06 Mar 2018: UPSC Exam Comprehensive News Analysis

A. GS1 Related
B. GS2 Related
GOVERNANCE
1. SC admits plea to clean top badminton body of 'political interference' just like in BCCI
HEALTH ISSUES
1. Child Marriages Drop By Half In India, Results In Global Decline: UNICEF
C. GS3 Related
ECONOMY
1. Know why RBI slapped penalties on Axis Bank, Indian Overseas Bank
2. US metal tariffs: Brokerages see limited impact on Indian market
SCIENCE AND TECHNOLOGY
1. What Happens When Tesla Roadster Contaminates Mars Or Other Planets With Bacteria From Earth
D. GS4 Related
E. Editorials
ECONOMY
1. Predatory pricing: TDSAT directs TRAI to respond to Bharti, Idea petitions
2. Being tough not enough! Why India’s bankruptcy regime needs a pragmatic touch
3. US FDA: a risk that keeps on giving
F. Prelims Fact
G. UPSC Prelims Practice Questions
H. UPSC Mains Practice Questions 

A. GS1 Related

B. GS2 Related

• The Supreme Court  admitted a petition to oust Assam minister and BJP leader Himanta Biswa Sarma and other active politicians from the helm of Badminton Association of India (BAI).
• A three-judge Bench led by Chief Justice of India Dipak Misra issued notice to the Centre, BAI and Mr. Sarma on the petition filed by Delhi resident, Kamlesh Verma, to make badminton free of political interference.
• The petition asks the apex court to take a leaf from the Justice Lodha committee recommendation in the BCCI case. Justice Lodha’s reform to ban political ministers from occupying position in the apex cricket body was upheld by the Supreme Court.
• Mr. Verma, represented by senior advocate Shanti Bhushan and advocate Rohit Singh, said the same ban should uniformly apply to all sporting associations, especially badminton.
• The petitioner is seeking directions to supersede the present office-bearers of the Badminton Association of India with immediate effect and appoint in their place a panel/ committee of administrators, as done in the case of BCCI, to ensure the smooth functioning of the Association. The petition said Mr. Sarma is facing corruption charges too.

In news

• The proportion of girls getting married in India has nearly halved in a decade, the United Nations children’s agency UNICEF said, which has contributed significantly to a global decline in child marriage.
• UNICEF said 25 million child marriages were prevented worldwide in the last decade, with the largest reduction seen in South Asia – where India was at the forefront.
• India constitutes more than 20 percent of the world’s adolescent population and accounts for the highest number of child marriages in South Asia given its size and population.
• In the current trend, 27 percent of girls, or nearly 1.5 million girls, get married before they turn 18 in India. This is a sharp decline from 47 percent a decade ago.
• Child marriage adds to health, education and abuse risks, and increases the chance of intergenerational poverty.
• Campaigners and officials attributed the drop in child marriages to better access to education for women and increased public awareness on the negative impact of child marriage.
• UNICEF estimates that 12 million girls a year are married globally, and says more is needed to end the practice by 2030 – the target set under the U.N.’s Sustainable Development Goals.
• UNICEF’s conclusions on India came after comparing data from its 2006 and 2016 health survey that asked women in the 20-24 age group whether they had married before they turned 18. It also took into account child marriage data from the 2011 census.
• The legal age of marriage in the country is 18 for women and 21 for men. Last year the Supreme Court ruled that sex with an underage wife constituted rape.
• The Prohibition of Child Marriage Act imposes a fine of Rs. 1 lakh and two years in prison for parents caught trying to marry off their underage children.
• Despite the law, child marriage remains deeply rooted and accepted in society, and is widespread in parts of the country.
• Better awareness of the Supreme Court’s verdict would deter child marriages, and declaring them invalid would strengthen India’s laws against them.

C. GS3 Related

In news

• A penalty of Rs 3 crore and Rs 2 crore was imposed on Axis Bank and Indian Overseas Bank (IOB), respectively by the Reserve Bank of India.
• The penalty was imposed by the central bank on the lending institutions for not complying with the known your customer (KYC) regulations.
• With respect to the financial position of Axis Bank, RBI had carried out a statutory inspection on March 31, 2016 and thereafter learnt that the bank had violated various regulations in carrying out assessment of the NPAs, PTI reported citing a  statement issued by the central bank.
• In case of Indian Overseas Bank, a public sector entity, the RBI detected a fraud at one of the branches of the bank. The central bank said that the latest action taken by it is based on the regulatory compliance deficiencies.
• Meanwhile, RBI also said an additional liquidity of Rs 1 lakh crore will be injected by it in the banks via long term financial instruments. The aim behind injection of liquidity is to ensure flexibility to meet the fund needs of the banks. The infusion of liquidity will be one towards March-end.
• A combination of appropriate instruments will be used to inject this liquidity in the banking system of the country, PTI reported citing RBI statement released on Monday.
• The infusion of liquidity will be done in addition to the regular Liquidity Adjustment Facility (LAF) operations. In March 2018, the central bank will conduct four variable term repurchase auction to the tune of Rs 25,000 crore.

The latest decision by the RBI to infuse additional liquidity in the banking system will help restrict the short-term rates and also help in bringing down the interest rate volatilities for the remaining month, ICRA said.

• The BSE Metal index was the worst performer among BSE sector indices on Monday as sentiment turned weak on US President Donald Trump’s announcement last week that he would impose tariffs on imports of steel and aluminium products.
• However, brokerages see limited impact on the Indian steel sector as India’s exports to the US are miniscule.

EDELWEISS SECURITIES

• Edelweiss said that the popular perception is that China will be the worst affected by the proposed tariffs on steel and aluminium and there will be a cascading effect across all countries including India.
• The brokerage said it differs in its view as bulk of the US primary aluminium and steel imports are from Canada, and exports from China and India are focused on Asia.
• There could be near-term stress on domestic stocks due to global pricing pressure and trade flow shifts, but the long-term impact is expected to be marginal, said Edelweiss.

ICICI BANK

• The bank said that even as a trade war is unlikely to be the outcome of the move by the US, global supply chains will go through sharp changes.
• The tariff hike by US is unlikely to have a major immediate impact on Indian exports as the country’s steel exports to the US are miniscule, said ICICI Bank.
• Around 1-2 per cent of US steel imports by volume are accounted for by India. The impact on India may be minimum, but possible retaliatory stances by other countries will vitiate the trade atmosphere, said ICICI Bank.

MORGAN STANLEY

• The direct impact of the potential restrictions by the US on Indian imports is likely to be limited as Indian steel exports to the US represent less than 1 per cent of India’s production and 4 per cent of India’s steel exports, said Morgan Stanley.
• The firm said that the key thing to watch would be the rising risk of counter measures from other countries which may trigger trade issues and lead to pressure on steel and aluminium prices outside the US.
• With safeguard duty for steel in place and domestic steel prices being at a discount to global steel prices on import parity, a potential increase in steel imports into India is unlikely.

• Some scientists fear that the bacteria from planet Earth brought by Elon Musk’s Tesla into space may contaminate other worlds. What would be the problem if this happens?
• Scientists are raising their concern over the space-cruising red Tesla car. They fear that Elon Musk’s car brings a large horde of bacteria from Earth that may contaminate Mars.

What Would Happen If Humans Contaminate Mars Or Other Planets?

• Contaminating another world is one of the things that NASA wants to avoid and for good reason. If Earth microbes are introduced to and survive on a planet such as Mars, scientists searching for signs of life in this worlds may mistake those bacteria for little organisms that originated from Mars. Such a misinterpretation will have a significant impact on how humans would view their place in the universe.
• In worlds with high chances of hosting microbial life such as Jupiter’s moon Europa and Saturn’s Enceladus, contamination would mean that microbes from Earth would interact with the organisms that could be thriving there
• This could have devastating consequences as suggested by what happens on ecosystems here on Earth after invasive species are introduced into parts of the worlds where they did not originally exist.
• A new and aggressive species that is introduced into a new ecosystem may have not natural predators or controls. This means that they can breed and spread quickly, and take over an area. The native species may not have the defenses needed to protect themselves from the invader or are unable to compete with a species that has no predators.
• The direct threats of invasive species include preying on native species, outcompeting native species for food or other resources, causing or carrying disease, and preventing native species from reproducing or killing a native species’ young.
• Microbes hitching a ride from planet Earth may have these effects on other worlds.
• NASA’s Planetary Protection, which was established to promote responsible exploration of the solar system, explained why humans must not contaminate other worlds.
• Planetary protection is essential for several important reasons: to preserve our ability to study other worlds as they exist in their natural states; to avoid contamination that would obscure our ability to find life elsewhere – if it exists; and to ensure that we take prudent precautions to protect Earth’s biosphere in case it does.

D. GS4 Related

E. Editorials

In news

• The Telecom Disputes Settlement and Appellate Tribunal (TDSAT) directed Trai to file its response on the appeals by Bharti Airtel and Idea Cellular, which alleged that the regulator’s latest regulation on predatory pricing had significant implications for the sector and would also hit customer interests.
• While the TDSAT did not grant a stay on the amendments to the TTO, as urged by Bharti and Idea, the tribunal directed Trai to file its response within four weeks.

What is the issue?

• Last week, both the operators had moved the tribunal against Trai’s 63rd amendment to the telecommunication tariff order (TTO), where the regulator has defined predatory pricing for the first time and has also amended the definition of significant market player or SMP. In their appeals, both the operators urged the TDSAT to stay the new regulations till the case is decided.
• Both Bharti and Idea pointed out that under the existing regime, an SMP is defined on the basis of the subscriber base, turnover, switching capacity and traffic volume. But, through the latest amendments, there has been a complete change in the entire regulatory regime.
• So, now a SMP will be defined on the basis on only two criteria – subscribers and revenue. Also, there was “no hint” of the changes in the definition of SMP during the consultation process on the regulatory principles of tariff assessment.
• They also challenged Trai’s regulation directing operators to report segmented offers, which are provided to customers, mostly on an individual basis and is used by operators to retain subscribers.
• Questioning the latest regulations, the country’s largest telecom operator claimed that the entire exercise is contrary to directions given by the TDSAT in its order on February 1, 2018 and that Trai’s directions are without proper consultation.
• Idea in its appeal said Section 11 (2) of the Trai Act only empowers the regulator to fix tariffs. But, Trai has amended the TTO and introduced several new provisions (and done away with crucial stipulations), which are completely ultra vires to the power of Trai aside from being “arbitrary, discriminatory and against the interest of the consumers.

• India’s pursuit of perfection could backfire. Bids for the bankrupt Essar Steel could fetch around $6 billion, plus billions of dollars more in capital expenditure, with interest from separate groups led by ArcelorMittal and Russian bank VTB.
• Both sit awkwardly with tough new rules barring large shareholders in defaulting entities from buying stressed assets. It is better to get good proceeds for creditors than to be a purist and fail, however. Essar Steel is the last major holding of the troubled Ruia brothers.
• The company, with prized assets including a state-of-the-art plant in Gujarat, is one of a dirty dozen forced into a new insolvency regime by the central bank, which is trying to clean up bad debt. Creditors face a haircut of around 40 to 50 percent on outstanding claims worth $12 billion.
• One potential hurdle is eligibility. ArcelorMittal, the world’s largest steelmaker, has teamed up with Japan’s Nippon Steel. The European company was a minority shareholder in a smaller Indian group called Uttam Galva that defaulted. Chairman Lakshmi Mittal also invested in a Kazakh business which ended up with a failing Indian unit. Although both shareholdings were sold before the bid for Essar Steel, they could still cause a problem.
• VTB’s bid more clearly breaks the spirit of the rules, which are intended to curb unruly tycoons. The Numetal consortium includes Rewant Ruia, son of Ravi Ruia, vice-chairman of the Essar Group. VTB is seen as a proxy for the Ruias, having financed part of Essar Oil’s $13 billion sale to Russia’s Rosneft. Even if VTB drops Ruia, Western sanctions on the state lender could complicate future investment in this strategic asset – hardly ideal from a political point of view. Neither bid is perfect.
• Blocking either could reduce the recovery for creditors – and for New Delhi, given its majority ownership of lending banks. A veto could also unleash a wave of lawsuits, delaying the overall resolution. If India shuts the door on a credible industry buyer like ArcelorMittal, it would send a particularly bad message to foreign investors keen to buy Indian distressed debt. As well as being tough, India’s bankruptcy regime needs to be pragmatic.

In news

• Aurobindo Pharma Ltd’s share had been on a roll since 21 February, gaining 9.3% till Thursday. Those gains could be one reason why its shares fell sharply on news that a US Food and Drug Administration (FDA) inspection at its facility ended with nine observations.
• Its shares closed with a loss of 3.7% as investors feared it may face delays in resolving the issue, although it is unclear how serious these observations are. The company clarified there were no repeat observations or data integrity issues, but that did not really placate rattled investors.
• The observations came after an inspection of the company’s Unit IV. The management had said that two units—Unit IV and Unit XII—were due for inspection, in a conference call after its December quarter results. Unit IV was also one in which there were three drug recalls, of which one had been addressed, and corrective work on the two others were in progress, the management had said in the same call.

What is the issue?

• Unit IV is a sterile injectables unit and as the name suggests, the standards expected of an injectables unit are higher than an oral formulations unit. Products made at such facilities also earn relatively higher margins, since there are fewer injectable units compared to those that make oral solids. They are expensive to set up and getting regulatory approvals is not easy. They add considerable value to a company. And some of the large domestic acquisitions made by foreign companies have been of sterile injectable facilities.
• That’s why this unit is material for Aurobindo, with 89 generic drug filings, of which it had final approval for 50, two tentative approvals and 37 pending as of 31 December. Its injectables business contributed $46 million or 15.6% of its US revenues in the December quarter.
• Coming to the observations themselves, they pertain to cleanliness and maintenance of equipment, infestation in the building, equipment used not being of proper design, lack of training among employees, laboratory control mechanism not being followed and appropriate controls over computers not being maintained, according to a BloombergQuint report. On the face of it, they may seem mild in nature but it is risky to jump to any conclusions.

What is the way ahead?

• The drug regulator will await a written response from Aurobindo, explaining the reason for these deficiencies and how it intends to resolve them. If the response is entirely satisfactory, a short wait later the matter will be resolved. This is the best case scenario.
• In some cases, another inspection may be required to see if the deficiencies have been taken care of, which could take time. A second inspection could uncover more deficiencies. This adds to the delay. However, the regulator may not find the response satisfactory, either on the explanation for the deficiency or the proposed remedy.
• That can escalate matters and even result in a warning letter, which could then stop fresh drug approvals to the unit. This can then delay the whole process for much longer. So, the resolution could take anywhere from a few months to over a year or more, depending on what happens next.
• It is that fear of not knowing where the US FDA will draw the line that is causing investors to take some money off the table. There have been instances in the past where the Street has taken a sanguine view on observations, only to be startled later by an escalation. They will wait a positive response from the US FDA or mitigating factors elsewhere in Aurobindo’s business to change their mind.
• This episode underlines the fact that the US FDA’s regulatory glare on Indian pharmaceutical companies is not going away. If companies are becoming wiser on data integrity and keeping a tight lid on old problems, the inspectors are uncovering problems they may have missed or ignored earlier.
• Unless companies go over their facilities with a toothcomb just like the inspectors are doing, even if it means a much higher cost of compliance for the US market, they will regularly trip over inspections, and investors will too.

F. Prelims Fact

G. Practice Questions for UPSC Prelims Exam

Question 1. Which of these establishments promote responsible exploration of Solar system? 

Question 2. Consider the following statements about UNICEF:

Question 3. Consider the following statements about Liquidity Adjustment Facility:

Question 4. Consider the following statements about Safeguards Duty:

H. UPSC Mains Practice Questions

Also, check previous Daily News Analysis