UPSC 2017: Comprehensive News Analysis - Aug 20

• Expressway long banks: The Assam government has decided to start dredging and deepening the entire river bed of the Brahmaputra across the State.
• Dredgers will be used for deepening the river bed, starting from Sadiya in the north of Assam to Dhubri in the south.
• The State Government has also decided to prepare a detailed project report to build a 725 km Brahmaputra Expressway along both the banks of the river with the sand recovered from the dredging.
• Advantages:
• Improve the water carrying capacity of the Brahmaputra
• The river becomes navigable for bigger cargo ships.
• Present situation: Heavy siltation has made the river bed shallow and reduced the water-carrying capacity.

Basic Information:

Dredging:

• Dredging is an excavation activity usually carried out underwater, in shallow seas or freshwater areas with the purpose of gathering up bottom sediments and widening. This technique is often used to keep waterways navigable and creates an anti-sludge pathway for boats. It is also used as a way to replenish sand on some public beaches, where sand has been lost because of coastal erosion.

B. GS2 Related

• According to the HRD Ministry, the top 20 per cent of higher education institutions in the country deserved more autonomy
• And the government would work towards exempting them from UGC’s review mechanism

Modalities:

• All higher education institutions will be divided into three categories

1. The top 20 per cent enjoying greater academic freedom

2. The next 40 per cent with relatively more regulations

3. The remaining 40 per cent that will remain under the UGC’s regulatory control

• The top 20 per cent will be chosen on the basis of the NAAC grading system scores

Objective:

• The plan to set up 20 world-class institutions, 10 government-run and 10 private
• The 20 will be known as “institutions of eminence”

• US Trade Representative has formally initiated an investigation of China’s intellectual property practices under Section 301 of the Trade Act of 1974.
• Investigation main aim: to determine if China (America’s largest trading partner) has been engaging in unfair practices.
• Key Fact: China is America’s largest trading partner, with annual trade in goods and services worth about US$ 663 billion.
• USTR observations:
• The Chinese government reportedly uses a variety of tools, including opaque and discretionary administrative approval processes, joint venture requirements, foreign equity limitations, procurements, and other mechanisms to regulate or intervene in US companies’ operations in China, in order to require or pressure the transfer of technologies and intellectual property to Chinese companies.
• Many US companies report facing vague and unwritten rules, as well as local rules that diverge from national ones, which are applied in a selective and non-transparent manner by the Chinese government officials to pressure technology transfer.
• The Chinese government’s acts, policies and practices reportedly deprive US companies of the ability to set market-based terms in licensing and other technology-related negotiations with Chinese companies and undermine US companies’ control over their technology in China.

• United State designated Hizbul Mujahideen as a foreign terrorist organization.

In news:

• India has welcomed this move.
• The move reflects the joint commitment of India and the US to firmly deal with terrorism in all its forms and manifestation.
• Pakistan stance: Pakistan which calls Hizbul a group of freedom fighters.

C. GS3 Related

• Reserve Bank Governor Urjit Patel called for recapitalisation of state-run banks
• Why? to help them resolve the NPAs issue in a time-bound manner.
• Matter of concern: Gross NPA ratio of the banking system at 9.6 per cent and stressed advances ratio at 12 per cent as of March 2017.
• Lenders to be blamed for the menace: poor credit appraisal systems have led to the pile of bad loans, which tops over Rs 9 lakh crore
• Key fact:5 per cent of GNPAs are accounted by large borrowers.
• Possible measures: combination of capital rising from the market, dilution of government holding, additional capital infusion by the government, merger based on strategic decision and sale of non-core assets.

Basic Information:

What is ‘Recapitalization’

• Recapitalization is restructuring a company’s debt and equity mixture, often with the aim of making a company’s capital structure more stable or optimal. Essentially, the process involves the exchange of one form of financing for another, such as removing preferred shares from the company’s capital structure and replacing them with bonds.

Non-performing Assets

• Non-performing assets (NPA) are loans where borrower payments have remained overdue for a period for over 90 days. Banks are required to classify NPAs further into substandard — when the loan is overdue for 90 days; doubtful asset — when the loan is overdue for 12 months; and loss asset — loans that are considered uncollectible.

Gross NPA

• Gross NPA is the amount outstanding in the borrowal account, in books of the bank other than the interest which has been recorded and not debited to the borrowal account. Net NPAs is the amount of gross NPAs less (1) interest debited to borrowal and not recovered and not recognized as income and kept in interest suspense (2) amount of provisions held in respect of NPAs and (3) amount of claim received and not appropriated.
• The Reserve Bank of India defines Net NPA as

Net NPA = Gross NPA – (Balance in Interest Suspense account + DICGC/ECGC claims received and held pending adjustment + Part payment received and kept in suspense account + Total provisions held).

2. Use coal while economical, says CEA

• Chief Economic Adviser Arvind Subramanian’s talk about costs of moving away from coal to renewable energy

Highlights

• India should leverage its coal assets while it is still economical to do so before ramping up its renewable energy capacity.
• India should not be influenced by ‘coal imperialism’, with developed countries trying to influence developing countries to cut their fossil fuel consumption at a rate not in keeping with historical factors and equity.
• Properly costed, renewables will achieve true parity in social terms with coal only in the future
• We should maximise the use of natural assets while economics permits it, and then ramp up the free assets such as renewable sources when needed

Costs of moving away from coal to renewable energy

• It will impact employment, and the regional economies where coal mines are located.
• Increasingly using renewable sources would further reduce the plant load factors of coal power plants, which, in turn, could further worsen their finances and the non-performing assets problem.
• If India achieves its target in renewable energy (of 175 GW by 2022), the plant load factor will decline by 13 percentage points, which is significant since the PLF is already so low
• The low tariffs seen in the renewable sector do not include several implicit costs that are, so far, being subsidised.
• Among the costs of adopting renewable energy that are not factored into the tariff included the cost of intermittent supply of power from solar and wind sources, the land acquisition costs, the upgradation of the grid to support energy from renewable sources, and the cost of stranded coal assets.

• The government is contemplating tougher foreign investment norms for multinational firms to acquire existing pharmaceutical facilities in India.
• Purpose: to protect the Indian drug manufacturing sector.
• Manufacturing in India is cheaper and most of the facilities have state-of-the-art infrastructure, foreign firms acquire these units and then stop manufacturing drugs for use in India.

New draft pharma policy proposals:

• Continuation of manufacturing of essential medicines.
• Expenditure on R&D and
• Technology transfer to seek approval for foreign direct investment (FDI).

Governments’ recent decision: June 2016

• Government allowed up to 74% FDI in brownfield projects through automatic route, with an aim to promote investment in the sector.
• At present there is no mechanism or system to monitor the post-acquisition (FDI) activities of the company.
• New draft pharma policy proposal: A system would be developed to monitor the adherence to these conditions.

Key facts:

• Many neighboring countries like Vietnam, South Korea, Sri Lanka and Bangladesh are emerging as generic drug manufacturers and posing competition to India.
• India, which is known for its ability to supply low priced quality generic medicines, is witnessing a decline in its compounded annual rate of growth in the pharmaceutical industry. It has seen a decline from 14.36% in 2010-11 to 8.68% in 2014-15.
• Pharmaceutical industry is the third largest export revenue churner for India.

• Scientists have solved the mystery of how the complex life forms appeared on the earth.
• Researchers led by the Australian National University (ANU) analysed ancient sedimentary rocks from central Australia, finding that the evolution of animals began with the rise of algae 650 million years ago.
• Rise of algae triggered one of the most profound ecological revolutions in the earth’s history, without which humans and other animals would not exist.

Snowball Earth:

• The earth was frozen over for 50 million years.
• Huge glaciers ground entire mountain ranges to powder that released nutrients, and when the snow melted during extreme global heating event rivers washed torrents of nutrients into the ocean.
• It was the transition from oceans being dominated by bacteria to a world inhabited by more complex life.
• These large and nutritious organisms at the base of the food web provided the burst of energy required for the evolution of complex ecosystems, where increasingly large and complex animals, including humans, could thrive on the earth.

D. GS4 Related

E. Practice Questions for UPSC Prelims Exam

Question 1. Exercise EKUVERIN is a joint military exercise between

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Question 2. Bedaquiline is a drug used to treat:

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Question 3. The ‘Zero Effect Zero defect’ idea aims to achieve:

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