# 16 Mar 2018: UPSC Exam Comprehensive News Analysis

A. GS1 Related
B. GS2 Related
POLITY
1. Supreme Court transfers Karti’s cases back to itself
INTERNATIONAL RELATIONS
1. Spy incident: 4 nations slam Russia
C. GS3 Related
DEFENCE
1. MoF declines 3% GDP allocation for defence
ECONOMY
1. PNB seeks information from peer banks to rule out any deficiency
2. India likely to push for dropping ‘Asian premium’ on oil prices
3. RBI norms may push power projects worth Rs. 2.5 lakh crore into bankruptcy’
D. GS4 Related
E. Editorials
INTERNATIONAL RELATIONS
1. The strategy of conflict
POLITY AND GOVERNANCE
1. Is active euthanasia the next step?
F. Prelims Fact
G. UPSC Prelims Practice Questions
H. UPSC Mains Practice Questions


A. GS1 Related

Nothing here for today!!!

B. GS2 Related

1. Supreme Court transfers Karti’s cases back to itself

Why in news?

A few days after it advised Karti Chidambaram to move the Delhi High Court for interim protection against arrest by the Enforcement Directorate in the INX Media FIPB approval case, the Supreme Court transferred cases pertaining to him back to itself.

What is the issue?

• A Bench led by Chief Justice of India Dipak Misra said the cardinal question to be decided by the apex court would be whether a person facing imminent arrest for money-laundering under Section 19 of the Prevention of Money Laundering Act could move a High Court under Article 226, complaining of violation of his fundamental rights.
• The apex court found there were conflicting opinions on the legal point among the various High Courts.
• Meanwhile, the Supreme Court allowed Mr. Karti interim protection from arrest till March 26, the next date of hearing. In fact, this relief from the Supreme Court came in the morning, a few hours after the Delhi High Court gave him interim protection till March 22.
• On March 8, the Supreme Court had refused to grant Mr. Karti interim protection against possible arrest by the ED. Instead, it allowed him the liberty to approach the High Court in the course of the day.
• Mehta had at that point of time urged the Supreme Court not to transfer the case to the High Court, alleging that Mr. Karti’s petition for interim protection was an abuse of the Supreme Court’s jurisdiction in order to get anticipatory bail.

1. Spy incident: 4 nations slam Russia

• Tensions between Russia and the West continued to ramp up as France, Germany, Britain and the U.S. jointly accused Russia of involvement in the attack on Sergei Skripal and his daughter in Salisbury in early March, which they said involved the first “offensive use” of a nerve agent in Europe since the Second World War.
• It is an assault on U.K. sovereignty and any such use by a state party is a clear violation of the Chemical Weapons Convention and a breach of international law. It threatens the security of all of us.
• All four shared Britain’s assessment that it was “highly likely” that Russia was responsible for the attack, and condemned Russia’s failure to address the “legitimate” request by the U.K. government to explain whether and how a nerve agent developed under a Russian programme could have gotten into third party control.
• That’s the only alternative to the Russian state’s direct involvement, they said.
• The joint statement will be seen as a diplomatic victory for Prime Minister Theresa May who has been under pressure to show her diplomatic clout both across the Atlantic and within Europe.
• European Commission President Donald Tusk also joined in, expressing “full solidarity” with the British position “in the face of the brutal attack inspired, most likely, by Moscow”.

Lowest point

• Relations between Britain and Russia have fallen to their lowest point since the Cold War, following the poisonings.
• Britain retaliated by announcing the expulsion of 23 Russian diplomats (the largest expulsion since 1985 when Britain expelled 25), and the revocation of an invitation to Russian Foreign Minister Sergey Lavrov to visit the country. It accused Russia of the “unlawful use of force”.
• At an urgent meeting of the Security Council in New York on Wednesday, the U.S. joined Britain in condemning Russia, pledging to stand in “absolute solidarity with Great Britain”.
• The U.S.’ Nikey Haley warned that if immediate action were not taken, Salisbury would not be the last time that a chemical attack happened on Western soil.
• Novichok, the type of nerve agent, which Britain says was used in the attack could not have been manufactured by “non-state actors”, Britain’s Representative Jonathan Allen said. He attacked Russia’s initial response that Britain was not following the protocol of the Organisation for the Prohibition of Chemical Weapons.
• Russia’s UN envoy Vissaly Nebenzia accused Britain of attempting to tarnish Russia with falsehoods, irresponsible statements, and threats to a sovereign state.

C. GS3 Related

1. MoF declines 3% GDP allocation for defence

• The Finance Ministry has declined a recommendation from the Parliamentary Standing Committee on Defence to have a fixed allocation of 3% of GDP for the Defence Ministry, a report of the Committee has stated.
• The recommendation of the Standing Committee for keeping a definite percent of GDP was referred to MoF for their consideration, the same was not approved by MoF,” the Ministry of Defence (MoD) said in its reply to the Committee.
• The Committee has on several occasions expressed favour for having a benchmark percentage of GDP earmarked for deciding on the allocation to the defence sector to continue modernisation.
• The MoF in its reply to the MoD said: “Since government resources come with definite cost, resource allocation is made among various competing priorities.
• Thus, defence expenditure as definite percentage of total government expenditure/GDP cannot be ensured considering the fact the resource allocations are made on need basis.”
• Finance Ministry further added that rationalisation of the expenditure is the prime objective of the government while finalising the revised estimates during mid-year review.
• The Vice Chief of Army Lt. Gen. Sarath Chand has deposed before the Committee that this year’s budgetary allocation has dashed their hopes, and the capital allocation does not even cater for the committee liabilities for the year.

1. PNB seeks information from peer banks to rule out any deficiency

• Punjab National Bank has asked for certain information from peer banks, but no condition has been set for payouts related to LoUs in the Rs. 12,968 crore scam involving Nirav Modi and his firms.
• Bankers aware of the development said as the matter was under investigation by the CBI, no final call on LoU payouts could be taken as of now.
• PNB has been calling for certain information from other banks to ascertain if there were any deficiency or laxity on the part of those other banks, if they also had some system lacunae or might have compromised on their system, things like that.
• On what had been derived among the banks on the liability of PNB towards other banks to pay against the Letters of Undertaking (LOUs) on the basis of which peer lenders made import credit payments to Nirav Modi and his firms. As the investigations are going on, there is no final call on LOUs payouts.
• As the investigation process was normally a long-drawn affair, the bankers fear they would be compelled to declare the portion of their exposure in the LoU fraud as non-performing.
• To plug the loopholes, PNB has started the process of urgently integrating SWIFT, with its core banking solution (CBS) system. A new software, Financle 10, had been installed and was in the testing phase. It is a superior system and would enable the bank at mid office and head office to view transactions of all branches through one administration.

2. India likely to push for dropping ‘Asian premium’ on oil prices

Why in news?

• India is likely to lobby heavily for an end to the discriminatory “Asian premium” on oil prices and a “responsible” price mechanism, as it prepares to host a major conference for oil producing and consuming countries.
• Addressing a curtain raiser for diplomats of countries that are expected to send delegations for the International Energy Forum (IEF) April 10-12, Petroleum Minister Dharmendra Pradhan said India would become a “happening point” for energy after the conference, which would be close on the heels of the International Solar Alliance (ISA).
• Key Oil Producing and Exporting Countries (OPEC) including Saudi Arabia, and Iran’s petroleum ministers, will attend the conference.
• The IEF represents 90% of world consumption and production of oil and gas. All 92 member countries of the IEF are expected to send delegations, with about 40 participating at a ministerial level.
• Since 2015, Mr. Pradhan has made repeated demands to the IEF countries to remove what is called the “Asian premium” on prices that was pioneered by Saudi Arabia, which distinguished consumers in Asia from the U.S. and European countries.
• However, the demands have met with little success and the issue is expected to be raised on the sidelines of the event, if not during the conference with Saudi Arabia and others.

3. RBI norms may push power projects worth Rs. 2.5 lakh crore into bankruptcy’

• More than 50,000 MW of stressed power projects, worth more than Rs. 2.5 lakh crore, with bank exposure of more than Rs. 1.75 lakh crore, are likely to face bankruptcy proceedings as, among others, the Reserve Bank of India (RBI) had scrapped all loan restructuring programmes in February, according to industry sources.
• About 50GW of operational capacity in private sector with total capex of about Rs. 2.5 lakh crore, having bank exposure of about Rs. 1.75 lakh crore may have to face bankruptcy proceedings if the underlying stress factors — resolution of change in law cases, coal supply and its restrictive usage policy and absence of power offtake agreements are not resolved quickly.
• The government has called for a high-level meeting of all the stakeholders, including public and private sector power firms, lenders, coal suppliers and railways on Friday to discuss the gravity of the situation.

Payment by discoms

• Of the 50,000 MW, about 12,000 MW have no power purchase agreements (PPAs) or coal linkages while 20,000 MW have coal linkages but don’t have long term PPAs.
• Another 11,000 MW of gas-based power plants are stranded for the want of gas while 9,800 MW coastal power plants of Tata Power, Adani Power and Essar Power are stranded due to lack of imported coal.
• The RBI had recently scrapped all loan restructuring programmes and it’s recent guidelines on ‘Resolution of Stressed Assets — Revised Framework’ mandates the banks to classify even a day’s delay in debt servicing as default.

D. GS4 Related

Nothing here for today!!!

E. Editorials

1. The strategy of conflict

Context:

• India must work towards some understanding with Pakistan before the situation on the border spins out of control

Keypoints:

• Since the beginning of 2018, the violence on the Jammu and Kashmir (J&K) stretch of the India-Pakistan border witnesses more than 633 ceasefire violations (CFVs) by Pakistan and has claimed the lives of 12 civilians and 10 soldiers.
• Till the first week of March, Pakistan reported 415 CFVs by India which have claimed 20 civilian lives (there is no data on Pakistani military casualties).
• With the rising brutality, losses and the upcoming election races in the two nations, we may have to resort to an ideal formula for escalation staring us in the face.

Is this sheer mindless violence, or is there a strategy behind this violence? And if there indeed is a strategy, is it a carefully calibrated one and what are its likely outcomes?

Strategy 1:

• As far back as the truce assention (CFA) of 2003, New Delhi appears to have taken after three wide procedures to manage the viciousness on the J&K border.
• These three approaches —
1. ‘talks over bullets’,
2. ‘talks and bullets’, and ‘
3. disproportionate bombardment’
• The years promptly after the 2003 CFA saw a lot of silence on the outskirts with CFVs dropping to a base despite the fact that penetration into J&K and sporadic, minor dread assaults against India kept on occurring. There were no real fear assaults, and Kashmir was quiet.
• Reciprocal talks definitely lessened brutality amid that stage. This kept going generally till 2008.
• Another phase when this strategy was evident was following Prime Minister Narendra Modi’s visit to Lahore.

Consequences of such moves:

• Engagement with Pakistan and calm on the outskirt are emphatically related.
• The drawback, in any case, is that New Delhi feels that it attempted the technique of peace and talks a few times before and neglected to get a positive reaction from Pakistan. This has prompted a lot of severity in India.
• Disappointment of this methodology has been because of the occasional fear assaults completed against India, invasion into J&K and the ascent of militancy in Kashmir, in all of which India sees critical commitment of the Pakistani foundation.

Strategy 2:

• The period from 2010 to 2012 seems to fall in this category.
• Two sides connected with each other in talks amid this time and CFVs decreased essentially.
• While the discussions went on, the firings on the J&K fringes did not go to a total stop.
• India reported 70 violations in 2010, 62 in 2011 and 114 in 2012.
• In 2010, the two Foreign Secretaries met in New Delhi, followed by the two Foreign Ministers meeting in Islamabad.
• In 2011, the two Foreign Secretaries met in Thimphu, and in 2012 the Indian and Pakistani Foreign Ministers issued a joint statement in Islamabad.
• The advantages of this session of proportionate reaction were ‘talks for talks and bullets for bullets’ which went ahead without much whine is clear: next to no danger of acceleration, less setbacks and constrained decimation.

Strategy 3:

• This strategy by India incorporates disproportionate bombardment of the Pakistani side utilizing high gauge weapons while not demonstrating any want for talks, transactions or concessions, and disregarding Pakistani recommendations thereof.
• India’s accounted for dismissal, in January, of a Pakistani proposition for a meeting between the two Directors General of Military Operations (DGMOs), saying it initially needed to see a drop in penetration levels is an immediate result of this methodology.
• The domestic component of this strategy also involves a great deal of politicisation of the Indian Army’s feats on or across the Line of Control, such as the surgical strikes against Pakistan in September 2016.
• CFVs since April 2016 and the current state of India-Pakistan relations are largely informed by this strategy.

Inherent costs associated with this strategy.

• The top-heavy bombardment strategy could possibly intensify to worrying levels where a rising toll could reverse popular support for the current muscular approach.
• Second, more killing and destruction would also steadily shrink the space available for negotiated outcomes with Pakistan.
• Finally, the current media frenzy surrounding the border violence and the associated nationalist sentiments could become a worry for the government if and when it wishes to negotiate with Pakistan.

Way forward

• There clear mismatch between the expectations and strategies of New Delhi and Islamabad/Rawalpindi.
• Whereas India is looking for an end to cross-border infiltration and Pakistani involvement in Kashmir in return for an end to shelling on the border, Pakistan is desirous of a resolution of or meaningful talks on Kashmir in return for calm borders and cracking down on anti-India terror groups in Pakistan.

1. Is active euthanasia the next step?

F. Prelims Fact

Nothing here for today!!!

G. Practice Questions for UPSC Prelims Exam

Question 1. Consider the following statements about LOU:
1. A LoU is an assurance given by one bank to another to meet a liability on behalf of a customer.
2. LoUs are used in international banking transactions.

Which of the statements are correct?

1. 1 only
2. 2 only
3. Both 1 and 2
4. None of the above

See

Question 2. Consider the following statements about Fugitive Economic Offenders Bill, 2018:
1. The Bill would help in laying down measures to deter economic offenders from evading the process of Indian law by remaining outside the jurisdiction of Indian courts.
2. A Fugitive Economic Offender is a person against whom an arrest warrant has been issued in respect of a scheduled offence and who has left India so as to avoid criminal prosecution, or being abroad, refuses to return to India to face criminal prosecution.

Which of the statements are correct?

1. 1 only
2. 2 only
3. Both 1 and 2
4. None of the above

See

Question 3. Consider the following statements about National Financial Reporting Authority (NFRA):
1. As per the Companies Act, 2013 the NFRA is tasked with the job of recommending accounting and auditing standards, ensuring compliance with them and overseeing the quality of service of the accounting and audit professions.
2. It has also been given the power to investigate matters of professional misconduct by chartered accountants or CA firms, impose penalty and debar the CA or firm for up to 10 years.

Which of the statements are correct?

1. 1 only
2. 2 only
3. Both 1 and 2
4. None of the above

See

H. UPSC Mains Practice Questions

General Studies II

1. With passive euthanasia judgment helping one die with dignity, should the courts also look into active euthanasia? Critically comment.
2. Discontinuation of LoU by RBI was a knee jerk reaction. Discuss the implications and suggest suitable measures.

Also, check previous Daily News Analysis

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