08 Aug 2022: UPSC Exam Comprehensive News Analysis

Quote for the day Set 5 11

CNA 08 Aug 2022:- Download PDF Here

TABLE OF CONTENTS

A. GS 1 Related
INDIAN SOCIETY
1. ‘Sarpanch Pati
B. GS 2 Related
C. GS 3 Related
ENVIRONMENT
1. Climate Change and Extreme Weather Events
ECONOMICS
1. Stablecoin regulation
D. GS 4 Related
E. Editorials
POLITY AND GOVERNANCE
1. The working of Supreme Court collegium
ENVIRONMENT
1. Tapping technology to check minor mineral plunder
F. Prelims Facts
1. Alleged ISIS member held in Delhi
G. Tidbits
H. UPSC Prelims Practice Questions
I. UPSC Mains Practice Questions

FIP Magazine

Category: ECONOMICS

1. Stablecoin regulation

Syllabus: Mobilization of resources

Mains: Opportunities and threats of Cryptocurrencies

Context: Major global regulators are working on regulations to enforce strict controls on the companies distributing cryptocurrencies classified as stablecoins. 

Introduction: 

  • After recent instabilities in the Cryptocurrency market, the Financial Stability Board (FSB) promised to push for stablecoin regulation and supervision.
  • Recently, the European Commission and EU-based legislators decided on the Markets in Crypto-Assets, or MiCA law, to impose strict controls on the companies distributing cryptocurrencies categorised as stablecoins.

What are stablecoins? 

  • A stablecoin is a cryptocurrency whose value is usually  pegged to a ‘stable’ asset, such as gold or the U.S. dollar . 
  • They are designed to be protected from the wild volatility that makes it difficult to use digital assets for payments or as a store of value.
  • They form a link between old-world money and new-world crypto. They also promise to function like perfectly safe holdings.
  • Stablecoins have a market cap of around $170 billion, making them a comparatively small part of the overall cryptocurrency market($1.2 trillion).
  • For a cryptocurrency trader, tracking stablecoin flows can help them gauge the state of the market.

Types of Stablecoins:

types of stablecoins

Image Credit: 101 Blockchains

  • The largest stablecoin today is Tether (USDT), whose market cap is close to $66 billion, putting it below Ethereum, the second largest cryptocurrency.
  • Tether also recently launched a stablecoin pegged to the British pound. 

What are the use cases for stablecoins? 

  • Stablecoins makes moving small amounts of money across borders is often efficient and inexpensive. 
  • Payments in stablecoins circumvent the 2-3% transaction fees that come with the intermediary processing fees by financial institutions.
  • Stablecoins have a value that is designed to be stable over any period which makes them an ideal safe haven asset especially because they have full custody of their assets. 
    • This has recently been illustrated with the politico-economic crisis in Venezuela, where many citizens fleeing the country have stored their savings in Bitcoin to avoid confiscation of their fiat money.
  • They can offer full transparency into the process by which they are backed through regular audits. 
  • In countries such as Nigeria, Argentina and Turkey where the local currency is losing value rapidly, converting funds to stablecoins is one way for residents to protect their earnings. 
  • In countries like Afghanistan and Iran where global sanctions have blocked remittance channels, stablecoin transfers have helped a few crypto users to secure their earnings. 

How ‘stable’ are stablecoins? 

  • Stablecoins are not authorized for use by country regulations or central banks, which means that investors take on considerable legal and financial risk to hold them.
  • Tether had surged from just $4.1 billion at the start of 2020 to $80 billion in April 2022 which potentially threatened the balance of the US dollar.
  • Recent regulations and penalties on Tether by various American agencies resulted in the decrease of Tether’s market cap from around $80 billion in April 2022 down to around $66 billion in July 2022.
  • After the recent crash of TerraUSD(UST) which lost nearly 100% of its value due to various market factors and company failures, several other stablecoins like USDT also lost value temporarily as investors panicked. 
  • The U.S. Federal Reserve in its recent biannual financial stability report warned stablecoins are increasingly used to facilitate leveraged trading in other cryptocurrencies.
  • For this reason, the crypto community does not want stablecoins to be controlled by centralized laws or standards

Nut Graf: Due to the recent cryptocurrency market crash and associated issues, various regulators across the globe have increased the scrutiny and are working towards more regulations on stablecoins.The risks within the stablecoin ecosystem are very high. And now, as regulators step in, the market is expected to make traders more fearful.

Category: ENVIRONMENT

1. Tapping technology to check minor mineral plunder

Syllabus: Environment pollution and degradation.

Mains: Illegal sand mining.

Details:  

  • The demand for minor minerals like sand and gravel has crossed 60 million metric tons in India due to rapid development.
  • It has thus became the second largest extractive industry on the planet, after water.
  • The  rampant and illegal mining of minor minerals continues unabated, even after stringent laws.

Provisions available against illegal mining:

  • The administrative and regulatory powers to set rules, prescribe rates of royalty and mineral concessions alongwith enforcement are entrusted  to the State governments exclusively.
  • On the recommendation of the Supreme Court, the amended EIA of 2016 made environmental clearance mandatory for mining in areas even less than five hectares, including minor minerals. 
  • The 2016 amendment also had provisions for setting up of a District Environment Impact Assessment Authority (EIAA) and a District Expert Appraisal Committee (EAC).

Associated concerns with illegal mining:

  • According to a State-wise review of EACs and EIAAs in States like Gujarat, Uttar Pradesh, Karnataka and Tamil Nadu, the authorities review over 50 project proposals on a daily basis and the rejection rate stands at a mere 1%.
  • As per United Nations Environment Programme, in 2019, India and China were top two countries where illegal sand mining has resulted in rampant environmental degradation.
  • Moreover there is a lack of comprehensive assessment methodology for evaluation of the status of sand mining in India.
  • The issue of illegal mining of minor minerals is often underestimated by the authorities,  further accentuating environmental consequences.
  • Regional studies by the Center for Science and Environment of the Yamuna riverbed in Uttar Pradesh has made following observations:
    • Rampant soil demands has severely impacted soil formation and the soil holding ability of the land
    • Severe loss to marine life.
    • An increased frequency of floods and droughts.
    • Degraded the water quality.
  • Similarly, in a study of the Narmada basin it was found that the population of Mahseer fish reduced by 76% between 1963 and 2015 due to sand mining.
  • Also in many cases it was found that gravel was being removed from agricultural lands or fallow lands of the government near major highways or construction projects due to its cost efficiency and accessibility. 
  • Illegal mining also causes extreme losses to the state exchequer. For example:
    • U.P. loses revenue from 70% of mining activities as only 30% of the area is legally mined.
    • The absence of royalty has resulted in a loss of ₹700 crore in Bihar.
    • Karnataka suffered a loss of ₹100 crore as a result of non-payment of various cesses due to unregulated mining.

State response to judicial orders:

  • According to a report of the Oversight Committee by the National Green Tribunal (NGT), Uttar Pradesh (where illegal sand mining has created a severe hazard) has either failed or complied partially with the orders issued regarding compensation for illegal sand mining.
  • Judicial pronouncements were also neglected in West Bengal, Bihar, and Madhya Pradesh.
  • A State-wide review of the reasons behind non-compliance are:
    • Malfunctioned governance due to weak institutions.
    • Inadequate and scarce state resources to ensure enforcement.
    • Poorly drafted regulatory provisions.
    • Lack of adequate monitoring and evaluation mechanism.
    • Huge number of litigations that dampens state administrative capacity.

Use of technology to resolve the sand mining issues:

  • Satellite imagery:
    • Satellite imagery can be used to assess the volume of extraction and also check the mining process.
    • Satellite pictures can also be used as evidence from the past 10 to 15 years to show the gravity of the issue and fix charges.
    • It was found that with well-planned execution of the directions of NGT to some states regarding use of satellite imaging the revenue from minor minerals mining increased considerably.
  • Moreover drones, the internet of things (IoT) and blockchain technology can also be incorporated in monitoring mechanisms complemented by Global Positioning System, radar and Radio Frequency (RF) Locator.
    • Gujarat State governments and judicial directions by the High Court of Madras have highlighted the use of these technologies to check illegal sand mining.

Nut Graf: Protection of minor minerals requires not just investment in production and consumption measurement but also monitoring and planning tools. To this end, technology can be used as an enabler to provide a sustainable solution.

Related link:  

https://byjus.com/free-ias-prep/upsc-exam-comprehensive-news-analysis-mar01/#CAG%20report%20unearths%20rampant%20illegal%20mining

F. Prelims Facts

1. Alleged ISIS member held in Delhi

Syllabus:Role of External State & Non-State Actors in Creating Challenges to Internal Security

Prelims: ISIS, NIA

Context: The National Investigation Agency (NIA) has arrested an active ISIS member from Delhi claiming that he was collecting funds from sympathizers in India and other countries as well and sending these funds to Syria in the form of cryptocurrency to help ISIS activities.

Read more on ISIS

Read more NIA

G. Tidbits

Nothing here for today!!!

H. UPSC Prelims Practice Questions

Q1. Consider the following pairs: (Level-Hard)

         Caves                                                      State

  1. Borra                                                     Andhra Pradesh
  2. Lomas Rishi                                        Bihar
  3. Mawsmai                                             Meghalaya
  4. Mandapeshwar                                   Himachal Pradesh
  5. Tabo                                                      Maharashtra

Which of the pairs given above are correct?

  1. 1, 2 and 3 only
  2. 3, 4 and 5 only
  3. 1, 2, 4 and 5 only
  4. 1, 2, 3, 4 and 5
CHECK ANSWERS:-

Answer: a

Explanation: 

  • Pair 01 is correct, The Borra Caves  are located on the East Coast of India, in the Ananthagiri hills of the Araku Valley in Andhra Pradesh.They  distinctly exhibit irregularly shaped stalactites and stalagmites and are considered the deepest caves in India.
  • Pair 02 is correct, The Lomas Rishi Cave is one of the man-made in the Barabar and Nagarjuni hills of Bihar. It was built in the 3rd century BC, as part of the sacred architecture of the Ajivikas sect.
The Lomas Rishi Cave

Image Credit: Wikipedia

  • Pair 03 is correct, Mawsmai Cave is a limestone cave found near Cherrapunji, Meghalaya.
  • Pair 04 is incorrect, The Mandapeshwar Caves an 8th Century rock-cut shrine dedicated to lord Shiva located in Maharashtra.
  • Pair 04 is incorrect, Tabo Caves are located in Spiti Valley, Himachal Pradesh.
Q2. With respect to Mullaperiyar Dam, which of the following statements is/are 
correct? (Level-Medium)
  1. It is a masonry gravity dam on the Periyar River
  2. It is located in Kerala but is operated by the government of Tamil Nadu

Options:

  1. 1 only
  2. 2 only
  3. Both
  4. None
CHECK ANSWERS:-

Answer: c

Explanation:

  • Statement 01 is correct, It is a 126-year-old masonry gravity dam located on the confluence of the Mullayar and Periyar rivers in Kerala’s Idukki district.
  • Statement 02 is correct, The dam is owned, operated and maintained by Tamil Nadu.
Q3. Which of the following statements with respect to Nalanda University is/are 
correct? (Level-Medium)
  1. It was founded by Kumargupta I of the Gupta dynasty in 5th century CE.
  2. The archaeological site of Nalanda University in Bihar has been included in the UNESCO’s World Heritage List
  3. Xu Beihong was a Chinese buddhist monk who traveled to India during the reign of King Harsha Vardhan and studied at Nalanda.
  4. Nalanda was ransacked and destroyed by Turkic invaders under Muhammad Ghori

Options:

  1. 1, 3 and 4 only
  2. 2 only
  3. 1 and 2 only
  4. 3 and 4 only
CHECK ANSWERS:-

Answer: c

Explanation: 

  • Statement 01 is correct,  Nalanda University was founded by Kumaragupta – I of the Gupta Dynasty in the 5th Century C.E. It was also supported by the famous ruler King Harshavardhana of Kannauj.
  • Statement 02 is correct, Nalanda University got inscribed as a World Heritage Site by the United Nations Educational, Scientific and Cultural Organization (UNESCO) in 2016.
  • Statement 03 is incorrect, Hiuen Tsang or Xuanzang, a Buddhist monk is said to have visited Nalanda in the 7th century.He studied for about 05 years at Nalanda.During his time at Nalanda, Hiuen Tsang studied logic, grammar, Sanskrit, and the Yogacara school of Buddhism.
  • Statement 04 is incorrect, in 1193, Nalanda was destroyed by a military general of the Ghurid Dynasty from Turk called Bakhtiyar Khilji.
Q4.Consider the following statements with respect to Hansen’s Disease:(Level-Easy)
  1. It is an infection caused by Dhori virus
  2. It can affect the nerves, skin, eyes, and lining of the nose (nasal mucosa).
  3. Hansen’s disease is not passed on from a mother to her unborn baby during pregnancy and it is also not spread through sexual contact.

Which of the statements given above is/are correct?

  1. 1 only
  2. 2 and 3 only
  3. 3 only
  4. 1, 2 and 3
CHECK ANSWERS:-

Answer: b

Explanation:

  • Statement 01 is incorrect, Hansen’s disease/leprosy is an infection caused by bacteria called Mycobacterium leprae.
  • Statement 02 is correct, it affects the skin, nerves, and mucous membranes (the soft, moist areas just inside the body’s openings).
  • Statement 03 is correct, It is not transmitted from a casual contact with a person who has Hansen’s disease.
    • Hansen’s disease is also not passed on from a mother to her unborn baby during pregnancy and it is also not spread through sexual contact.
Q5. The “Miyawaki method” is well known for (Level-Medium)(CSE Prelims-2022)
  1. Promotion of commercial farming in arid and semiarid areas
  2. Development of gardens using genetically modified flora
  3. Creation of mini forests in urban areas
  4. Harvesting wind energy on coastal areas and on sea surfaces
CHECK ANSWERS:-

Answer: c

Explanation:

  • The Miyawaki Method is one of the most effective tree planting methods for creating forest cover quickly on degraded land that has been used for other purposes such as agriculture or construction.
Miyawaki method

Image Credit: Pinterest

Read the previous CNA here.

CNA 08 Aug 2022:- Download PDF Here

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