20 Mar 2022: UPSC Exam Comprehensive News Analysis

CNA 20 Mar 2022:-Download PDF Here

TABLE OF CONTENTS

A. GS 1 Related
B. GS 2 Related
INTERNATIONAL RELATIONS
1. India, Japan set target for $42 bn investment
2. How Russia’s bankruptcy law can punish foreign companies
POLITY AND GOVERNANCE
1. ‘Centre has right to expel foreigners’
C. GS 3 Related
D. GS 4 Related
E. Editorials
POLITY
1. Overlooking ‘reasonable accommodation’
ECONOMY
1. Will the war in Ukraine rattle India’s banks?
HEALTH
1. What is the NPPA’s role in fixing drug prices?
F. Prelims Facts
1. Youngsters in the throes of a fast-spreading drug menace
2. Study reveals major decline in golden langur habitat
3. Recombination of two virus variants seen since 2020
G. Tidbits
H. UPSC Prelims Practice Questions
I. UPSC Mains Practice Questions

Syllabus: Effect of policies and politics of developed and developing countries on India’s interests, Indian diaspora.

Mains: India and Japan Trade Relations

Context: India and Japan have set an investment target of “five trillion yen” ($42 billion) in the next five years.

 India and Japan Trade Relations

• In recent years, the economic relationship between Japan and India has steadily expanded and deepened. 
• The volume of trade between the two countries has increased. 
• India was the 18th largest trading partner for Japan, and Japan was the 12th largest trading partner for India in 2020. 
• Also, direct investment from Japan to India has been increased, and Japan was the 4th largest investor for India in FY2020.
• Know more about India – Japan Relations.

Challenges to India and Japan Trade Relations

• The global post-COVID recovery process falters and “geopolitical developments” present new challenges.
• Russia’s invasion of Ukraine is a grave development and there is a clear sign of differences over India-Japan stands on the Russia-Ukraine conflict.
• Conflict in the India-China relationship is another matter of concern as Japan observed that normalcy would depend on the progress of the situation at the Line of Actual Control (LAC) with China.
• Indian exports to Japan are presently affected by a number of issues, which include both tariff, and non-tariff barriers like Technical Barriers to Trade (TBT) and Sanitary and Phytosanitary Measures (SPS).

2. How Russia’s bankruptcy law can punish foreign companies

Syllabus: Effect of policies and politics of developed and developing countries on India’s interests, Indian diaspora.

Mains: Russia’s bankruptcy law and impact on India.

Context: This article examines Russia’s new bankruptcy law and its consequences on the companies desiring to leave Russia amidst the Russia-Ukraine war.

How does Russia’s bankruptcy law differ from that of the United States?

• In the U.S., bankruptcy laws are meant to give indebted companies a fresh start. Distressed firms in the U.S. usually enter bankruptcy willingly; the law lets them retain existing management and control over assets.
• Russia’s law generally prioritizes the needs of creditors who are owed money. This means creditors, including the Russian government, can force a company into involuntary bankruptcy and oust its management. 
• Some legal experts said foreign companies fear Russian creditors could abuse that process to install leaders willing to sell their assets to business rivals or companies aligned with the Russian government.

Concerns with Russian bankruptcy law

• Russian courts have been more willing to pursue criminal penalties for some bankruptcy-related offenses, such as hiding assets. 
• Tax debt has been used to drive companies into bankruptcy in Russia, in a way that penalizes foreign investors, according to an international arbitration court. 
• The Permanent Court of Arbitration in The Hague ruled in 2014 that Russia had manipulated the legal system to bankrupt Yukos Oil in 2006 after its chief had fallen out with Vladimir Putin. 
• Experts believe that since the Russian government owns major energy firms, it could use energy bills as well as taxes to force a company into bankruptcy.

Russian bankruptcy law and Impact on India

• As foreign companies seek to exit Russia over the war in Ukraine, they face the prospect that Russian bankruptcy law could be used to seize assets and even lead to criminal penalties.
• Some businesses are concerned that bankruptcy law will be used to retaliate against the firms that are leaving, experts said.
• That proposal would build on the bankruptcy law’s procedure for installing court-appointed external management, but could be wielded against companies with no debt, experts said.

1. ‘Centre has right to expel foreigners’

Syllabus: Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

Mains: Issues with the issuance of visas and Supreme Court judgment 1955

Context: The Union government wants the Supreme Court’s help to frame a law with “long-lasting implications” on the rights of foreigners who violate visa conditions.

What is the government’s argument?

The government argues that the issuance of visas is a “sovereign function”. There cannot be any remedy in court for a foreigner who breaks visa conditions. 

Supreme Court judgment of 1955: Hans Muller of Nurenberg v Superintendent, Presidency Jail, Calcutta Case

• This case is a much-thumbed precedent from the Supreme Court in matters concerning the rights of foreigners in India.
• In this judgment,  the top court held that the Centre had an “absolute and unfettered right” to expel foreigners.
• But it added that foreign nationals have the basic right to be not deprived of their life or liberty “except according to procedure established by law”. 
  • The judgment took into consideration the prospect of a foreign national being detained before expulsion.
• “Article 21 guarantees the protection of personal liberty to citizens and foreigners alike. No person can be deprived of his personal liberty ‘except according to procedure established by law’,” the five-judge Bench held in 1955.
• The court held that the mere prescription of “some kind of procedure” cannot ever meet the mandate of Article 21.

Category: ECONOMY

1. Will the war in Ukraine rattle India’s banks?

Syllabus:  Indian Economy and issues relating to planning, mobilization, of resources, growth, development.

Mains: The impact of war in Ukraine and other factors on the Indian economy

Context

• Reports suggest that the crisis in Ukraine will cause hardships to the Indian economy.
• S&P Global, which is a rating agency, predicts that the rising inflation and borrower stress could impact the ability of companies in India to pay back loans fully.

Impact of Ukraine war on Indian Economy

• The war in Ukraine has affected the production and logistics of various raw materials and goods.
• Ukraine is the key source of sunflower oil to India. The war has affected the supplies and this would further affect the prices of edible oils.
• War in Ukraine has resulted in the closedown of its neon factories that account for nearly 50% of the global supply which is crucial in the production of semiconductors. 
  • This along with the prevailing global chip shortage issues has serious repercussions on car and automobile manufacturing in India.
• The domino effect on industries’ supply chains will harm the ability of businesses to repay their loans.

Other factors that hinder the ability of companies to repay loans.

• Rise in Oil prices – Oil prices are on the rise since the onset of the war in Ukraine.
  • This will increase the prices of petrol and diesel in India resulting in an increase in the cost of transportation.
  • This further leads to an increase in the prices of goods from agricultural produce, raw materials for the factories and finished products leading to inflation.
  • This makes it difficult for the producers to repay their loans as inflation impacts both the demand and profitability of producers.
• Weakening of Rupee – As the exchange rate is affected, importers now should spend more rupees for the same dollar value of imports than earlier.
• Widening current account deficit (CAD) – The growth of imports at a faster rate than exports causes the widening of the CAD.
  • The widening of CAD will further weaken the rupee compared to dollars.
• Inflation – Increase in inflation which is already over the RBI’s upper tolerance limit of 6% will result in an increase in the interest rates.
  • More interest rate means less profit for the manufacturers and retailers.
  • This will further hurt the ability of small and medium enterprises to repay already existing loans. 

Conclusion 

In the Financial Stability Report for December 2021, the RBI cautioned that the Gross Non-Performing Asset Ratio for commercial banks would increase to 9.5% under severe stress by September 2022 from 6.9% at the same time last year (2021). This will impact the credit ecosystem in India, thereby affecting the state of the Indian economy.

1. What is the NPPA’s role in fixing drug prices?

Syllabus: Issues relating to development and management of Social Sector/Services relating to Health

Prelims: National Pharmaceutical Pricing Authority (NPPA) and National List of Essential Medicines (NLEM).

Mains: The mechanism of increasing prices of drugs and the way forward.

Context

The pharmaceutical companies have been pursuing the Government to extend the annual hike of 10% to scheduled drugs.

Background

• The prices of drugs and devices will be increased, if the National Pharmaceutical Pricing Authority (NPPA) permits a price hike of over 10% in the drugs and devices listed under the National List of Essential Medicines (NLEM).
• The rise in the prices is triggered by the rise in the Wholesale Price Index (WPI).

National Pharmaceutical Pricing Authority (NPPA)

• NPPA was established in 1997 as an office under the Ministry of Chemicals and Fertilizers.
• It is responsible for regulating the prices of drugs in the country and ensuring their availability, accessibility and affordability to every citizen of the country. 
• Its key function is to implement and enforce the provisions under the Drugs Price Control Order (DPCO), 1995/2013.
• The NPPA is also empowered to collect and maintain data on production; exports and imports; market share of individual companies, and the profitability of companies.

Read more – National Pharmaceutical Pricing Authority (NPPA).

National List of Essential Medicines (NLEM)

• Essential medicines are those that satisfy the priority healthcare needs of the majority of the population. 
• The essential medicines list is country-specific and addresses the disease burden of the nation and the commonly used medicines at primary, secondary and tertiary healthcare levels. 
• The first National List of Essential Medicines of India was prepared and released in 1996.
• The National List of Essential Medicines (NLEM) plays a crucial role in balancing the healthcare delivery system of a country which inter alia includes accessible, affordable quality medicine at all the primary, secondary, tertiary levels of healthcare. 
• The medicines mentioned in the NLEM are available at affordable costs and with assured quality.
• The key function of NLEM is to promote rational use of medicines considering the three key factors namely cost, safety and efficacy. 
• The NLEM lists the drugs that are used to treat fever, infection, heart disease, hypertension, anaemia, etc. and also includes commonly used medicines like paracetamol and azithromycin.

The mechanism of price increase

• The annual hike in the prices of drugs listed in the NLEM is based on the WPI.
• According to the Drugs (Prices) Control Order 2013, the prices of drugs that constitute around 15% of the pharma market which are listed in the NLEM, are allowed an increase by the government as per the WPI.
• The prices of the rest of the drugs in the market are allowed a 10% increase every year in the automatic route.

The demands of pharma players

• The pharmaceutical companies claim that the input costs have increased substantially and now are asking for at least a 10% increase in the cost of scheduled drugs (the ones listed under NLEM) irrespective of WPI.
• The increase in prices will result in consumers paying more to get crucial life-saving medicines.

Way forward

• Self-reliance in production 
  • India is highly dependent on China for the import of Active Pharmaceutical Ingredients (APIs) and chemicals/intermediates.
  • Scaling of production of these in the domestic market will ease the prices.
• Change in the method to calculate the annual ceiling price
  • WPI takes into account a wide range of items, even the ones that are not linked with medicines.
  • This method should be replaced with a cost-plus mechanism that was prevalent under the earlier DPCO 1995 wherein the prices of drugs are fixed by the manufacturers based on their manufacturing costs.

2. Study reveals major decline in golden langur habitat

Syllabus: GS3: Environment and Ecology: Conservation, environmental pollution and degradation, environmental impact assessment. 

Prelims: Golden langur

Context: A recent study by scientists has suggested a significant decline in the habitat of the golden langur (Trachypithecus geei).

Golden langur (Trachypithecus geei):

• Gee’s golden langur (Trachypithecus geei), or the golden langur, is an Old World monkey found in a small region of western Assam, India and in the neighbouring foothills of the Black Mountains of Bhutan.  
• Golden langurs are easily recognised by the colour of their fur and are distributed in forested habitats, fragmented and isolated areas.
• It is considered sacred by many Himalayan people.  

IUCN conservation status: Endangered

3. Recombination of two virus variants seen since 2020

Syllabus: GS3: Science and Technology: Science and Technology- developments and their applications and effects in everyday life.

Prelims:  recombination virus; RNA And DNA mutations

Context: This article examines how the mutations take place when viruses replicate. 

What is a recombination virus?

Viral recombination occurs when viruses of two different parent strains infect the same host cell and interact during replication to generate virus progeny that has some genes from both parents.

RNA and DNA mutations:

• Generally, RNA viruses have a higher rate of mutations compared with DNA viruses. 
• However, unlike other RNA viruses, coronaviruses have fewer mutations. 
• This is because coronaviruses have a genetic “proofreading mechanism” that corrects some of the errors made during replication. 

Q1. Consider the following statements with respect to the Qutb Shahi dynasty:

Q2. With respect to Golden Langur, which of the following statements is/are correct?

Q3. The first concrete step towards modern education in India was laid by

Q4. Which of the following is/are correctly matched?

Q5. With reference to street-lighting, how do sodium lamps differ from LED lamps?

CNA 20 Mar 2022:-Download PDF Here