9 PM Daily Current Affairs Brief – November 19th, 2021

Mains Oriented Articles 

GS Paper 2

• Vending For India
• US’s engagement with China is par for the course. Delhi should not panic, must enhance its global standing
• Ordinances extending tenures of CBI, ED chiefs show a worrying trend

GS Paper 3

• Time to harvest the tailwind in exports
• The government should prepare for a sustained spell of inflation
• An SOS call from the Indian micro-irrigation industry
• The monetary, fiscal challenges of cryptocurrency
• Strengthening financial sector

Prelims Oriented Articles (Factly)

• Need global collaboration to regulate cryptos: Modi
• India needs $10 tn. to meet net zero
• ‘Tight oil’: What is shale and its potential in India
• Prime Minister to Formally Handover DRDO Designed and Developed Advanced Electronic Warfare Suite ‘Shakti’ for Indian Naval Ships to Chief of Naval Staff
• Coal Ministry Accelerates Sustainable Development Efforts: Constitutes Sustainable Development Cell
• Government will repeal all 3 farm laws: Modi
• Personal guarantors may be part of cross-border insolvency framework
• RBI working group warns on digital lending by big tech players
• Second Chinese village along Arunachal border: Satellite images
• Sexual intent, not skin-to-skin contact, key: SC
• One-day Conference on PESA organised on completion of 25 years of the Ac
• India, world’s largest recipient of remittances, received $87 billion in 2021: World Bank

Mains Oriented Articles

GS Paper 2

Vending For India

News: Recent decision by multiple municipalities across the state of Gujarat to ban vendors selling non-vegetarian food has led to vendor organizations planning protests across these cities.

What are the critical roles played by street vendors?

Creating substantial employment opportunities. According to a study, 11% of the total urban workforce across India is in street vending.

Street vendors also play an important role in food distribution, food security, as well as in making public spaces safer.

Moreover, households across income classes (rich and poor alike) regularly rely on street vendors for procuring food.

What are the issues faced by Street vendors?

State or city governments crack down frequently on street vendors, in an effort to ‘clean up’ their cities, roads and public spaces. Attempts are also made to relocate public markets to the outskirts of cities.

Violence by police and local officials: In addition, street vendors also face everyday harassment, confiscation of goods, and sometimes violence by police and local level officials on the street. This leads to further exclusion for vendors.

Poor living conditions: Street vendors live in poorly serviced housing, work long hours with long commute times, face difficult conditions in carrying out their daily work.

What steps are being taken to ensure the development of street vendors?

Firstly, India is one of the few countries that recognise the right to work on the street, through the National Policy for Street Vendors, 2004, and the Protection of Livelihood and Regulation of Street Vending Act, 2014.

– The Acts provide for the formation of a Town Vending Committee. However, the implementation of this remains partial. Evidence suggests that the TVCs have not been formed because the different stakeholders have been unable to work together.

Secondly, Main Bhi Dilli campaign, a collective of civil society organisations, have brought attention to the ways in which urban planning can be more responsive to the needs of street vendors.

Thirdly, government is experimenting with several approaches to address the question of providing social security or assuring basic minimum incomes for the street vendors. For instance, proposals on an urban employment guarantee program.

What is the way forward?

First, Vending should be included in the cities Master Planning process, which would help balance the needs of vendors, pedestrians and vehicular mobility.

Second, an entire Land use category (such as commercial, residential) should not be declared as a no-vending zone. This will help in providing improved amenities for vendors.

Third, adopting the spirit and the letter of the Street Vending Act, will help in forming genuine partnerships with vendor organisations. It will help them in addressing the governance issues related to street vending.

US’s engagement with China is par for the course. Delhi should not panic, must enhance its global standing

News: Recently a virtual summit occurred between US President and the Chinese President. In that, both the nations have decided to expand their cooperation and engagement.

What are the challenges in China-US relations?

Failed fulfilments: During the Trump regime, the Phase 1 Trade Agreement, required China to buy $380 billion worth of American goods by the end of 2021. But China didn’t fulfil the agreement.

Deepening structural contradiction: Both the US and China have structural contradictions that are unlikely to resolve soon.

The approach of Trump and Biden on China: Under Trump, the US shifted from engagement at all costs with China to challenging it across a broad front, including trade, technology, human rights, security, and global governance.

Under Biden, the US has moved more systematically in challenging China. For instance, by strengthening US alliances and focusing on domestic economic renewal.

What US-China relations mean for India?

Many in India worry that any relaxation of tensions between the US and China would undermine India’s position in relation to China. So, India must carefully monitor the state of US-China relations. But India has no reason to panic. This is because,

1. China is far too important for any major power to ignore it, 2. Even after Chinese aggression in Ladakh, India continued its engagement with China. More recently, in COP 26 also, India and China coordinated with each other. 3. All of India’s Asian and European partners have huge stakes in a productive economic relationship with China.

So, engaging with China is a fact of international life today.

What India should do?

1. Strengthen India’s partnership with all major powers, including the US, Europe, Japan and Russia, 2. Enhance India’s own standing in the great power constellation.

Overall, India can’t see itself as a victim of great powers, but as a nation that can shape the regional and global balance of power.

Ordinances extending tenures of CBI, ED chiefs show a worrying trend

News: The Government of India has brought two ordinances to extend the tenure of Enforcement Directorate (ED) and Central Bureau of Investigation(CBI) directors up to 5 years.

About the Ordinances

The two ordinances promulgated were the Delhi Special Police Establishment (Amendment) Ordinance, 2021, and the Central Vigilance Commission (Amendment) Ordinance, 2021, which extend the tenures, respectively, of the director of the Central Bureau of Investigation and the Enforcement Directorate.

What are the concerns associated with the ordinances?

Read here: Extension of terms of CBI, ED chiefs by ordinance goes against SC verdicts

Why the ordinance is necessary?

Read here: Longer term, better impact

In our country, ordinances are no longer just ordinances. They are the forerunners of something harsher to come.

GS Paper 3

Time to harvest the tailwind in exports

News: The current increase in global trade offers an opportunity for India to get its exports’ strategy in order before growth dips again.

What are the factors that have contributed to the growth in exports?

Factors that have given thrust to exports are,

– Revival of global growth

– Inventory restocking in early 2021 as economies opened.

– Pandemic-induced shift towards consumption of goods.

How does India stand to gain from this trend?

India’s merchandise exports could continue to benefit from a rise in external demand in the short run due to the following reasons:

One, merchandise exports highly elastic to global growth are driving the post-pandemic surge. India has a high share of these items in its export’s basket. Such items include chemicals engineering goods, petroleum products, and gems and jewelry.

Elasticity is calculated as the ratio of growth in exports to growth in world GDP, and a measure higher than 1 indicates high sensitivity to global growth.

Two, value of exports has grown faster than volume this fiscal, compared with the pre-pandemic levels. High global commodity prices have provided a disproportionate lift to the value of exports.

Three, despite higher commodity prices, the terms of trade (the ratio of export prices to import prices) remain favorable to exporters, but the gap has narrowed. This suggests prices of imports are growing faster than those of exports, and it could reduce the net earnings of exporters.

What are the risks that can offset exports trade?

The risks include,

– Supply-chain disruptions and material shortages

– Uncertainties around the impact of the delta variant

– Medium-term cut in global potential output.

– UNCTAD report cautions that the momentum in global trade in 2021 may be short-lived, as it partially reflects inventory restocking cycle.

What India should do to consolidate the benefits arising out of exports?

First, enhancing domestic production capacity will open avenues for exports in import-dependent sectors. In this context, PLI scheme can be a crucial bridge between short-term opportunities and longer-lasting growth.

Second, improving India’s competitiveness through focused reduction in trade costs (tariff and non-tariff barriers, transportation, and other costs) is critical.

The government should prepare for a sustained spell of inflation

News: Inflation data based on the consumer price index (CPI) released this week suggest that, inflation has decreased compared to the previous months.

This may be good news for the Reserve Bank of India, but any complacency would not only be premature, it could also create challenges for an economic recovery.

Why India should not get complacent wrt inflation?

Inflation based on the wholesale price index (WPI) is still high: It was at 12.5% in October. This is the seventh month that this measure has been in double digits. Unlike CPI inflation, it hasn’t shown any pattern of reduction. Moreover, wholesale food inflation has declined much slower than the retail.

Prices of cereals and edible oils have started rising: The FAO index has reported faster inflation for cereals and edible oils. It is due to increase in oil prices. Increasing oil prices result in higher demand for grains that can be used for ethanol production. The spill-over effect of these is felt on other food grains.

Supply shocks in the global market: Supply bottlenecks and adverse weather concerns have also prompted countries to hoard grain stocks, causing supply issues in the global market.

Increasing domestic demand: economic activity returning to normal would drive inflation.

Likelihood of Food inflation due to increase in input costs in the agricultural sector. Diesel and electricity prices have increased sharply, while a rise in fertilizer prices along with increasing wages has further pushed up the cost of cultivation.

What challenges/issues this type of inflation presents?

The nature and persistence of this type of inflation is what makes it worrisome. Because there are very few options of controlling it.

– Monetary policy is unlikely to be of any help. Global price movements may be beyond the control of domestic policy. Moreover, any attempt to control inflation for consumers would likely hurt the agrarian economy, which has been in distress for the past five years

– Also, on the other hand, falling casual wages, lack of employment opportunities and dearer essentials have worsened many human development indicators, nutritional outcomes included.

This poses multiple challenges for the government.

Government has to control inflationary pressures while protecting the real incomes of the poor, at the same time it has to ensure that the cost of this exercise is not borne by farmers.

What is the way forward?

First, Government has to use public expenditure to protect the profitability of farming by enhancing subsidies and access to essential inputs.

Second, Government can expand the public distribution system (PDS) through universalization and an expansion of entitlements, such as the addition of pulses and edible oils to the PDS basket.

Third, the above strategies should be supplemented with the reopening of schools and anganwadis everywhere and enlarged access for children and pregnant women to food schemes.

An SOS call from the Indian micro-irrigation industry

News: Despite the demonstrated benefits of micro irrigation in the sustainability of Indian agriculture, the industry that provides the resources for it is currently struggling to survive.

What are the benefits of micro irrigation system?

– water savings in comparison with flood irrigation.

– decrease in electricity consumption.

– the adoption of micro irrigation results in savings on fertilizers.

– results in the increase of the average productivity of fruits and vegetables.

– increase in farmers’ income.

What are the issues faced by the manufacturers & suppliers of drip irrigation systems?

Issue of prolonging the selection process and extending delays: In most Indian states, despite the availability of funds, scheme applications are processed only at the end of a financial year. This is done typically to achieve pre-set targets in what is famously known as the ‘March rush’. This tends to discourage farmers from availing the benefits offered under this scheme.

Delays in the reimbursement of subsidies to industries: Unlike other subsidies that are directly transferred to beneficiaries, those for installing drip irrigation systems are transferred to vendors only after due diligence. Further, there is no fixed timeline for the inspection and testing of an installed system. This results in a long pendency of disbursement against bills.

Governments continue to dishonor their commitments to support industries: For instance, under the scheme, the prices of equipment and installation services are fixed by the government. These have not been revised in the past five years. However, raw material costs, however, have risen by at least 50%.

What reforms are needed?

– set a timeline for each stage, from an application by a farmer to the execution and payment disbursement.

– strengthen the Centre’s monitoring mechanism by insisting on a periodic review of applications, approvals, work orders and actual installations.

– establish a central information system to monitor the scheme’s progress.

– deploy direct benefit transfers for subsidy sums to go straight into the bank accounts of farmers.

– ask state administrations to operate the scheme throughout the year on a first- come-first-serve basis.

– link equipment prices to either inflation or underlying input costs.

Strengthening financial sector

News: For a swift economic recovery of India, the central bank would need to guide the economy towards normalcy. In terms of monetary policy management, the central bank has started the unwinding process.

In the context of financial sector oversight, RBI Governor Shaktikanta Das touched upon several interdependent issues in his remarks at an event recently, and these require more attention.

What is the present situation of the financial sector?

The impact of the pandemic on asset quality in the banking sector has been far lower than initially anticipated.

Asset quality and capital levels improved for the banking system in the September quarter compared to the previous one.

Various banks have reported better than expected profits.

What are some issues with the financial sector that merit attention?

Improved parameters are partly a result of regulatory relief provided by the central bank along with the support extended by the government. As regulatory support is withdrawn, some of the accounts that have been restructured may not remain solvent, and the banking system will have to get those resolved.

The RBI, however, does not have adequate powers to regulate PSBs, which often function with vacancies in the board and top management.

The government has been encouraging PSBs to push lending, including through outreach programmes. The idea is that pushing credit through PSBs will help increase consumption and investment demand. But it is important to recognise that overall economic growth depends on a variety of factors and pushing demand through the extension of credit may not be sustainable.

What steps are being taken?

RBI has started taking a closer look at the business models of banks as some are following a high risk-high return strategy with the objective of serving the interests of shareholders. Closely following the functioning of banks as will help RBI intervene in time to avoid any build-up of risk and ensure stability in the banking system

What is the way forward?

The RBI will need to ensure that lenders don’t delay the resolution of restructured accounts, as has been the case in the past.

Since the condition of PSBs is significant for the flow of credit in the Indian economy, it makes sense to bring them at level with private banks in terms of regulation. This will help improve the overall health of the banking system in the long run.

In the short to medium term, the RBI should ensure that banks and NBFCs deal with the overall impact of the pandemic transparently, and have adequate capital to facilitate economic recovery.

Good governance is also necessary for a well-functioning and resilient financial institution.

The monetary, fiscal challenges of cryptocurrency

News: Digital money in the form of cryptocurrencies is gaining widespread popularity, esp with countries like El Salvador adopting Bitcoin as a legal tender. The debate around Cryptocurrencies frequently refer to their speculative nature as a cause of concern.

But, what happens if, over time, cryptos evolve from speculative assets to become viable mediums of exchange? What would this imply for the conduct of monetary, fiscal and exchange rate policies?

Are cryptocurrencies viable as a medium of exchange?

Anything in excess supply is cheap. So whenever a central bank prints more and more currency, its value erodes over time.

The global financial crisis of 2008 resulted in a similar unprecedented expansion of G3 central bank balance sheets. This sparked fears of debasement (lowering of value) of currency.

To prevent a similar thing from happening to Bitcoin, the founders fixed its supply to a set number. One unintended side effect of this was that, like a usual currency, the supply of Bitcoin could not be modified as per demand. This often causes price volatility, i.e. huge upward or downward movement of price.

This in turn means that Bitcoin or any other Cryptocurrency is not suitable as a medium of exchange.

Instead, it is a speculative asset.

How do stable coins solve the problem of price volatility?

To get around this issue, Stablecoins, like USDT (Tether), have been introduced, whose value is pegged to a fiat currency by maintaining equivalent reserves.

By providing much greater price stability, these Stablecoins hope to serve as viable mediums of exchange, and have proliferated rapidly in recent years.

Still, the risk to the monetary policy will depend on the degree of currency substitution.

What are the challenges if cryptocurrencies are adopted as medium of exchange?

Impact on monetary policy: If a privately-issued cryptocurrency begins to compete with fiat currency, something similar to Dollarisation would happen. For instance: In various Latin American countries, as citizens lost faith in domestic currency, they began transacting more and more in Dollars. This rendered domestic monetary policy ineffective, because domestic central banks cannot set interest rates and inject liquidity in a foreign currency.

Widespread adoption of privately issued digital currencies as a medium of exchange will have the same impact. The domestic monetary policy will not be able to respond to business cycle needs and external shocks.

Mega tech companies may start running global e-commerce or social networking platforms, issuing their own digital currencies to their global customer base. These digital currencies will serve both as a unit of account and a medium of exchange on their platforms.

Reorganisation of global economic activity into digital currency areas (DCAs) that run across national boundaries. These DCAs will be characterised by their own digital currency and unit of account issued by the network owner. The size of these DCAs might become larger than various national economies.

What are the implications of widespread adoption of Cryptos as mediums of exchange?

Threat to the monetary policy: If the privately issued Global Stablecoins gain credibility and acceptance over time, there will be every incentive for network owners to break free from fiat currencies pegs to generate monetary discretion. Once that happens, the fate of economies to respond to shocks, at least in part, would be in the hands of the network owner or private firms. This would present an existential threat to monetary policy.

Loss of seigniorage revenues to governments from the monopoly issuance of fiat currency

Fiscal revenues can also be adversely impacted by the increased tax evasion opportunities that crypto-currencies can facilitate.

In the light of an ineffective monetary policy, the burden on fiscal policy to respond to economic shocks will commensurately rise. This could create challenges in a post-Covid world.

Impact on rupee:

– Capital account volatility: If cryptos begin to get mined inside the Indian territory, they will induce capital inflows. It can increase capital account volatility.  And if these cross-border flows circumvent capital flow measures, they also increase capital account convertibility.

What is the way forward?

The implications of widespread crypto adoption are complex and interlinked. But, the true challenge will be if the unbacked private digital currencies are seen as viable mediums of exchange. That’s what policy must anticipate and prepare for.

Prelims Oriented Articles (Factly)

Need global collaboration to regulate cryptos: Modi

Source: This post is based on the following articles:

‘Need global collaboration to regulate cryptos: Modi‘ published in Livemint on 19th Nov 2021.

‘Centre works on tax framework to regulate cryptocurrencies‘ published in Indian Express on 19th Nov 2021.

‘PM delivers keynote address at The Sydney Dialogue, speaks on India’s technology evolution and revolution‘ published in PIB on 19th Nov 21.

What is the news?

Indian Prime Minister, delivered the keynote at the inaugural Sydney Dialogue via video conferencing. He spoke on the theme of India’s technology evolution and revolution and new age digital tech like cryptocurrencies.

Indian PM called for countries to collaborate for regulating cryptocurrencies to prevent any harmful impact on youth. The reference to bitcoins comes days after a Parliament committee discussed ways to ensure safety of bitcoins.

The Centre is also deliberating on a taxation framework for the Cryptocurrency sector.

What are the five important transitions taking place in India?

Indian PM listed five significant transitions happening in India currently:

One, the world’s most extensive public information infrastructure being built in India i.e. UPI and Aadhaar

Two, use of digital technology for governance, inclusion, empowerment, connectivity, delivery of benefits and welfare.

Three, India has the world’s third largest and fastest growing Startup Eco-system.

Four, India’s industry and services sectors, even agriculture, are undergoing massive digital transformation.

Five, India is investing in developing indigenous capabilities in technology such as 5G and 6G, Cloud platforms and cloud computing. It is one of the leading nations in artificial intelligence and machine learning, especially in human-centered and ethical use of artificial intelligence.

What is being planned wrt regulation of Cryptocurrency?

The issue of regulatory gaps is being discussed in meetings involving the Government and regulators such as the Reserve Bank of India (RBI).

For holders and traders of digital currencies, deliberations are underway to explore the possibility of imposing short-term and long-term capital gains tax.

For service providers in the cryptocurrency ecosystem, the option of imposing GST at the rate of 18%, is being explored.

A key aspect being considered is the definition of a brokerage to include entities that undertake or facilitate digital asset trades. This would include practically all cryptocurrency exchanges.

Govt could introduce something like the accredited investor concept in crypto investment, where somebody with a specified minimum annual income is allowed to invest in certain asset classes,

There have been suggestions that cryptocurrencies in India should be regulated by SEBI, with RBI monitoring their inward and outward movements in the country.

India needs $10 tn. to meet net zero

Source: This post is based on the article “India needs $10 tn. to meet net zero” published in The Hindu on 18th Nov 2021.

What is the news?

According to a study by climate and energy research firm, CEEW Centre for Energy Finance (CEEW-CEF), India is going to need Rs 700 lakh crore (10 trillion) to meet its net-zero target by 2070.

What are the findings of the study?

– Majority of the funds would be needed to significantly scale up generation from renewable energy and for the necessary integration, distribution and transmission infrastructure. A smaller part would have to be invested in the industrial sector for setting up green hydrogen production capacity.

– Concessional finance: India would fall short by $3.5 trillion to achieve net-zero emissions by 2070. Hence, investment support of $1.4 trillion, in the form of concessional finance, would be required from developed economies.

Concessional finance refers to loans at below-market interest rates.

– On the domestic front, financial regulators such as the RBI and SEBI need to create an enabling ecosystem for financing India’s transition to a green economy.

– Finally, given the size of the investments required, private capital, from both domestic and international institutions, should form the bulk of investment. Public funds should work towards de-risking investments in existing and emerging clean technologies.

‘Tight oil’: What is shale and its potential in India

Source: This post is based on the article “‘Tight oil’: What is shale and its potential in India” published by Indian Express on 18th Nov 2021.

What is the News?

Cairn Oil & Gas has announced that it is partnering with US-based Halliburton to start shale exploration in the Lower Barmer Hill formation, Western Rajasthan. 

What is Shale Oil?

​​Shale oil is an unconventional oil produced from oil shale rock fragments.

How does Shale Oil differ from conventional crude oil? The key difference between shale oil (also known as Tight Oil) and conventional crude is that the shale oil is conventional crude deposits. Its extraction requires the creation of fractures in oil and gas rich shale to release hydrocarbons through a process called hydraulic fracking.

What are the challenges in Shale Oil Exploration? Environmental concerns around massive water requirements for fracking and potential for groundwater contamination.

Who are the Largest Producers of Shale Oil? Russia and the US are among the largest shale oil producers in the world, with a surge in shale oil production in the US having played a key role in turning the country from an importer of crude to a net exporter in 2019. 

Shale Oil Exploration in India: Currently, there is no large-scale commercial production of shale oil and gas in India. 

Note: Earlier, State-owned ONGC had found prospects of shale oil at the Cambay basin in Gujarat and the Krishna Godavari basin in Andhra Pradesh. However, the company concluded that the quantity of oil flow observed in these basins did not indicate “commerciality” and that the general characteristics of Indian shales are quite different from North American ones.

Prime Minister to Formally Handover DRDO Designed and Developed Advanced Electronic Warfare Suite ‘Shakti’ for Indian Naval Ships to Chief of Naval Staff

What is the News?

The Prime Minister will formally hand over the advanced electronic warfare system ‘Shakti’ to the Chief of Naval Staff at a ceremony in Jhansi.

What is Shakti?

Shakti is an advanced electronic warfare(EW) system developed for the Indian Navy.

Designed and Developed by:  Defence Electronics Research Laboratory in Hyderabad, which is part of the Defence Research and Development Organisation (DRDO).

Aim: To provide an electronic layer of defence against modern radars and anti-ship missiles to ensure survivability in the maritime battlefield.

The First Shakti system has been installed on-board INS Visakhapatnam and is being installed on-board Indigenous Aircraft Carrier, INS Vikrant. 

What are the Key Features of Shakti?

Firstly, it has been designed for the Indian Navy’s capital warships for the purposes of interception, detection, classification, identification and jamming of conventional and modern radars.

Secondly, the system has been integrated with the wideband electronic support measures (ESM) and electronic countermeasures for the defence of Indian Navy ships against missile attacks. The ESM of the system helps in finding accurate direction and interception of modern radars.

Thirdly, the system has a built-in radar fingerprinting and data recording replay feature for post-mission analysis.

Source: This post is based on the article “Prime Minister to Formally Handover DRDO Designed and Developed Advanced Electronic Warfare Suite ‘Shakti’ for Indian Naval Ships to Chief of Naval” published by PIB on 18th Nov 2021.

Coal Ministry Accelerates Sustainable Development Efforts: Constitutes Sustainable Development Cell

What is the News?

The Ministry of Coal has accelerated the establishment of the Sustainable Development Cell.

What is the aim of the Sustainable Development Cell?

Aim: To promote environmentally sustainable coal mining in the country and to address environmental concerns during mining operation and till the decommissioning or final closure of mines.

What are the functions of a Sustainable Development Cell?

To advise, mentor, plan and monitor the mitigation measures taken by coal companies.

To act as a nodal point at the level of the Ministry in formulating future policy framework for environmental mitigation measures including regulation of Mine closure Fund.

What are the other measures taken by the Ministry of Coal to minimise environmental pollution?

First Mile Connectivity(FMC): Under this, coal is being transported through a conveyor belt from Coal Handling Plants to Silo for loading. This process eliminates the movement of coal through roads. 

Installing additional Renewable Capacity: In order to contribute to India’s commitment to increase non-fossil energy capacity to 500GW by 2030, Coal & Lignite companies have planned to install an additional 5.5GW of renewable capacity.

Bio-Reclamation of mined-out land: Mine reclamation is the process of restoring land that has been mined to a natural or economically usable state.

Surface Coal Gasification Projects have been planned for SynGas production which will be used further either for production of Methanol/Ethanol, Urea or Petrochemicals. This will be a way forward for use of dry fuel as green coal with a relatively lesser carbon footprint and environmental pollution. 

The use of LNG to substitute diesel consumption in mining and coal transport equipment has also been planned on a massive scale. 

Source: This post is based on the article “Coal Ministry Accelerates Sustainable Development Efforts: Constitutes Sustainable Development Cell” published by PIB on 17th Nov 2021.

Government will repeal all 3 farm laws: Modi

What is the News?

The Prime Minister has announced that the government has decided to repeal the three controversial farm laws passed in the Monsoon Session of Parliament in September 2020.

What were the three farm laws that have been repealed?

Farmers Produce Trade and Commerce (Promotion and Facilitation) Act, 2020; 

Essential Commodities (Amendment) Act, 2020; and 

Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020.

Why have farmers opposed these farm laws?

Farmers feared the laws would lead to the abolishment of the Minimum Support Price (MSP) guaranteed by the government on select crops and leave them at the mercy of big corporations. 

What are the other announcements made by the Prime Minister?

The Prime Minister has announced the formation of a committee to promote zero-budget farming, to make Minimum Support Price(MSP) more efficient and to scientifically change the crop pattern.

The committee will consist of representatives from the central government, state governments, farmers, agricultural scientists and economists.

Source: This post is based on the article “‘Government will repeal all 3 farm laws: Modi” published by Down To Earth on 18th Nov 2021.

Personal guarantors may be part of cross-border insolvency framework

What is the News?

The government is planning to bring personal guarantors for corporate debtors under the purview of the cross-border insolvency regime.

What is Cross Border Insolvency?

Cross border insolvency denotes the treatment of financially burdened debtors where: the assets are in more than one country (or) creditors are in more than one country.

For example – Jet Airways (India) was one such case wherein Insolvency proceedings were initiated in the Netherlands and India simultaneously.

Does India have a Cross Border Insolvency Framework?

Cross border insolvency framework is yet to be notified under the Insolvency and Bankruptcy Code. 

So far, the Government was planning to bring the Cross border framework only for corporate insolvency resolution. But now the government wants to notify it together for both companies and personal guarantors for corporate debtors.

Note:  A personal guarantor is a person or an entity that promises the payment of another person’s debt, in case the latter fails to pay it off.

How will the Cross Border Insolvency Framework be based on?

The government is discussing bringing the Cross Border Insolvency Framework based on the UNCITRAL Model Law on Cross-border Insolvency, 1997.

About UNCITRAL Model Law on Cross-border Insolvency, 1997

UNCITRAL Model Law on Cross-Border Insolvency, 1997 (Model Law) provides a legal framework to deal with cross-border insolvency issues while ensuring the least intrusion into the country’s domestic insolvency law.

Principles: The model law deals with four major principles of cross-border insolvency:

• Direct access to foreign insolvency professionals and foreign creditors to participate in or commence domestic insolvency proceedings against a defaulting debtor; 
• Recognition of foreign proceedings & provision of remedies; 
• Cooperation between domestic and foreign courts & domestic and foreign insolvency practitioners; and 
• Coordination between two or more concurrent insolvency proceedings in different countries. The main proceeding is determined by the concept of centre of main interest (“COMI”).

Source: This post is based on the article “Personal guarantors may be part of cross-border insolvency framework” published by Business Standard on 18th Nov 2021.

RBI working group warns on digital lending by big tech players

What is the News?

A working group set up by the Reserve Bank of India (RBI) has proposed stricter norms for digital lenders. 

Background

RBI had constituted the working group on digital lending including lending through online platforms and mobile apps under the chairmanship of Jayant Kumar Dash, Executive Director, RBI.

The working group was set up in the backdrop of business conduct and customer protection concerns arising out of the increase in digital lending activities.

The working group has now submitted its recommendations.

What are the key recommendations of the working group?

Legislation to curb Digital Lending: The group has recommended a separate legislation to prevent illegal digital lending activities. 

Nodal Agency:  A nodal agency should be set up which will verify the technological credentials of digital apps of balance sheet lenders and lending service providers. It will also maintain a public register of verified apps on its website.

Self-Regulation: RBI has mooted a Self-Regulatory Organisation for participants in the digital lending ecosystem.

Develop a Baseline Technology: Development of certain baseline technology standards and compliance with those standards as a pre-condition for offering digital lending solutions.

Data collection: Data Collection should be done with the prior and explicit consent of borrowers with verifiable audit trails. All data should also be stored in servers located in India.

Neo-Banks: Neo-banks should be brought under the regulations of the RBI. 

Note: Neobanks are financial institutions that give customers a cheaper alternative to traditional banks. One can think of them as digital banks without any physical branches, offering services that traditional banks don’t, and doing so efficiently. In India, these firms don’t have a bank licence of their own but rely on bank partners to offer licensed services.

Pricing of Loans: RBI should establish standard definitions for the cost of digital short-term consumer credit as Annual Percent Rate (APR). 

Regulation of Third Party Service Providers: There are three players in the ecosystem: RBI-regulated entities; other regulated entities; and unregulated entities, including third-party service providers. The working group said the onus of subjecting third-party lending service providers to a standard protocol of business conduct would lie with the regulated entities, to which they are attached.

Source: This post is based on the following articles: 

• “RBI working group warns on digital lending by big tech players” published in Business Standard on 18th November 2021.
• “RBI proposes new law to regulate digital lending” published in TOI on 18th November 2021.
• “Dash-led Reserve Bank committee suggests regulating digital loan apps” published in Livemint on 18th November 2021.

Second Chinese village along Arunachal border: Satellite images

What is the News?

According to reports, China has constructed a second village along the disputed border in Arunachal Pradesh.

However, the Indian Army has said that the location of this enclave was north of the Line of Actual Control(LAC) in Chinese-held territory.

Moreover, this strategy of construction of villages shows China’s salami-slicing tactics to nibble away territory of its neighbours like India and Bhutan.

What are Salami Slicing Tactics?

Salami slicing is described as a strategy that involves the divide and conquer process of threats and alliances to overcome opposition and acquire new territories.

The term was coined by Stalinist dictator Mátyás Rákosi during the 1940s. He used the term to justify the actions of the Hungarian Communist Party to grab complete power in Hungary. 

Salami Slicing Tactics by China

China is the only country that has been expanding its territorial jurisdiction post-World War II at the expense of its neighbours. This expansion has taken place in both territorial and maritime regions.

For instance, the acquisition of Tibet, the capture of Aksai Chin and the annexation of Paracel Islands.

Source:  This post is based on the article “Second Chinese village along Arunachal border: Satellite images” published by TOI on 19th Nov 2021.

Sexual intent, not skin-to-skin contact, key: SC

Source: This post is based on the following articles: 

• “Sexual intent, not skin-to-skin contact, key: SC” published in The Hindu on 19th November 2021.
• “Touch with sexual intent is assault: SC” published in Livemint on 19th November 2021.
• “Skin-to-skin touch not a must for sex assault: Supreme Court” published in TOI on 19th November 2021.

What is the News?

The Supreme Court of India has set aside the controversial judgment of the Bombay HC which held that ‘skin-to-skin’ contact is necessary for the offence of sexual assault under the Protection of Children from Sexual Offences(POCSO) Act.

Background

The Bombay High Court in Satish v State of Maharashtra had acquitted a man charged with assault under the POCSO Act solely on the grounds that he groped the child over her clothes without “skin-to-skin” contact.

This judgment was challenged in the Supreme Court.

What has the Supreme Court said?

The Supreme Court has quashed the judgement of the Bombay High Court.

The court said that touching a child with sexual intent—even through clothing—is sexual assault under the POCSO Act.

Further, the court said that the most important ingredient for constituting an offence of sexual assault under Section 7 of POCSO Act is the “sexual intent” and not the “skin-to-skin” contact with the child.

Hence, limiting the ambit of “touch” to a narrow definition would lead to an “absurd interpretation” and defeat the purpose of the act.

Note: Section 7 of POCSO Act mandates that “whoever with sexual intent touches the vagina, penis, anus or breast of the child or makes the child touch the vagina, penis, anus or breast of such person or any other person, or does any other act with sexual intent which involves physical contact without penetration is said to commit sexual assault”.

One-day Conference on PESA organised on completion of 25 years of the Act

Source: This post is based on the article “One-day Conference on PESA organised on completion of 25 years of the Act” published by PIB on 18th Nov 2021.

What is the News?

Union Minister of Tribal Affairs inaugurated the one-day National Conference on provisions of the Panchayats Extension to Scheduled Areas (PESA) Act 1996 (PESA).

What is the PESA Act?

The Provisions of the Panchayats (Extension to the Scheduled Areas) Act,1996 (PESA) is an important and key legislation to empower the tribal communities.  

Aim: The act aims at devolving governance to Panchayats/Gram Sabhas in Schedule V areas for mainstreaming tribal development. 

States covered: The act is currently in force in 10 states of the country with a predominantly tribal population, namely, Andhra Pradesh, Chhattisgarh, Gujarat, Himachal Pradesh, Jharkhand, Madhya Pradesh, Maharashtra, Odisha, Rajasthan and Telangana.

Gram Sabha: Every village shall have its own Gram Sabha. A village may consist of one or more habitations or hamlets comprising a community and managing its affairs in accordance with traditions and customs. 

What are the significant powers provided to Gram Sabha under PESA?

Approve plans, programmes and projects for social and economic development. 

Identify persons as beneficiaries under the poverty alleviation and other programmes. 

Right to mandatory consultation in land acquisition, resettlement and rehabilitation of displaced persons.

Mandatory recommendations by Gram Sabha or Panchayat at an appropriate level for prospective licenses/leases, concessions for mines and minerals.

To safeguard and preserve the traditions and customs of the people, and their cultural identity, community resources and customary mode of dispute resolution.  

Regulate sale/consumption of intoxicants and ownership of minor forest produce.

Manage village markets and control over money lending to STs.

India, world’s largest recipient of remittances, received $87 billion in 2021: World Bank

What is the News?

The World Bank has released its Migration and Development Brief Report.

What are the key findings of the report?

India is the world’s largest recipient of remittances. It received $87 billion in 2021. India had received over $83 billion in remittances in 2020.

Reasons for the increase in Remittances: 1) Migrants determination to support their families in times of need, 2) Stronger oil prices and the resulting pickup in economic activity in Gulf, 3) Severity of caseloads and deaths during the second wave of pandemic played a prominent role in drawing substantial flows (including for the purchase of oxygen tanks) to the country.

Biggest Source of Remittance for India: The United States was the biggest source, accounting for over 20% of these funds.

Other Countries: India was followed by China, Mexico, the Philippines, and Egypt.

Projections for 2022: In India, remittances are projected to grow 3%in 2022 to $89.6 billion, reflecting a drop in overall migrant stock as a large proportion of returnees from the Arab countries await the return.

Source: This post is based on the article “India, world’s largest recipient of remittances, received $87 billion in 2021: World Bank” published by Indian Express on 18th Nov 2021.