UPSC 2017: Comprehensive News Analysis - January 03

A. GS1 Related
B. GS2 Related
POLITY
1. Fears over FRDI Bill misplaced, says government
2. Arun Jaitley notifies electoral bonds for political donations
3. 'Panic Button' On Mobiles For Women's Safety: Trial To Begin From UP On Republic Day
HEALTH ISSUES
1. National Medical Commission Bill
INTERNATIONAL AFFAIRS AND BILATERAL RELATIONS
1. Sushma to go on tri-nation tour
2. Israel passes law to prevent ceding control of Jerusalem
3. China develops underwater surveillance networks in Indian Ocean, South China Sea
C. GS3 Related
ECONOMY
1. Electronics Manufacturing in India needs a policy push
ENVIRONMENTAL SCIENCE AND ECOLOGY
1. Warming may turn quarter of Earth arid
SCIENCE AND TECHNOLOGY
1. 2018 space chart: trips to the moon, rocket launches
2. Astronauts Have Identified Unknown Microbes in Space For The First Time
D. GS4 Related
E. Prelims Fact
F. UPSC Prelims Practice Questions
G. UPSC Mains Practice Questions 

A. GS1 Related

B. GS2 Related

 Financial Regulatory and Deposit Insurance (FRDI) Bill:

• This Bill is similar to the Insolvency and Bankruptcy Code, 2016, which was enacted last year.
• Both of these are about issues that can arise when companies go bankrupt or insolvent, except that this Bill deals only with the companies that are in the financial sector.
• The insolvency code Act deals with companies in all other sectors.
• The FRDI will provide a comprehensive resolution framework to deal with bankruptcy situations in financial sector entities such as banks and insurance companies.

What the Bill offers?

• FRDI Bill, 2017 seeks to protect customers of financial service providers in times of financial distress.
• It also aims to inculcate discipline among financial service providers in the event of financial crises, by limiting the use of public money to bail out distressed entities.
• The Bill would help in maintaining financial stability in the economy by ensuring adequate preventive measures, while at the same time providing the necessary instruments for dealing with crisis events.
• The Bill aims to strengthen and streamline the current framework of deposit insurance for the benefit of retail depositors.
• Further, it seeks to decrease the time and costs involved in resolving distressed financial entities.
• Once enacted, a resolution corporation will be setup to strengthen the stability and resilience of the entities in the financial sector.

 Clarification given by the Government:

• Depositors will be given preferential treatment in the event of liquidation of a bank, and the controversial bail-in clause will be used only with the prior consent of depositors.
• The bail-in clause would not be applied to public sector banks, and it would be a tool of last resort — when a merger or acquisition is not viable — in the case of private sector banks.
• The government reiterated its implicit guarantee for the solvency of public sector banks.

Current practice:

• Under current laws, deposits with banks are insured up to 1 lakh. Under the FRDI law, the Resolution Corporation is empowered to increase this deposit insurance amount.

Bail-in clause explained:

• In case a bank or an insurance firm or a mutual fund failed and it was not possible to revive it by any other means such as a merger, then depositors money could be used to revive the entity after depositors are given back up to Rs 5 lakh from their deposits, bonds, policies or mutual funds with that entity.
• The rest of the money would be converted into a long-term bond backed by the government and used for the bail-in.

 About Electoral bonds

• Electoral bonds would be a bearer instrument in the nature of a promissory note and an interest-free banking instrument
• A citizen of India or a body incorporated in India will be eligible to purchase the bond
• Electoral bonds can be purchased for any value in multiples of Rs.1,000, 10,000, Rs.10 lakh, and Rs.1 crore from any of the specified branches of the State Bank of India.
• The purchaser will be allowed to buy electoral bonds only on due fulfillment of all the extant KYC norms and by making payment from a bank account
• It will not carry the name of the payee.
• These bonds will have a life of 15 days during which they can be used to make donations to registered political parties that have secured not less than 1% of the votes polled in the last election to the Lok Sabha or Assembly.
• The bonds shall be available for purchase for a period of 10 days each in the months of January, April, July and October, with an additional 30 days to be specified by the Central government in the year of a general election.
• The bond shall be encashed by an eligible political party only through a designated bank account with the authorised bank.
• Every political party will file before Election Commission return as to how much money has come through electoral bonds

Why such a bond?

• The aim was to bring transparency in funding of political parties and elections.
• The political funding mechanism developed over the last 70 years has faced widespread criticism as people do not get clear details about how much money comes, from where it comes and where it is spent.

 ‘Panic button’ feature on mobile phones:

• A pilot project to ensure women safety will kick-start from Uttar Pradesh on the Republic Day on January 26.
• In April, 2016, the Department of Telecommunications had, through a gazette notification, made it mandatory for mobile manufacturers to provide panic buttons in cell phones by January, 2017.
• The order said the phones will have to have the panic button in the form of numeric key 5 or 9 to invoke emergency calls.
• Smart phones without the facility of an emergency call, too, will have to have the same provision, or allow use of power on or off button as the panic button.
• A smartphone user will have to download a mobile application which will send alerts if a victim long presses the panic button on the phone.
• However, a person using a basic phone need only press the designated key.
• Once, a user presses the panic button, five calls will be made to emergency number 112. Following this, five SMSs will be immediately sent to police authorities, and another three to five SMSs will be sent to family members of the victim.
• Nearly 25-50 volunteers in the vicinity of the victim will also be alerted through messages.

• The decision of the Lok Sabha to send the National Medical Commission Bill to a standing committee for a relook is the right one. First proposed in 2016, the Bill aims to overhaul the corrupt and inefficient Medical Council of India, which regulates medical education and practice.
• But despite its plus points, the NMC isn’t the game-changing legislation it could have been. One of its goals is to rein in corruption in the MCI through greater distribution of powers.
• This is sought to be accomplished through an independent Medical Advisory Council to oversee the National Medical Commission, the proposed successor of the MCI.
• But all members of the NMC are members of the Council, undermining the latter are independence. This, and other concerns, must be addressed.
• Perhaps the most controversial provision of all is for a bridge course allowing alternative-medicine practitioners to prescribe modern drugs.
• One motivation could be to plug the shortfall of rural doctors by creating a new cadre of practitioners. But if this was the rationale, better solutions exist.
• The shortfall of MBBS doctors is partly due to the fact that many of them seek a post-graduate degree to improve career prospects.
• MCI regulations prevent even experienced MBBS doctors from carrying out procedures like caesareans and ultrasound tests, while nurses are barred from administering anaesthesia.
• Empowering doctors and nurses to do more is a reform many have called for, and that would have been easier to implement than a bridge course for AYUSH practitioners.
• Yet, the NMC Bill hasn’t taken it up. Another way to bolster healthcare delivery is a three-year diploma for rural medical-care providers, along the lines of the Licentiate Medical Practitioners who practised in India before 1946.
• Chhattisgarh tried this experiment in 2001 to tackle the paucity of doctors it faced as it was formed. Graduates from such a three-year programme would only be allowed to provide basic care in under-served pockets.
• Massive protests by the Indian Medical Association and poor execution derailed the Chhattisgarh experiment, but the idea wasn’t without merit. India has no choice but to innovate with health-care delivery models to tackle the challenges it faces.
• The trick is to base these innovations on evidence. There is plenty of evidence that MBBS doctors and nurses can do more than they are legally allowed to do.
• But integrating alternative-medicine practitioners into modern medicine requires a lot more thought. The government will do well to empower existing doctors before attempting more ambitious, and questionable, experiments.

 In news:

• External Affairs Minister Sushma Swaraj will visit Thailand, Indonesia and Singapore from January 4 to 8.
• The three-nation visit is likely to cover India’s annual plans for the region and include the launch of the Regional Pravasi Bharatiya Divas for the ASEAN countries.

ASEAN-India Commemorative Summit: marks 25 years since the establishment of dialogue partnership between India and ASEAN.

Regional Pravasi Bharatiya Divas

• The visiting Minister will inaugurate the Regional Pravasi Bharatiya Divas of ASEAN countries in Singapore.
• The Regional PBD is a large-scale event covering a wide range of sectors such as political relations, culture, connectivity, start-ups and science & technology.
• Theme: “Ancient route, new journey: diaspora in the dynamic ASEAN-India partnership”.

 In news:

• Israel’s parliament passed a law that bars ceding any part of Jerusalem to a foreign power without the approval of a supermajority of lawmakers
• A move that threatens to further hinder prospects of peace between Israel and the Palestinians.
• The newly passed law also allows the government to separate areas of the city — such as majority Palestinian neighbourhoods — from the Jerusalem municipality, but requires those new administrations to remain under Israeli sovereignty.
• A 2014 law already requires a supermajority in parliament or a national referendum for Israel to ratify an agreement that stipulates the conceding of territory under Israeli law, namely East Jerusalem and the Golan Heights.

Key fact:

• Israel considers the whole of Jerusalem to be its united capital
• While the Palestinians see East Jerusalem, which Israel captured in the 1967 war and subsequently annexed, as the capital of a future state.
• Most of the international community does not recognise Israeli sovereignty over East Jerusalem.

 In news:

• China has developed a new underwater surveillance network to help its submarines get a stronger lock on targets while protecting the nation’s interests along the maritime Silk Road. This includes the Indian Ocean

About the system

• The system, which has already been launched, works by gathering information about the underwater environment, particularly water temperature and salinity
• The Chinese system is based on a network of platforms — buoys, surface vessels, satellites and underwater gliders — that gather data from the South China Sea, and the Western Pacific and Indian oceans
• The Navy can use this data to more accurately track target vessels as well as improve navigation and positioning

China’s expansion in Indian Ocean

• In recent years, China has stepped up naval expeditions to the Indian Ocean to fight the pirates in Gulf of Aden
• China is also seeking to establish logistic bases in the Indian Ocean
• The first such base was opened by China in Djibouti last year and it acquired the Hambantota port of Sri Lanka on 99 years lease for debt swap
• It is currently developing the Gwadar port in Pakistan as part of China-Pakistan Economic Corridor

South China Sea dispute

• China is involved in maritime disputes in the South and East China Seas
• It claims almost all of the South China Sea and has also laid claims on the Senkaku islands under the control of Japan in the East China Sea
• These islands are believed to harbor vast natural resources below their seabed
• The US has been periodically deploying its naval ships and fighter planes in the South China Sea to assert freedom of navigation in the disputed areas

Impact:

• The project is part of an unprecedented military expansion fuelled by Beijing’s desire to challenge the US in the world’s oceans
• By 2030 China will have 260 warships and submarines compared to the US’ 199
• Since the Cold War, the US had closely guarded the Western Pacific via “island chains”
• China is now moving in the same direction with ‘String of pearls’ around India and establishing bases in African subcontinent and other areas in Pacific ocean

C. GS3 Related

• A growing middle class, rising disposable incomes, declining prices of electronics and a number of government initiatives have led to a fast-growing market for electronics and hardware products.
• However, India’s weak manufacturing base has not been able to respond to this increasing demand, leading to a growing trade deficit.
• Of the country’s total demand for electronics, between 50-60% of the products and 70-80% of the components are imported. India’s imports of electronic goods grew 31% between April and October 2017 to $29.8 billion.
• Meanwhile, the trade deficit reached close to $100 billion during the April-November period of 2017, against $67 billion in the same eight-month period a year ago.
• A report by Deloitte Touche Tohmatsu states that expenses on electronics imports could surpass those on oil imports by 2020. Moreover, the industry has the potential to provide millions of jobs, directly and indirectly.
• In order to deal with the problem, the government has listed the electronics industry as a priority sector under its Make In India campaign.
• There are various government schemes to encourage domestic manufacturing which provide tax and tariff concessions, investment subsidies, preferential market access in government procurement and export subsidy.
• In fact, as recently as December, the government increased the import duty on various electronic items like smartphones, LED bulbs and microwave ovens—for most products, the rate increased from 10% to either 15% or 20%.
• The way forward is to increase the country’s general competitiveness in the export market instead of pursuing sectoral policies. India’s share in the global electronics market was a minuscule 1.6% of the market in 2015 that is currently valued over $1.75 trillion.
• With a large domestic market and a number of trained engineers, India’s absence in the electronics manufacturing supply chain is an anomaly that better policies can correct.
• Instead of preserving our market for domestic manufacturers, the goal should be to capture a larger piece of this global market. There are various factors that have kept these goals from being met.
• First is the inverted tax structure for electronic goods. Due to a limited base of local component suppliers, manufacturers are dependent on importing parts. Under the World Trade Organisation’s information technology agreement of 1995 (ITA-1), tariffs on 217 IT products were set at zero.
• However, the positive custom duties on the components (or parts) used in electronic products make it expensive for domestic manufacturers to compete with foreign competitors who can access the components at lower prices. The solution is to bring the duties on components down to the level of the product.
• Some parts might be used for multiple products that may have different duties, but it’s important to rule in favour of simple rules and apply the rate-cut regardless of use. It’s not difficult to imagine a rule for assessing the eligibility for the duty-concession depending on the use to which a component is put—it is precisely this kind of paperwork that needs to be avoided.
• Second, foreign direct investment (FDI) in electronics is less than 1% of the total FDI inflow because of onerous labour laws, delays in land-acquisition and the uncertain tax regime have kept investors at bay.
• While the labour laws may be reformed in 2018, and we might be past the times of retrospective taxation, the memory of the Vodafone and Nokia cases is still fresh in investors’ memory.
• In order to inspire confidence, laws need to be liberal and predictable. In the case of taxation, it is important to clearly establish the tax liabilities under different circumstances in full detail.
• A possible experiment could be special economic zones like the Dubai International Financial Centre—Dubai’s normal civil and commercial laws do not apply in this area and a British chief justice ensures the practice of British common law.
• Third, the procedures for cross-border trade work against the competitiveness of Indian producers as shown by the Doing Business rankings—India ranks 146 in the category of trading across borders due to the high costs of compliance.
• The numerous forms, fees, inspections and the associated time discourage domestic producers from exporting and keep them out of the international supply chain.
• Between 2000 and 2015, hardware production in India increased from Rs31,100 crore to Rs1.02 trillion. Meanwhile, information technology (IT) services revenue increased from Rs37,750 crore to Rs8.4 trillion.
• This shows that India is capable of producing globally competitive products. But while the non-material nature of IT services has constrained the state’s grabbing hand, the electronics manufacturing industry did not have that privilege.
• China, with its rising labour costs, will soon not be the global manufacturing hub it is today. This is an opportunity for countries like India, the Philippines, Thailand, etc., to attract companies to move their plants to their country. Despite its low costs of labour, India might lose this race if it doesn’t reform the key sectors of the economy.
• This is not to suggest that the government is oblivious to these challenges. In fact, much has been done in the past couple of years to suggest that we are moving in the right direction.
• Introduction of the landmark goods and services tax (GST) has increased the distance that trucks are travelling by about 30%. GST has also reduced the confusion associated with various state and local taxes. And the government seems determined to improve the condition of highways and ports.

 Scientific predictions:

• Over a quarter of the world’s land could become significantly drier even if global warming is limited to the target of two degree Celsius.
• The change would cause an increased threat of drought and wildfires.
• Solution: limiting global warming to under 1.5 degree Celsius would dramatically reduce the fraction of the Earth’s surface that undergoes such changes.
• Aridity is a measure of the dryness of the land surface, obtained from combining precipitation and evaporation.
• Aridification would emerge over about 20-30 per cent of the world’s land surface by the time the global mean temperature change reaches two degrees Celsius
• Aridification is a serious threat because it can critically impact areas such as agriculture, water quality, and biodiversity. It can also lead to more droughts and wildfires

 Zuma Mission:

• “Zuma” mission: SpaceX is planning the first test flight of Falcon Heavy. Falcon Heavy is the most powerful operational rocket in the world.
• A successful test would be an important step toward demonstrating SpaceX’s ability to send spacecraft beyond Earth’s orbit, perhaps even to Mars.
• SpaceX also could try to prove it can carry people into space in 2018.

Chandrayaan-2:

• The ISRO intends to send an uncrewed orbiter, lander and rover to the moon in the first half of 2018. Known as Chandrayaan-2
• The mission aims to demonstrate that India can land a spacecraft on the moon.
• The orbiter will also beam images of the moon and information about its surface back to Earth.
• The spacecraft would be India’s second mission to the moon, after Chandrayaan-1. The country currently has a spacecraft orbiting Mars known as the Mars Orbiter Mission.

 In news:

• Astronauts aboard the International Space Station (ISS) have for the first time identified microbes in space without having to samples back to Earth for tests

Importance:

• The ability to identify microbes in space could aid in the ability to diagnose and treat astronaut ailments in real time, as well as assisting in the identification of DNA-based life on other planets
• It could also benefit other experiments aboard the orbiting laboratory

D. GS4 Related

E. Prelims Fact

F. Practice Questions for UPSC Prelims Exam

Question 1. Consider the following statements:

Question 2. Consider the following statements:

Question 3. Consider the following statements:

Question 4. Consider the following statements:

Question 5. Identify the correct statement with reference to “Masala Bonds”.

G. UPSC Mains Practice Questions

GS Paper II

GS Paper III

Also, check previous Daily News Analysis