GS Paper 3

How carbon dating works

Context: Radiocarbon dating is currently under the spotlight as the Supreme Court deferred the implementation of a direction given by the Allahabad High Court to conduct carbon dating and scientific survey of the ‘Shivling’ allegedly found on the Gyanvapi mosque premises in Varanasi.

Radiocarbon dating:

  • Radiocarbon dating is a technique developed to determine the age of certain archaeological artefactsof a biological origin (bone, cloth, wood and plant fibres).
    • It was developed in the late 1940s by University of Chicago professor Willard Libby (who won the Nobel Prize for Chemistry in 1960). 
  • The method utilises the properties of radiocarbon (carbon 14) which is an isotope of carbon that is unstable and weakly radioactive. The method is designed to measure residual radioactivity

The process: 

  • It is based on the amount of radioactive carbon and non-radioactive carbon measured in an organic sample. These amounts exist in a fixed ratio in all living organisms, but the ratio changes over time after death. 
  • Plants absorb carbon from the atmosphere as part of carbon dioxide and pass it on to other organisms across the food chain. The proportion between radioactive and non-radioactive carbon in all these organisms, therefore, is the same as their proportion in the atmosphere.
  • This ratio does not change throughout an organism’s lifetime. Although radioactive carbon decays over time, it gets replenished continuously as the organism regenerates tissue. After the organism dies, however, radioactive carbon decays without being replenished.
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  • For dating an organic sample, researchers measure both radioactive carbon (called C14) and the commonest form of non-radioactive carbon (C12). They calculate the ratio between the two amounts and compare this with the known ratio in living organisms. This tells them how much C14 has decayed.
  • Since, the rate at which C14 decays is already known. Having worked out how much has decayed in the sample, researchers can calculate the time it would have taken for that amount of decay – in effect, the age of the sample.
  • Radiocarbon dating does not, however, work with samples older than 55,000 years. By then, so much C14 would have decayed that it would no longer be possible to measure whatever remains.

Uses:

  • Radiocarbon dating works only onorganic samples from the past, or something that was once alive and is now dead. That puts certain materials – such as rock – beyond its scope.
    • If the structure is made of rock, radiometric dating of various isotopes can determine the rock’s geological age – but not when it was sculpted, carved, or otherwise worked on by human hands
  • It may work on cement or mortar if there is an organic material trapped inside it, based on measuring the decay in the organic material. 
  • It can also be done on paint, which contains a mix of organic and inorganic pigments. 

Even limited Arsenic exposure can mar cognitive ability

Context: As per a latest study, even low levels of Arsenic consumption may impact cognitive function in children, adolescents, and young adults.

Those exposed to Arsenic had reduced grey matter (brain tissue that is vital to cognitive functions) and weaker connections within key regions of the brain that enable concentration, switching between tasks, and temporary storage of information.

Arsenic contamination of water:

  • Arsenic is a natural component of the earth’s crust and is widely distributed throughout the environment in the air, water and land. Highly toxic in its inorganic form, it is introduced into soil and groundwater during weathering of rocks and minerals followed by subsequent leaching and runoff. 
  • People are also exposed to elevated levels of inorganic Arsenic through:
    • Drinking or using contaminated water in food preparation and irrigation of food crops
    • Industrial processes (Arsenic is used industrially as an alloying agent, and in the processing of glass, pigments, textiles, paper, metal adhesives, wood preservatives and ammunition)
    • Smoking tobacco (tobacco plants can take up Arsenic naturally present in the soil).
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Impacts:

  • Long-term exposure can lead to mortality due to chronic Arsenic poisoning, multiple cancers (skin lesions and skin cancer), lung disease, heart attacks, kidney failure and diseases of the skin (colour changes, and hard patches on palms and soles). 
  • Negative impacts of Arsenic exposure on cognitive development, intelligence and memory.
  • Adverse pregnancy outcomes, infant mortality and impacts on child health.
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Management of Arsenic contamination:

  • A common strategy employed is to encourage piped water access rather than groundwater extraction, adopting rainwater harvesting/ watershed management practices and installing Arsenic removal plants. 

Solar Payment Guarantee Fund & Solar Insurance Fund of ISA

Context: The International Solar Alliance (ISA) is engaging in discussions with member-countries, such as India and European nations, regarding contributions to its payment guarantee fund and insurance fund.

Solar Payment Guarantee Fund:

  • It aims to provide essential support to solar energy projects in the event of default, mitigating the risk of premature closures or bankruptcy. 
  • To benefit from this fund, projects will contribute a premium, ensuring their coverage. By doing so, the fund effectively alleviates concerns among lenders, making financing more accessible for projects that may have otherwise struggled to secure funding. 
  • The payment guarantee fund will offer only partial coverage. This intentional limitation is designed to discourage opportunistic behaviour and prevent the inclusion of subpar projects. 
  • By minimizing the possibility of default, the fund opens up opportunities for short-term investments in regions that have historically received limited investment. 
  • It allows investors to participate in solar projects without relying on the guarantee fund for recourse.
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Solar Insurance Fund:

  • It aims to alleviate the burden of insurance premiums for solar developers specifically during the pre-revenue phase or construction phase of the project. 
  • The goal is to enhance the bankability of solar projects by mitigating the impact of high insurance premiums.
  • It would collaborate with reputable project insurance organizations, such as Multilateral Investment Guarantee Agency (MIGA), to provide insurance coverage. 
  • During the specified period, the fund would cover a portion or the entirety of the insurance premium, effectively reducing the financial strain on developers. 
  • To recover the covered insurance premium, projects could incorporate an additional tariff during the revenue phase, allowing them to recoup the costs incurred during the pre-revenue stage. 

About International Solar Alliance (ISA):

  • It is an action-oriented, member-driven, collaborative platform for increased deployment of solar energy technologies as a means for bringing energy access, ensuring energy security, and driving energy transition in its member countries.
  • The ISA was conceived as a joint effort by India and France to mobilize efforts against climate change through deployment of solar energy solutions. 
  • It was conceptualized on the side-lines of the 21st Conference of Parties (COP21) to the United Nations Framework Convention on Climate Change (UNFCCC) held in Paris in 2015. 
  • Its headquarter is located at Gurugram.
  • The ISA's Framework Agreement was amended in 2020, making all member states of the United Nations eligible to join. 
  • The ISA is guided by its ‘Towards 1000’ strategy which aims to mobilise USD 1,000 billions of investments in solar energy solutions by 2030, while delivering energy access to 1,000 million people using clean energy solutions and resulting in installation of 1,000 GW of solar energy capacity. This would help mitigate global solar emissions to the tune of 1,000 million tonnes of CO2 every year. 
  • Activities under the programmes focuses on 4 priority areas – Analytics & Advocacy, Capacity Building, Programmatic Support, and readiness and enabling activities, that help create a favourable environment for solar energy investments to take root in the country.

PLI Scheme

What is a PLI Scheme?

  • Production Linked Incentive refers to a rebate given to producers. This rebate is calculated as a certain percentage of sales of the producer (sales referred in it can be total sales or incremental sales). 
  • For example, the PLI scheme for the Electronics Sector offered a rebate of 4-6% on the incremental sales of the producer.
  • The incentives, calculated on the basis of incremental sales, range from as low as 1 per cent for the electronics and technology products to as high as 20 per cent for the manufacturing of critical key starting drugs and certain drug intermediaries. 

Key features of the PLI Scheme

  • The scheme is outcome-based, which means that incentives will be disbursed only after production has taken place.
  • The calculation of incentives is based on incremental production at a high rate of growth. In some sectors such as advanced chemistry cell batteries, textile products and the drone industry, the incentive to be given will be calculated on the basis of sales, performance and local value addition done over the period of five years.
  • The scheme focuses on size and scale by selecting those players who can deliver on volumes.
  • The selection of sectors covering cutting-edge technology, sectors for integration with global value chains, job-creating sectors and sectors closely linked to the rural economy, is highly calibrated.
  • Also, the design of the earlier PLI scheme for electronics is such that it is compatible with World Trade Organization commitments as the quantum of support is not directly linked to exports or value-addition.

Sectors Covered under PLI Scheme (14 Sectors)

  • Key Starting Materials (KSMs)/Drug Intermediates (DIs) and Active Pharmaceutical Ingredients (APIs): Department of Pharmaceuticals
  • Manufacturing of Medical Devices: Department of Pharmaceuticals
  • Pharmaceuticals drugs: Department of Pharmaceuticals
  • Large Scale Electronics Manufacturing: Ministry of Electronics and Information Technology
  • Electronic/Technology Products: Ministry of Electronics and Information Technology
  • Telecom & Networking Products: Department of Telecommunications
  • Food Products: Ministry of Food Processing Industries
  • White Goods (ACs & LED): Department for Promotion of Industry and Internal Trade
  • High-Efficiency Solar PV Modules: Ministry of New and Renewable Energy
  • Automobiles & Auto Components: Department of Heavy Industry
  • Advance Chemistry Cell (ACC) Battery: Department of Heavy Industry
  • Textile Products: MMF segment and technical textiles: Ministry of Textiles
  • Specialty Steel: Ministry of Steel
  • Drones and Drone Components: Ministry of Civil Aviation

PLI Scheme for IT Hardware

  • The PLI for IT hardware such as laptops, tablets, all-in-one computers, and servers was first announced in February 2021 with an initial outlay of around Rs 7,300 crore over a period of four years. 
  • Under the scheme, domestic players investing Rs 20 crore and clocking sales of Rs 50 crore in the first year, Rs 100 crore in the second, Rs 200 crore in the third, and Rs 300 crore in the final year, would pocket incentives of 1-4 per cent on incremental sales over 2019-20, the base financial year. 
  • The first version of the scheme was a laggard with only two companies – Dell and Bhagwati – managing to meet first year’s (FY22) targets, and the industry called for a renewed scheme with an increased budgetary outlay.

Revised Scheme

  • The Union Cabinet cleared a revised production linked incentive (PLI) scheme for IT hardware with an outlay of Rs 17,000 crore, which is more than double the budget of the scheme that was first cleared in 2021. 
  • Implementation: The scheme will be implemented from July 1, with a cap on maximum incentives available to participating companies.
  • Tenure: The tenure of the new scheme has been fixed for six years and the Centre is expecting an investment of over Rs 2,430 crore as part of it. 
  • Expected Outcome: The expected incremental production value could touch Rs 3.35 lakh crore, and the scheme could generate 75,000 direct jobs – in total, the employment figure could touch 2 lakh when accounted for indirect jobs. 
  • Coverage: Investments made by eligible companies in contract manufacturers and for attaining exclusive arrangements with component manufacturers will also be considered under the scheme.
  • Investment: It is worth noting that under the previous PLI scheme, the expected investment was pegged at Rs 2,500 crore – under the renewed plan, that projection has been reduced (to Rs 2,430 crore) despite sweetening the incentive structure.  
  • Incentives: The average incentive over six years will be about 5 per cent compared with the 2 per cent over four years offered earlier. Companies that locally manufacture certain components including memory modules, solid state drives and display panels will also get additional incentives under the restructured scheme. There will be flexibility in choosing the base year as well.
  • Cap: While the final policy with its specifics is yet to be released, it is understood that for global companies, the maximum incentive has been capped at Rs 4,500 crore, Rs 2,250 crore for hybrid – which have an element of both global and domestic entities – and Rs 500 crore for domestic companies.

Analysis of the Scheme

  • The PLI scheme was conceived to scale up domestic manufacturing capability, accompanied by higher import substitution and employment generation. The government has set aside Rs 1.97 lakh crore under the PLI schemes for various sectors and an additional allocation of Rs 19,500 crore was made towards PLI for solar PV modules in Budget 2022-23.
  • As of December 2022, 650 applications have been approved under 13 Schemes and more than 100 MSMEs are among the PLI beneficiaries in sectors such as Bulk Drugs, Medical Devices, Telecom, White Goods and Food Processing.
  • The electronics industry continues to ascend in importance as its applications become pervasive, particularly in the socio-economic development of a country. Electronics, supported by continuously improving communication services, will significantly enhance productivity, efficient service delivery, and social transformation. 
  • The domestic electronics industry, as of FY20, is valued at US$118 billion. India aims to reach US$300 billion worth of electronics manufacturing and US$ 120 billion in exports by FY263, supported by the vision of a US$ 1 trillion digital economy by 2025. Improvement in manufacturing and export over the past five years ensures that India is on the right trajectory to achieve this target. 
  • Electronic goods were among the top five commodity groups exhibiting positive export growth in November 2022, with the exports in this segment growing YoY by 55.1%.
  • The major drivers of growth in this industry are mobile phones, consumer electronics, and industrial electronics. In the mobile phone segment, India has become the second-largest mobile phone manufacturer globally, with the production of handsets going up from six crore units in FY15 to 31 crore units in FY22. These numbers are expected to improve as more domestic and global players set up and expand their bases in India. 
  • Participation in the PLI scheme will help many more domestic players to attain economies of scale in production through localising. Hence, this will further enhance export competitiveness and increase India’s participation in the global value chain. 
  • As one of the earliest ones, the ministry of electronics and information technology’s PLI scheme for large-scale electronics manufacturing (LSEM) saw successful results, with 97% of mobile phones sold in India now being made in India. Furthermore, they are also being “Made in India for the World” as we witness a sharp growth in smartphone exports by 139% over the last three years. 
  • As of September 2022, the PLI scheme for LSEM attracted investments of ₹4,784 crore, with a total production of ₹2,03,952 crore, while also generating 41,000 additional jobs. In the medium-term, the scheme is expected to bring in additional production to the tune of ₹10.69 lakh crore and generate 700,000 jobs. 
  • Similar successes are replicated in the pharma sector PLI with 35 imported active pharmaceutical ingredients or key chemical inputs for drugs being developed in India. In addition, other sectors, such as food products, telecom and networking products, and drones are reporting successes with visible growth in investment, employment, and production. Over 600 foreign and domestic firms have been selected across 14 key sectors in two years, indicating enthusiastic industry participation.

Benefits of PLI Scheme

  • The renewed scheme could attract big global IT hardware manufacturers to shift their production base to India and give a boost to local production of laptops, servers and personal computers.
  • It focusses on expanding India’s production and presence in Global value chains of IT hardware, servers and laptops. By deepening & broadening the electronics ecosystem in India, this scheme will play a key role in catalysing India’s tech trade and in achieving the $1 trillion digital economy goal – including $300 billion of electronics manufacturing by 2025-26.
  • The IT hardware industry is targeted to reach a production of $24 billion by 2025-26, with exports anticipated to be in the range of $12-17 billion during the same period. This revised PLI is expected to serve as a major catalyst for both global and domestic companies aiming to establish or expand their IT hardware manufacturing operations in India.
  • The successes signal that the scheme is leading to the development of a potent ecosystem that is self-sustaining and thriving. 
  • Focuses on advanced technologies: it is likely to upgrade the skills of the existing labour force. 
  • Replace technologically obsolete machinery and make the manufacturing sector globally competitive. 
  • Enhanced production volumes will cater to increasing consumer demand. This can be seen for telecom and networking products, where timely intervention by the scheme will enable faster adoption of 4G and 5G products across India. 
  • With PLI in green technologies, India can pioneer green policy implementation with a reduced carbon footprint.
  • Better productivity will create a thrust in free trade agreements for better market access. 
  • Increased sales will demand better logistical connectivity. The PM Gati Shakti plan provides multimodal connectivity to manufacturing zones across India, making logistics and operations efficient. Cluster parks with plug-and-play infrastructure have also been introduced to support manufacturing in different regions.

Stock Market Regulation in India

Context: The Securities and Exchange Board of India (SEBI) has proposed changes in the current definition of unpublished price sensitive information (UPSI) in a bid to bring regulatory certainty and uniformity in compliance by listed entities.

About Stock Markets

  • It is a place where shares of public listed companies are traded. 
  • The primary market is where companies float shares to the general public in an initial public offering (IPO) to raise capital.
  • Once new securities have been sold in the primary market, they are traded in the secondary market - where one investor buys shares from another investor at the prevailing market price or at whatever price both the buyer and seller agree upon. The secondary market or the stock exchanges are regulated by the regulatory authority. 
  • In India, the secondary and primary markets are governed by the Security and Exchange Board of India (SEBI).
  • A stock exchange facilitates stock brokers to trade company stocks and other securities. A stock may be bought or sold only if it is listed on an exchange. Thus, it is the meeting place of the stock buyers and sellers. India's premier stock exchanges are the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).

Laws Governing the Market

  • The securities market in India is regulated by four key laws:
    • The Companies Act, 2013
    • The Securities and Exchange Board of India Act, 1992 (SEBI Act)
    • The Securities Contracts (Regulation) Act, 1956 (SCRA)
    • Depositories Act, 1996. 
  • The framing of these laws reflect the evolution and development of the capital market in India.

Securities and Exchange Board of India (SEBI)

  • Structure:
    • Sebi is run by its board of members. The board consists of a Chairman and several other whole time and part time members. 
    • The chairman is nominated by the union government. 
    • The others include two members from the finance ministry, one member from Reserve Bank of India and five other members are also nominated by the Centre.
    • The headquarters of Sebi is situated in Mumbai and the regional offices are located in Ahmedabad, Kolkata, Chennai and Delhi.
  • The SEBI Act empowers SEBI to protect the interests of investors and to regulate and promote the development of the capital/securities market.
    • SEBI was given the power to register intermediaries like stock brokers, merchant bankers, portfolio managers and regulate their functioning by prescribing eligibility criteria, conditions to carry on activities and periodic inspections. 
    • It also has the power to impose penalties such as monetary penalties, including suspending or cancelling the registration. 
  • The SCRA empowers SEBI to recognise (and derecognise) stock exchanges, prescribe rules and bye laws for their functioning, and regulate trading, clearing and settlement on stock exchanges. 
  • As part of the development of the securities market, Parliament passed the Depositories Act and SEBI made regulations to enforce the provisions.
    • This Act introduced and legitimised the concept of dematerialised securities being held in an electronic form. Today almost all the listed securities are held in dematerialised (DEMAT) form. SEBI set up the infrastructure for doing this by registering depositories and depository participants. 
    • The depository regulations empower SEBI to regulate functioning of depositories and depository participants by prescribing eligibility conditions, periodic inspections and powers to impose penalties including suspending or cancelling the registration as well as monetary penalties.
  • Appeals against orders of SEBI and the stock exchanges can be made to the Securities Appellate Tribunal (SAT) comprising a presiding officer and two other members. Appeals from the SAT can be made to the Supreme Court.

Functions Of SEBI

  • Curbing Market Volatility: 
    • While SEBI does not interfere to prevent market volatility, exchanges have circuit filters — upper and lower — to prevent excessive volatility. 
    • However, SEBI can issue directions to those who are associated with the market, and has powers to regulate trading and settlement on stock exchanges.
      • Using these powers, SEBI can direct stock exchanges to stop trading, totally or selectively. 
      • It can also prohibit entities or persons from buying, selling or dealing in securities, from raising funds from the market and being associated with intermediaries or listed companies.
  • Monitor Fund-raising:
    • The Companies Act, which regulates companies incorporated/registered in India, has delegated the authority to enforce some of its provisions to SEBI, including the regulation of raising capital, corporate governance norms such as periodic disclosures, board composition, oversight management and resolution of investor grievances. 
    • Specific regulations are enacted by SEBI from time to time in order to:
      • Regulate fund-raising activities
      • Ensure that listed companies followed corporate governance norms
      • Regulation of entities involved in fund-raising through issues of capital such as merchant bankers.
  • Regulate Stock Exchanges:
    • The SCRA has empowered SEBI to recognise and regulate stock exchanges and later commodity exchanges in India. Powers of SEBI in this regard concerns with:
      • Declare an instrument as a security. 
      • Regulate listing of securities like equity shares, the functioning of stock exchanges including control over their management and administration. 
      • Powers to determine the manner in which a settlement is done on stock exchanges and recognising and regulating clearing corporations.
      • Provision for arbitrating disputes that arise between stock brokers who trade on stock exchanges and investors who are clients of such stock brokers.
      • Protect the interests of investors by creating an Investor Protection Fund for each stock exchange.
  • Safeguards Against Fraud:
    • Fraud undermines regulation and prevents a market from being fair and transparent. 
    • SEBI has been given the powers of a civil court to summon persons, seize documents and records, attach bank accounts and property, and to carry out investigations.
    • SEBI notified Regulations to: 
    • Prevent the two key forms of fraud, market manipulation, and insider trading. 
    • Ensures protection of investors’ interests by regulating the listing and trading of equity shares and other securities, and by registering and regulating institutions handling public funds. 

Challenges In Stock Market Regulations

  • Enforcement process: SEBI has made various regulations and issued orders as a civil court but only making regulations and giving orders is not enough if it is not able to enforce the same.
  • Dearth of human resources: SEBI unable to attract smart bright talent inside SEBI. In 2012 SEBI had 643 employees whereas the US security and exchange commission alone had 1000 people. 
  • Deepening capital market: The total number of DEMAT accounts increased by 37% in the last year, however monthly active users have declined. SEBI has done a lot to encourage people to participate in the capital market such as abolishing entry load on mutual funds, simplifying KYC norms but it needs to take some stronger steps to deepen participation in the capital market.
  • Corporate debt and securitization market: Despite numerous attempts the debt market volume has increased but it has failed to attract sufficient liquidity. 
  • Matching up to global standard: Capital markets are growing and the size of SEBI as compared to the security market is not sufficient to properly regulate the capital market. 
  • Non-transparent recruitment process: SEBI’s appointment process has always been criticised. Allegations of corruption by SEBI staff are frequently heard. The accountability mechanisms that envelope SEBI are quite poor.  
  • Wide legislative and discretionary powers with SEBI
  • Limited and selective prior consultation with the market.
  • Securities offering documents are extraordinarily bulky with little to no substantive disclosures of high quality.
  • Obsolete Regulations: as regulations on merger and acquisition are nearly six years old.

Way Forward

  • SEBI needs to strengthen its surveillance and enforcement functions.it needs to ensure that violations do not go unnoticed whether small or large.
  • It also needs to increase its human resource in both quality and quantity. It needs to significantly improve its market intelligence, technology and talent pool in order to improve its performance.
  • SEBI should work deeper participation in equity by pension, superannuation and gratuity funds, developing a vibrant retail debt segment and reducing the cost of transaction.
  • The regulator needs to develop a vibrant corporate debt market and securitization market but these largely remain part of the over the counter market.
  • Like its peers (regulators of US and UK) it needs to establish self-regulatory organisations. They can focus on routine decisions and SEBI can work on more important issues.
  • It is also very important to make the recruitment process fair and transparent.

WMO Annual Update: Projections for Next Decade's Temperature Trends

Context: The World Meteorological Organisation (WMO) has released its yearly update on its forecasts for temperature trends over the following ten years.

Key points

  • The annual mean global near-surface temperature for each year between 2023 and 2027 is likely to be 1.1°-1.8°C higher than the average from 1850-1900. 
  • There is a 66% chance that the global near-surface temperature will exceed 1.5°C above pre-industrial levels, in at least one year before 2027 though it is unlikely that the five-year mean will exceed this threshold. 
  • At least one of the years, from 2023 to 2027 will be the hottest on record — exceeding the 14.84°C reported in 2016 (it was about 0.07°C warmer than the previous record set in 2015). 
  • The five-year mean for 2023-2027 was very likely to be higher than that in the last five years (2018-2022). 
  •  The El Niño-Southern Oscillation (ENSO) is likely to be positive in December to February 2023-24, meaning that the Central Equatorial Pacific Ocean is likely to be at least half a degree, more likely over a degree above what is normal.
  • Hotter oceans also mean stronger cyclones. For Example- Cyclone Mocha, which barrelled through Myanmar this week and claimed at least 60 lives and wrought severe damage.

Forecast for  India

  • The WMO update does not have specific inputs for India; however, the overall trend in indicators suggests that India, dependent as it is on rain-fed agriculture and with its long coastline, will be severely tested due to changes in the global climate. 
  • India’s abilities at forecasting cyclones and weather anomalies have improved but developing resilience is far more challenging. Greater investments in bolstering disaster-related infrastructure are the need of the hour.

 Paris Agreement 

  • The Paris Agreement is a legally binding international treaty on climate change. It was adopted by 196 Parties at COP 21 in Paris, in 2015.

Important Provisions of Paris Agreement 

  • Long-term temperature goal (Art. 2) – limiting global temperature increase to well below 2 degrees Celsius, while pursuing efforts to limit the increase to 1.5 degrees.
  • Mitigation (Art. 4) – The Paris Agreement establishes binding commitments by all Parties to prepare, communicate and maintain a nationally determined contribution (NDC) and to pursue domestic measures to achieve them.
  • It also prescribes that Parties shall communicate their NDCs every 5 years and provide information necessary for clarity and transparency.
  •  Finance, technology and capacity-building support (Art. 9, 10 and 11) – The Paris Agreement reaffirms the obligations of developed countries to support the efforts of developing country Parties to build clean, climate resilient futures, while for the first time encouraging voluntary contributions by other Parties. 

Global Stocktake (Art. 14) – A “global stocktake”, to take place in 2023 and every 5 years thereafter, will assess collective progress toward achieving the purpose of the Agreement in a comprehensive and facilitative manner.

World Metrological Organisation

  • WMO is a specialized agency of the United Nations (UN) with 193 Member States and Territories. 
  • Its mandate is in the areas of meteorology (weather and climate), operational hydrology and related geophysical sciences. 
  • The Secretariat, headquartered in Geneva, is headed by the Secretary General.
  • India is a member of WMO. It has been the member since 1949 
  • WMO reports 
  • Green House Gas Bulletin 
  • Status of World Climate

EU norm threatens coffee, leather export

Context: The European Union’s approval this week of new deforestation regulations poses a threat to Indian exports of items like coffee, leather, paper and wooden furniture.

The regulation is part of a larger trend of “demand-side” restrictions, in which major consumers of agricultural commodities are leveraging their market share to encourage sustainable production. The United Kingdom recently approved a similar regulation, and United States lawmakers introduced a similar bill in Congress. In March, the Chinese government announced an initiative with Brazil’s largest beef lobby for deforestation-free beef exports.

What is the new deforestation regulation of the European Union?

  • It requires EU-based companies to ensure that their imports and exports are “deforestation-free” and uphold human rights, Human Rights Watch.  
  • The law establishes the legal requirements for European businesses regarding biodiversity loss and human rights abuses embedded in their international supply chains.
  • On April 19, 2023, the European Parliament voted for the European Union Deforestation-Free Products Regulation (EUDR).
  • Regulations covering wood, palm oil, soy, coffee, cocoa, rubber, and cattle they import or export have not been produced on land that was deforested after December 31, 2020.
  • The law requires companies to trace the commodities back to the plot of land where they were produced, or, in the case of cattle, the particular locations where the animals were raised.
  • The regulation also requires companies to ensure that these seven agricultural commodities are produced in conditions that comply with “relevant laws” in their country of origin. 
  • These include laws on land use rights; labour rights; human rights protected under international law; free, prior, and informed consent, as set out in the United Nations Declaration on the Rights of Indigenous Peoples; and anti-corruption laws. 
  • Even the European companies will also have to ensure that the commodities they produce domestically comply with the regulation, raising questions about some EU member states’ practices. In Sweden, for example, the timber industry has often encroached upon land that Sami people rely on for reindeer husbandry, a practice central to their cultural identity.
  • Within 18 months after it enters into force, the European Commission will announce which producer countries – including EU member states – are deemed low, medium, or high risk based on their rate of deforestation and forest degradation, and the existence, compliance with, and effective enforcement of laws protecting human rights, the rights of Indigenous peoples, local communities, and other customary tenure rights holders, among other criteria.
  • Products from countries determined to be “high risk” will face tougher scrutiny by EU customs authorities and require European companies to conduct greater in-depth due diligence when sourcing from those locations.
  • Larger companies will have 18 months after the regulation enters into force to make changes to comply with the law before facing penalties for violations. The new rules will apply to large firms from December 2024 and small firms by June 2025.

Why such a move?

  • Deforestation is second only to fossil fuels as a global source of greenhouse gas emissions fueling the climate crisis. Globally, industrial agriculture is the most significant driver of deforestation. 
  • Industrial agriculture has been linked to a range of human rights abuses, including forced and child labour, dangerous exposure to toxic pesticides, forced evictions and displacement, encroachment on Indigenous peoples’ traditional territories, and violence and intimidation against environmental defenders, among others.
  • The volume of deforestation associated with EU imports is second only to China, according to a 2021 study by the World Wildlife Fund and Trase. 
  • For example: Nearly one-tenth (9.6 percent) of Malaysia’s sawn wood exports were headed for the EU in 2021, according to the Observatory of Economic Complexity (OEC), a trade database. 

Impact on India:

  • Regulations would impact 479 products exported from India worth around 1.3 billion dollars. 
  • This would make new participants in the agro-goods export-less. They would have to re-orient their policies.
  • Indian exporters would have to look for new markets for their products in future. This would raise the transportation costs, partnership cost and insurance cost on the exported items. Thereby hurting the exports in the long-term.

Way-forward

India along with other developing and agro-exporting countries should create a platform and negotiate with the members of the European Union.

Merchant Discount Rate

Context: The Payments Council of India (PCI), an industry body representing payment fintechs in the country, has requested finance minister to restore Merchant Discount Rate (MDR) for RuPay debit cards, as payment aggregator fintechs continue to lose on revenue lines for processing payments through the card infrastructure.

Merchant Discount Rate:

  • MDR (Merchant Discount Rate) refers to a fee that a merchant is charged by their issuing bank for accepting payments from their customers via credit and debit cards. ‌It is also known as Transaction Discount Rate (TDR). While the card-issuing bank gets a share of it, the remaining amount is distributed between the payment network and point-of-sale terminal providers. 

Push for Digitalisation: 

  • The Government had mandated that large businesses (With turnover greater than ₹50 crore) provide customers with low-cost digital modes of payment and had asked banks to levy zero charges on the same.
  • The finance minister gave this initiative a further push by mandating that no MDR charges will be applicable on digital transactions via the Rupay and UPI platforms. 

Concerns of Fintechs:

  • Payment aggregator fintechs are claiming that a loss of Rs 5,500 crore from no revenue being earned on UPI and RuPay debit card transactions. To compensate for this, the body has sought an incentive of Rs 4,000 crore in its representations to the ministry.
  • Zero MDR is also seen as a hindrance in attracting more players to adopt these payment modes and invest more in the development of the tech infrastructure to handle the huge volumes of transactions.

Central Drugs Standard Control Organisation (CDSCO)

Context: Recently, the Central Drugs Standard Control Organisation (CDSCO) put out a list of over 50 medicines that were either found to be spurious or ‘not of standard quality’, raising a furore.

What is CDSCO

  • India takes pride in its pharmaceutical industry, being the largest global producer of generic medicines that benefit the global poor.
  • However, the industry has faced challenges, including struggles to achieve scale and defamatory claims about the ineffectiveness and harm caused by Indian drugs. 
  • Quality concerns persist, with numerous drugs failing to meet standards, leading to substandard drugs in routine use and adverse events. 
  • Global regulators have raised issues with compliance, potentially damaging India's reputation. Recommendations include amending regulations, centralizing the drug regulatory system, enhancing transparency, and focusing on producing quality generics and innovative drugs.

About Central Drugs Standard Control Organisation (CDSCO)

  • It functions as India's national regulatory body overseeing cosmetics, pharmaceuticals, and medical devices. 
  • The CDSCO is organized with the Drug Controller General of India (DCGI) overseeing pharmaceuticals and medical devices. 
  • It is assigned duties under Drugs and Cosmetics Act, 1940.
  • The DCGI is situated within the Ministry of Health and Family Welfare and receives guidance from the Drug Technical Advisory Board (DTAB) and the Drug Consultative Committee (DCC). 
  • The CDSCO operates through zonal offices that conduct inspections prior to licensing, post-licensing inspections, post-market surveillance, and, if necessary, initiates drug recalls. 
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What is LIBOR and why RBI has asked the banks to Move away from it

Context: The Reserve Bank of India has directed the banks and other financial institutions to move away from the LIBOR (London Interbank Offered Rate) and move to any Alternative Reference Rates (ARR).

What is LIBOR?

LIBOR stands for the London Interbank Offered Rate. It is a benchmark interest rate that indicates the average rate at which major banks in London are willing to borrow from each other in the interbank market. LIBOR serves as a reference rate for a wide range of financial products and transactions, including loans, derivatives, and other financial contracts.

  • The British Bankers' Association (BBA) used to administer LIBOR until 2014, after which the Intercontinental Exchange Benchmark Administration (ICE Benchmark Administration) took over the responsibility.
  • LIBOR is calculated for various currencies and different borrowing periods, ranging from overnight to one year.
  • The calculation of LIBOR involves a panel of major banks submitting their borrowing rates, which are then used to determine an average rate. These rates are supposed to reflect the rates at which banks can borrow funds in the London wholesale money market.

How Is Libor Calculated?

  • Each day, 18 international banks submit their ideas of the rates they think they would pay if they had to borrow money from another bank on the interbank lending market in London.
  • To safeguard against extreme highs or lows, the Intercontinental Exchange (ICE) Benchmark Administration strips out the four highest submissions and the four lowest submissions before calculating an average.
  • It’s important to note that Libor isn’t set on what banks actually pay to borrow funds from each other. Instead, it’s based on their submissions related to what they think they would pay. As a result, it’s possible for banks to submit lower rates and manipulate Libor fairly easily.

Libor Scandals and the 2008 Financial Crisis

  • During the crisis, banks manipulated the LIBOR rates for their own benefit. They understated or manipulated their reported rates to create an illusion of financial health and to appear more creditworthy than they actually were.
  • By manipulating LIBOR rates, banks were able to lower their borrowing costs and increase their profits. This also gave them a false sense of security and credibility in the eyes of investors and counterparties.
  • The manipulation of LIBOR distorted the true pricing of financial products, leading to mispricing and increased risk in the global financial system.
  • Many financial institutions around the world relied on LIBOR as a benchmark for pricing and valuing their financial products. The manipulation of LIBOR undermined the integrity of these markets and eroded trust among market participants.
  • The impact of the LIBOR manipulation was far-reaching. It affected trillions of dollars' worth of financial contracts globally, including loans, mortgages, and derivatives. This, in turn, had a significant impact on individuals, businesses, and the overall economy.
  • The revelation of the LIBOR manipulation sparked a wave of investigations, lawsuits, and regulatory actions against banks involved in the scandal. Several major financial institutions faced substantial fines and penalties for their involvement.
  • The 2008 financial crisis exposed the vulnerabilities and weaknesses in the LIBOR benchmark system. It highlighted the need for reform and the development of alternative, more robust benchmark rates to ensure the integrity and stability of financial markets.
  • In response to the crisis, efforts were made to transition away from LIBOR as a benchmark rate. Various alternative reference rates, such as the Secured Overnight Financing Rate (SOFR) in the United States, were introduced to replace LIBOR and mitigate the risk of manipulation.

The RBI has directed all banks in India to end all contracts with LIBOR by 31 Dec and use the Mumbai Interbank Forward Offer rate (MIFOR).

What is MIFOR?

  • MIFOR stands for Mumbai Interbank Forward Offer Rate. It is a benchmark interest rate used in India to determine the pricing of various financial instruments, particularly forward rate agreements (FRAs) and interest rate swaps (IRS).
  • MIFOR is derived from a combination of the Mumbai Interbank Offered Rate (MIBOR) and the corresponding foreign currency benchmark rate. MIBOR is the interest rate at which banks in Mumbai, India, lend to one another in the interbank market.
  • The foreign currency benchmark rate used in the calculation of MIFOR depends on the currency involved in the transaction.
  • MIFOR is commonly used in India for hedging and pricing purposes in the derivatives market. It reflects the market's expectations of future interest rates in India and provides a reference point for interest rate-related transactions.
  • It's worth noting that the information provided is accurate up until my last knowledge update in September 2021. There might have been updates or changes in the financial landscape since then, so it's always a good idea to consult up-to-date sources and experts for the most recent information.

ONDC Project

Context: Despite best efforts, the Government's Open Network for Digital Commerce could go in vain if proper supply chain management is not being developed.

What is Open Network for Digital Commerce?

  • Open Network for Digital Commerce (ONDC) is an initiative aiming at promoting open networks for all aspects of exchange of goods and services over digital or electronic networks (like e-commerce). 
  • Sponsored by DPIIT (the Department for Promotion of Industry and Internal Trade), the non-profit programme, will bring together all stakeholders – buyers, sellers, logistics players, and digital payment providers – on one platform for convenience and growth.
  • ONDC is to be based on open-sourced methodology, using open specifications and open network protocols independent of any specific platform.
  • ONDC are to be open protocols for all aspects in the entire chain of activities in exchange of goods and services, similar to hypertext transfer protocol for information exchange over internet, simple mail transfer protocol for exchange of emails and unified payments interface for payments.
  • These open protocols would be used for establishing public digital infrastructure in the form of open registries and open network gateways to enable exchange of information between providers and consumers. 
  • Providers and consumers would be able to use any compatible application of their choice for exchange of information and carrying out transactions over ONDC.

Benefits:

  • The initiative will not only facilitate the rapid adoption of e-commerce but also boost and strengthen the growth of startups in India. By facilitating scalable and cost-effective e-commerce through the open protocol, ONDC will empower startups to grow collaboratively.
  • ONDC will take ecommerce penetration to 40-50% in the coming years, as opposed to the current 10% share within India’s overall retail market.
  • For businesses, this will help create a level playing field and further drive open commerce, similar to how the United Payments Interface (UPI) democratised the digital payments segment. 
  • Buyers, too, will benefit from easy access to a massive merchant base, great pricing, faster delivery, and enhanced customer experience.
  • ONDC will keep referral commissions capped at 3-5% at a later stage (for now, it is free), a massive reduction in costs compared to what businesses have to pay now for selling their goods online. According to a Gofrugal estimate, this is 7 to 10 times less than the usual online-selling commission rate of 23% to 28% on the cart value.
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Challenge to ONDC:

  • ONDC does not have the best of the supply chain management when compared to other ecommerce giants like Amazon or Flipkart. 
  • It still depends upon the ability of the others to facilitate logistics and warehousing.
  • Number of participants is still very low (not very popular among people).

Kuki-Meities Conflict in Manipur

Context: Manipur’s Kuki Zomi tribes are in conflict with the majority Meitei tribe which has tolled over 60 people in the state. MLAs belonging to the Kuki Zomi tribe now demand separate administration within the state.

History of Kuki’s Homeland demand

  • Demand for the separate Kuki Homeland has been burning since the 1980s when one Kuki insurgent group Kuki National Organisation (KNO) came into being. 
  • After the acceptance of the new state of Telangana, there was a resurgence of demand for Kukiland by the Kuki State Demand Committee. It claims over 60 per cent of Manipur's area. They argued that Kuki habitations were not part of the British Protectorate after the Anglo-Manipur war in 1891. Hence, India cannot claim any rights over this tribal group or its habitation. 
  • KNO has also complained about the grabbing of Kuki land by Naga insurgent groups.

About the Kuki Tribe:

  • Kukis are known by different names to different communities. 
  • Some called them Lushai, some called them Kukis, Darlongs, Rokhums and among the Burma border they are known as Chins. 
  • They called themselves Hare-ems. However ‘Kuki’ has been accepted as the generic name for the community.
  • As per 2011 Census all together Kukis are 10,965 persons in Tripura. In the past they lived in hill tops and maintained their livelihood through jhum cultivation and also by producing fruits. 
  • Now-a-days they do plain land cultivation and rear livestock. 
  • Linguistically they speak a language which is closely related to the Kuki-Chin linguistic family of Sino-Tibetan race. The Kukis have many clans and subclans.
  • Kukis are fond of music and dance. They work hard in Jhum field, garden and enjoy dance and music at community level. 
  • Normally they do not arrange any marriage alliance outside their community. Traditionally they were not Christian but animist and worship different deities and spirits. But for the last 90(ninety) years the majority of them have embraced Christianity as their religion. 
  • They have their own customary laws and village council. 
  • LAL is a term to denote village chief. This is the reason for which Darlong uses Lal before their name.
  • The village chief generally looks up all sorts of social and religious disputes Including disputes related to marriage and divorce. 
  • Presently Kukis are socio-economically advanced then other tribes.

About Meitei Tribe:

  • It is a majority tribal group of Manipur (53% of the population). They speak Meitei language (Manipuri language) which is a Tibeto-Burman language, also the official language of Manipur (written in Bengali language).
  • They are primarily settled in the Imphal Valley region (of Manipur), Assam, Tripura, Nagaland, Meghalaya, and Mizoram.
  • They are divided into various clans and do not intermarry.
  • Majority of them follow Hinduism, while more than 8% are Muslims.
  • Manipuri martial art Thang-ta is a combative sport which had its origin from the Meitei knights during the kings rule.
  • Lai Haraoba is the important dance festival celebrated in this tribe.