-resolution of Inter-State issues relating to sharing of costs, rehabilitation, aspects of power production etc., including river interlinking projects.
- Intra-State projects with additional irrigation potential of more than two lakh hectare and with no dispute regarding sharing of water and where hydrology is established.
- Extension, renovation and modernization (ERM) projects envisaging extension/ restoration of irrigation potential of 2 lakh hectare.
- However, mere eligibility of a project does not entitle its inclusion under the NP scheme.
- Inclusion is also dependent upon approval of Advisory Committee on Irrigation, Flood Control and Multipurpose projects of DoWR, RD&GR as per laid down procedure, investment clearance, recommendations by High Powered Steering Committee, availability of funds as well as Government priorities at that time, etc.
- Central assistance in the form of grant under NP scheme, is given on the balance works component of the project pertaining to irrigation and drinking water only.
- Projects in 8 North-Eastern, 2 Himalayan States (Himachal Pradesh and Uttarakhand) and Union Territories of Jammu & Kashmir and Ladakh – 90 (Centre) : 10 (State)
- Projects in other states – 60 (Centre) : 40 ( State)
11. Aero India 2023: LCA Tejas will be the star attraction at the India Pavilion
Subject : Science and Technology
Section : Defence
- A fullscale LCA Tejas aircraft in Final Operational Clearance (FOC) configuration will be at the centre stage of India Pavilion at Aero India 2023, which is being held at the Air Force Station Yelahanka in Bengaluru between February 13 and 17.
About LCA Tejas
- The Light Combat Aircraft (LCA) programmewas started by the Government of India in 1984 when they established the Aeronautical Development Agency (ADA) to manage the LCA programme.
- It replaced the ageing Mig 21 fighter planes.
- It is designed by Aeronautical Development Agency under the Department of Defence Research and Development.
- It is manufactured by State-owned Hindustan Aeronautics Limited (HAL).
- The lightest, smallest and tailless multi-role supersonic fighter aircraft in its class.
- Designed to carry a range of air-to-air, air-to-surface, precision-guided, weapons.
- Air to air refuelling
- Maximum payload capacity of 4000 kg.
- It can attend the maximum speed of Mach 1.8.
- The range of the aircraft is 3,000km
Variants of Tejas:
- Tejas Trainer: 2-seater operational conversion trainer for training air force pilots.
- LCA Navy: Twin- and single-seat carrier-capable for the Indian Navy.
- LCA Tejas Navy MK2: This is phase 2 of the LCA Navy variant.
- LCA Tejas Mk-1A: This is an improvement over the LCA Tejas Mk1 with a higher thrust engine.
Section: National Income
Nominal GDP and Real GDP
- Nominal GDP refers to the current year production of final goods and services valued at current year prices.
- Real GDP refers to the current year production of goods and service valued at base year prices. Base year prices are constant prices.
- Currently, the base year for GDP calculation is 2011-12.
- The ratio of nominal to real GDP is a well-known index of prices. This is called GDP deflator.
- GDP Deflator = Nominal GDP/ Real GDP
- The GDP deflator is, therefore, a measure of inflation.
- If GDP deflator is 2, then it means prices are doubled as compared to base year.
- The GDP deflator is considered the better measure of price behavior because it covers all goods and services produced in the country.
Crowding out and Crowding in Effect
- When the government pursues expansionary fiscal policy (higher spending financed by borrowing) there are two possible effects :
- Crowding out – higher government spending financed by borrowing leads to a fall in private sector saving. This is for two main reasons
- With expansionary fiscal policy, private sector savers buy government bonds and so have fewer savings to fund private sector investment.
- Also, higher government borrowing tends to push up interest rates and these higher interest rates reduce investment.
- Crowding in – this relates to how higher government spending encourages firms to invest more.
- This is due to the income effect of higher government spending.
- If the economy is in a recession or below full capacity, expansionary fiscal policy can increase the economic growth rate and create a positive multiplier effect, which leads to greater private sector investment.
- Sticky inflation is an undesirable economic situation where there is a combination of stubbornly high inflation and often stagnant growth.
- Sticky inflation is often associated with cost-push factors, i.e. factors which cause a rise in the inflation rate but also lead to lower spending and economic growth.
- In 2008 financial crisis, we experienced a rise in inflation, but economic growth fellleading to recession.
- In 2011, we had a similar rise in inflation, but a fall in the growth rate.
13. Govt can seek rethink on collegium recommendations
Subject : Polity
- Asserting that the Union government can seek a reconsideration of the names recommended by the Supreme Court Collegium (SCC), Law Minister Kiren Rijiju informed the Rajya Sabha that there are 18 such cases.
Collegium system and the government role
- It is the system of appointment and transfer of judges that has evolved through judgments of the Supreme Court, and not by an Act of Parliament or by a provision of the Constitution.
- The Supreme Court collegium is headed by the Chief Justice of India and comprises four other seniormost judges of the court.
- A High Court collegium is led by its Chief Justice and four other seniormost judges of that court.
- Names recommended for appointment by a High Court collegium are appointed, only after approval by the CJI and the Supreme Court collegium.
- According to the existing procedure, the High Court Collegiums send their proposals for the appointment of judges to the Law Ministry’s Justice Department, which then attaches Intelligence Bureau reports on the candidates and forwards the proposal to the Supreme Court Collegium to take a call.
- Judges of the higher judiciary are appointed only through the collegium system — and the government has a role only after names have been decided by the collegium.
- The government’s role is limited to getting an inquiry conducted by the Intelligence Bureau (IB) if a lawyer is to be elevated as a judge in a High Court or the Supreme Court.
- It can also raise objections and seek clarifications regarding the collegium’s choices, but if the collegium reiterates the same names, the government is bound, under Constitution Bench judgments, to appoint them as judges.
14. Deep Ocean Mission gets Rs 600 crore
Subject : Geography
Section: Economic Geography
- The Centre’s Deep Ocean Mission, which aims to explore marine biodiversity for the sustainable use of resources, has been allocated Rs 600 crore in the Union Budget 2023-2024.
- The government has doubled the allocation from last year’s revised fund of Rs 300 crore.
- The ministry aims to allot money to a myriad of activities such as a manned submersible, ship-building, exploration and conservation of deep-sea biodiversity and identification of mineral deposits in the deep ocean.
Deep Ocean Mission
- The cost of the Mission has been estimated at Rs. 4,077 crore over a five-year period and will be implemented in phases.
- MoES will be the nodal ministry implementing this multi-institutional ambitious mission.
- It will be a mission mode project to support the Blue Economy Initiatives of the Government of India.
- Blue Economy is the sustainable use of ocean resources for economic growth, improved livelihoods and jobs, and ocean ecosystem health.
- The technology and expertise needed in such missions is now available with only five countries – US, Russia, France, Japan and China.
- India will now be the sixth country to have it.
- Development of Technologies for Deep Sea Mining, and Manned Submersible:
- A manned submersible will be developed to carry three people to a depth of 6,000 metres in the ocean with a suite of scientific sensors and tools.
- An Integrated Mining System will be also developed for mining polymetallic nodules at those depths in the central Indian Ocean.
- Polymetallic nodules are rocks scattered on the seabed containing iron, manganese, nickel and cobalt.
- The exploration studies of minerals will pave the way for commercial exploitation in the near future, as and when commercial exploitation code is evolved by the International Seabed Authority, an United Nations (UN) organisation.
- Development of Ocean Climate Change Advisory Services:
- It entails developing a suite of observations and models to understand and provide future projections of important climate variables on seasonal to decadal time scales.
- Technological Innovations for Exploration and Conservation of Deep-sea Biodiversity:
- Bio-prospecting of deep-sea flora and fauna including microbes and studies on sustainable utilization of deep sea bio-resources will be the main focus.
- Deep Ocean Survey and Exploration:
- It will explore and identify potential sites of multi-metal Hydrothermal Sulphides mineralization along the Indian Ocean mid-oceanic ridges.
- Energy and Freshwater from the Ocean:
- Studies and detailed engineering design for offshore Ocean Thermal Energy Conversion (OTEC) powered desalination plants are envisaged in this proof of concept proposal.
- OTEC is a technology which uses ocean temperature differences from the surface to depths lower than 1,000 meters, to extract energy.
- Advanced Marine Station for Ocean Biology:
- It is aimed at the development of human capacity and enterprise in ocean biology and engineering.
- It will translate research into industrial application and product development through on-site business incubator facilities.
Significance of the Mission:
- The ‘Deep Ocean Mission’ plan will enable India to develop capabilities to exploit resources in the Central Indian Ocean Basin (CIOB).
- India has been allotted 75,000 square kilometres in the Central Indian Ocean Basin (CIOB) by UN International Sea Bed Authority for exploration of poly-metallic nodules.
- CIOB reserves contain deposits of metals like iron, manganese, nickel and cobalt.
- It is envisaged that 10% of recovery of that large reserve can meet the energy requirement of India for the next 100 years.
- It has been estimated that 380 million metric tonnes of polymetallic nodules are available at the bottom of the seas in the Central Indian Ocean.
15. Angel Tax extended to foreign investors
Subject : Economy
Section :Fiscal Policy
- In Budget 2023-24, the government has proposed to extend the so-called ‘angel tax’ provisions to transactions involving foreign investors.
- According to the proposal, the excess premium received on sale of shares by an Indian unlisted company to a foreign investor will be construed as “income from other sources” and subject to tax.
- Angel Tax is a term basically used to refer to the income tax payable on the capital raised by unlisted companies via the issue of shares through off-market transactions.
- This tax is levied on the capital raised via the issue of shares by unlisted companies from an Indian investor if the share price of issued shares is seen in excess of the fair market value of the company.
- The excess realization is considered as income and therefore, taxed accordingly.
- , If the fair market value of a start-up share is Rs 10 a piece, and in a subsequent funding round they offer it to an investor for Rs 20, then the difference of Rs 10 would be taxed as income.
- Angel tax gets its name from the wealthy individuals (“angels”) who invest heavily in risky, unproven business ventures and start-ups, in the initial stages when they are yet to be recognized widely.
What was the rationale behind introducing Angel Tax?
- Rule related to Angel Tax is described in Section 56(2) (viib) of the Income Tax Act, 1961.
- This clause was inserted into the act in 2012 to prevent laundering of black money, roundtripping via investments with a large premium into unlisted companies.
Which investments used to fall under the ambit of Angel Tax?
- Before budget 2023-24, angel tax was imposed only on investments made by a resident investor.
- e., it was not applicable in case the investments are made by any non-resident or venture capital funds.
- Allaying the concerns of the startup community, the govt had exempted investments made by the domestic investors in companies approved by an inter-ministerial panel from Angel Tax.
- e., Government recognized startups, upon meeting certain criteria, were exempted from this tax.
What is the proposed change in Budget 2023-24 with respect to angel tax?
- The Finance Bill, 2023 has proposed to amend Section 56(2) VII B of the Income Tax Act.
- With this, the government has proposed to include foreign investors in the ambit, meaning that when a start-up raises funding from a foreign investor, that too will now be counted as income and be taxable.
- However, these foreign investors will not need to pay any angel tax while investing in a government-recognized (Department for Promotion of Industry and Internal Trade (DPIIT) registered) startup in India — similar to the provision for domestic investors.
- Fear among startups:
- The imposition of angel tax hinges on the fair market valuation of the company.
- This has been a bone of contention between startups and the income tax department.
- The tax department goes by the rule book and calculates market value based on the net assets of the company.
- However, estimated growth prospects of the startup and future projections based on these growth prospects are major factors in determining the fair market valuation of the startup.
- Hence, the new proposal would further increase the trust deficit in the startup ecosystem.
Impact on FDI inflow:
- The proposed tax might deter the foreign investors as they may not want to deal with additional tax liability by virtue of their investment in the startup.
- This in turn will affect the FDI flow in India.
- Creates issues with multiple valuation methods :
- The proposed tax will also create issues with multiple valuation methods for FEMA (Foreign Exchange Management Act) and tax purposes.
- The Foreign Exchange Management Act (FEMA) 1999 is legislation which regulates the inflow and outflow of foreign exchange.
- It came into force on 1st June 2000.
- Impact on funding from foreign sources :
- The recent change came at a time when funding for India’s startups dropped by 33 per cent to $24 billion in 2022 as compared to the previous year.
- Foreign investors are a key source of funding for the start-ups and have played a big role in increasing the valuation.
- , Tiger Global, one of the most prolific foreign investors in India, has invested in over a third of the start-ups that have turned unicorn, with a valuation of at least $1 billion.
16. Deer could be reservoir of old coronavirus variants
Subject : Science and technology
- The alpha and gamma variants of the coronavirus continued to circulate and evolve in white-tailed deer, even after they stopped spreading widely among people, a new study suggests.
- For the new study, Diel and his colleagues analysed about 5,500 tissue samples collected from deer killed by hunters in New York state.
- Genetic sequencing revealed that three variants of concern — alpha, gamma and delta — were all present in deer during the 2021 season.
Link between deer and coronavirus
- Previous studies of deer have suggested humans have repeatedly introduced the coronavirus into white-tailed deer populations in the United States and Canada and that deer can spread the virus to one another.
- Scientists are not sure how people are passing the virus to deer, but they have speculated that it might happen when people feed deer or deer encounter human trash or waste.
- Also,thescale of the risk that infected deer pose to humans remains unclear.
- Scientists speculate that there is high risk of transmission when there is regular contact between the infected animal and the humans.
What can happen if the virus circulates in these animals?
- The longer the virus circulates in these animals and infects a larger number of individuals, the more likely it is to evolve and potentially lead to the emergence of a completely new variant resistant to the current vaccines.
- The white-tailed deer is scientifically called as Odocoileus virginianus. It is also called as whitetail or Virginia deer.
- The deer is a medium-sized and is native to North America, Ecuador, Central America, Peru, South America, and Bolivia.
- It has also been introduced to New Zealand, Cuba, Puerto Rico, Jamaica and Hispaniola as well as some countries in Europe like Finland, Czech Republic, Romania, France, Germany, and Serbia.
- IUCN Classification :Least Concern
17. Additional Surveillance Mechanism
Subject : Economy
Section: Capital Markets
- The National Stock Exchange (NSE) placed Adani Enterprises, Adani Ports, and Ambuja Cements under the additional surveillance mechanism (ASM).
- The move comes as shares of Adani group companies continue to fall in the wake of accusations of stock manipulation.
Additional Surveillance Mechanism (ASM)
- The ASM was introduced in 2018 by SEBI with the intention to protect investors from market volatility and unusual changes in share price.
- The shortlisting of securities for placing in ASM is based on criteria that are jointly decided by the Securities and Exchange Board of India (SEBI) and exchanges, covering the parameters of:
- High low variation,
- Client concentration,
- Close-to-close price variation,
- Market capitalization [Market Cap = Current Share Price * Total Number of Shares Outstanding. For example, a company with 20 million shares selling at $100 a share would have a market cap of $2 billion]
- Volume variation,
- Price-Earnings Ratio, (Read below)
- Delivery percentage, and
- Number of unique PANs.
- Put simply, an ASM shortlisting signals to investors that the stocks have seen unusual activity.
- The shortlisting of securities under ASM is purely on account of market surveillance and it should not be construed as an adverse action against the concerned company / entity.
- Stricter measures are imposed on those stocks to discourage speculators and intra-day traders from taking heavy positions in stocks.
Stricter Exchange Rules imposed on ASM stocks:
Percentage price band
- If Stock A enters the surveillance list today (say July 31), it will be moved into a percent price band on August 1. That is, its price can move only 5 percent either way from the previous day’s closing level. The stock will be halted from trading for the rest of the day if it breaches the 5 percent limit.
- From the fifth trading day (August 7, in our example), 100 percent margin money will be required to trade Stock A.
- A stock in the surveillance list will be moved to a Trade-To-Trade Settlement if its PE ratio shoots above 100. It will be moved out of the list if its PE falls below 10 or below the ratio of Nifty 500 Index.
- Trade to Trade settlement is a segment where shares can be traded only for compulsory delivery basis.
- It means Trade to Trade shares cannot be traded on intraday. Each share purchased/sold which are parts of this segment need to be taken delivery by paying full amount.
- Price to Earnings Ratio or Price Earnings Multiple is the ratio of share price of a stock to its earnings per share (EPS).
- PE ratio is one of the most popular valuation metrics of stocks. It provides an indication of whether a stock at its current market price is expensive or cheap.
18. SC Allows Adoption of Child of 20-Year-old Student who Sought Abortion of 29-Week Pregnancy
- The Supreme Court invoked its extraordinary power under Article 142 to allow the adoption of a child after the delivery of a 20-year-old student who was carrying a 29-week unwanted pregnancy.
- Solicitor General Tushar Mehta and Bhati apprised the court that an effort has been made to facilitate the process of adoption of the child after delivery, by prospective parents who are registered with the Child Adoption Resource Authority (CARA) under the Union Ministry of Women and Child Development. The court was apprised of the fact that two prospective parents who have been registered with a parent registration number under CARA are ready and willing to adopt the child.
- It further added that permission is granted for the adoption of the child by the prospective parents whose details have been set out in the CARA registration form and CARA shall take all necessary steps to facilitate the implementation of this order.
- SC adopted the present course of action consistent with the jurisdiction of this court under Article 142 of the Constitution having regard to the extraordinary situation which has emerged before the court involving a young woman in distress, who moved this court at a late stage of her pregnancy.
- Central Adoption Resource Authority (CARA) is a statutory body of Ministry of Women & Child Development, Government of India. It functions as the nodal body for adoption of Indian children and is mandated to monitor and regulate in-country and inter-country adoptions. CARA is designated as the Central Authority to deal with inter-country adoptions in accordance with the provisions of the Hague Convention on Inter-country Adoption, 1993, ratified by Government of India in 2003.
- CARA primarily deals with adoption of orphan, abandoned and surrendered children through its associated / recognised adoption agencies.
What is Article 142 of the Constitution:
- Article 142 provides a unique power to the Supreme Court, to do complete justice between the parties, where at times law or statute may not provide a remedy.
- In those situations, the Court can extend itself to put a quietus to a dispute in a manner that would fit the facts of the case.
19. SC junks plea seeking bar on twin candidature in polls
Context: A PIL was filed to restrict a candidate from contesting the Lok Sabha and Assembly elections simultaneously from more than one constituency.
- The SC said in the absence of any manifest arbitrariness in Section 33(7) of the RPA, it was not possible to strike it down.
- SC observed that permitting a candidate to contest from more than one seat is a matter of legislative policy since it is ultimately the Parliament’s will as to whether the political democracy in the country is furthered by granting such a choice.
- Noting that candidates may contest elections from different seats due to a variety of reasons, the top court said it was for Parliament to decide if such a choice would further the course of democracy.
Why there is a demand to restrict candidates to one constituency?
- “One person, one vote” and “one candidate, one constituency” is the dictum of democracy. However, as per the law, as it stands today, a person can contest the election for the same office from two constituencies simultaneously