Daily Prelims Notes 4 February 2022

February 4, 2022
Posted by: OptimizeIAS Team
Category: DPN

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Daily Prelims Notes

4 February 2022

Table Of Contents

1. BEIJING WINTER OLYMPICS

TOPIC: International Relations

Context- India has announced a diplomatic boycott of the Beijing Winter Olympics.

Concept-

Other countries which announced boycott include the USA , United Kingdom, Australia, New Zealand, Canada, Japan, New Zealand and the Netherlands.

What is a diplomatic boycott?

It simply means these countries will not send official government delegations to Beijing during the Games.
These officials are often labeled as the ‘VIP visitors’.

Does a diplomatic boycott affect athletes’ participation?

It doesn’t. A diplomatic boycott is a token protest that has no impact on the sporting spectacle.
However the Olympics are now are a billion-dollar enterprise and a complete boycott could cost athletes, broadcasters and the organisers a fortune.

Why have the Beijing Winter Games been so controversial?

In India’s case, the boycott was announced after a Chinese soldier involved in the Galwan incident was made an Olympic torchbearer.
The Western countries, led by the US, made the diplomatic snub over China’s alleged treatment of the Uyghur Muslims and human rights issues.
Some countries like Austria, New Zealand, Slovenia, Sweden and the Netherlands have cited pandemic-related risks for not sending government officials.

2. BOND YIELD

TOPIC: Economy

Context- On February 1, as Finance Minister indicated that the government would borrow more from the market, the yield on the 10-year benchmark bond issued by the central government jumped 17 basis points to 6.85%.

Concept-

Bond:

Bond is an instrument to borrow money.
A bond could be floated/issued by a country’s government or by a company to raise funds.

Bond Yield:

In simple terms, yield is the amount of return that an investor will realize on a bond. The yield of a bond is the effective rate of return that it earns.
If the investor holds the bond to maturity, s/he will be guaranteed to get the principal amount back plus the interest.
However, a bond does not necessarily have to be held to maturity by the investors.
Instead, investors may sell them for a higher or lower price to other investors.
The bond prices and yields generally move in opposite directions.
This is because, as a bond’s price increases, its yield to maturity falls.
g. for a bond purchased with a par (face) value of $100, and a 10% annual coupon rate, its yield would be 10% (10/100 = 0.10)
If the bond price fall to $90, the yield would become 11% (10/90 = 0.11).

Factors affecting the yield:

Monetary policy of the RBI (interest Rates), fiscal position of the government and its borrowing programme, global markets, economy, and inflation.
A fall in interest rates makes bond prices rise, and bond yields fall.
Rising interest rates cause bond prices to fall, and bond yields to rise.
So, a rise in bond yields means interest rates in the monetary system have fallen, and the returns for investors have declined.

Impact of Rise in Bond Yield:

Stock Market:
- When bond yields go up, investors start reallocating investments.
- They shift away from equities into bonds, as they are much safer.
- Equities become less attractive.
Borrowing & Economy:
- When bond yields rise, the RBI has to offer higher cut-off price/yield to investors during auctions.
- This means borrowing costs will increase.
- However, RBI is expected to stabilise yields through open market operations and operation twists.
- Also, government borrowing costs are used as the benchmark for pricing loans to businesses and consumers. So, any increase in yields will be transmitted to the real economy.
FPI:
- Traditionally, when bond yields rise in the US, FPIs (foreign portfolio investment) move out of Indian equities. it results in capital outflows from equities and into debt.
- A higher return on treasury bonds in the US leads investors to move their asset allocation from more risky emerging market equities or debt to the US Treasury.
- India will likely witness an outflow of funds.
Banking:
- A rise in bond yields will put pressure on interest rates in the banking system which will lead to a hike in lending rates.

3. SURETY BONDS

TOPIC: Economy

Concept- The government has allowed the use of surety insurance bonds as a substitute for bank guarantees for infrastructure development.

Concept-

What is Surety Bond?

Surety Bond is a three-party agreement that legally binds together a principal who needs the bond, an obligee who requires the bond and a surety company that sells the bond.
Surety bonds provide financial guarantee that contracts will be completed according to predefined and mutual terms.
Surety bond is provided by the insurance company on behalf of the contractor to the entity which is awarding the project. When a principal breaks a bond’s terms, the harmed party can make a claim on the bond to recover losses.
It can effectively replace the system of bank guarantee issued by banks for projects and help reduce risks due to cost overrun, project delays and poor contract performance
Surety bonds are mainly aimed at infrastructure development, mainly to reduce indirect cost for suppliers and work-contractors thereby diversifying their options and acting as a substitute for bank guarantee.
Currently, Surety Bond for contractors is not being offered by insurance companies in the market to guarantee satisfactory completion of a project by a contractor and provide performance security to various government agencies

IRDAI guidelines for surety bonds:

The premium charged for all surety insurance policies under written in a financial year, including all instalments due in subsequent years for those policies, should not exceed 10 per cent of the total gross written premium of that year, subject to a maximum of Rs 500 crore.
The limit of guarantee should not exceed 30 per cent of the contract value. Surety Insurance contracts should be issued only to specific projects and not clubbed for multiple projects.

4. NEET BILL

TOPIC: Indian Polity

Context- Tamil Nadu Governor R.N. Ravi has returned to the Assembly Speaker a Bill seeking to dispense with NEET- based admissions for under- graduate medical degree courses.

Concept-

About NEET

It is an all-India pre-medical entrance test for students who wish to pursue undergraduate medical (MBBS), dental (BDS) and AYUSH (BAMS, BUMS, BHMS, etc.) courses.
The exam is conducted by National Testing Agency (NTA).
The NEET has replaced the formerly All India Pre-Medical Test (AIPMT).

TN law: Permanent Exemption for NEET

The Bill exempts medical aspirants in Tamil Nadu from taking NEET examination for admission to UG degree courses in Indian medicine, dentistry and homeopathy.
Instead, it seeks to provide admission to such courses on the basis of marks obtained in the qualifying examination, through “Normalization methods”.
The aim of the Bill is to ensure “social justice, uphold equality and equal opportunity, protect all vulnerable student communities from being discriminated” & “mainstreaming of medical and dental education particularly the rural areas”.

Why TN is against NEET?

Non-representative: TN opposes because NEET undermined the diverse societal representation in MBBS and higher medical studies.
Exams for the elite: It considers NEET not a fair or equitable method of admission since it favored the rich and elite sections of society.
Healthcare concerns: If continued, the rural and urban poor may not be able to pursue medical courses.
Disfavors the poor: It has favored mainly the affordable and affluent sections of the society and thwarting the dreams of underprivileged social groups.

Can any state legislate against NEET?

Admissions to medical courses are traceable to entry 25 of List III (Concurrent List), Schedule VII of the Constitution.
Therefore, the State can also enact a law regarding admission and amend any Central law on admission procedures.
Yet, as far as matters relating to the determination of standards for higher education are concerned, the central government has the power to amend a clause or repeal an Act.

5. MAP OF INDIA ON WHO’s WEBSITE

TOPIC: Maps

Context- The issue of the wrong depiction of a map of India on WHO’s website has been “raised strongly” with the World Health Organisation, the Ministry of External Affairs (MEA) said on Monday.

Concept-

Aksai Chin Region:

China controls Aksai Chin area, while India claims that it is part of Indian Territory (Union territory of Ladakh).

Dispute over Aksai Chin:

During the time of British rule in India, two borders between India and China were proposed- Johnson’s Line and McDonald Line.
The Johnson’s line (proposed in 1865) shows Aksai Chin in erstwhile Jammu and Kashmir (now Ladakh) i.e. under India’s control whereas McDonald Line (proposed in 1893) places it under China’s control.
India considers Johnson Line as a correct, rightful national border with China, while on the other hand, China considers the McDonald Line as the correct border with India.
At present, Line of Actual Control (LAC) is the line separating Indian areas of Ladakh from Aksai Chin. It is concurrent with the Chinese Aksai Chin claim line.

6. JOB RESERVATIONS FOR LOCALS

TOPIC: Polity

Context- The Punjab and Haryana High Court on Thursday granted an interim stay on the controversial law for reservation of 75% jobs in private companies, societies and trusts for local Haryana candidates.

Concept-

Prior to Haryana, States such as Madhya Pradesh, Karnataka, Andhra Pradesh also tried to provide reservation in private jobs.

About Haryana State Employment of Local Candidates Bill, 2020

It provides for a 75 per cent job quota for local people in private sector jobs which offer a salary of less than Rs. 50,000 a month.
The law applies to private companies, societies, trusts, and partnership firms, among others, located in the state. Furthermore, it is applicable to organizations having 10 or more employees.
It will be applicable to the new job openings only and won’t affect the outsiders already working in the private sector.
Penalty for non-compliance ranges from Rs. 10,000 to Rs. 2,00,000 rupees.
A domicile certificate would be mandatory for the candidate seeking benefit under the law.

Constitutional Provisions related to reservations in employment:

The constitution under Article 16 and Article 371 mentions the Reservation in jobs.

Article 16(1): It provides for equality of opportunity for all citizens in matters relating to ’employment or appointment’ to any office under the State.
Article 16(2): It provides that there cannot be any discrimination on grounds only of religion, race, caste, sex, descent, place of birth, residence or any of them.
Article 16(3): It provides an exception by saying that Parliament may make a law “prescribing” a requirement of residence for jobs in a particular state. This power vests solely in the Parliament, not state legislatures.
Article 371: Some states have special protections under Article 371. Andhra Pradesh under Section 371(d) has powers to have “direct recruitment of local cadre” in specified areas.

Supreme Court Judgements regarding reservation in private jobs

Pradeep Jain v Union of India (1984) case: The Supreme Court discussed the issue of legislation for “sons of the soil”. Further, The court held an opinion that such policies would be unconstitutional but did not expressly rule on it.
Sunanda Reddy v State of Andhra Pradesh (1995) case: The Supreme Court repeated its earlier interpretation in Dr Pradeep Jain case. Further, the court strikes down the state government policy that gave 5% extra weightage to candidates who had studied with Telugu as the medium of instruction.
The Rajasthan government gave preference to “people belonging to the concerned district or the rural areas of that district” in appointments. But, in 2002 the Supreme Court invalidated the appointment of government teachers in Rajasthan.
In 2019, the Allahabad High Court struck down a recruitment notification issued by the Uttar Pradesh Subordinate Service Selection Commission. The commission prescribed preference for women who were original residents of the state in job appointments.

7. INTERNATIONAL SPACE STATION

TOPIC: Science & Tech

Context- NASA has said the International Space Station cease operations in 2031.

Concept-

International Space Station:

The ISS is a manmade space station or artificial satellite that is habitable for humans in space.
It is in the low-earth orbit and there are astronauts living onboard the space station conducting experiments on earth science, biology, biotechnology, astronomy, microgravity, meteorology, physics, etc.
The International Space Station was the brainchild of former US President Ronald Reagan, who in 1984 proposed building a permanently inhabited spacecraft in cooperation with a few other countries.
The ISS was developed and built by five space agencies namely, NASA (USA), Roscosmos (Russia), European Space Agency (ESA-Europe), JAXA (Japan) and the Canadian Space Agency (CSA-Canada).
The station is divided into two sections: the Russian Orbital Segment (ROS) is operated by Russia, while the United States Orbital Segment (USOS) is run by the United States as well as many other nations.

How will the ISS retire?

According to NASA, the ISS’ re-entry into the Earth’s atmosphere will take place in January 2031.
Mission control will first lower its altitude and then descent into the South Pacific Oceanic Uninhabited Area (SPOUA), in an area known as Point Nemo.
- Point Nemo is a sort of space cemetery, where decommissioned space debris are often brought to rest. It is located at a distance of 2,700 km from any land. The place has been named after a character in Jules Verne’s novel “Twenty Thousand Leagues Under the Sea.

What’s next for the ISS?

According to NASA, once it retires, the ISS will be replaced by “one or more commercially-owned and -operated” space platforms.

8. INDIA-SRI LANKA DISPUTE

TOPIC: Maps

Context- 2 Sri Lankans were killed ‘in a clash’ with Indian ﬁshermen in Jaffna.

Concept-

India- Sri Lanka fishermen issue:

Arrest of Indian fishermen on the Sri Lankan side of the International Maritime Boundary Line (IMBL) in the Palk Straits and the Gulf of Mannar by Sri Lankan authorities has been a long-standing problem with the Sri Lankan Navy firing on Indian fishing vessels.
The catch on the Sri Lankan side is better both in terms of quality (high-value prawns) and quantity.
The issue started because of Indian fishermen having used mechanised trawlers, which deprived the Sri Lankan fishermen (including Tamils) of their catch and damaged their fishing boats.
The Sri Lankan government wants India to ban use of mechanized trawlers in the Palk Strait region, and negotiations on this subject are undergoing.
So far, no concrete agreement has been reached since India favours regulating these trawlers instead of banning them altogether.

9. STARLINK NETWORK

TOPIC: Science & tech

Context- Elon Musk’s satellite internet venture Starlink has started offering a ‘premium’ service to its customers.

Concept-

Starlink is a SpaceX project to build a broadband network with a cluster of orbiting spacecraft that could eventually number thousands.

What is the satellite broadband service?

The service offers low-latency broadband internet to remote areas across the globe, using a constellation of satellites in low-Earth orbit.
In other words, it allows users to connect to the internet beamed from space onto a dish antenna, much like satellite TV.
Amazon and One Web are also working on their versions of this satellite internet technology.

What is Starlink’s premium service?

The premium service claims to provide internet speeds ranging between 150 and 500 mbps. The latency of the premium service is between 20-40ms.
In contrast, the regular Starlink service has speeds between 100 and 200 mbps.

Space Internet with Low Earth Orbit

The LEO extends up to 2,000 km above the Earth’s surface.
Advantages:
- Reduced Latency: The presence of satellite at a lower height from the Earth’s surface, will help to bring the lag down to 20-30 milliseconds, roughly the time it takes for terrestrial systems to transfer data.
- More Viable: The signals from satellites in space can overcome obstacles faced by fibre-optic cables or wireless networks easily.
- The traditional ways to deliver the internet — fibre-optic cables or wireless networks are not feasible in remote areas or places with difficult terrain.
Disadvantages:
- Coverage: Due to its lower height, its signals cover a relatively small area. As a result, many more satellites are needed in order to reach signals to every part of the planet.
- Space Debris: It will generate more space debris.
- Difficulty in Space Studies: The constellations of space internet satellites will make it difficult to observe other space objects, and to detect their signals.
- Light Pollution: There will be an increased risk of light pollution. Light reflected from the man-made satellites can interfere with — and be mistaken for — light coming from other space bodies.

Can satellite-based internet services challenge terrestrial networks?

Services proposed by companies such as Starlink and One Web mainly depend on low-earth orbit (LEO) satellites.
While in the short term satellite broadband may only be targeted at remote areas where terrestrial networks haven’t reached, in the longer term it could end up competing with these networks even in the developed regions given one key benefit, which is that signals travel faster through space than they do through optic fibre cables.

10. TAX ON DIGITAL ASSETS UNDER INCOME TAX ACT

TOPIC: Economy

Context- Finance Minister Nirmala Sitharaman has proposed to tax all proﬁts from transactions in such assets at 30% along with the applicable surcharge and cess, and a 1% tax to be deducted by buyers while trading in any virtual digital asset beyond a threshold.

Concepts-

Finance Minister introduced 30% income tax on returns of virtual and digital currencies.
also introduced 1% TDS on digital assets.
Taxation of Virtual Digital Assets is being clarified by inserting Section 115 BBH in the Income Tax Acte. Income from sale of virtual digital asset such as cryptocurrency, NFT etc would be taxed at base rate of 30 percent.

Capital Gains

This gain or profit comes under the category of ‘income’.
Hence, the capital gain tax will be required to be paid for that amount in the year in which the transfer of the capital asset takes place. This is called the capital gains tax, which can be both short-term and long-term.
Long-term Capital Gains Tax:
- It is a levy on the profits from the sale of assets held for more than a year. The rates are 0%, 15%, or 20%, depending on the tax bracket.
Short-term Capital Gains Tax:
- It applies to assets held for a year or less and is taxed as ordinary income.
Capital gains can be reduced by deducting the capital losses that occur when a taxable asset is sold for less than the original purchase price. The total of capital gains minus any capital losses is known as the “net capital gains”.
Capital assets are significant pieces of property such as homes, cars, investment properties, stocks, bonds, and even collectibles, digital assets or art.

11. Planetary boundaries

Topic: Environment

About:

The concept of planetary boundaries was first proposed by a team of international scientists in 2009 to articulate key natural processes that, when kept in balance, support biodiversity.

Nine planetary boundaries beyond which we can’t push Earth Systems without putting our societies at risk:

climate change,
biodiversity loss,
ocean acidification,
ozone depletion,
atmospheric aerosol pollution,
freshwater use,
biogeochemical flows of nitrogen and phosphorus,
land-system change, and
Release of novel chemicals.

Humanity already exists outside the safe operating space for at least four of the nine boundaries:

climate change,
biodiversity,
land-system change, and
biogeochemical flows (nitrogen and phosphorus imbalance).

The best way to prevent overshoot, researchers say, is to revamp our energy and food systems.

The nine planetary boundaries, counter clockwise from top: climate change, biosphere integrity (functional and genetic), land-system change, freshwater use, biogeochemical flows (nitrogen and phosphorus), ocean acidification, atmospheric aerosol pollution, stratospheric ozone depletion, and release of novel chemicals (including heavy metals, radioactive materials, plastics, and more).

Earth Trajectories: Think of the Earth’s climate taking different trajectories through time — pathways weaving between different climate states.
Different paths through all the possible climates can be influenced by distinct tipping points.
Self-reinforcing feedback processes can lock the planet into a particular trajectory for centuries or millennia.
There is no evidence that modern societies can exist, let alone thrive, in conditions substantially different from the Holocene.

12. Forever chemicals

Topic: Environment

About:

Per- and polyfluoroalkyl substances (PFASs) are synthetic organofluoride chemical compounds that have multiple fluorine atoms attached to an alkyl chain.
PFAS are known as “forever chemicals” because they never break down and remain present in the human body.
People consume the chemical after it leaks into the ground water or is released into the air.
Of the more than 9,000 known PFAS compounds, 600 are currently used in the U.S. in countless products, including firefighting foam, cookware, cosmetics, carpet treatments and even dental floss.
Because of their widespread use, release and disposal over the decades, PFASs show up virtually everywhere: in soil, surface water, the atmosphere, the deep ocean—and even the human body.

13. BPA

Topic: Environment

About:

BisphenolA (BPA) is a chemical compound and one of the simplest and best-known bisphenols.
It is produced by the condensation of phenol and acetone, with an estimated 4 million tonnes of produced worldwide in 2015.
It is a colourless solid which is soluble in organic solvents, but poorly soluble in water (0.344 wt % at 83 °C).
BisphenolA (BPA) is a chemical produced in large quantities for use primarily in the production of polycarbonate plastics.
It is found in various products including shatterproof windows, eyewear, water bottles, and epoxy resins that coat some metal food cans, bottle tops, and water supply pipes.
The primary source of exposure to BPA for most people is through the
While air, dust, and water are other possible sources of exposure, BPA in food and beverages accounts for the majority of daily human exposure.
Bisphenol A can leach into food from the protective internal epoxy resin coatings of canned foods and from consumer products such as polycarbonate tableware, food storage containers, water bottles, and baby bottles.
The degree to which BPA leaches from polycarbonate bottles into liquid may depend more on the temperature of the liquid or bottle, than the age of the container.
BPA can also be found in breast milk.
BPA is a known endocrine disruptor.
Generally, BPA acts on hormonal level by distorting hormonal balance and inducing estrogenic effects through binding with estrogen-related receptors (ERR).
The resultant effects are numerous of which hormonal related abnormalities have been mostly reported.