CNA 08 June 2022:- Download PDF Here
TABLE OF CONTENTS
A. GS 1 Related B. GS 2 Related POLITY AND GOVERNANCE 1. Freeze on new IAS deputation rules C. GS 3 Related ECONOMY 1. Of what good is a bad bank? D. GS 4 Related E. Editorials ECONOMY 1. The Shadows over global recovery are long MISCELLANEOUS 1. Crime and copyright infringement POLITY 1. The Weight of GST Council Ruling F. Prelims Facts 1. New rules allow retired officers to hold CDS post 2. Tamil Nadu tops food safety index G. Tidbits 1. Two States, one panchayat: Kotia can’t be better placed H. UPSC Prelims Practice Questions I. UPSC Mains Practice Questions
A. GS 1 Related
Nothing here for today!!!
B. GS 2 Related
Category: POLITY AND GOVERNANCE
1. Freeze on new IAS deputation rules
Syllabus: Role of civil services in a democracy.
Prelims: IAS (Cadre) Rules, 1954; proposed amendments
Mains: Concerns with Proposed Amendments to IAS (Cadre) Rules, 1954
Context:
The Department of Personnel and Training (DoPT) said in a Right to Information (RTI) response that a final view on the proposal of the central deputation of officers is yet to be taken and it cannot disclose the information held in a “fiduciary relationship”.
Know more about the Proposed amendments to the IAS (Cadre) Rules.
C. GS 3 Related
1. Of what good is a bad bank?
Syllabus: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.
Prelims: What is a Bad bank?
Mains: Need of ‘bad bank’ and its impact on credit flow in the economy
Context:
The Finance Minister announced that the National Asset Reconstruction Company (NARCL) along with the India Debt Resolution Company (IDRCL) will take over the first set of bad loans from banks and try to resolve them.
What is a ‘bad bank’?
- A bad bank is a financial entity set up to buy non-performing assets (NPAs), or bad loans, from banks.
- The aim of setting up a bad bank is to help ease the burden on banks by taking bad loans off their balance sheets and get them to lend again to customers without constraints.
- Know more about Bad Bank.
- Pros of setting up a bad bank: It can help consolidate all bad loans of banks under a single exclusive entity.
- Cons of setting up a bad bank:
- Many critics have pointed out several problems with the idea of a bad bank to deal with bad loans.
- Former RBI governor Raghuram Rajan has argued that a bad bank backed by the government will merely shift bad assets from the hands of public sector banks.
- A mere transfer of assets from one pocket of the government to another will not necessarily lead to a successful resolution of these bad debts when the set of incentives facing these entities is essentially the same.
- Other analysts believe that unlike a bad bank set up by the private sector, a bad bank backed by the government is likely to pay too much for stressed assets.
Need for ‘bad bank’ to ease the bad loan crisis
- A key reason behind the bad loan crisis in public sector banks is the nature of their ownership.
- Unlike private banks, public sector banks are managed by bureaucrats who may often not have the same commitment to ensuring these lenders’ profitability.
- To that extent, bailing out banks through a bad bank does not really address the root problem of the bad loan crisis.
- Further, there is a huge risk of moral hazard. Commercial banks that are bailed out by a bad bank are likely to have little reason to mend their ways.
Bad bank and its impact on credit flow in the economy
- Some experts believe that by taking bad loans off the books of troubled banks, a bad bank can help free capital of over ₹5 lakh crore that is locked in by banks as provisions against these bad loans.
- This will give banks the freedom to use the freed-up capital to extend more loans to their customers.
- This gives the impression that banks have unused funds lying in their balance sheets that they could use if only they could get rid of their bad loans.
- It is important not to mistake banks’ reserve requirements for their capital position. This is because what may be stopping banks from lending more aggressively may not be the lack of sufficient reserves which banks need to maintain against their loans.
Global Experience:
- The idea of a bad bank has been tried out in countries such as the U.S., Germany, Japan and others in the past.
- The troubled asset relief program, also known as TARP, implemented by the U.S. Treasury in the aftermath of the 2008 financial crisis, was modelled around the idea of a bad bank.
The problem of bad loans has been a perennial one in the Indian banking sector; the decision to set up a bad bank can improve banks’ capital buffers by freeing up capital, it could help banks feel more confident to start lending again.
D. GS 4 Related
Nothing here for today!!!
E. Editorials
1. The Shadows over global recovery are long
Syllabus: GS III, Economy, growth, development
Mains: Discussing the collective implications of the pandemic and the geopolitical tensions on global economic recovery.
Context: The article presents the aftermath of the pandemic and the Russia-Ukraine conflict on global economic recovery.
Overviewing the situation:
- The world economy has been confronted with another challenge posed by the invasion of Ukraine by Russia even as it was recovering from the aftershocks of the pandemic.
- The gap between the advanced economies and the developing ones has been widening and affecting global growth by disrupting the supply chains.
- The consecutive lockdowns in key manufacturing hubs have also created bottlenecks in the supply chain and offered a negative impact on economic growth.
- The key macroeconomic variables that have a long term impact on growth include:
- Persisting price pressure – results in trade-offs, especially in developing economies.
- Capital outflows and a tightening of financial conditions – affect investment and growth in the medium and long terms.
Highlighting the Impacts:
- Inflation:
- High inflation has been a global concern and is anticipated to remain at an elevated level for a long time.
- Increasing energy and food prices are the major contributors to emerging concerns of inflation.
- Due to the tight fossil fuel supply driven by geopolitical uncertainties, there has been a considerable increase in oil and gas prices, resulting in an overall spike in worldwide energy costs.
- In developing countries, it is observed that rising food prices have a cascading effect leading to higher overall inflation.
- According to the International Monetary Fund, inflation is projected at 2.5% for advanced economies and 6.5% for emerging markets and developing economies in 2023.
- Affecting Households:
- In developing countries, the rise in the prices of commodities impacts different sections of society differently.
- The impact of price rise on households also depends on the type of food consumed by the different strata of society.
- Higher energy prices affect cereal prices as a result of rising transportation costs and increased input prices such as fertilisers.
- If the shortage in supply and increase in food and fuel prices prolong, there will be a significant risk of social unrest as poverty will shoot up to a larger extent.
- Capital Outflows:
- Capital outflows have been an impediment to the growth of developing markets.
- Due to this, emerging markets have suffered by and large.
- Growth fluctuations in the developing economies have been persistent and are accompanied by currency depreciation and tighter external sector conditions.
- The domestic fiscal policy space has further complicated the situation.
- The increase in global interest rates will further reduce this contracted fiscal space in many economies.
Read more on this issue in CNA dated June 5 2022.
Ways Ahead:
- It is imperative that the intensity of policy tightening form an alignment with the present economic scenario and the levels of economic activities.
- The central banks can possibly signal a shift in monetary stance to maintain credibility and stabilise inflation rates by backing it with policy actions.
- Experts believe that interventions in foreign exchange could also address the market imbalances created by capital outflows.
- It is necessary to reduce expenditure and get back to the road of fiscal consolidation.
- Such consolidation shall not prevent the government from spending on developmental schemes that are intended for the vulnerable sections of society.
- The expenditure must be regulated in a manner that it entails the targeted income support measures assisting the most vulnerable ones at lower costs.
- The implications of energy transition should also be taken into account. These transitions to reduced dependence on fossil fuels will require potential labour market and income support policies that assure the provisions of safety nets to the workers without disturbing the employment growth.
In order to confront and tackle the challenges of the global economic crisis, the policymakers in the developing economies must enhance their preparedness and resilience towards tighter financial conditions and spillovers from geopolitical volatility.
1. Crime and copyright infringement
Syllabus: Issues relating to intellectual property rights
Prelims: Copyrights Act
Mains: Critically analysing the recognition of copyright infringement as a cognisable offence.
Context: The Supreme Court has delivered a judgement on copyright infringement which is expected to have far-reaching consequences.
What is meant by Copyright Infringement?
- The act of using any work protected under copyright law without the copyright owner’s permission is known as copyright infringement.
- It is often related to piracy.
- It creates enough room to attack the originality of a work, thereby interfering with one’s Intellectual Property Rights.
- This leads to counterfeiting and is sometimes prosecuted through the criminal justice system.
- The copyright disputes are resolved through direct negotiations, notice or litigation in courts.
- A copyright is created when a piece of art or music or literature is fixed on a medium with its originality.
- In India, Section 52 of the Copyrights Act outlines the limitations and exceptions to copyright infringement.
- There are provisions in the copyright law that explain fair dealing and circumstances under which certain parts of the copyrighted work can be reproduced.
About the Judgement:
- In the case of Knit Pro International vs the State of NCT, the apex court ruled that copyright infringement is a cognisable offence under the Code of Criminal Procedure, 1973.
- This judgement opens up the avenues of investigations by the police in receiving complaints regarding copyright infringement.
- The investigations in the cases of copyright infringement can now begin without the cognisance of the offence by the judicial magistrate.
- In the case of non-cognisable offences, the police can only initiate an investigation after the cognisance of the offence by the judicial magistrate.
Possible Outcomes:
- The judgement will allow the copyright owner, especially in the software and music industries, to use the threat of police to scare the infringers.
- As the offence of copyright infringement is made cognisable and non-bailable, it takes away the right of the accused to post a bail bond with the police and shifts the responsibility to the courts for a judicial determination on a case-by-case basis.
- The judgement has been perceived by many as a mode to provide the police with unbridled power of investigation.
- The lack of efficiency in the police to carry out investigations related to copyright infringement without proper training given to them is brought into question.
Read about the Copyrights Act in the link shared.
Conclusion:
The decision of the Supreme Court on copyright infringement will empower the police to infringe the freedom of the people unless the law is amended to not only differentiate between the different acts of copyright infringement but also require prior judicial cognisance as a precondition for criminal investigations.
The recognition of copyright infringement as a cognisable offence can lead to the misuse of the copyright law by the police and interfere with civil liberties and hence, warrants reconsideration.
1. The Weight of GST Council Ruling
Syllabus: GS II, Polity, issues and challenges pertaining to the federal structure
Prelims: GST, GST Council
Mains: Discuss the roles and responsibilities of the GST council.
Context: In the case of Union of India vs Mohit Minerals Pvt. Ltd., the Supreme Court has asserted that the recommendations of the GST Council are not binding on either the Union or the States.
Delving deeper:
- This has raised several questions on the extent to which the GST Council functions and the judicial interventions into the recommendations of the council.
- On the other hand, some states have shown significant agreement with the judgement of the apex court stating that the autonomy of the states to legislate on GST has been restored and revived through this judgement.
Read about this issue in CNA dated May 25 2022.
Conclusion:
The Supreme Court precisely conveyed that the recommendations of the GST council are not mandatory and binding on the states and the Union. It can be construed that in a democracy, the power to legislate is given to the Parliament/Assembly by the people who have curtailed their private autonomy to accept collective decisions.
In a democracy, the power of recommendations must rest on cooperative federalism and collaborative decision making.
F. Prelims Facts
1. New rules allow retired officers to hold CDS post
Syllabus: GS3: Security Challenges: Various Security forces and agencies and their mandate.
Prelims: Chief of Defence Staff (CDS)
Context:
The government issued a notification to alter the rules of selection of a new Chief of Defence Staff (CDS).
New Rules of Selection:
- The amended rules will allow serving or retired Lt General-rank officers to be eligible for the post, but with the condition that the age at the time of appointment is under 62 years.
- The Chiefs of the three armed forces, who retire at 62 years or after putting in 3 years of service (whichever is earlier), will not be eligible unless they get selected before the retirement date or retire before they reach 62.
- The government could also pick the CDS from among the serving three-star officers.
2. Tamil Nadu tops food safety index
Syllabus: GS2: Polity and Governance: Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
Prelims: State Food Safety Index (SFSI)
Context:
The State Food Safety Index (SFSI) was published by the Food Safety and Standards Authority of India (FSSAI).
Performance of states/Uts in State Food Safety Index (SFSI):
- Tamil Nadu topped the State Food Safety Index (SFSI) in 2022, followed by Gujarat and Maharashtra.
- Among the smaller States, Goa stood first, followed by Manipur and Sikkim.
- Among the Union Territories, Jammu and Kashmir, Delhi and Chandigarh secured the first, second and third ranks.
About State Food Safety Index (SFSI):
- The State Food Safety Index (SFSI) measures the performance of States on the basis of five parameters prescribed by the Health Ministry.
- The rating is done by the Food Safety and Standards Authority of India (FSSAI).
- The index was started in 2018-19 with an aim to galvanise States/UTs to work towards ensuring safe and nutritious food to the citizens.
G. Tidbits
1. Two States, one panchayat: Kotia can’t be better placed
- Phagunasineri is a village in India that has two “elected” sarpanches wielding their authority and implementing welfare schemes.
- Phagunasineri is tucked away in the forested hilly areas along the Odisha-Andhra Pradesh boundary.
- At the heart of the “dual citizenry” lies an over seven-decade-old boundary dispute between the two States that has peaked in recent times. Both States are busy flooding welfare schemes at mere mention by the tribal people.
- Odisha and A.P. have challenged each other’s administrative control over the Kotia gram panchayat or Kotia group of villages comprising 21 revenue villages. The Supreme Court has ordered a status quo on the issue.
H. UPSC Prelims Practice Questions
Q1. Consider the following pairs of tribal revolts and the associated personalities. (Level: Difficult)
Tribal revolts Personality
- Khasi uprising of 1830s Tirot Sing
- Kol uprising of 1830s Budhu Bhagat
- Santhal rebellion of 1850s Sidhu Murmu
Which of the above pairs are correctly matched?
- Only one pair
- Only two pairs
- All three pairs
- None of the pairs
CHECK ANSWERS:-
Answer: c
Explanation:
- The Khasi rebellion occurred in 1833 in the land between the Khasi and Jaintia Hills, in protest of a planned British route across the area. The insurrection was led by Tirot Sing Syiem. The Khasis were defeated in this battle, and the British acquired control of the highlands.
- In 1831, the Kol tribesmen of Chhota Nagpur, who were upset over the exploitation by agents of the East India Company (EIC), rose in revolt against the EIC. The rebel Kols were under the leadership of Buddhu Bhagat, Joa Bhagat, Jhindrai Manki, Madara Mahato and others.
- On 30th June 1855, two years before the Great Revolt of 1857, two Santhal brothers Sidhu and Kanhu Murmu organized 10,000 Santhals and proclaimed a rebellion against the British. The tribals took an oath to drive the British away from their homeland.
Q2. Which of the following statements is/are correct with respect to surface-level Ozone pollutant? (Level: Medium)
- Ozone is a secondary pollutant.
- As per the new air quality standards notified by the environment ministry, for ozone, the limits are 100 and 180 µg/m3 respectively as 1-hour and 8-hour mean values.
Options:
- 1 only
- 2 only
- Both 1 and 2
- Neither 1 nor 2
CHECK ANSWERS:-
Answer: a
Explanation:
- Ground-level ozone is a colourless and highly irritating gas that forms just above the earth’s surface. It is called a “secondary” pollutant because it is produced when two primary pollutants react in sunlight and stagnant air.
- Data from the Delhi Pollution Control Committee (DPCC) indicates that ozone levels were well above the 8-hour standard of 100 µg/m3 and hourly standard of 180 µg/m3 according to the National Ambient Air Quality Standards at different monitoring stations on multiple days.
Q3. Which of the following statements is/are correct with respect to e-waste in India? (Level: Easy)
- India is the world’s largest e-waste generator in the last two years.
- More than 90% of the e-waste generated in India is collected and scientifically disposed of.
Options:
- 1 only
- 2 only
- Both 1 and 2
- Neither 1 nor 2
CHECK ANSWERS:-
Answer: d
Explanation:
- India is the third-largest electronic waste generator in the world after China and the USA. Hence statement 1 is incorrect.
- According to recent data, Only 22.7 per cent of the e-waste generated in 2019-20 in India was collected, dismantled, and recycled or disposed of. Hence statement 2 is incorrect.
Q4. Which of the following are the powers enjoyed by the Rajya Sabha? (Level: Medium)
- The authority to move a subject from the State List to the Union List for a set amount of time.
- Recommending the creation of additional All-India Services.
- When the Lok Sabha is dissolved, Rajya Sabha can declare an emergency under Article 352 for a limited time.
Options:
- 1 and 2 only
- 2 and 3 only
- 1 and 3 only
- 1, 2 and 3
CHECK ANSWERS:-
Answer: d
Explanation:
- According to the Constitution, Rajya Sabha may pass a resolution by a majority of at least two-thirds of the Members present and voting, stating that it is fundamental or convenient in the national interest for Parliament to make law on any issue on the State List.
- The All India Services (including All India Judicial Service) can be created by the parliament of India if the Rajya Sabha passes a resolution declaring that it is essential in the interest of the nation.
- If the Lok Sabha is dissolved at the time of the declaration of emergency, it must be approved by the reconstituted Lok Sabha within thirty days of its first sitting, unless it has already been approved by the Rajya Sabha.
- Hence all the Statements are correct.
Q5. In the context of digital technologies for entertainment, consider the following statements: (Level: Medium) [UPSC 2019]
- In Augmented Reality (AR), a simulated environment is created, and the physical the world is completely shut out.
- In Virtual Reality (VR), images generated from a computer are projected onto real life objects or surroundings.
- AR allows individuals to be present in the world and improves the experience using the camera of a smart-phone or PC.
- VR closes the world, and transposes an individual, providing complete immersion experience.
Which of the statements given above is/are correct?
- 1 and 2 only
- 3 and 4
- 1, 2 and 3
- 4 only
CHECK ANSWERS:-
Answer: b
Explanation:
- Images generated by a computer are projected onto real-life objects or surroundings in Augmented Reality (AR). Hence, Statement 1 is incorrect.
- A computer-generated simulation of an alternate world or reality is referred to as virtual reality. Virtual Reality (VR) creates a simulated environment while blocking out the physical world. Hence, statement 2 is incorrect.
- AR allows people to be present in their surroundings and enhances the experience by utilizing the camera on their smartphone or PC. Hence, statement 3 is correct.
- Virtual reality has also been used for a long time in training, education, and science. Users in VR interact with the visual environment. Hence, statement 4 is correct.
I. UPSC Mains Practice Questions
- What is a Bad Bank? How far would it go in resolving the problem of NPAs in India? (250 words; 15 marks) GS III (Economics)
- The nations that are supposed to be the guardians of International institutions are the ones weakening them. Comment. (250 words; 15 marks) GS II (International Relations)
Read the previous CNA here.
CNA 08 June 2022:- Download PDF Here
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