26 Aug 2021: UPSC Exam Comprehensive News Analysis

August 26th, 2021, CNA:- Download PDF Here

TABLE OF CONTENTS

A. GS 1 Related
B. GS 2 Related
POLITY AND GOVERNANCE
1. Probe agencies too hit by lack of manpower: CJI
INTERNATIONAL RELATIONS
1. Putin, Xi agree to jointly combat ‘threats’
C. GS 3 Related
ECONOMY
1. Centre raises fair price of sugar cane
D. GS 4 Related
E. Editorials
POLITY AND GOVERNANCE
1. Income and quotas
2. Helping and hindering justice
ECONOMY
1. It’s time for Industry 4.0
2. A way of diluting credit discipline
ENVIRONMENT AND ECOLOGY
1. Negotiating the new global climate policy
F. Prelims Facts
1. Campaign for one million soak pits in 100 days
G. Tidbits
1. Gadkari tells automakers to shift focus from diesel
H. UPSC Prelims Practice Questions
I. UPSC Mains Practice Questions

Category: INTERNATIONAL RELATIONS

1. Putin, Xi agree to jointly combat ‘threats’

Context:

• Coordination and collaboration between China and Russia on the Afghanistan issue.

Background:

• Russia and China have followed a drastically different approach to the Afghanistan issue as compared to other world powers with both countries retaining their diplomatic presence in Afghanistan even after the takeover by the Taliban and have even sought to engage actively with the Taliban.
• China has on several occasions expressed its keenness to deepen friendly and cooperative relations with Afghanistan under the Taliban rule.

Details:

• Russian President Vladimir Putin and his Chinese counterpart Xi Jinping have agreed to step up efforts to counter threats emerging from Afghanistan following the Taliban’s takeover. The focus will be on efforts to combat terrorism as well as drug trafficking in the region.
• The two leaders have expressed interest in making the most of the potential of the Shanghai Cooperation Organisation (SCO) that is due to convene soon for a summit in Tajikistan.
• The discussion between the heads of China and Russia involved the importance of establishing peace in Afghanistan and preventing the spread of instability to adjacent regions.

The talks of co-operation between China and Russia follows a similar attempt at co-operation between India and Russia on the Afghanistan issue. For information on that topic, refer to the following article.

UPSC Comprehensive News Analysis of 25th Aug 2021

2. Helping and hindering justice

The article explains that while adopting new technologies in courts can be a significant positive development, relying solely on digital transformation may not be a sound idea in addressing the problems that plague Indian courts.

Details:

• In the wake of the pandemic, the delivery of justice has become more challenging.
• Although the courts have risen to the challenge posed by the COVID-19 pandemic by using existing technology at an unprecedented scale and speed, it is proving to be an uphill task.
  • Example: In May 2020, the Supreme Court introduced a new system of e-filing and artificial intelligence-enabled referencing.
  • This was meant to ensure efficiency, transparency and access to court delivery services for every user.
• The judiciary’s effort seeks to make use of technology in overcoming and resolving the problems that have been plaguing the judiciary for long now. These include:
  • Massive backlog of cases
  • Unacceptable levels of judicial vacancies across the country at all levels.
• Evidence shows that despite considerable investment to digitalise judicial infrastructure and administration, beginning with Phase 1 of the eCourts in 2007, the judiciary’s performance during the pandemic period has exposed multiple deficiencies.
  • In absolute terms, data show that pendency reached an all-time high during this year of virtual functioning of the courts.

Way Forward:

• Given that the pandemic has posed significant challenges to all the institutions, it can be seen as an opportunity to make lasting changes that could transform the creaking justice delivery system in India.
• The Judiciary must address its digital deprivation.
  • The shortage of technical infrastructure has often meant that access to online hearings is curtailed. This ad hoc deviation cannot be allowed to become a habit of convenience.
• The next course of action should be based on an evidence-based rational approach.
  • There is a need to study and understand why video conferencing in criminal cases has neither shortened trials nor reduced the number of people awaiting trial.
  • Similarly, there is a need to address uneven digital access.
• Technology is not immune to biases and therefore, it must be properly evaluated to see whether it works to increase the power imbalance between citizens and the state or whether it affirms and furthers citizens’ rights.
• Besides, technology, no matter how advanced, cannot be a substitute for judges of whom there remains a big shortfall.
• Over-reliance on technology is not the ultimate solution.
• Excessively relying on technology without forethought, could become counterproductive.

Conclusion:

The latest Vision Document for Phase III of the e-Courts Project envisages an infrastructure for the judicial system that is ‘natively digital’ and reflects the effect that the pandemic has had on India’s judicial timeline and thinking. There will always be an inherent resistance to change. Therefore, two preconditions need to be addressed: adequate trained manpower, and tailoring systems to the specifications and contexts.
Category: ECONOMY

1. It’s time for Industry 4.0

The article throws light upon how the adoption of Industry 4.0 technologies can make MSMEs more efficient and competitive.

What is Industry 4.0?

• The term ‘Industry 4.0’ was coined by the German government in 2011.
• Industry 4.0 or the Fourth Industrial Revolution (4IR) is the ongoing automation of traditional manufacturing and industrial practices, using modern smart technology.

Significance:

• With technologies such as Additive Manufacturing, the Internet of Things, Cyber-Physical Systems, Augmented Reality/Virtual Reality and data, the manufacturing industry will be able to make data-driven decisions.
• The reduced costs of electronics like sensors, transmitters, and cloud have paved the way for the capture of the data produced during operational activities.
• With the availability of advanced algorithms, the data captured can be analysed for making real-time decision-making.
• Thus, Industry 4.0 has integrated ‘data’ with manufacturing and Information Technology.

To take advantage of data-driven decision-making, the governments of other countries also coined their own industrial initiatives like Industry 4.0. For example, the U.S. calls it Smart Manufacturing, China calls it Made in China 2025, and India refers to it as Make in India or Digital India.

The potential of MSMEs:

• Micro, Small and Medium Enterprises (MSMEs) are expected to become the backbone of India as the economy grows larger.
• MSMEs form more than 95% of the industries in India.
• They produce more than 45% of the total manufacturing output and employ more than 40% of the workforce.
• According to the Economic Survey 2020-21, over 6 crore MSMEs employ more than 11 crore people and contribute roughly 30% to the GDP and half of the country’s export.
• MSMEs are also ancillaries to larger enterprises, leading to a seamless supply chain integration.
• As a result, making MSMEs more efficient will be advantageous for the whole economy.

Challenges faced by MSMEs w.r.t Industry 4.0:

Adoption:

• MSMEs face challenges in adopting the new technologies of Industry 4.0.

Awareness:

• They lack awareness regarding Industry 4.0 and its benefits.
• While Industry 4.0 believes in improving the existing system, MSMEs consider such technologies to be disruptive.

Finances:

• MSMEs will need to make major financial investments to adopt Industry 4.0.
• Investing in the right set of technologies will also need experts and consultants.

Lack of framework:

• The frameworks and steps that can assist MSMEs in adopting Industry 4.0 technologies have been missing.

Way Forward:

• For any new technology to be adopted, an organisation requires a positive organisational culture and the support of people.
• MSMEs need to believe in the advantages that Industry 4.0 technologies can offer.
• MSMEs need to understand the data they are producing from all their operational activities. Based on such data, their readiness to adopt 4IR technologies can be evaluated.
• MSMEs should develop their own vision of Industry 4.0 technologies that they want to adopt and identify the relevant tools and practices they need for such a tailored vision.
• Proper sensitisation of the Government of India, higher education institutions, practitioners, entrepreneurs, industrial associations, trade unions, venture capitalists, consultants and research agencies would help to speed up this task.

Conclusion:

Though adoption of Industry 4.0 technologies by MSMEs requires them to address a bunch of challenges, it will make them more competitive and prepare them to offer world-class quality products to customers. With India having joined the group of top 50 countries in the Global Innovation Index for the first time in 2020, the time is ripe for the MSMEs to embrace Industry 4.0 technologies without any hesitation.

2. A way of diluting credit discipline

The article talks about the operational and regulatory issues in the new RBI Current Account notification.

Context:

• The Reserve Bank of India recently issued a new Current Account notification to bring about improvement with credit discipline.
• With this, the RBI has introduced new measures and constraints on the opening of current accounts for borrowers.
• The date for compliance with the notification is October 31, 2021.

Diversion of Funds:

• Diversion of funds is a major reason for large non-performing assets (NPAs).
  1. Internal diversion is for non-priority purposes such as luxury vehicles, offices, and vanity acquisition of companies.
  2. Funds can also be diverted to other firms, owned or controlled by the same group, friends or relatives.
• The first is the result of misguided strategies or priorities. The second is an intention to defraud lenders, other creditors, and non-controlling shareholders.

Current Accounts:

• Current accounts with non-lending banks are an important channel for diversion.
• To prevent this, the RBI mandates a No-Objection Certificate (NOC) from lending banks before opening such accounts.
• Banks should verify with the Central Repository of Information on Large Credits (CRILC), the RBI credit database, and inform lenders.
• Banks should also obtain an NOC from the drawee bank when an account is opened through cheques.

The Regulations:

• Widespread non-compliance with mandated safeguards forced the RBI to bar non-lending banks from opening current accounts for large borrowers.
• If borrowing is through a cash credit or overdraft account, no bank can open a current account.
• If a borrower has no cash credit or overdraft account, a current account can be opened subject to restrictions.
• If the bank’s exposure is less than 10% of total borrowings, debits to the account can only be for transfers to accounts with a designated bank.
• If total borrowing is ₹50 crore or more, there should be an escrow mechanism managed by one bank which alone can open a current account.
  • Other lending banks can open ‘collection accounts’ from which funds will be periodically transferred to the escrow account.
• If the borrowing is between ₹5 crore and ₹50 crore, lending banks can open current accounts.
• Non-lending banks can open collection accounts.
  • A collection account is a debt account that has been sold by the original creditor to a third-party debt collection agency.
• If borrowing is below ₹5 crore, even non-lending banks can open current accounts.
• The working capital credit should be bifurcated into loan and cash credit components at individual bank levels.

What are the issues with the regulation?

Operational Issues:

• The regulations involve many operational issues.
• If a borrower has an overdraft, there will be a Current Account.
  • An overdraft is the right to overdraw in a current account up to a limit. Without a limit, a banker may allow a temporary overdraft.
  • The circular forecloses such operational flexibility.
• A bank with low exposure would want to use it to adjust other dues with it instead of transferring funds to another bank.
• Share in borrowing is not static. Crossing the threshold both ways could happen often. It could be seasonal or monthly with salary payments or collection of dues. Huge lumps accompany one-time heavy payments or large export proceeds.
• There is a mismatch between what a borrower needs and what the regulations allow.
  • Support of non-lending banks through current accounts in other banks is required for large accounts. The circular rules out this possibility.
  • But such support is available when the exposure is below ₹5 crore, when it may not be required.
• The regulation mandates splitting working capital into the loan and cash credit components across all banks. Such a one-size-fits-all regulation does not factor in the purpose of the different facilities.

Regulatory Issues:

• It is more effective to base regulation more on principles that focus on outcomes than rules that are content with mere compliance. Rules are not flexible, do not provide for unforeseen circumstances, and can be easily circumvented.
• Regulation needs to use more generic terms. Terms such as Working Capital Term Loan might mean different things in different banks.

Implications for compliance:

• When regulation ignores market practices, it lacks legitimacy. When legitimacy is lacking, compliance suffers. The regulatee organisations will resort to cosmetic or creative compliance.
  • For instance, a new banking practice of overdraft in fixed deposits has emerged.
• Another form of creative compliance could involve sanctioning unnecessary non-funded limits to artificially boost exposure.
• A bank could also merely rename current accounts as overdraft, as there is no bar to having a credit balance in an overdraft account.

It is argued that these rules will have a counter-intuitive effect of diluting credit discipline rather than strengthening it – the goal with which the RBI circular was issued.
Category: ENVIRONMENT AND ECOLOGY

1. Negotiating the new global climate policy

Context:

“Climate Change 2021: The Physical Science Basis”- Sixth Assessment Report has been released by the Intergovernmental Panel on Climate Change (IPCC).

Read more on the findings of the report covered in Aug 10th, 2021 CNA.

Details:

• The policy significance of the IPCC report is that reaching net zero alone is not enough as it is the cumulative emissions up to net zero which determine the temperature that is reached.
• It emphasised that a global policy that considers only current emissions will not limit global warming and its adverse effects.

This issue has been covered in Aug 17th, 2021 CNA.

Q1: Which of the following is/are correct regarding e-Shram?

Q2: Which of the following statements regarding the Start-up Accelerators of MeitY for product 
Innovation, Development and growth (SAMRIDH) is correct?

Q3: Which of the following is/are correctly matched?

Q4: Consider the following statements:

Q5: Which one of the following protected areas is well-known for the conservation of a 
sub-species of the Indian swamp deer (Barasingha) that thrives well on hard ground and is 
exclusively graminivorous? (UPSC 2020)

Read the previous CNA here.

August 26th, 2021, CNA:- Download PDF Here