Daily Prelims Notes 9 October 2020
Table Of Contents
- STUBBLE BURNING
- TRP SYSTEM
- ROLE OF CAG
- BAD BANKS
- CANNABIS PLANT and NDPS ACT
- ORGAN TRANSPLANTATION
- WORLD BANK
- GST COMPENSATION
Subject: Agriculture
Context: IARI has developed ‘decomposer’ capsules, which when mixed in a water solution and sprayed on land, gets to work on paddy stubble, softening and decomposing it to the extent it can mix with soil and act as compost
Concept:
Paddy stubble-burning season is here, and satellite remote sensing data from the Indian Agriculture Research Institute (IARI) show a five-fold increase in the number of farm fires in Punjab, Haryana, and Uttar Pradesh during the first six days of October compared to the corresponding dates in 2019.
What is stubble burning?
It is a common practice in October and November across North West India, but primarily in Punjab, Haryana, and Uttar Pradesh to quickly clear crop residue from their fields before planting the rabi wheat crop
The burning of paddy stubble left in the fields after harvest has been a cause of concern for the past several years as it contributes to air pollution in the northern Gangetic plains and its already polluted cities like Delhi.
Several solutions have been proposed over the years to tackle the issue. The most recent one, which has been billed as a game-changer if found successful, is the ‘Pusa Decomposer’ capsule developed by IARI.
What is the ‘Pusa Decomposer’?
It is essentially a fungi-based liquid solution that can soften hard stubble to the extent that it can be easily mixed with soil in the field to act as compost. This would then rule out the need to burn the stubble, and also help in retaining the essential microbes and nutrients in soil that are otherwise damaged when the residue is burned.
How long does it take for the decomposer to work?
The window of time required for the solution to work, which is currently the main concern of farmers, is around 20 to 25 days, as per the IARI. Farmers argue that this window is too long for them, as they ideally wait about a week or 10 days after harvesting the non-basmati variety of rice — which leaves hard stubble — to sow the wheat crop.IARI scientists, however, say that farmers do not necessarily have to plant the next crop in a rush — and that 20-25 days is enough waiting time.
How is this technology being used?
Union Environment Minister Prakash Javadekar has said that the decomposer will be used on a trial basis this year in Punjab, Haryana, Uttar Pradesh and Delhi.
Ministry officials said the technology would be used over 100 hectares of land in Punjab and Haryana, 800 hectares in Delhi and 10,000 hectares in Uttar Pradesh, which they said has been experimenting with a similar technology for the last three years.
IARI has been conducting experiments for a year-and-a-half on the decomposer. The technology was licensed for commercial use to four companies in 2019, and to two other companies in 2020.
Delhi has started preparing the solution with help from IARI and would begin spraying it over fields October 11 onwards.
2. TRP SYSTEM
Subject: Economy
Context: Mumbai Police Commissioner said that police are looking into a scam about manipulation of TRPs (Television Rating Points) by rigging the devices used by the Broadcast Audience Research Council (BARC) India, which has the mandate to measure television audience in India.
Concept:
What is TRP?
In simple terms, TRPs represent how many people, from which socio-economic categories, watched which channels for how much time during a particular period. This could be for an hour, a day, or even a week; India follows the international standard of one minute. The data is usually made public every week.
A consultation paper about television audience measurement and ratings in India floated by the Telecom Regulatory Authority of India (TRAI) in 2018 defined its importance as: “On the basis of audience measurement data, ratings are assigned to various programmes on television. Television ratings in turn influence programmes produced for the viewers. Better ratings would promote a programme while poor ratings will discourage a programme. Incorrect ratings will lead to production of programmes which may not be really popular while good programmes may be left out.”
What is BARC?
It is an industry body jointly owned by advertisers, ad agencies, and broadcasting companies, represented by The Indian Society of Advertisers, the Indian Broadcasting Foundation and the Advertising Agencies Association of India. Though it was created in 2010, the I&B Ministry notified the Policy Guidelines for Television Rating Agencies in India on January 10, 2014 and registered BARC in July 2015 under these guidelines, to carry out television ratings in India.
How is TRP calculated?
BARC has installed “BAR-O-meters” in over 45,000 empanelled households. These households are classified into 12 categories under the New Consumer Classification System (NCCS), the so-called “new SEC” adopted by BARC in 2015, based on the education level of the main wage earner and the ownership of consumer durables from a list of 11 items ranging from an electricity connection to a car.
While watching a show, members of the household register their presence by pressing their viewer ID button — every person in household has a separate ID — thus capturing the duration for which the channel was watched and by whom, and providing data on viewership habits across age and socio-economic groups. The panel chosen to capture TRPs must be representative of the country’s population, and the methodology must be economically viable for the industry.
How can TRP data be rigged?
If broadcasters can find the households where devices are installed, they can either bribe them to watch their channels, or ask cable operators or multi-system operators to ensure their channel is available as the “landing page” when the TV is switched on.
For TRPs, it does not matter what the entire country is watching, but essentially what the 45,000-odd households supposed to represent TV viewership of the country have watched. Broadcasters can target these households to fudge actual viewership data.
In the 2018 consultation paper, TRAI said: “One of the biggest challenges has been the absence of any specific law through which the agents/ suspects involved in panel tampering/infiltration could be penalised”. It noted that BARC “has filed FIRs in various police stations against the agents/ suspects involved in panel tampering/infiltration” but its efforts “to mitigate panel tampering/ infiltration have been hampered due to absence of any legal framework”.
How does panel tampering affect TRPs?
TRAI mentioned “panel infiltration has a significant impact when the panel size is smaller” and “with the increase in panel size, infiltration of panel homes becomes challenging”.
In the current case, an FIR was filed against employees of Hansa Research, which BARC hires for certain field jobs like going to panel households. BARC hires multiple agencies so that no single agency has the entire map of panel households across the country.
For instance taking the example of English TV news, which has a small share of the national viewership pie at around 1.5%, which means that for around 45,000 panel households, around 700 households will contribute to the viewership. “What actually happens is that while your sample is around 700, not all of them are watching English TV news every day. Actual watching will be around 350 homes.” In such a scenario, “if someone manage to rig 10 among the heavy viewing homes, then one can swing the needle big time”.
When the sample is smaller, “manipulation becomes easier”. In a genre like English news, “because fewer homes will have larger weightage, change in behaviour of one home gets amplified at a much larger scale nationwide”.
Additionally, as each channel tries to project itself as a market leader in a particular segment, it slices the data into socio-economic brackets on the basis of NCCS, age, gender, time slots (primetime) etc to find the perfect data slice. This too increases relative error in the data, because of the small sample size.
How often have allegations been made?
For over a decade, questions have been raised by people from within the industry.
Two years ago, the I&B Ministry had raised concerns that BARC was under-reporting viewership of Doordarshan, and floated the idea of chip-based activity logs through all set-top boxes. The idea was finally rejected.
In 2017, the editor of one of the top five English news channels had written to BARC about how a few households from Gujarat were contributing heavily to a rival channel’s overall viewership.
3. ROLE OF CAG
Subject: Polity
The latest India-specific data on COVID-19 infections is alarming. With the nation spending substantial resources to manage the pandemic, the role of CAG as a supreme audit institution has gained greater importance.
About
CAG is an independent authority under the Constitution of India.
He is the head of the Indian audit & account department and chief Guardian of Public purse.
It is the institution through which the accountability of the government and other public authorities (all those who spend public funds) to Parliament and State Legislatures and through them to the people is ensured.
Comparison with Britain CAG
CAG of India only performed the role of an Auditor General and not of a Comptroller but in Britain it has the power of both Comptroller as well as Auditor General.
In India the CAG audits the accounts after the expenditure is committed i.e. ex post facto. In UK no money can be drawn from the public exchequer without the approval of the CAG.
In India, CAG is not a member of the parliament while in Britain; CAG is a member of house of the Commons.
Constitutional Provisions
Article 148 broadly deals with the CAG appointment, oath and conditions of service.
Article 149 deals with Duties and Powers of the Comptroller and Auditor-General of India.
Article 150 says that the accounts of the Union and of the States shall be kept in such form as the President may, on the advice of the CAG, prescribe.
Article 151 says that the reports of the Comptroller and Auditor-General of India relating to the accounts of the Union shall be submitted to the president, who shall cause them to be laid before each House of Parliament.
Article 279 – Calculation of “net proceeds” is ascertained and certified by the Comptroller and Auditor-General of India, whose certificate is final.
Third Schedule – Section IV of the Third Schedule of the Constitution of India prescribes the form of oath or affirmation to be made by the Judges of the Supreme Court and the Comptroller and Auditor-General of India at the time of assumption of office.
According to Sixth Schedule the accounts of the District Council or Regional Council should be kept in such form as CAG, with the approval of the President, prescribe. In addition these bodies account are audited in such manner as CAG may think fit, and the reports relating to such accounts shall be submitted to the Governor who shall cause them to be laid before the Council.
Independence of CAG
CAG is appointed by the President by warrant under his hand and seal and provided with tenure of 6 years or 65 years of age, whichever is earlier.
CAG can be removed by the President only in accordance with the procedure mentioned in the Constitution that is the manner same as removal of a Supreme Court Judge.
He is ineligible to hold any office, either under the Government of India or of any state, once he retires/ resigns as a CAG.
His salary and other service conditions cannot be varied to his disadvantage after appointment.
His administrative powers and the conditions of service of persons serving in the Indian Audit and Accounts Department are prescribed by the President only after consulting him.
The administrative expenses of the office of CAG, including all salaries, allowances and pensions are charged upon the Consolidated Fund of India that is not subject to vote
Functions and Power of CAG
CAG derives its audit mandate from different sources like–
Constitution (Articles 148 to 151)
The Comptroller and Auditor General’s (Duties, Powers and Conditions of Service) Act, 1971
Important Judgments
Instructions of Government of India
Regulations on Audit & Accounts-2007
CAG audits the accounts related to all expenditure from the Consolidated Fund of India, Consolidated Fund of each state and UT’s having a legislative assembly.
He audits all expenditure from the Contingency Fund of India and the Public Account of India as well as the Contingency Fund and Public Account of each state.
He audits all trading, manufacturing, profit and loss accounts, balance sheets and other subsidiary accounts kept by any department of the Central Government and the state governments.
He audits the receipts and expenditure of all bodies and authorities substantially financed from the Central or State revenues; government companies; other corporations and bodies, when so required by related laws.
He audits the accounts of any other authority when requested by the President or Governor e.g. Local bodies.
He advises the President with regard to prescription of the form in which the accounts of the Centre and States shall be kept.
He submits his audit reports relating to the accounts of the Centre to the President, who shall, in turn, place them before both the houses of Parliament.
He submits his audit reports relating to the accounts of a State to the Governor, who shall, in turn, place them before the state legislature.
CAG also acts as a guide, friend and philosopher of the Public Accounts Committee of the Parliament.
CAG and Public Accounts Committee (PAC)
PAC is a Parliamentary Standing Committee created under GOI Act, 1919.
CAG audit reports are handed over to the PACs at the centre and at the state.
Three CAG reports i.e. audit report on appropriation accounts, audit report on finance accounts and audit report on public sector undertakings are examined by PAC.
At the central level, these reports are submitted by CAG to president, who makes them to be laid in parliament.
CAG also assists the committee in its deliberations by preparing a list of the most urgent matters which deserve the attention of the PAC.
He also helps in making the actions of the committee clear to the witnesses and in making the action of the government clear to the committee.
CAG position is sometimes one of interpreter and translator, explaining the officials’ views to the politicians and vice-versa.
The responsibility of the CAG does not end here. He has to watch whether the corrective action suggested by him has been taken or not. In cases whether it has not been taken, he reports the matter to the PAC which will take up the matter.
4. BAD BANKS
Subject: Economy
Context: It is reported that the former RBI Governor D Subbarao made a strong case for setting up a bad bank saying it is not just necessary but unavoidable in the present circumstances when NPAs are likely to balloon and much of the resolution will have to take place outside the IBC framework.
Concept:
Bad Bank:
A bad bank is a bank set up to buy the bad loans and other illiquid holdings of another financial institution.
The entity holding significant nonperforming assets will sell these holdings to the bad bank at market price. By transferring such assets to the bad bank, the original institution may clear its balance sheet—although it will still be forced to take write-downs.
A bad bank structure may also assume the risky assets of a group of financial institutions, instead of a single bank.
Bad banks are typically set up in times of crisis when long-standing financial institutions are trying to recuperate their reputations and wallets. While shareholders and bondholders generally stand to lose money from this solution, depositors usually do not.
Banks that become insolvent as a result of the process can be recapitalized, nationalized, or liquidated. If they do not become insolvent, it is possible for a bad bank’s managers to focus exclusively on maximizing the value of its newly acquired high-risk assets.
Some criticize the setup of bad banks, highlighting how if states take over non-performing loans, this encourages banks to take undue risks, leading to a moral hazard.
The 2017 Economic Survey examined this idea, suggesting the creation of a Public Sector Asset Rehabilitation Agency (PARA).
Before that, the 2015 Asset Quality Review conducted by Reserve Bank under Governor RaghuramRajan, which forced banks to recognise problem accounts as non-performing assets, had also sparked a debate on bad bank as a possible solution.
In short, the idea is not novel and has been suggested by various people at different points of time.
Why be concerned about bad loans?
Indian banks’ pile of bad loans is a huge drag on the economy.
It’s a drain on banks’ profits. Because profits are eroded, public sector banks (PSBs), where the bulk of the bad loans reside, cannot raise enough capital to fund credit growth.
Lack of credit growth, in turn, comes in the way of the economy’s return to an 8% growth trajectory. Therefore, the bad loan problem requires effective resolution.
Is the current framework equipped to handle NPAs?
If there is no appetite for AMCs, AIFs and ARCs to take over bad loans, it could be because the owners of those assets want a price higher than the fair market value.
ARCs will buy those pools of stressed assets only if they see continued viability of those pools being recovered and if they are able to get higher returns than the original purchase price
5. CANNABIS PLANT and NDPS ACT
Subject: Legislations
What is the cannabis plant?
According to the World Health Organisation (WHO), cannabis is a generic term used to denote the several psychoactive preparations of the plant Cannabis sativa. The major psychoactive constituent in cannabis is Delta-9 tetrahydrocannabinol (THC). The Mexican name ‘marijuana‘ is frequently used in referring to cannabis leaves or other crude plant material in many countries.
Most species of cannabis are dioecious plants that can be identified as either male or female. The unpollinated female plants are called hashish. Cannabis oil (hashish oil) is a concentrate of cannabinoids — compounds which are structurally similar to THC — obtained by solvent extraction of the crude plant material or of the resin.
The WHO says that cannabis is by far the most widely cultivated, trafficked and abused illicit drug in the world.
How does the NDPS Act define cannabis?
According to the NDPS Act “cannabis plant” means any plant of the genus cannabis. The legislation that was enacted in 1985 succeeded the Dangerous Drugs Act, 1930. It was introduced as lawmakers felt that the older legislation that entailed a maximum punishment of up to four years was not strict enough to check drug trafficking.
Under section 2 (iii), the Act defines cannabis (hemp). The sub-sections refer to parts of the plant that come under the purview of the Act.
‘Charas’ is the separated resin extracted from the cannabis plant. The NDPS Act covers separated raisin, in whatever form, whether crude or purified, obtained from the cannabis plant and also includes concentrated preparation and resin known as hashish oil or liquid hashish.
According to a 2018 WHO report by the Secretariat of the Expert Committee on Drug Dependence (ECDD), “The resin can resemble a resinous secretion of the plant, which is produced in the glandular trichomes, but also occurs as finer plant material, which appears as loose or pressed sticky powder, depending on the method of production.” Charas is also commonly called ‘hash’.
Section 2(iii)(b) of the NDPS Act defines ‘ganja’ as the flowering or fruiting tops of the cannabis plant but it clearly excludes the seeds and leaves, when not accompanied by the tops, by whatever name they may be known or designated. Street names for the drug include ‘weed’ and ‘marijuana’.
The Act also illegalises any mixture with or without any neutral material, of any of the two forms of cannabis – charas and ganja — or any drink prepared from it.
Are substances made from cannabis leaves also illegal under the NDPS Act?
No. As defined in the Act, the legislature left seeds and leaves of the cannabis plant out of the ambit of the NDPS Act.
The serrated leaves of the plant have negligible THC content. THC is the psychoactive or intoxicating compound present in the cannabis plant that is mainly responsible for giving consumers the ‘high’. ‘Bhang’, which is commonly consumed during festivals like Holi, is a paste made out of the leaves of the cannabis plant, and is hence not outlawed.
Similarly, CBD oil — an acronym for cannabidiol derived from the cannabis plant —would not come under the NDPS Act.
It also does not bear the ‘NRx’ sign that prescription drugs that contain substances that may come under the NDPS Act, are required to have according to section 97(c ) of the Drugs and Cosmetics Act that refers to labelling of medicines.
Then why is the use of CBD oil still contentious in India?
The NDPS Act does not permit the recreational use of cannabis in India. While CBD oil manufactured with a licence under the Drugs and Cosmetics Act, 1940 can be legally used, it is not very common. Some Indian websites do sell CBD oil with a prescription and many even facilitate it.
Some states in the US have legalised CBD oil but not In India . Cannabis content is very low and it has very low THC and has no addictive properties. More than anxiety and depression, it has been found useful in cancer treatment like in multiple myeloma. For associated symptoms of cancer it has been found useful. There have been several discussions on this. Cannabis is mired in so much controversy. It should not have been in the NDPS Act, but unfortunately, it is.
CBD also has a non-specific recommendation. People think it will at least have a ‘feel good’ factor or cheer up the person.
Medical practitioners said many people suffering from anxiety and depression are known to buy it legally in the US and bring it back to India for personal use in small quantities.
Subject: Healthcare
Context: Two patients undergo lung transplant at Apollo Hospitals
Concept:
Organ donation/transplantation
Organ donation means giving part of the body (organ) to a person with end stage organ disease who needs a transplant.
The organs that can be donated for transplantation include kidney, liver, heart, lungs, and small bowel and tissues such as corneas, heart valves, skin and bone.Tissue means a group of cells performing a particular function in the human body such as bone, skin, cornea of the eye, heart valve, blood vessels, nerves and tendon etc.
Living Donor Organ Donation: A person during his life can donate one kidney, a portion of pancreas and a part of the liver.
Deceased Donor Organ Donation: A person can donate multiple organs and tissues after (brain-stem/cardiac) death.
Legal Framework:
Organ Transplantation and Donation is permitted by law, and covered under the “Transplantation of Human Organs Act 1994”, which has allowed organ donation by live & Brain-stem Dead donors.
In 2011, amendment of the Act also brought in donation of human tissues, thereby calling the Amended Act “Transplantation of Human Organs & Tissues Act 2011”.
The Government of India has also started a National Organ and Transplant Program (NOTP), under which patients below the poverty line are supported for the cost of transplant as well as cost of immunosuppression after transplant for one year.
7. WORLD BANK
Subject: International Organisation
Context: The World Bank expects India’s economy to contract by 9.6% in 2020-21, revising its earlier estimate in June that output will shrink by just 3.2% amidst the COVID-19 pandemic. This revision reflects ‘the impact of the national lockdown and the income shock experienced by households and firms’.
Concept: The World Bank Group is an international partnership comprising 189 countries and five constituent institutions that works towards eradicating poverty and creating prosperity.
The five development institutions under the World Bank Group are:
International Bank for Reconstruction and Development (IBRD)
International Development Association (IDA)
International Finance Corporation (IFC)
Multilateral Guarantee Agency (MIGA)
International Centre for the Settlement of Investment Disputes (ICSID)
The WBG is headquartered in Washington, D.C. The World Bank Group is a specialized agency of the United Nations.
World Bank Group Membership
To join the World Bank Group, a country must first become a member of the IMF.
To become members of the IDA, IFC, and MIGA, the countries must first become members of IBRD.
International Bank for Reconstruction and Development (IBRD)
The IBRD calls itself a global development cooperative. It has a membership of 189 countries.
It is the world’s largest development bank.
It provides loans, guarantees, advisory services, and risk management products to middle-income and creditworthy low-income countries.
Middle-income countries represent more than 60% of the IBRD’s portfolio.
IBRD finances investments across all sectors and offers technical support and expertise at every stage of a project.
IBRD deals only with sovereign governments and not private players.
It also assists governments in augmenting the investment climate of countries, removing service delivery bottlenecks, and strengthening institutions and policies.
IBRD sources most of its funds from the world’s financial markets.
IBRD and India
India is a founding member of IBRD.
It started lending to India in 1949, the first project being undertaken for the Indian Railways.
Since the 1960s, the IBRD is an important source of long-term funding for India.
India is the largest IBRD client of the World Bank.
India is a blend country, which means it is transitioning from a lower-middle-income to a middle-income country.
India is eligible for loans from both the IBRD and the IDA.
International Development Association (IDA)
The main objective of the IDA is to provide grants and concessional loans to the world’s poorest countries.
International Finance Corporation (IFC)
The IFC is a sister organization of the World Bank (IDA + IBRD). It is the largest international development institution focused on the private sector in developing countries.
It functions as the private sector arm of the WBG.
It works for economic development by investing in for-profit and commercial projects for poverty reduction and augmenting development.
It also engages in mobilizing third-party resources for projects.
The IFC works with the private sector to boost entrepreneurship and create sustainable businesses.
The IFC provides investment, advice, and asset management offerings.
It lends to businesses and private sector projects.
IFC and India
India is a founding member of the IFC.
Over the past few years, IFC has augmented its portfolio in India, improving profitability and investing in high impact projects.
It is expanding its activities in the LIS (the Low Income States and the NE States) in India.
Improving the investment climate for private sector development and inclusive growth.
Financial inclusion by focusing on microfinance institutions.
Focus on renewable energy and cleaner production methods.
Developing PPP transactions with a focus on social services (health and education) and climate change impact projects.
Multilateral Investment Guarantee Agency (MIGA)
MIGA’s chief goal is to enhance cross-border investment in developing countries by giving guarantees (political risk insurance and credit enhancement) to lenders and investors.
The agency’s guarantees to protect investments against non-commercial risks.
It emphasizes on Fragile and Conflict-affected States.
Political risk insurance products:
Coverage against losses due to war, terrorism, and civil disturbance.
Coverage against expropriation by governments.
Coverage against breach of contract.
Protection against losses arising from an inability to legally convert local currency into hard currency.
Credit enhancement – protection when governments fail to honor financial obligations.
India became a member of the MIGA in 1994.
International Centre for Settlement of Investment Disputes (ICSID)
ICSID engages in international investment dispute settlement.
It settles disputes between investors and governments.
It also settles state-state disputes under investment treaties and free trade agreements and acts as an administrative registry.
The Centre provides for settlement of disputes by arbitration, conciliation, or fact-finding.
It also disseminates information on international law on foreign investment.
India is not a member of the ICSID because it claims that the ICSID’s functioning and structure are biased towards the developed countries.
India set up the BRICS Arbitration Centre (BRICS Centre) to address and reinforce international arbitrations with foreign investors. Although this is limited to the BRICS countries, it will be available for all developing countries in the future
Subject: Economy
Context: Opposition leader of Tamilnadu has written to Chief Minister urging him to hold the Centre accountable for the non-payment of GST compensation to the States.
Concept:
Three years after the introduction of India’s new indirect tax regime, GST, it has started to face an existential crisis. The gains of GST have started to quickly erode as the slowdown in the economy, exacerbated by the Covid-19 lockdowns, has thrown all revenue calculations to the wind.
Due to huge shortfalls in the tax collection under GST the Central government and State Government has come at loggerheads as Centre has shown its incapability to compensate the States as promised under the GST Act 2017.
GST Compensation
After the introduction of GST States have very limited taxation rights as most of the taxes, barring those on petroleum, alcohol, and stamp duty, were subsumed under GST.
GST accounts for almost 42% of states’ own tax revenues, and tax revenues account for around 60% of states’ total revenues.
Under the GST (Compensation to States) Act, 2017, states are guaranteed compensation for loss of revenue on account of implementation of GST for a transition period of five years between 2017 and 22.
The compensation is calculated based on the difference between the states’ current GST revenue and the protected revenue after estimating an annualised 14% growth rate from the base year of 2015-16.
Logic Behind GST Compensation
In theory the GST should generate as much revenue as the previous tax regime.
However, the new tax regime is taxed on consumption and not manufacturing.
This means that tax won’t be levied at the place of production which also means manufacturing states would lose out and hence several states strongly opposed the idea of GST.
It was to assuage these states that the idea of compensation was mooted.
To make this promise watertight, the idea of compensation was both written into the Constitution and its finer details passed by way of central legislation.