GS Paper 3

Electronic-Negotiable Warehouse Receipts

About Warehousing Development & Regulatory Authority (WDRA)

  • WDRA is a statutory body created under the Warehousing (Development & Regulation) Act, 2007 and shall have the duty to regulate and ensure implementation of WDRA, 2007 and promote orderly growth of warehousing business.
  • It is headed by a Chairman and two full-time members.
  • WDRA aims to ensure that interests of farmers are protected through
    • Growth and development in warehousing sector.
    • Improve fiduciary trust of depositors and banks.
    • Increase in liquidity in rural areas.
    • Encourage scientific warehousing of goods.
    • Lower cost of financing.
    • Promote shorter and efficient supply chains.
    • Enhance reward for grading and quality.
    • Ensure better price risk management.
  • Only Warehouses registered with the WDRA can issue negotiable warehouse receipts.
  • Requirements for warehouses for registration with WDRA:
    • Warehouse should be constructed as per BIS/CWC/FCI standards and is storage worthy.
    • Has all safety and security arrangements for stock and premises.
    • Has got requisite manpower with adequate experience in warehousing.
    • Availability of requisite infrastructure in weighing, grading and preservation.
    • Warehouse should have its own Standard Operating Procedures (SOPs) or adopts model SOP of WDRA.
    • Adequate insurance is taken for stock against fire, theft, burglary, misappropriation, riots, strikes or terrorism.
    • Financial network and security deposit for securing negotiable warehouse receipts issued.
  • Commodities covered against which NWRs can be issued by WDRA: Currently, 136 agricultural commodities including cereals, pulses, oilseeds, spices, rubber, tobacco, coffee etc. are notified under the WDRA Act for issuing negotiable warehouse receipts. Also, 24 horticultural commodities for cold storage and 9 non-agricultural commodities have been notified. 

About Negotiable Warehouse Receipts (NWRs):

  • NWRs issued by WDRA will help farmers to seek loans from banks against the NWRs to avoid distress sales of agricultural produce during the peak marketing season and to avoid the post-harvest storage loss. WDRA Act allows issue of NWRs in writing form or electronic form.
  • Benefits of NWRs
    • Increased liquidity in rural areas.
    • Encouragement of scientific storage of goods and thereby reducing post-harvest losses.
    • Lower cost of financing
    • Shorter and more efficient supply chains
    • Enhanced rewards for standard section, grading and quality.
    • Better price risk management
    • Better returns to farmers and better services (Quality of Goods) to consumers.

About Electronic Negotiable Warehouse Receipt (e-NWRs):

  • According to Amendment to Warehousing (Development & Regulation) Registration of Warehouses Rules, 2017, no registered warehouses under the WDRA act will issue NWRs in physical form and shall register with one or more repositories registered with WDRA for issuing negotiable warehouse receipts has migrated to system of launching electronic Negotiable Warehouse Receipt in 2018 which is a IT based eNWR ecosystem.
  • Repositories for eNWRs: Two repositories have been notified for issuing eNWRs: National E-Repository and CDSL Commodity Repository.
  • Benefits of eNWR
    • Avoidance of forgery/loss/tamper/mutilation of a physical NWR.
    • Avoidance of multiple financing against the same NWR.
    • Reduction of monitoring costs and building credibility amongst market participants.
    • Market participants to have secured accessible to view and manage their warehouse receipts via online portal.
    • Easy access to finance by enabling multiple transfers without physical movement of goods.
    • Splitting of NWRs for partial sale/pledge/withdrawal.

Steps for Mainstreaming of eNWRs

  • RBI’s Priority Sector Lending Guidelines prescribes for loan against pledge/hypothecation of agricultural produce. Thus, loans up to Rs 75 lakhs can be given against eNWRs.
  • Integration of e-NWRs with e-NAM Platforms: farmers/holders of an e-NWR issued by a registered warehouse can sell their underlying stocks on e-NAM platform and have better price discovery. The registered warehouse is required to be declared as a market sub-yard by the state authority for trade on e-NAM APMC market.

Challenges restricting expansion of NWR ecosystem:

  • Warehousing sector has been mostly un-organised and highly fragmented.
  • Registration of warehouses is voluntary and hence scope for increase in the number of registered warehouses is limited.
  • There is inadequate regulatory framework under the Act.
  • Registration system and issuance of NWRs had been paper based.
  • Monitoring & surveillance system of registered warehouses had been inadequate.

Way Forward

  • Easier registration of warehouses with WDRA.
  • Making it mandatory for newer warehouses getting assistance under government schemes to register with WDRA.
  • Training and capacity building of warehousemen.
  • Awareness among farmers about benefits and access of Negotiable Warehouse Receipts.

ChatGPT and Open AI

In the artificial intelligence (AI) field, there has been a lot of talk about a significant statement made by OpenAI. The company recently released GPT-4, a sizable multimodal model that can handle both text and visual inputs. This new language model is an improvement on its predecessor, GPT-3, which was already revolutionary in and of itself.

GPT-4 and its features

  • Large-scale multimodal model GPT-4 was developed by OpenAI.
  • Text is just one component of multimodal models; GPT-4 also takes picture input. GPT-3 and GPT-3.5, on the other hand, only supported text as a mode of operation, which limited users to typing out queries.
  • Moreover, GPT-4 "displays human-level performance on numerous academic and professional criteria."
  • The language model's stronger general knowledge and problem-solving skills enable it to pass a mock bar exam with a score in the top 10% of test takers and to solve challenging questions more accurately.
  • It may, for instance, "address tax-related queries, arrange a meeting for three busy individuals, or determine a user's creative writing style."
  • A more comprehensive range of use cases, including lengthy discussions, document search and analysis, and long-form content production, is now possible because of GPT-4's ability to handle texts longer than 25,000 words.

How is GPT-4 different from GPT-3?

Here are some of the major differences:

GPT-4 can ‘see’ images now

  • The most obvious modification to GPT-4 is that it is multimodal, enabling it to comprehend input from several informational modalities.
  • GPT-3 and ChatGPT's GPT-3.5 could only read and write text, hence they were restricted to text input and output. GPT-4, however, may be instructed to produce data in response to pictures that are supplied to it.
  • It makes sense if this makes you think of Google Lens. Lens, however, only looks for data that is relevant to a picture.
  • GPT-4 is far more sophisticated in that it can comprehend and analyse images.
  • An illustration of an outrageously huge iPhone connection with the language model explaining the humour was supplied by OpenAI. The main drawback is that picture inputs are currently at the research preview stage and are not accessible to the general public.

GPT-4 is harder to trick

  • The tendency of generative models like ChatGPT and Bing to periodically go off course and provide suggestions that raise questions or, worse, outright scare users is one of their major shortcomings.
  • They may also mess up the facts and spread false information.
  • The company's "best-ever results on factuality, steerability, and refusing to stray outside of guardrails" were achieved, according to OpenAI, after 6 months of training GPT-4 using lessons from its "adversarial testing programme" and ChatGPT.

GPT-4 can process a lot more information at a time

  • Despite having been trained on trillions of parameters and infinite quantities of data, there are limitations to how much information Large Language Models (LLMs) can handle during a conversation.
  • The GPT-3.5 model of ChatGPT was capable of handling 4,096 tokens, or around 8,000 words, while GPT-4 increases those capacities to 32,768 tokens or over 64,000 words.
  • This improvement implies that, unlike ChatGPT, which could only process 8,000 words at a time before losing track of things, GPT-4 can continue to function properly for far longer talks.
  • Moreover, it can handle longer documents and produce long-form material, which was much more restricted on GPT-3.5.

GPT-4 has an improved accuracy

  • OpenAI acknowledges that GPT-4 still lacks complete reliability and commits reasoning gaffes, much as earlier iterations.
  • Nonetheless, "GPT-4 dramatically lowers hallucinations compared to earlier models" and receives a factuality assessment score 40% higher than GPT-3.5.
  • It will be far more difficult to persuade GPT-4 to generate undesired outputs like hate speech and false information.

GPT-4 is better at understanding languages that are not English

  • Training LLMs in other languages might be difficult since machine learning data and most of the content on the internet nowadays are primarily in English.
  • Yet, OpenAI has shown that it beats GPT-3.5 and other LLMs by correctly answering thousands of multiple-choice questions across 26 languages, whereas GPT-4 is more multilingual.
  • With an accuracy rate of 85.5%, it clearly handles English the best, although Indian languages like Telugu aren't far behind at 71.4%.
  • This implies that consumers will be able to utilise chatbots built on GPT-4 to provide outputs in their local languages that are more accurate and clear.

Variety of risks that can arise out of GPT-4

  • GPT-4 is still susceptible to manipulation by cyber hackers who want to create harmful programmes.
  • It entails utilising the C++ programming language to create malware that can gather sensitive Portable Document Format (PDF) files and send them to distant servers through a covert file transfer mechanism.
  • Additional risks that Check Point's researchers may utilise include the "PHP Reverse Shell" technique, which hackers use to access a device and its data remotely, writing Java code to download malware remotely, and developing phishing draughts by pretending to be bank and employee emails.
  • With advancements in technologies like GPT-4, people in outlying towns and cities may now launch more complex social engineering assaults, which can produce a significant amount of cyber threats.
  • With one of the numerous generative AI tools, a significantly greater number of users who would not have been proficient at writing realistic phishing and spam letters can easily produce social engineering draughts, such as posing as an employee or a corporation, to target new customers.

Is GPT-4 available for the public right now?

  • For various reasons, GPT-4 has already been included in services like Duolingo, Stripe, and Khan Academy.
  • Even though it hasn't yet been made freely accessible to everyone, a $20 per month ChatGPT Plus membership may get you to access right now. Although this is going on, GPT-3.5 continues to form the foundation of ChatGPT's free tier.
  • There is, however, an "unofficial" option to start utilising GPT-4 right away if you don't want to pay.
  • According to Microsoft, the new Bing search interface is now powered by GPT-4, and you can use it right now at bing.com/chat.

National Institute of Ocean Technology (NIOT) - Desalination Plant In Lakshadweep

Stepping up from its ongoing initiative of providing potable water in six islands of Lakshadweep using Low Temperature Thermal Desalination (LTTD) technology, the Chennai-based National Institute of Ocean Technology (NIOT) is working at making this process free of emissions.

What is Low Temperature Thermal Desalination (LTTD) technology?

  • It is based on Ocean Thermal Energy Conversion (OTEC) principle.
  • It is one process that uses the availability of a temperature gradient between two water bodies or flows to evaporate the warmer water at low pressure and condense the resultant vapour with the colder water to obtain freshwater.
  • While ocean, with its temperature variation across its depth, presents one such scenario of two water bodies, a coast based thermal power plant discharging huge amounts of condenser reject water into the nearby ocean represents an alternate scenario.

Note: Near Lakshwadeep there is a difference of about 15 - 20 degree Celsius between sea surface water and deep sea water.

image 40
  • Warm surface sea water is flash evaporated at low pressure and the vapour is condensed with cold deep sea water.
  • LTTD exploits the difference in temperature (nearly 15°C) in ocean water at the surface and at depths of about 600 feet.
  • This cold water condenses water at the surface, that is warmer but whose pressure has been lowered using vacuum pumps.
  • Such de-pressurised water can evaporate even at ambient temperatures and this resulting vapour when condensed is free of salts and contaminants and fit to consume.

Note: Sea water is salty. When water evaporates, it leaves the salts behind. Those vapours when get condensed, are transformed into pure fresh water.

image 41
  • The LTTD technology does not require any chemical pre and post-treatment of seawater and thus the pollution problems are minimal and suitable for island territories.
  • Since no effluent treatment is required, it gives less operational maintenance problems compared to other desalination processes.
  • The LTTD technology is completely indigenous, robust and environment friendly.
  • The cost per liter of desalination would depend on the technology used and cost of electricity which varies from place to place.

Existing issue: Currently the desalination plants, each of which provides at least 100,000 litres of potable water everyday, are powered by diesel generator sets — there being no other source of power in the islands. However, the need for diesel power to reduce the water pressure means that the process is not fossil-fuel free and also consumes diesel, a precious commodity in the islands that has to be shipped from the mainland critical for powering the electric grid.  

International Grains Council

About International Grains Council

  • International Wheat Council as established by the International Wheat Agreement, 1949 was renamed as International Grains Council by the Grains Trade Convention, in 1995. It is located in London.
  • International Grains Council is an inter-governmental organisation that administers the Grains Trade Convention.
  • Scope: Food Items Covered under the definition of Grains are Rice (added later), Pulses (added later), barley, maize, oats, rye, sorghum,  triticale and wheat and their products.
  • Functions of International Grains Council:
    • Further international cooperation in grain trade.
    • Promote expansion, openness and fairness in grains sector.
    • Contribute to grain market stability and enhance world food security.
    • Forum for exchange of information and discussion of members regarding trade in grains
  • International Grains Council has been formed under the Grains Trade Convention, 1995 and also administers the GTC.
  • Membership: Membership of IGC consists of all parties to the Grain Trade Convention, 1995 with 30 countries as members. Each member is designated as an importer or exporter based on its average trade in grains, rice and oilseeds. India is a member of this organisation. Department of Food & Public Distribution under Ministry of Consumer Affairs, Food & Public Distribution Acts as the nodal agency on behalf of government of India in International Grains Council. 
  • Chairperson and Vice-Chairperson of this council are elected annually by the council.
  • IGC holds two regular Council Sessions each year, either in London or by invitation in member countries.
  • IGC also acts as the secretariat of Food Assistance Convention, 2013. (Food Assistance Convention aims to reduce hunger, improve food security and improve nutritional status of the most vulnerable populations. India is not a party to this convention).

Initiatives of the International Grains Council

  • Grains & Oilseeds Index: An index developed by International Grains Council which provides daily updates on variation of prices of commodities covered by International Grains Council.
  • Grain Market Report: It is a monthly publication that reviews the situation and outlook for wheat (including durum), maize (corn), barley, sorghum, oats, rye, rice, soybeans, soy meal and rapeseed/canola markets.
  • Agricultural Market Information System (AMIS): International Grains Council joined the Secretariat of Agricultural Market Information System (AMIS) in 2012. AMIS was established at the request of Agriculture Ministers of G20. It covers four crops (Wheat, Maize, Rice and Soyabeans). AMIS aims to promote food market transparency and coordination of policy action in response to market uncertainty.

Grains Trade Convention, 1995 (GTC)

  • GTC is the only international treaty covering trade in grains, rice and oilseeds trade.
  • Scope: Food Items Covered under the definition of Grains are Rice (added later), Pulses (added later), barley, maize, oats, rye, sorghum,  triticale and wheat and their products.
  • Recently, Egypt which is one of the largest importers of Wheat in the world, withdrew from the Grains Trade Convention, 1995.

Rising Milk Prices

Context:

  • Within the last year, the Gujarat Cooperative Milk Marketing Federation has raised the maximum retail price (MRP) of its Amul brand full-cream milk (containing 6% fat and 9% SNF or solids-not-fat) in Delhi from Rs 58 to Rs 64 per litre.
  • The National Dairy Development Board (NDDB)-owned Mother Dairy went further — from Rs 57 to Rs 66 per litre — between March 5 and December 27, 2022.

Reasons for the price rise:

  • Crash in prices following the Covid-induced lockdowns as a result of demand destruction led dairies to slash procurement prices of milk and its products. Farmers responded by:
    • Shrinking (or at least not expanding) the size of their herds, as milk prices would not cover the cost of feeding and maintaining the animals
    • Underfeeding the calves and the pregnant/ dry cattle who did not give milk. The calves that were underfed during the lockdown are today’s cows. Most of them, even if they have survived, are poor milkers. This is evidenced by dairies across India reporting lower milk procurement
  • Supply side issues - Increase in cost of animal feed:
    • The cattle feeding cost alone has increased by around 20% compared to last year, on the back of more expensive ingredients such as cotton-seed, rapeseed and groundnut extractions, soybean meal, maize, de-oiled rice bran and molasses.
    • Availability of straw (particularly wheat, due to a poor 2021-22 crop) and fodder (because of near-incessant rains, especially in the South, from October-December 2021 through 2022, which did not allow the grass to fully come out) has also been an issue.
    • Zoonotic Diseases: Some major milk-producing states have seen a rise in cases of disease among cattle. Lumpy Skin Disease, which leads to fall in milk output, has been reported in Gujarat, Punjab and Haryana.
    • There has also been a rise in transport, logistics, manpower, and energy costs.
  • Demand side issues - the lifting of lockdown restrictions and revival of economic activity from late-2021 coincided precisely with the building up of supply pressures.
    • This was exacerbated by India exporting more than 46,000 tonnes of milk fat between April 2021-November 2022, against a mere 15,600 tonnes in 2020-21.
    • Higher exports of butter, ghee, and anhydrous milk fat, enabled by soaring international prices, have added to the domestic shortage.

Way Forward:

  • Allow duty-free imports of butter oil and SMP. Butter fat imports currently attract 40% duty. For SMP imports, it is 15% up to 10,000 tonnes per year and 60% for quantities more than that.
  • The government can permit NDDB to import fat and SMP at zero duty for building up a buffer stock necessary for the summer, when milk supplies will dry up in the normal course.

Distribution of Net Proceeds among States

Context: 

  • With population given a higher weightage over performance, the revenue-sharing formula has created friction between States and the Centre.
  • Southern states feel that horizontal distribution of net proceeds by the Centre as per formula suggested by 15th Finance Commission are “inequitable”, putting them at a disadvantage vis-a-vis Northern states.

Facts:

  • The Centre’s tax collections are pooled-in from States and a part of it is distributed among them, based on the Finance Commission’s (FC) formula. 
  • The share of taxes that each state gets is decided by a formula. The largest weight in this formula is given to what is called the “income distance” parameter, which is essentially the inverse of the per capita income of a state. Thus, the lower the per capita income, the more the state gets.
  • India’s poorest states, Bihar and Uttar Pradesh, therefore, have the highest share in tax devolution to states, much higher than they would get if population was the only parameter
  • The 15th FC formula is skewed in favour of some States, resulting in wide inter-State variations. As population is given a higher weightage, it tilts the balance in favour of some northern States. 
  • For every one rupee that Tamil Nadu gives the Centre, it gets back 29 paise. On the other hand, Uttar Pradesh gets ₹2.73, and Bihar gets back ₹7.06.
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  • The 15th FC had arrived at the States’ share in the divisible pool of taxes based on each State’s needs (population, area and forest and ecology), equity (per capita income difference) and performance (own tax revenue and lower fertility rate).
  • The weight assigned to needs was 40%, equity 45%, and 15% for performance.
    • This formula meant that Uttar Pradesh and Bihar got 17.9% and 10%, respectively in the XVFC. Karnataka, Kerala and Tamil Nadu got 3.65%, 1.93% and 4.08%, respectively. 
    • Chart below shows that in successive FCs, the share of southern States has seen a consistent decline.
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  • Also, the 15th FC introduced the fertility rate in the formula to reward States which had reduced the fertility levels.
  • While this does favour the developed States which have pushed their TFR below replacement rate as shown in the chart below, the weightage given to the component is relatively lower than equity and need
nn6ODZJjgRXuR8p9z2uhIR0VZNAL7t NjfSUg6TWfIBCT1kMoB45 ZleaEUuskPhvGEz43sQWyMKFOPTd8ZwD9BuF3y8kQ

Rationale for Equitable Distribution

  • Active state intervention was envisaged to reduce the developmental disparities. 
  • The mechanism employed to achieve these goals was the transfer of resources from the Centre to the states.
  • These transfers, which are more heavily directed to populous and poorer states, were channelled in the past through the Finance Commission and the Planning Commission.

Arguments:

  • In Favour: The objective is not to return the money you get from a State. Transfers enable a State to provide comparable levels of services. The basic rationale is horizontal equity. Taxes accrued to Tamil Nadu are not necessarily from the State. Yes, per capita income levels increased substantially in Karnataka, Kerala and Tamil Nadu. Now, the increase need not necessarily have to do only with the States’ efforts.
  • Against: The southern States have grown faster, and contribute larger revenue to the central kitty. The argument is that both Northern as well as Southern states should get equally higher amounts. Equity needs to be balanced so that it does not adversely impact efficiency of Southern states. The Centre needs to incentivise developing States to generate more tax revenue for an even more effective distribution.

Article 280 of the Indian Constitution:

  • Clause (1): The President shall, within two years from the commencement of this Constitution and thereafter at the expiration of every fifth year or at such earlier time as the President considers necessary, constitute a Finance Commission which shall consist of a Chairman and four other members to be appointed by the President.
  • Clause (2): Parliament may by law determine the qualifications which shall be requisite for appointment as members of the Commission and the manner in which they shall be selected.
  • Clause (3): It shall be the duty of the Commission to make recommendations to the President as to:
    • (a) the distribution between the Union and the States of the net proceeds of taxes which are to be, or may be, divided between them under this Chapter and the allocation between the States of the respective shares of such proceeds;
    • (b) the principles which should govern the grants in-aid of the revenues of the States out of the Consolidated Fund of India;
    • (bb) the measures needed to augment the Consolidated Fund of a State to supplement the resources of the Panchayats in the State on the basis of the recommendations made by the Finance Commission of the State; 
    • (c) the measures needed to augment the Consolidated Fund of a State to supplement the resources of the Municipalities in the State on the basis of the recommendations made by the Finance Commission of the State;
    • (d) any other matter referred to the Commission by the President in the interests of sound finance.
  • Clause (4): The Commission shall determine their procedure and shall have such powers in the performance of their functions as Parliament may by law confer on them.

15th Finance Commission:

Criteria for Horizontal distribution of taxes among States:

  • The criteria for distribution of central taxes among states for the 2021-26 period is the same as that for 2020-21.
Criteria14th Finance Commission15th Finance Commission
Income Distance5045
Population (1971 Census)17.5Not Considered
Population (2011 census)1015
Demographic PerformanceNot Considered12.5
Forest Cover7.5Not Considered
Forest and EcologyNot Considered10
Area1515
Tax EffortNot considered2.5
Total100100

Way Forward:

  • The inequalities between rich and poor states are manifest in almost every economic dimension. Incomes, assets and discretionary purchasing power are higher in the richer states. They are the locus of formal employment and of high value jobs, which is why the hunger for government jobs is so much more intense in the poorer regions of India. The overwhelming majority of foreign investment comes to the richer states. They have better healthcare, higher levels of literacy and better public services than the poorer states.
  • Therefore, any scheme of allocation should take into account both development needs as well as past performance, with the latter serving both to incentivize better performance and to allocate resources where they can be most effectively used.
  • ‘Committee for Evolving a Composite Development Index of States’ in 2013 proposed a general method for allocating funds from the Centre to the states based both on a state’s development needs as well as its development performance.
  • The methodology developed by the Committee first allocates funds across states based on need. Need is based on a simple index of (under) development. The index proposed here is an average of the following ten sub-components: (i) monthly per capita consumption expenditure, (ii) education, (iii) health, (iv) household amenities, (v) poverty rate, (vi) female literacy, (vii) percent of SC-ST population, (viii) urbanisation rate, (viii) financial inclusion, and (x) connectivity.
    • The proposed allocation scheme accommodates differences in needs, even while recognizing that the truly needy should be given disproportionately more. Less developed states rank higher on the index, and would get larger allocations based on the need criteria.
  • Given that poor administration or weak institutions in a recipient state can fritter away allocated resources to the detriment of the population, there should be some recognition for effective governance and the efficiency of resource use. This becomes all the more necessary since the proposal to give substantially more to underdeveloped states might create a mild disincentive to develop.
  • In sum, 8.4% of funds will be allocated as a fixed basic allocation. Of the remaining 91.6%, we choose parameters such that 3/4th of it is allocated based on need and 1/4th based on performance. 
  • A positive feature of this formula for allocation of funds is that the incremental reward for performance is increasing in the level of underdevelopment – this is because the reward for performance is multiplied by need.

Domestic Systemically Important Banks (D-SIBs)

Under the D-SIB framework, the RBI was required to disclose the names of banks designated as D-SIBs, and to place them in appropriate buckets depending upon their Systemic Importance Scores (SISs).

Depending on the bucket in which a D-SIB is placed, an additional common equity requirement is applicable to it. The additional CET1 requirement was in addition to the capital conservation buffer. It means that these banks have to earmark additional capital and provisions to safeguard their operations.

Background:

  • The Basel, Switzerland-based Financial Stability Board (FSB), an initiative of G20 nations, has identified, in consultation with the Basel Committee on Banking Supervision (BCBS) and Swiss national authorities, a list of global systemically important banks (G-SIBs).
  • There are 30 G-SIBs currently, including JP Morgan, Citibank, HSBC, Bank of America, Bank of China, Barclays, BNP Paribas, Deutsche Bank, and Goldman Sachs. No Indian bank is on the list.

Why create SIBs?

  • 2008 crisis - problems faced by large and highly interconnected financial institutions hampered the orderly functioning of the global financial system - negatively impacting the real economy.
    • Government intervention - became necessary to ensure financial stability.
    • Cost of public sector intervention, and the consequential increase in moral hazard, required that future regulatory policies should aim at reducing the probability and the impact of the failure of SIBs.
  • In October 2010, the FSB recommended that all member countries should put in place a framework to reduce risks attributable to Systemically Important Financial Institutions (SIFIs) in their jurisdictions.
  • SIBs are perceived as banks that are ‘Too Big To Fail (TBTF)’, due to which these banks enjoy certain advantages in the funding markets.
    • However, this perception creates an expectation of government support at times of distress, which encourages risk-taking, reduces market discipline, creates competitive distortions, and increases the probability of distress in the future.
    • It is therefore felt that SIBs should be subjected to additional policy measures to guard against systemic risks and moral hazard issues.
  • While the Basel-III Norms prescribe a capital adequacy ratio (CAR) — the bank’s ratio of capital to risk — of 8%, the RBI has been more cautious and mandated a CAR of 9% for scheduled commercial banks and 12% for public sector banks.

Two-step process to assess the systemic importance of banks:

  • First, a sample of banks to be assessed for their systemic importance is decided. All banks are not considered — many smaller banks would be of lower systemic importance, and burdening them with onerous data requirements on a regular basis may not be prudent.
    • Banks are selected for computation of systemic importance based on an analysis of their size (based on Basel-III Leverage Ratio Exposure Measure) as a percentage of GDP. Banks having a size beyond 2% of GDP will be selected in the sample.
    • Once the sample of banks is selected, a detailed study to compute their systemic importance is initiated. Based on a range of indicators, a composite score of systemic importance is computed for each bank.
    • Banks that have a systemic importance above a certain threshold are designated as D-SIBs.
  • Second, the D-SIBs are segregated into buckets based on their systemic importance scores, and subjected to a graded loss absorbency capital surcharge, depending on the buckets in which they are placed.
  • A D-SIB in the lower bucket will attract a lower capital charge, and a D-SIB in the higher bucket will attract a higher capital charge.

Plastic Rocks on Island Off Brazil

Rocks made of plastic debris have been discovered on the volcanic Trindade Island of Brazil.

What are Plastic rocks?

  • Technically they are called as plastiglomerate.
image 27
  • It is formed when plastic trash melts and fuses together with natural materials such as basaltic lava fragments, sand, shells, wood and coral, resulting in a plastic-rock hybrid.
  • When the plastic melts, it cements rock fragments, sand, and shell debris together, or the plastic can flow into larger rocks and fill in cracks and bubbles.
image 28
  • Researchers say the new material is likely to last a very long time, possibly becoming a permanent marker in Earth’s geologic record.

About Trindade Islands:Location – It is located 1140 Km from Southeastern state of Espirito Santo of Brazil in South Atlantic Ocean.

image 29
  • Ecological significance: Trindade Island is one of the world’s most important conservation spots for green turtles, or Chelonia mydas, with thousands arriving each year to lay their eggs. The only human inhabitants on Trindade are members of the Brazilian navy, which maintains a base on the island and protects the nesting turtles.
  • Plastic threat: It mainly comes from fishing nets, which is very common debris on Trinidade Island’s beaches. The (nets) are dragged by the marine currents and accumulate on the beach. When the temperature rises, this plastic melts and becomes embedded with the beach’s natural material.

What is Plastisphere?

  • The plastisphere consists of ecosystems that have evolved to live in human-made plastic environments.
  • The Plastisphere is a diverse microbial community living on bits of plastic floating in the ocean. These communities are distinct from the surrounding water, suggesting that plastic serves as its own habitat in the ocean.
  • It’s like a biofilm—a sticky material that traps all sorts of microorganisms, protozoa and fungi. They can multiply and create a unique biome around the plastics.


What is Marine snow?

  • Marine snow is a term popularized by scientific explorer and diver William Beebe in the 1930s. It’s made up of nutrient-rich, organic material that falls like snow from the ocean’s surface to the sea floor.
image 30
  • The marine snow phenomenon explains why there’s life at the bottom of the ocean.
  • Also, how carbon can move from top to bottom in the ocean can also be partly explained through marine snow.

Bio & Organic Fertilisers

NITI Aayog has released a report on the promotion of Bio and Organic Fertilisers.

Organic Fertilisers

  • Organic fertilisers are substances made up of one or more unprocessed materials of a biological nature (plant/animal) and may include unprocessed mineral materials that have been altered through the microbiological decomposition process.
  • Organic fertilisers are composted/fermented products made from organic wastes (city waste, agro-waste, crop residue, livestock waste, food processing industry waste etc.)
  • Organic fertilisers specified under FCO, 1985 are classified into the following categories:
  • City compost
  • Vermicompost
  • Phosphate-rich organic manure
  • Organic manure
  • Bio-enriched organic manure
  • Bone meal (raw/steamed)
  • Potash derived from rhodophytes
  • Fermented organic manure
  • Liquid-fermented organic manure

Biofertilisers

  • Biofertilisers are different from organic fertilisers. Biofertilisers are defined as a product containing carrier-based (solid or liquid) living microorganisms which are agriculturally useful in terms of nitrogen fixation, phosphorus solubilisation or nutrient mobilisation, to increase the productivity of soil and/or crop (FCO 1985).
  • Upon application to seed or soil, these microbial preparations multiply rapidly around emerging crop roots and fix/mobilise nutrients from air and soil, from unavailable form to available form.
  • Nutrient solubilisers (P, K or Zn solubilizers) transform insoluble nutrients present in the soil to soluble form for easy uptake by crop plants.
  • Average dose of mixed bio fertilisers application is 6 litre/hectare for liquid formulations and 12 kg/hectare for solid carrier-based for solid carrier-based, for fixation/solubilisation of 20-25 kg nutrients/hectare.
  • Biofertilisers are available in four different forms:
    • Nitrogen fixers (Rhizobium, Azotobacter, Azospirillum, Gluconacetobacter)
    • Phosphorus solubilisers (Wide range of bacteria, fungi and Mycorrhiza)
    • Potassium solubilisers (Bacillus mucilaginous, Bacillus edaphicus, Bacillus circulanscan, Frateuriaaurentia)
    • Zinc and other micronutrient solubilisers.

Regulation of Organic & Biofertilisers

  • Organic & Biofertilisers are regulated by the Fertiliser (Inorganic, Organic or Mixed) (Control) Order (FCO, 1985) under the Union Ministry of Agriculture & Farmers' Welfare.
  • Currently, 11 bio fertilisers & 10 organic fertilisers are approved under FCO for use in India as of now.

Need for promoting organic and biofertilisers

  • Sustainable Agriculture: Organic and chemical-free agriculture can reverse environmental ill effects like groundwater depletion and loss of biodiversity etc primarily caused due to overuse of chemical fertilisers and pesticides after the green revolution.
    • Nutrient run-off from farms laced with chemical fertilisers adversely affects land ecosystems.
    • Ammonia emissions from agricultural activities can combine with vehicle exhausts to create dangerous particulates in the air and exacerbate respiratory diseases.
    • Chemical fertiliser production and use also lead to significant greenhouse gas emissions.
  • Promoting Soil Health: India's soil is getting depleted of organic matter. Nutritional quality of food produced from soil poor in organic matter is also poor. Organic and bio fertilisers conserve the micro-fauna of soil and act as a natural surface purifier. Dung manure contains basic elements critical to plant health i.e., nitrogen (N), phosphorus (P), potassium (K) and several micronutrients. Also, humus in dung manure act as a soil amender and preserves moisture in the soil. Application of organic and bio fertilisers will lead to the sustainability of agriculture.
  • Incomes for farmers and gaushalas: Promoting the use of cow dung manure will improve economy of gaushalas, support natural farming and improve sustainability of agriculture.
  • Address the problem of stray cattle: Promoting use of cow and animal waste-based organic and bio-fertilisers will address the issue of stray cattle which has led to a big menace in rural areas.
  • Waste management: Production of bio and organic fertilisers from animal waste, cow dung etc. will help to sustainably address the issue of waste management in rural areas.
  • Less input cost of agriculture: Increasing the use of bio and organic fertilisers will reduce the input cost of farming and is expected to increase the incomes of farmers over the long term.
  • Reduced expenditure on fertiliser subsidy: Fertilisers subsidy alone accounts for more than Rs 1,50,000 lakh crores per year. This increases the fiscal deficit of the government. This can be reduced if we promote the use of bio and organic fertilisers.
  • Fertiliser security: Most chemical fertilisers have to be imported into India as India lacks domestic sources of phosphorous, potassium and urea. This dependence on imports exposes Indian agriculture to supply chain constraints. Thus, promoting bio and organic fertilisers will come to the fertiliser supply more assured.

Government Initiatives for Promoting Organic and Biofertilisers

  • Paramparagat Krishi Vikas Yojana
  • Mission Organic Value Chain Development for North Eastern Region
  • Namami Ganga Program
  • National Program for Organic Production
  • Capital Investment Subsidy Scheme (CISS)
  • Soil Health Management Scheme
  • Policy on Promotion of City Compost
  • New National Biogas and Organic Manure Programme (NNBOMP)
  • Government has set a target to bring additional 10 lakh hectares under organic farming in the next 3 years.

Challenges

  • Heavy subsidies on chemical fertilisers especially urea discourage the use and uptake of organic fertilisers and biofertilisers, which do not get any subsidy.
  • Limited R&D in the field of organic & bio fertilisers.
  • Lack of regional resource centres for the supply of authentic and efficient microbial strains; Lack of awareness of biofertilisers for proper preservation, sub-culturing, storage, and procurement of authentic strains suitable for local environmental conditions.
  • Lack of availability of options for enriched organic fertilisers with essential nutrients for agricultural use.
  • Absence of economically viable mass production systems could lower the selling cost of biofertilisers.
  • Inadequate funds are spent on the promotion of bio and organic fertilisers despite various schemes for their promotion of them.
  • Lack of suitable infrastructure: Infrastructure support funds provided under schemes like the Capital Investment Subsidy Scheme and Soil Health Management have not seen much uptake in states and remain underutilised. Gaushalas and farmers cannot market compost and other organic fertiliser produced by them and there is no organised market and buyer for their produce.
  • Lack of extension and awareness on the use and benefits of organic and bio fertilisers amongst farming communities.
  • Issues of regulation: (i) FCO does not list some bio & organic fertilisers prepared from livestock waste such as Panchagavya, Dasagavya, Sheep & Goat Manure, Poultry Manure, Sanjivak, Gokripa Amrut, Amrit Pani, Fermented curd water, Ghanjivamrut, Crystallised cow urine. (ii) Lack of testing facilities and personnel and certification for organic and bio fertilisers in states which have slowed market prospects for manufacturers of organic fertilisers, especially PROM. (iii) Currently, the regulatory process for Bio and Organic fertilisers differs between states.

Way Forward

  • Digitisation of the whole process of manufacturing, license to sale authorisation to a dealer, stock records and maintenance, timely sampling by an inspector as per FCO with time-bound consultation with States.
  • Parity between inorganic and bio and organic fertilisers: There is a need for some parity in support for organic & bio fertilisers vis-a-vis organic, bio fertilisers and other animal waste-based compost, manures, jivamrit etc. This will also help cow farmers and cow shed owners earn extra income.
  • Marketing of bio & organic fertiliser: (i) Public sector fertiliser distribution agencies like IFFCO, KRIBHCO and such state-level agencies should be mandated to market standardised bio and organic fertilisers. (ii) A mechanism should be established to mandate fertiliser selling and manufacturing agencies to sell inorganic and organic fertiliser. (iii) Policy support to encourage commercial production, packaging, marketing & distribution of cow dung-based organic fertilisers including brand development. (iv) Gram panchayats should be involved in the production of organic and bio fertilisers at cow sheds.
  • Expanding the scope of FCO, 1985: (i) FCO, 1985 should be amended to include livestock waste fertilisers such as Panchagavya etc. (ii) Adequate testing facility should be created for manufacturers of organic and bio fertilisers. (iii) Quality certification of bio and organic fertilisers should be undertaken which would help farmers to identify safe and certified products. (iv) There is a need for uniformity in the regulatory process accommodating state specificities across India for registration and marketing of bio and organic fertilisers.
  • Incentives to encourage production and consumption of bio & organic fertilisers: (i) Extension of subsidy/market development assistance for bio fertiliser in line with city compost Rs 1500/ton. (ii) Mandatory 10-20% off-take of bio and organic fertiliser by fertiliser companies. (iii) Via gap funding to be provided to capital assistance and marketing of cow dung and cow-urine-based formulations for application in agriculture. (iv) Attracting the private sector to invest in mass-scale production of organic and bio fertilisers, bio pesticides, soil-enriching products and stimulants for use in agriculture.
  • Research & Development: (i) Improvement of efficiency of different formulations of organic and bio fertiliser. (ii) ICAR and other institutions should be encouraged to research organic & biofertilisers. (iii) These institutions should be encouraged to carry extension among farmers to take over bio and organic fertilisers.

Gaganyaan Mission

Central Government has allocated a budget of Rs. 9023 Crores towards achieving the objectives of the Gaganyaan mission.

  • The Department of Space is also in the process of formulating a comprehensive, overarching space policy to provide a further boost to the entire space ecosystem.

About Gaganyaan Mission:

  • Gaganyaan Mission by ISRO aims to demonstrate India's capability to conduct human spaceflight and safe return.
  • The mission will launch a crew of three members to a low earth orbit (LEO) of 400 kilometres for three days and bring them back safely to earth, by landing in Indian sea waters.
    • The first trial (uncrewed flight) for Gaganyaan is being planned for the end of 2023 or early 2024.
    • It will be followed by sending Vyom Mitra- a humanoid, and then with the crew onboard.
    • The crewed mission is expected to be launched by December 2024. If successful, India would be the 4th country to send a manned mission after Russia, the USA, and China.

Precursor Missions:

  • Various precursor missions are being undertaken before carrying out the actual Human Space Flight mission including Integrated Air Drop Test (IADT), Pad Abort Test (PAT) and Test Vehicle (TV) flights.
    • Integrated Air Drop Test (IADT): The test is a simulation of different failure conditions of the Gaganyaan Parachute system. It is designed to test the capability of the crew module’s parachute system to handle the stresses of atmospheric re-entry and ensure the safety of the astronauts during their return to Earth.
    • Pad Abort Test (PAT)/ Crew Escape System: An emergency accident-avoidance measure designed to quickly get astronauts and their spacecraft away from the launch vehicle if a malfunction occurs during the initial stage of the launch. In July 2018, ISRO completed the first successful flight ‘Pad Abort Test’ or Crew Escape System.

Critical components of Gaganyaan:

  1. Launch Vehicle: GSLV Mk III satellite, popularly known as Launch Vehicle Mark-3 (LVM3). The Human-rated LVM3 rocket consists of the solid stage, liquid stage and cryogenic stage.
  • Pad Abort Test (PAT)/ Crew Escape System
  • Crew Module Atmospheric Re-Entry technology (CARE):
  • Satellites that are launched for communication or remote sensing are meant to remain in space. However, a manned spacecraft needs to come back. While re-entering Earth’s atmosphere, the spacecraft needs to withstand very high temperatures created due to friction.
  • A prior critical experiment was carried out in 2014 along with GSLV MK-III when the CARE (Crew Module Atmospheric Re-entry Experiment) capsule successfully demonstrated that it could survive atmospheric re-entry.
  • Environmental Control & Life Support System (ECLSS):
  • The crew module carrying human beings must have conditions inside it suitable for humans to live comfortably.
  • ECLSS will:
    • Maintain steady cabin pressure and air composition.
    • Remove carbon dioxide and other harmful gases.
    • Control temperature and humidity
    • Manage parameters like fire detection and suppression.

Steel Slag in Road Construction

In line with Government’s ‘Waste to Wealth’ mission and encouraging environmentally sustainable National Highways construction, a trial use of ‘Steel Slag’ in road construction has been initiated by the National Highways Authority of India (NHAI).

Major Highlights:

  • Earlier, NHAI had announced testing the use of phosphor-gypsum — a by-product of fertilizer production — in road construction on national highways.
  • NHAI has also used fly ash — the fine residue of coal combustion in thermal power plants — for the construction of highways and flyover embankments.
  • NHAI is encouraging the use of waste plastic in road construction. Studies have established that roads built using plastic waste are durable, sustainable and increase the life of bitumen.

Significance:

  • The initiative will help to address the challenge of shortage of materials used in the development of the National Highways and could replace natural aggregates such as sand, gravel, or crushed stone with the waste material from the steel industry.
  • The use of such materials in road construction shall make construction more economical and will promote the circular economy.

About Steel slag:

  • Steel slag is a solid waste or an unavoidable by-product during the production of steel. It is produced in large quantities (nearly 100-150 kg per tonne of steel) during the separation of the molten steel from impurities in steel-making furnace.

Benefits:

  • Steel slag particles become an integral part of the concrete matrix, acting as a filler and helping to improve the density of the concrete i.e., improve its strength and durability.
  • Steel slag is resistant to weathering and can withstand more load and pressure than traditional aggregates such as gravel and crushed limestone.

Vulture population in India

Recently, as many as 246 vultures were spotted in the first­ever synchronised survey conducted along the borders of Tamil Nadu, Kerala and Karnataka.

  • The estimation was carried out in the Mudumalai Tiger Reserve (MTR) and the adjoining landscape consisting of the Sathyamangalam Tiger Reserve (STR) in Tamil Nadu, the Wayanad Wildlife Sanctuary (WWS) in Kerala, the Bandipur Tiger Reserve (BTR) and the Nager hole Tiger Reserve (NTR) in Karnataka.
  • A total of 98 vultures were seen in MTR, two in STR, 52 in WWS, 73 in BTR, and 23 in NTR.

About Vultures

Varieties of vultures found in India: 

India is home to 9 species of Vulture namely

Vultures        IUCN Status  
Oriental white-backed VultureCritically endangered
Long-billed VultureCritically endangered
Slender-billed VultureCritically endangered
Himalayan griffon vultureNearly threatened
Red-headed VultureCritically endangered
Egyptian vultureEndangered
Bearded vultureNearly threatened
Cinereous vultureNearly threatened
Eurasian GriffonLeast concerned

ECOLOGICAL SIGNIFICANCE

• They act an important function as nature’s garbage collectors and help to keep the environment clean of waste.

• Vultures also play a valuable role in keeping wildlife diseases in check.

THREAT

• Diclofenac is a common anti-inflammatory drug administered to livestock and is used to treat the symptoms of inflammation, fevers and/or pain associated with disease or wounds. • Diclofenac leads to renal failure in vultures damaging their excretory system (direct inhibition of uric acid secretion in vultures).

CONSERVATION: The Ministry for Environment, Forests and Climate Change launched a Vulture Action Plan 2020- 25 for the conservation of vultures in the country. To upscaling conservation four rescue centres will be opened like Pinjore in the north, Bhopal in central India, Guwahati in Northeast and Hyderabad in South India.

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