17 Feb 2018: UPSC Exam Comprehensive News Analysis

A. GS1 Related

B. GS2 Related

• The court made it mandatory for candidates contesting elections and their associates to declare their assets and source of income at the time of nomination.
• The obligation of a candidate to disclose both his assets and the source of income is a part of the fundamental right of citizen to know, under Article 19 (1) (a) of the Constitution.
• The court said enforcement of a citizen’s fundamental right needs no statutory sanction from the government or the Parliament.
• A candidate’s constitutional right to contest an election to the legislature should be subservient to the voter’s fundamental right to know the relevant information regarding the candidate.
• It held that undue accretion of assets is an independent ground for disqualifying an MP or an MLA. Amassing wealth is a culpable offence by itself and a law maker can be prosecuted even without charging him for offences under the Prevention of Corruption Act.
• The court said the amassment of unaccounted wealth by lawmakers is the mark of a failing democracy. If left unattended it would inevitably lead to the destruction of democracy and pave the way for the rule of mafia.

• The Supreme Court decision to allow an additional supply of 14.75 tmc ft. water for Karnataka is a leaf borrowed from the government’s National Water Policy that drinking water requirements of a State should be placed at the highest pedestal.
• The Cauvery judgment authored by a three-judge Bench led by Chief Justice of India Dipak Misra based the supply of water to Bengaluru on the ground that both the National Water Policy and also courts of different countries hold that drinking water should be given first priority.
• The States shall first allocate waters to satisfy vital human needs, the Supreme Court observed, while referring to international law provisions on water.

C. GS3 Related

In news

• Punjab National Bank (PNB), the country’s second-largest public sector lender, is now in the middle of a ₹11,400 crore transaction fraud case.
• PNB informed the Bombay Stock Exchange that it has detected some fraudulent and unauthorised transactions in one of its branches in Mumbai to the tune of $1771.69 million (approx).
• Meanwhile, the Central Bureau of Investigation (CBI) received two complaints from PNB against billionaire diamantaire Nirav Modi and a jewellery company alleging fraudulent transactions worth about 11,400 crore, the Press Trust of India reported. This is in addition to the 280 crore fraud case that he is already under investigation for, again filed by PNB.

Who is Nirav Modi?

• Nirav Modi, the billionaire in the middle of this controversy, is a luxury diamond jewellery designer who was ranked #57 in the Forbes list of India’s billionaires in 2017.
• He is the founder and creative director of the Nirav Modi chain of diamond jewellery retail stores, and is the Chairman of Firestar International, the parent of the Nirav Modi chain, which has stores in key markets across the globe. His designs have been worn to the Oscars by ‘Hidden Figures’ star Taraji P. Henson and to the Golden Globes by Dakota Johnson, among others. Actor Priyanka Chopra is the brand ambassador.

How the fraud was detected?

• According to the complaint filed by PNB with the CBI on January 28, the fraudulent issuance of Letters of Undertakings (LOU) was detected at the Mid Corporate Branch, Brady House in Mumbai.
• A set of partnership firms — Diamond R US, Solar Exports and Stellar Diamonds — approached the bank on January 16 with a set of import documents and requested for Buyer’s Credit to make payments to overseas suppliers.
• The firms have Nirav Modi, his brother Nishal Modi, Mr. Nirav’s wife Ami Nirav Modi, and Mehul Chinubhai Chokshi as partners.

What is Buyers Credit?

• Buyers Credit is, typically, a short-term loan facility extended to an importer by a bank to finance goods and services. It is a common mode of transaction in international trade where a bank extends credit to the importer and a finance agency based in the exporter’s country guarantees the loan.
• As there was no sanctioned limit in the name of the firms, the branch officials requested the firms to furnish 100% cash margin for issuing the LOU for raising the Buyer’s Credit. At this, the firms contested that they have been availing this facility in the past; but the branch records do not corroborate this.
• On digging further, the bank officials discovered that two of its employees had fraudulently issued LOUs in the past without following prescribed procedures and approvals. The employees had then transmitted SWIFT instructions to the overseas branches of Indian banks for raising Buyer’s Credit without making entries in banking system to avoid detection.
• The complaint also said that the funds so raised for the payment of the Import Bills have not been utilised for such purposes in many cases.
• As per the FIR, five of the SWIFT messages (SWIFT is a messaging network used by financial institutions to securely transmit instruction) were issued to Allahabad Bank in Hong Kong and three to Axis Bank in Hong Kong.

What is procedure of audit for Banks?

• Banks are audited at three levels — apart from an internal audit, there is an external auditor and a statutory audit undertaken by the RBI. The CVC is keen to understand how none of these audits picked up a red flag on the letters of undertaking that seem to have been issued bypassing the system.

What is the role of Audit Regulator now?

• CA regulator seeks details from PNB, CBI, ED and SEBI to ascertain if there were wrongdoings by auditors; sets up high powered group to examine systemic issues
• The Institute of Chartered Accountants of India (ICAI) had asked Punjab National Bank (PNB) as well as probe agencies, including the CBI, Enforcement Directorate (ED) and capital markets regulator SEBI to provide it with the details regarding the alleged Rs. 11,500 crore scam to ascertain whether there was professional misconduct/wrongdoings by auditors.
• In a statement, the ICAI said it had set up a high-powered group to examine whether there were systemic issues. The group would also suggest remedial measures and improvements in the banking system to prevent the recurrence of such incidents.

What is the role of CVC ?

• The Central Vigilance Commission (CVC), India’s apex body for checking corruption in the government, has summoned senior officials of the Reserve Bank of India and the Finance Ministry, along with the Chief Vigilance Officer of Punjab National Bank (PNB), early next week to assess how the Rs. 11,500 crore fraud reported by the government-owned PNB, slipped past all the in-built checks and balances in the banking system.
• An official aware of the development said the CVC would like to ascertain if there is a systemic issue that needs to be corrected, as it isn’t convinced by the bank’s claims that junior employees colluded with the fugitive diamond merchant Nirav Modi and other banks were to blame for not carrying out due diligence on the letters of undertaking (LoUs).

 What does the RBI have to say?

• The Reserve Bank of India (RBI) said the failure of internal controls was the main reason for the Rs. 11,500 crore fraud that occurred in Punjab National Bank (PNB).
• The banking regulator, in its first reaction since the issue came to light on described the fraud as a case of operational risk arising out of delinquent behaviour by the bank’s employees.
• The fraud in PNB is a case of operational risk arising on account of delinquent behaviour by one or more employees of the bank and failure of internal controls.
• RBI said it was assessing the situation and would take appropriate supervisory action.It has already undertaken a supervisory assessment of control systems in PNB and will take appropriate supervisory action.
• RBI denied directing PNB to pay other banks.

What will happen now?

• One of the worrying aspects of the scam is that in its statement, PNB says that based on the fraudulent transactions, other banks appear to have advanced money to the customers abroad.
• It goes on to add that these transactions are contingent in nature and any liability arising out of these on the bank will have to be decided based on the law and genuineness of underlying transactions.
• However, the 11,400 crore scam comes at a time when the Central government is attempting to provide a breather to ailing PSBs, having announced a 2.11 lakh crore capital infusion to the sector in October 2017.
• The CBI and the Enforcement Directorate conducted searches on Mr. Modi’s firms and his associates across the country.
• The External Affairs Ministry suspended his passports along with that of his relative Mehul Choksi.
• The Ministry said it would revoke their passports if they failed to respond to the notice of suspension within one week.

What is ‘KYE’? Is it time to bring back KYE?

• The Rs. 11,500-crore fraud in the state-run Punjab National Bank (PNB) has brought back into focus the importance of Know Your Employee (KYE) norms for banks, according to some experts.
• As early as 2005, when the banking sector was in the initial stages of adopting technology, Reserve Bank of India (RBI) had highlighted the importance of banks enforcing KYE norms which would act as a firewall against frauds committed in connivance with employees.
• The latest scam at PNB involves issuing unauthorised Letters of Undertaking (LoUs) in favour of companies for availing buyers’ credit, allegedly in connivance with a former employee and a present employee.
• In September 2005, the central bank had cited the recent cases of technological mishaps, resulting in mainly employees or ex-employees of banks-induced financial losses which had also damaged the lenders’ reputation.
• G Padmanabhan, the then chief general manager of RBI, had urged the banking community to enforce KYE norms not only prior to staff recruitment but even more vigorously thereafter.
• Proper and systematic employee background verification is the need of the hour but the number of public sector units that opt for background checks are low in India because human resources practices have not evolved and there is a resistance to change.
• There has been a rise in number of private sector banks and NBFCs that are not only conducting background screening but are also doing regular credit checks on their employees who at the end of the day handle large amounts of clients’ money.
• Not only the banking regulator but the central vigilance commission (CVC) has also talked about the importance of KYE recently.
• According to a vigilance manual released last year, CVC said that several frauds were insider jobs or perpetrated with the help of insiders.
• It had asked banks to take extra care and have continuous vigil on their staff while highlighting the need for KYE and Know Your Partner norms.

• The Telecom Regulatory Authority of India (TRAI) said a financial disincentive of up to Rs. 50 lakh for each service area can be imposed on a telco in case a tariff offered by the operator is found to be predatory.
• In its new tariff order, aimed at ensuring transparency, non-discrimination and non-predation, TRAI said in the case of non- compliance with norms to report any new tariff to the regulator, the telco may be liable to pay five thousand rupees, by way of financial disincentive for every day of delay subject to a maximum of Rs. 2 lakh as the Authority may by order direct.”
• TRAI added there was no need to impose restrictions on the number of promotional offers that an operator can provide to its subscribers. Restrictions may not be in the interest of consumers, apart from possibly hindering competition. Promotional offers are reflection of maturity of competition at most of times and restricting them would amount to interference with market forces.
• For regular tariffs, TRAI decided to continue with the cap of 25 plans offered by a telco in each licensed service area at any given point of time. The regulations follow a controversy that started after Reliance Jio started operations with a ‘welcome offer,’ giving free voice and data to its subscribers for three months.
• It later extended the offer till March 31, 2017, naming it ‘Happy New Year’ offer. Bharti Airtel, Vodafone and Idea had alleged that Reliance Jio violated some tariff norms.
• TRAI said all segmented offers — either for retention or acquisition of new consumers — are to filed with the Authority and be displayed on the operator’s website.
• The issue brought out about the tariff plans offered to the individual customers/consumers and which are not filed with TRAI, is a cause of serious concern. Any justification with reference to such violation cannot be accepted.

• Around half of all orangutans living on the Southeast Asian island of Borneo — nearly 150,000 in all — vanished during a recent 16-year period.
• The causes included logging, land clearance for agriculture and mining that destroyed their habitats.
• However, many orangutans also disappeared from more intact, forested areas, the researchers say, suggesting that hunting and other direct conflicts between orangutans and humans remain a major threat to the species.
• The decline in population density was most severe in areas that were deforested or transformed for industrial agriculture, as orangutans struggle to live outside forest areas.
• Worryingly, however, the largest number of orangutans were lost from areas that remained forested during the study period. This implies a large role of killing.
• In February, Indonesian police arrested two rubber plantation workers in Borneo, accusing them of shooting an orangutan multiple times, decapitating it and then throwing its body into a river. The men claimed they were acting in self-defense, according to local media reports.
• To estimate changes in the size of Borneo’s orangutan population over time, researchers representing 38 international institutions compiled field surveys conducted between 1999 and 2015. They extrapolated the overall size of the island’s population from the number of orangutan nests found throughout the species’ range in Borneo.
• The team observed 36,555 nests and estimated a loss of 148,500 orangutans during that period. The data also suggested that only 38 of the 64 identified groups of orangutans now include more than 100 individuals, which the researchers say is the lower limit to be considered a viable grouping.
• That would leave the surviving number at around 148,000, according to the report. However, the World Wildlife Fund estimates that the remaining population of Borneo orangutans is much smaller, at around 105,000.
• By 2015, they reported, about half of the orangutans estimated to live in Borneo in 1999 were found in areas in which human resource use has caused significant changes to the surrounding environment. Based on predicted future losses of forest cover and the assumption that orangutans ultimately cannot survive outside forest areas, the researchers predicted that more than 45,000 additional orangutans will die during the next 35 years.
• To identify the likely causes of orangutan population losses, the researchers relied on maps of estimated land cover change on Borneo during the 16-year period.
• The comparison of orangutan and habitat losses suggested that land clearance caused the most dramatic rates of decline. However, a much larger number of orangutans were lost in areas where there was less logging and deforestation. While the rates of decline were less in those areas, the additional forest cover means far more orangutans are found in them, the researchers said.
• So, in addition to protection of forests, we need to focus on addressing the underlying causes of orangutan killing.
• The latter requires public awareness and education, more effective law enforcement, and also more studies as to why people kill orangutans in the first place

Background

• Orangutans, which inhabit both the Indonesian and Malaysian sides of Borneo, as well as the Indonesian region of Sumatra, are an endangered species, with some populations critically endangered.
• Their prime habitat in Borneo is lowland rain forests, which have been ravaged for decades by illegal logging operations and slash-and-burn land clearing for palm oil plantations and other agricultural activities.
• Orangutans are flexible and can survive to some extent in a mosaic of forests, plantations and logged forest, but only when they are not killed.

• The new planets discovered by NASA’s Kepler telescope range in size from smaller than Earth to bigger than Jupiter.
• Scientists have confirmed nearly 100 new planets outside our solar system, bringing the total number of exoplanets found using NASA’s K2 mission to almost 300.
• The scientists analysed signals of potential exoplanets to determine which were created by exoplanets and which were caused by other sources.One of the planets detected was orbiting a very bright star.
• The Kepler spacecraft was launched in 2009 to hunt for exoplanets in a single patch of sky, but in 2013, a mechanical failure crippled it. However, astronomers and engineers devised a way to save the telescope by changing its field of view periodically.
• This solution paved the way for the follow-up K2 mission, which is still ongoing as the spacecraft searches for exoplanet transits. These transits can be found by registering dips in light caused by the shadow of an exoplanet as it crosses in front of its host star.
• The dips are indications of exoplanets, which must then be examined more closely to confirm their nature.
• The first planet orbiting a star similar to our own sun was detected in 1995. Today, some 3,600 exoplanets have been found, ranging from rocky Earth-sized planets to large gas giants like Jupiter.
• A planet on a 10-day orbit around a star called HD 212657, which is now the brightest star found by either the Kepler or K2 missions to host a validated planet.
• Planets around bright stars are important because astronomers can learn a lot about them from ground-based observatories

• For the first time, the electrons responsible for colours of auroras have been observed directly
• Scientists have, for the first time, directly observed the shower of electrons bouncing across Earth’s magnetic field, which causes the spectacular, colourful phenomenon commonly known as the Northern Lights.
• While the cause of these colourful auroras has long been hypothesized, researchers had never directly observed the underlying mechanism until now.
• The spectacle of these subatomic showers is legendary. Green, red, and purple waltz across the night sky, blending into one another for a fantastic show widely considered one of the great wonders of the world.
• With the advent of a new satellite with advanced measuring tools, researchers have now identified that this wonder is caused by the hard-to-detect interaction between electrons and plasma waves.
• This interaction takes place in the Earth’s magnetosphere, the region surrounding the Earth in which the behaviours of the electric particles is usually governed by the planet’s magnetic field.

How are Auroral substorms caused?

• Auroral substorms are caused by global reconfiguration in the magnetosphere, which releases stored solar wind energy.
• They are characterized by auroral brightening from dusk to midnight, followed by violent motions of distinct auroral arcs that eventually break up, and emerge as diffuse, pulsating auroral patches at dawn.
• The global reconfiguration often drives a specific type of plasma waves called chorus waves, to rain electrons into the upper atmosphere. This stabilizes the system, and gives off a colourful light as the electrons fall. However, scientists have questioned if the chorus waves were powerful enough to excite electrons to the extent of creating auroras.
• Scientists could not see this direct evidence of electron scattering before because typical electron sensors cannot distinguish the precipitating electrons from others.
• Researchers designed a specialised electron sensor that observed the precise interactions of auroral electrons driven by chorus waves.
• The sensor was aboard the Exploration of energization and Radiation in Geospace (ERG) satellite, also known as the Arase spacecraft, launched by the Japan Aerospace Exploration Agency.

• The biggest development on tackling climate change since the Paris Accord of 2015 has been the International Solar Alliance, said Prime Minister Narendra Modi at the inaugural session of the World Sustainable Development Summit.
• India and France initiated the International Solar Alliance. It aims to mobilise $1,000 billion in investments by 2030
• It already has 121 members [countries] and is perhaps the single most important global achievement since the Paris Agreement of 2015.
• The International Solar Alliance (ISA) that aims at increasing solar energy deployment in member countries, came into legal, independent existence in December and is the first treaty-based international intergovernmental organisation to be based out of India.
• The ISA aims to mobilise more than $1,000 billion in investments by 2030 for “massive deployment” of solar energy, pave the way for future technologies adapted to the needs of moving to a fossil-free future and keep global temperatures from rising above 2°C by the end of the century.

India’s target

• India has committed itself to having 175,000 MW of renewed energy in the grid by 2022.
• As part of the agreement, India will contribute $27 million (Rs. 175.5 crore approximately) to the ISA for creating corpus, building infrastructure and recurring expenditure over five years from 2016-17 to 2020-21.
• The ISA was launched on November 30, 2015 in Paris, on the sidelines of COP-21, the UN climate conference.

What is India’s contribution to ISA?

• The Government of India will contribute US $ 27 million to the ISA for creating corpus, building infrastructure and towards recurring expenditure over a 5 year duration from 2016-17 to 2020-21. An initial donation of US $ 16 million has already been made.
• In addition, public sector undertakings of the Government of India namely Solar Energy Corporation of India (SECI) and Indian Renewable Energy Development Agency (IREDA) have made contributions of US $ 1 million each for creating the ISA corpus fund.
• In addition, the Government of India has offered training support for prospective ISA member countries at the National Institute of Solar Energy.
• They have also offered to support the prospective ISA member countries by organising demonstration on projects like solar home lighting, solar pumps for farmers and for other solar applications.
• The Government of India has dedicated 5 acres (over 20,000 Sq. meters) of land in the National Institute of Solar Energy campus for the construction ISA Headquarters. Proposal for allocating additional 5 acres of land is also under consideration

FUNDING

• All costs relating to the running of the ISA will be funded through voluntary contributions of member-countries, partner countries, partner organizations and Strategic Partners.
• Strategic and financial partnerships have been entered into with the UNDP, the World Bank and the Climate Parliament to further the mandate of ISA.
• Financial partnerships have also been entered with European Investment Bank (EIB), European Bank for Reconstruction and Development (EBRD).
• The proposals of entering into financial partnerships with the Asian Development Bank (ADB) and the New Development Bank (NDB) are also at advanced stages.
• The United Nations including its organs are ISA’s strategic partners.

Objectives

• to force down prices by driving demand;
• to bring standardization in solar technologies
• To foster research and development.
• increasing utilization and promotion of solar energy and solar applications
• Forcing down prices
• Currently, the global installed capacity of solar power is around 180 GW at present.
• It has grown around tenfold in last one decade only. The prices of solar panels and other related equipments have gradually become very competitive, but still India and world are far from reaching the grid parity.
• Grid Parity is when cost of per unit energy produced via solar or any other alternative method is equal to cost of purchasing the same from an existing electricity grid.
• To achieve the grid parity, it is a prerequisite to bring down the cost of generation of solar power.
• The idea behind an international alliance is that the countries can come together to collaborate in installation of solar plants and thus can drive up the demand for solar technologies manifold.
• This would force down the prices around the world and will make generation of solar energy rather cheap.

Standardization

• The second rationale of this alliance is to bring standardization in the manufacturing of the solar panels and other solar technologies, so that the prices can fall substantially.
• The countries can also come together in technological innovation also to bring down the prices.

Research and Development

• One of the key objectives of ISA is to foster research and development in solar technologies. Currently, a technology breakthrough is awaited in the field of storage of energy.
• Currently, there is no way to store the electricity being produced by solar systems due to which it has not established itself as reliable energy source.

D. GS4 Related

E. Editorials

• The Indian legal system is built on the concept of open courts.
• Open courts are the ones where proceedings are open to all members of the public.
• But in reality, on any given day, only a handful of people can be physically present and are allowed in the courtroom.

Digitization of courts

• While the courts are now opting for digitization, with online records of all cases, a provision for filing FIRs online, an automated system of case rotation, etc.
• In the light of these technological advancements, Live streaming of court cases can be needed for the cases though not for all.
• Those matters that are of great public importance should be available for all to see.
• Therefore, matters which have a privacy dimension, such as family matters or criminal matters, or matters with legal procedural intricacies, such as most trial court matters, can be out of its scope.
• But matters which have a bearing on important public interest issues such as the constitutionality of the Aadhaar scheme, or the legality of Section 377 of the Indian Penal Code,all of which are pending before the Supreme Court, should be available for all to watch

Other Organs of the government

• To promote transparency, live-streaming has been allowed for both Lok Sabha and Rajya Sabha proceedings since 2004.
• Similarly, the recording of videos in the highest courts in Canada and Australia, the International Court of Justice, shows that this exercise is neither novel nor so difficult

Utilization

• To educate common people on how the judiciary functions is a strong reason in favor of allowing live-streaming of court proceedings
• It presents a hope for the Indian legal system to finally deliver on its promise to empower the masses, not be scared of them

• By upholding the approach of the Cauvery Water Dispute Tribunal, the Supreme Court has supported the possibilities of a practical water-sharing course of action among the riparian States.

Decision

• Court has reduced the Tribunal’s allocation for Tamil Nadu and raised Karnataka’s share.
• It has underscored that no single State has power in accessing water assets and that streams are national resources. This is a critical acknowledgment of the guideline of impartial dissemination of between State streams.
• The Supreme Court’s message is that the Center ought to get down to making a lawful and specialized system to execute the Tribunal’s honor, as adjusted by the judgment.
• Strongest affirmation ever on a State’s right to its share of water on a regular basis without having to hurry to the court for ad hoc orders to open the washes of reservoirs during monsoon-deficit years.

Possible consequences at the state level

• Tamil Nadu, as a State that has seen agrarian trouble in its delta areas, should be happy with any recommended designation being met according to a schedule.
• Karnataka can take heart from the decrease in its required discharge target and the additional share for Bengaluru.
• Neither State should be aggrieved by the condition that equity is at the heart of a water-sharing arrangement.

Resolving Inter-state water dispute

• It is mainly about balancing the competing genuine demands and interests of each State and coming up with a rational sharing arrangement.
• The parties should see the judgments as the culmination of a fair and scientific adjudicative process. They should pose no further impediment to the smooth implementation of the order and be prepared, for the next 15 years, to share both the bounty and distress caused by nature.
• Centre has not covered itself in glory throughout the dispute It should comply with the court’s direction and set up the Cauvery Management Board and Water Regulation Committee as part of the scheme.
• It will be terrible if the States and the Center are hesitant to acknowledge this decision and decline to recognize its certainty.

F. Prelims Fact

G. Practice Questions for UPSC Prelims Exam

H. UPSC Mains Practice Questions

GS Paper II

1. The supreme court has addressed all the important issues in its Cauvery judgment. Analyze. Also, comment on the responsibility of the state and center Govt in this regard.
2. There is a gender imbalance in lower Judiciary. What are the reasons for imbalance and what can the Govt do to overcome this issue?