9 PM Daily Current Affairs Brief – April 20th, 2022

Posted on April 20th, 2022 Last modified on September 8th, 2022 Comments Views : 1.5k

Dear Friends,

We have initiated some changes in the 9 PM Brief and other postings related to current affairs. What we sought to do:

Ensure that all relevant facts, data, and arguments from today’s newspaper are readily available to you.
We have widened the sources to provide you with content that is more than enough and adds value not just for GS but also for essay writing. Hence, the 9 PM brief now covers the following newspapers:
1. The Hindu
2. Indian Express
3. Livemint
4. Business Standard
5. Times of India
6. Down To Earth
7. PIB
We have also introduced the relevance part to every article. This ensures that you know why a particular article is important.
Since these changes are new, so initially the number of articles might increase, but they’ll go down over time.
It is our endeavor to provide you with the best content and your feedback is essential for the same. We will be anticipating your feedback and ensure the blog serves as an optimal medium of learning for all the aspirants.
- For previous editions of 9 PM Brief – Click Here
- For individual articles of 9 PM Brief– Click Here

Current Affairs Compilations for UPSC IAS Prelims 2022

Mains Oriented Articles

Mains Oriented Articles

GS Paper 2

Demolition drives violate international law

Source: This post is based on the article “Demolition drives violate international law” published in The Hindu on 20th Apr 22.

Syllabus: GS2 – Indian Constitution, Rights

Relevance: Arbitrary state action post rioting and violation of India’s international obligations

Context: Communal clashes broke out during Ram Navami processions in several parts of the country including at Khargone in Madhya Pradesh.

Subsequently, the Madhya Pradesh government bulldozed the houses of those who were allegedly involved in rioting. The State government claims that these demolitions are in response to illegal encroachments.

However, the fact that these arbitrary demolitions are being carried out against the alleged rioters of one particular community and in the immediate aftermath of the riots shows that their purpose seems to be to impose collective punishment.

Such an act violates various domestic and several international legal provisions under Right to housing.

What are the various domestic and international obligations being violated?

Right to housing: The right to housing is a fundamental right recognised under Article 21 of the Indian Constitution. Further, it is also a well-documented right under the international human rights law framework, which is binding on India.

For instance,

UDHR

– Article 25 of the Universal Declaration of Human Rights (UDHR) states that “everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care…”.

– Article 12 of UDHR prohibits arbitrary interference in an individual’s right to property. It also stipulates that “everyone has the right to the protection of the law against such interference or attacks”.

International Covenant on Civil and Political Rights (ICCPR)

Article 17 further provides that everyone has the right to own property alone as well as in association with others and that no one shall be arbitrarily deprived of his property. Thus, arbitrary interference with an individual’s property is a gross violation of the ICCPR.

ICESCR

– Article 11.1 of the International Covenant on Economic, Social and Cultural Rights (ICESCR) recognises “the right of everyone to an adequate standard of living for himself and his family, including adequate food, clothing and housing, and to the continuous improvement of living conditions”. Under this article, countries are under an obligation to take “appropriate steps” to ensure the realisation of these rights.

The rights recognised under ICESCR, according to Article 4, can be restricted by States only if the limitations are determined by law in a manner compatible with the nature of these rights and solely to promote society’s general welfare.

Thus, the bulldozing of the houses by the Madhya Pradesh government of the alleged rioters amounts to forced eviction and arbitrary interference with an individual’s home, thus a breach of Article 11.1 of the ICESCR.

Domestic law

The international human rights law identified above has been judicially incorporated by the Supreme Court of India into the Indian legal system.

The apex court in cases like Bachan Singh vs State of Punjab, Vishaka vs State of Rajasthan, and in the Puttaswamy vs Union of India has stated that the fundamental rights must be read and interpreted in a manner which would enhance their conformity with international human rights law.

How does UN Human Rights Office details Right to housing?

According to the UN Human Rights Office, an integral element of the right to adequate housing is ‘protection against forced evictions’.

It defines ‘forced evictions’ as ‘permanent or temporary removal against the will of individuals, families and/or communities from the homes and/or land which they occupy, without the provision of, and access to, appropriate forms of legal or other protection’.

The right to adequate housing also entails freedom from arbitrary interference with one’s home, privacy, and family.

What is the way forward?

As the custodian of India’s constitutional order, it is high time that the judiciary acted and imposed necessary checks on the unbridled exercise of power by the executive. Courts should use international law to counter the nationalist-populist discourse.

A vision for US-India economic partnership

Source: The post is based on an article “A vision for US-India economic partnership” published in the Business Standard on 19th April 2022.

Syllabus: GS2 – International Relations, Bilateral Relations, Regional groupings

Relevance: Indo-US Relations and Indo-Pacific

News: Recently, there has been differences between the United States and India over India’s stand on Russia’s invasion of Ukraine. This has brought the bilateral relationship between the largest and sixth-largest global economies at the centre of debate and their expected role in the Indo-Pacific Region.

What have been the convergence of Interests between India and the US?

Over the past 22 years, the United States and India have steadily widened and deepened their partnership. It covers almost every area of human endeavour.

In 2017, the US withdrew from the Trans-Pacific Partnership (TPP). In 2019, India pulled out of the Regional Comprehensive Economic Partnership (RCEP) negotiations. This has allowed China to shape the Asian trade landscape. China is already part of RCEP. It has also applied to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Digital Economy Partnership Agreement.

China has adopted an assertive approach. It is integrating itself with its neighbours through the Belt and Road Initiative.

What are the issues in bilateral relations?

Despite efforts, the US-India trade relationship remains a weak component of the strategic partnership.

The flows of goods and services between the two countries are well below the levels.

Way Forward

The US and India should rethink their economic and trade strategies. This is important as China can shape the rules for trade and investment in the Indo-Pacific Region.

There is a need to enhance bilateral trade. It is important for both economies to grow. It will provide a long-term ballast to the US-India strategic partnership.

Both must play a central role in developing the economic framework and regional trade rules for a free and open Indo-Pacific.

The Biden administration is going to finalize the new Indo-Pacific Economic Framework (IPEF). It will build regional economic architecture in the Indo-Pacific Region. It provides an important opportunity to build economic ties for India.

The US should reinstate India’s Generalised System of Preferences (GSP) benefits. It will resolve outstanding bilateral issues.

The mandate of the Quad can be expanded to include trade. At present, all the QUAD countries already have bilateral trade agreements with each other. These agreements could provide the foundation for a Quad working group on trade.

In future, both India and the US could engage with other Indo-Pacific partners like the Association of Southeast Asian Nations (ASEAN) and the CPTPP.

Why is there no debate in Parliament?

Source: The post is based on an article “Why is there no debate in Parliament?” published in the Indian Express on 20th April 2022.

Syllabus: GS2 – Parliament and State Legislatures—Structure, Functioning, Conduct of Business, Powers & Privileges and Issues Arising out of these.

Relevance: Parliamentary debates

News: Parliament’s productivity was around 129% for the Lok Sabha in the last session in 2022. However, under the garb of enhanced productivity, a tradition of intense debate over bills has been lost.

What are the features of a parliamentary democracy?

In a parliamentary democracy, all the proposals or legislations must be put to deliberations and discussions. For example, India’s constituent assembly debates to frame the Constitution went on for 166 days.

In a parliamentary democracy, the MPs are allowed to take initiative. For example, private member bills.

What is the situation wrt parliamentary debates in India?

In the 2021 Session (particularly Monsoon Session), the Lok Sabha cleared over 18 bills. Around 34 minutes were taken for discussion on each bill. For example, the Farm Laws Repeal Bill (2021) was passed in just eight minutes (three minutes in the Lok Sabha, five minutes in the Rajya Sabha).

In fact, not even a single bill was referred to a parliamentary committee in the last few sessions of the parliament.

The voice vote has become a norm. As a result, the MPs have rarely mustered in the House to record votes.

MPs rarely have adequate resources to conduct in-depth research. In India, MPs gets an allowance of Rs 40,000 per month to hire a legislative assistant

In India, long-term development plans are simply not subject to parliamentary scrutiny, with just annual outlays approved.

In India, MPs do not have freedom to take initiative. For example, In the UK, seven private member bills have been passed since 2019, and In Canada, six private member bills have been passed.

However, In India just 14 private member bills have been passed by both Houses since 1952. For example, the Parliamentary Proceedings (Protection of Publication) Act (1956) was a private member bill. In India, MPs have the limited ability to drive change in their constituencies.

India has institutional mechanisms to stifle debate and to limit initiative by MPs. For example, the anti-defection law punishes any errant MP or MLA. This law has disincentivise MPs. They go by the direction of the whip.

What steps should be taken?

India can adopt the Philippines model for India’s MPLAD programme. The Philippine’s Priority Development Assistance Fund provides funds to senators for small-scale infrastructure and community projects. Its usher’s constituency-specific development.

The anti-defection law has not served its purpose. It should simply be scrapped. If not, MPs will not be lawmakers who ideate and debate.

In comparison to other democracies like the US and the UK (92000 people), Indian MPs represent a large number of representatives i.e., over 25 lakh citizens. This number is larger than the population of countries like Botswana, Bhutan etc.

The time of parliamentary proceedings should be set aside separately for debates and discussion on legislation. It will improve the quality of legislation and improve consensus.

To revive deliberation, the government should raise funding for parliamentary research. The average allowance given to the MP for a legislative assistant in the UK is very high as compared to India.

In the future, after 2026, there is the possibility that the number of MPs in the Lok Sabha may increase up to 1,000 seats.

In Westminster, the British prime minister is required to answer questions from MPs in the House of Commons every Wednesday, from 12 pm to 12:30 pm. This was done even during Covid-19 induced lockdowns.

The accountability can be ensured through the parliamentary committees. For example, in the US, Senate and House Committees scrutinise laws, confirm government appointments, conduct investigations, and hold hearings.

In the UK, in 2013, the House of Commons allowed public to add comments to draft legislation via a web portal

It should be made compulsory to refer all bills to a select committee or Department Related Standing Committees (DRSCs) for scrutiny. For example, it is a compulsory phenomenon in New Zealand.

Ideally, we should set up mechanisms to enable private member bills to gain a hearing and even to be put to vote.

GS Paper 3

Why wheat prices have shot up despite India’s huge reserves

Source: This post is based on the article “Why wheat prices have shot up despite India’s huge reserves” published in Livemint on 20th Apr 22.

Syllabus: GS3 – Indian Economy – Agriculture

Relevance: Food inflation

Context: One side effect of Russia attacking Ukraine has been a rise in global wheat prices. Wheat importers are struggling.

Significance of wheat

The consumer price index (CPI), which measures retail inflation, has two entries for wheat, wheat/atta-PDS (public distribution system) and wheat/atta-other sources.

This takes into account the wheat sold both through the PDS and in the open market.

The wheat entry for ‘other sources’ has a weightage of 2.56% in the index, implying that wheat is a significant part of the overall consumption basket of an average Indian.

Is there a shortage of wheat in India?

No.

As of 1 April, total wheat stocks in FCI’s central pool stood at 19 million tonnes. This is far more than the required operational and strategic stocks of around 7.5 million tonnes.

Also, in May-June, as Food Corporation of India (FCI) buys rabi harvests that will start reaching wholesale mandis, its wheat stocks will grow.

Hence, there doesn’t seem to be any shortage of wheat, as per FCI data.

So, why have the wheat prices gone up?

Free foodgrains scheme: Union government in the aftermath of the covid pandemic has been running a 5kg per month free foodgrains scheme. This explains why FCI wheat stocks are down, even though they are more than what is officially required.

No selling of FCI stocks in open market: Further, typically when wheat (or rice) prices start going up, the government sells FCI stocks in the open market to cool down prices. That hasn’t happened this year, primarily because of the free foodgrains scheme. Nonetheless, FCI has enough stocks to do both, and this is something that the government should be looking to do soon.

Export of wheat: The total amount of wheat exported from April 2021 to February 2022 during fiscal year 2021-22, stood at around 6.7 million tonnes. This is more or less similar to the total amount of wheat exported from 2014-15 to 2020-21, a 7-year span.

– Impact of the Russia-Ukraine war: The majority of the wheat export was done during October 2021 – Feb 2022 period. This means that countries which do not produce enough wheat began to stock up once the chances of Russia attacking Ukraine went up.

Moreover, Russia and Ukraine are the world’s largest and fifth-largest exporters of wheat and this supply has been negatively impacted due to their conflict.
Also, Russia is the world’s largest exporter of fertilizer. And fertilizer prices have risen by more than 40% since January-end. This will further feed into foodgrain inflation in particular and food inflation in general.

– Import of wheat by Egypt: Recently, Egypt, the world’s largest importer of wheat, announced that it had decided to import wheat from India. This has led to private wheat traders stocking up on wheat from the open market, pushing up prices.

Fall in production in India: India’s wheat production from the rabi crop is likely to be around 10% lower. Multiple reasons are being offered for this fall in output, including unseasonal rains, recent high temperatures, a shift in cropping pattern away from wheat, among others.

What is the way forward?

International wheat prices are unlikely to fall so long as the war in Ukraine continues.

Hence, to cool prices down of this dietary staple, the Indian government needs to release some wheat from FCI stocks into the open market.

Also, any export commitments must be carefully worked out to ensure that it doesn’t end up creating a wheat shortage in the country.

The rooftop eclipse on India’s solar ambitions

Source: This post is based on the article “The rooftop eclipse on India’s solar ambitions” published in Livemint on 20th Apr 22.

Syllabus: GS3 – Energy and Infrastructure

Relevance: India’s Solar energy capacity

Context: In 2015, the Govt set a target of 100 GW (gigawatt) of solar energy capacity by 2022.

Of the 100 GW, 60 GW was to come from utility-scale solar plants, which stood at 41.7 GW, or 70% of the target, by 2021.

The rest was to come from solar rooftop, which has managed only 8.9 GW, or 22% of its target. This sub-segment added just 1.4 GW in 2020 and 2.2 GW in 2021.

It is clear that at current speed India will miss out on its targets.

Solar rooftop refers to panels mounted on top of commercial, industrial and residential buildings.

Why the deficit holds significance?

The deficits matter in the context of India’s solar vision.

Solar is the key driver in India’s move towards green energy, and to cut its CO₂ emissions intensity to 33-35% of its 2005 levels, as per the Paris Agreement.

More solar would also help address the air pollution problem: India has 63 of the world’s 100 most polluted cities, according to IQAir.

Why India has struggled to achieve its solar targets?

One reason why India has struggled to achieve its solar targets is what Crisil Research terms an “unstable policy environment“. There is a growing incoherence between the policy thrust on renewable energy on the one hand and the actual action by implementation agencies like the Solar Corporation of India (SECI) and state distribution companies on the other.

Regional differences: About 35% of the installed capacity in solar rooftop is from just the top three states, and around 50% comes from the top five. Geographical advantages only partly explain the differences. For example:

– J&K and Andhra Pradesh are among the top five states in solar potential, according to the National Institute of Solar Energy (NISE). But none of them features in the top five by installed capacity in the commercial and industrial segments.

– Similarly, Tamil Nadu is among the top five by installed capacity, but has lower solar potential, as per the NISE ranking.

How has residential segment contributed to solar capacity?

In the last two years, the residential segment, and not the commercial and industrial segments, has driven new capacity in solar rooftop.

According to Bridge to India, the share of residential in new capacity increased from 11% in 2017 to 34% in 2021. There exists some barriers:

Net metering issue: It lets consumers use the solar power they generate and be billed only for the additional power they draw from the grid. In 2021, the Centre introduced guidelines to lower the rooftop threshold for net metering to 500 kW in 2021, and several states followed suit. This made solar rooftop less attractive, especially to large and medium industrial consumers.

A basic customs duty on imported solar cells and modules, which came into effect this month, also impacted the economics of solar projects whose implementation got delayed by the pandemic.

What is the global situation wrt solar power?

Demand for solar cells and modules is picking up globally.

Bloomberg New Energy Finance expects global solar capacity to increase from 183 GW in 2021 to 334 GW in 2030.

China has been leading the race in solar: from just 4 GW of solar rooftop capacity in 2016, it expanded to 27.3 GW in 2021, according to Rystad Energy, a research firm.

What is the way forward?

The key to India’s success in this domain will be in aligning its policies to intent, while building its manufacturing base.

Time to set price distortions right

Source: The post is based on an article “Time to set price distortions right” published in The Hindu on 20th April 2022.

Syllabus: GS3 – Indian Economy, Direct and Indirect Subsidies

Relevance: Pricing Distortions in India

Context: Since 1991, India has undergone economic liberalisation, openness to international trade and investment, resulting into an open free market economy in India. The government’s major priority since then has always been to improve the ease of doing business.

However, it has failed to improve the cost of doing business, which been very high due to the government policy-induced pricing distortions.

Some Cases of Pricing distortion in India

Petrol and diesel pricing distortion: Earlier, the diesel was subsidized. Therefore, diesel car’s demand surged. Later, the government removed diesel subsidy. Now, it is levying high taxes on fuels to raise revenues to moderate the fiscal impact from COVID. This has given an inflationary impetus.

Electricity pricing distortion: A cess of ₹400 per tonne is levied on coal. Earlier, it was levied to generate resources for promotion of renewable energy and decarbonisation of the economy. Now it is used to meet shortfalls in tax receipts.

In Indian railways, there’s a cross subsidisation of passenger and freight fare. The high freight fare increases transportation cost of commodities. For example, transportation cost of coal becomes high. It also distorts the pricing of electricity for the distribution companies. It leads to loss of competitiveness, lower manufacturing growth and the creation of fewer jobs in India.

In India, it is difficult to get land for business enterprises. The land prices are distorted due to a real estate asset price bubble.

What factors have led to government policy induced pricing distortions?

One factor is the political need to find a way out for a cash-strapped government to raise resources, OR

To provide affordable goods and services to those in need. It is provided through a cross subsidy within the sector.

Why are the pricing distortions dangerous for the Indian economy?

These pricing distortions lead to competitive disadvantage to domestic value addition and job creation in an open economy.

– For example, energy is the basic requirement of the modern industrial economy. But energy prices distortion reduces competitiveness in the market.

It has led to India’s relative lack of success in manufacturing and employment generation.

Ways Forward

There is a need for political leadership and investment of political capital in generating a consensus and steering change in addressing pricing distortions.

Petrol and diesel should be brought into the ambit of GST. For instance, If the highest rate of 28% is levied on petrol. The pricing of petrol would be around ₹60 per litre.

Land use conversion and redevelopment processes need to be made user-friendly.

There is a need to improve public provision and upgradation of quality infrastructure. It would reduce supply side constraints and lower prices in real terms.

There is a requirement of reducing the cost of doing business. In addition, private investment needs to be promoted. It will create better jobs.

Too Many Dollars In Reserve?

Source: The post is based on an article “Too Many Dollars In Reserve” Published in the Times of India on 20th April 2022. Syllabus: GS3 – Indian Economy, External Sector

Relevance: Forex Reserve and Foreign Currency Reserve

News: Recently, the sanctions imposed by the west following the Russia-Ukraine conflict have triggered discussions on how other countries would manage their foreign currency (FX) reserves, which are used as an insurance against economic shocks.

How countries accumulate Forex?

A country running current account surpluses accumulate foreign assets over time. For example, China and Saudi Arabia have grown their foreign asset holdings

History of forex reserves

Reserves have been part of economic discourse for more than a century. They were helpful during the interregnum between the two world wars, and in 1935 when economic sanctions were imposed on Italy for attacking Ethiopia.

The Asian Financial Crisis 1998 reinforced the need to have sufficient reserves.

The global FX reserves rose from 2 trillion USD in 1999 to nearly 12 trillion USD by 2014. It was based on the premise that the forex is important to cover all short-term external debt.

However, the share of the USD in global FX reserves has fallen from 71% in 1999 to 59% in 2021. This has shifted to the Euro, the Yen, the Chinese yuan (CNY), the British pound, and the Canadian and Australian dollars.

CNY share of global financial transactions (both trade-related and financing-related) is bound to rise.

What are the issues with Foreign Currency Reserves?

Liquidity comes at a cost, which can be financial or geopolitical cost. On the contrary, the geopolitical returns on the liquid assets are lower than on less liquid and less safe assets.

Therefore, reserves as a share of total foreign assets have fallen for China, Saudi Arabia and any other country (except Switzerland and India).

The US inflation could continue to push down the share of global reserves held in USD assets.

Triffin Paradox: A country whose currency becomes a global reserve currency would have to run a continuous trade deficit. It has to keep borrowing to provide a sufficient supply of assets to the whole world.

Further, “New Triffin dilemma” says that the US would not be able to supply the safe assets the world needs, as the US share of global GDP declines

What are other options for investment?

(1) Sovereign Wealth Funds (SWF): SWFs globally now manage 10 trillion USD of assets. For example, Norway, Saudi Arabia and Singapore have grown their SWF at large scale

(2) Other countries like Japan and China have allowed their firms to buy foreign assets. These assets are hard to use in times of crisis. But they are better for the overall economy.

(3) The countries can accrue returns from bond markets. For example, recent 8% decline in the value (or increase in yields) of 10-year US government bonds provides another investment alternative to currency adjusted returns. In fact, The US government bonds supply has grown significantly more than the demand for them from global central banks.

Towards a peaceful, stable Northeast

Source: The post is based on an article “Towards a peaceful, stable Northeast” published in the India Express on 20th April 2022.

Syllabus: GS3 – Internal Security

Relevance: Inter-state disputes and Insurgency in the N-E Region

News: Recently, the Chief Ministers of Assam and Meghalaya signed an agreement to resolve the five-decade-old border dispute.

Simultaneously, the Union Ministry of Home Affairs (MHA) decided to reduce the disturbed areas in Assam, Nagaland and Manipur after decades declared under the Armed Forces (Special Powers) Act (AFSPA).

What is the strategic plan for the North-East?

It includes (a) ending all disputes; (b) ushering in economic progress and taking the region’s contribution to GDP back to its pre-Independence levels; and (c) maintaining and preserving the region’s languages, dialects, dance, music, food, and culture and make it attractive for the whole country.

The Union government wants to make the northeastern region the main pillar of the Act East policy.

What are the recent developments in the N-E Region?

An agreement has been signed between Assam and Meghalaya. However, progress is being made in the other disputes. The state’s border disputes dialogues are continuing at a steady pace with Meghalaya, Arunachal Pradesh, Nagaland and Mizoram. For example, Assam and Nagaland agreed to settle their dispute out of court.

The regular engagements are being undertaken to maintain peace and work out a permanent solution.

The MHA has been undertaking informal talks with various stakeholders for the removal of AFSPA.

The government has reached peace agreements with a number of insurgent groups.

– For example, the NLFT Tripura Agreement 2019, the Bru Agreement 2020, the Bodo Peace Accord 2020 and the Karbi Anglong Agreement 2021. The militants have surrendered and declared cessation of violence. In 2021, militancy incidents had reduced by 74% compared to 2014 and deaths of security personnel and civilians have also come down by 60% and 84% respectively, during this period.

The AFSPA was completely removed from Tripura in 2015 and Meghalaya in 2018. In 2022, The disturbed areas tag was removed from various parts of Assam, Manipur and Nagaland. This has led to removal of AFSPA.

What is the importance of these measures?

The developments are significant for restoring normalcy in the north-eastern region. It will also enable perception changes towards the rest of India.

Political stability is very crucial for optimal economic development and capacity enhancement in the region.

Prelims Oriented Articles (Factly)

Gati Shakti may enable faster implementation of dedicated freight corridors

What is the News?

Prime Minister’s Gati Shakti – National Master Plan which is being adopted by every infrastructure department is set to enable faster implementation of the Dedicated Freight Corridors(DFCs).

What is PM Gati Shakti?

Click Here to read about it

What are Dedicated Freight Corridors(DFCs)?

Click Here to read about it

How is Gati Shakti helping in the implementation of DFCs?

The Ministry of Railways has prepared Detailed Project Reports(DPRs) for Dedicated Freight Corridors on three new routes — the north-south corridor, the east-west sub-corridor and the east coast corridor.

The Rail Ministry first mapped the proposed alignments — developed through a standard process of the three corridors. Then it mapped the same alignments on the PM Gati Shakti National Master Plan(NMP).

When the alignment was superimposed on the NMP, it was found that the original alignment was passing through forests, mining areas and industrial parks. That would have meant long-drawn and costly clearance processes.

To avoid this, the alignment was modified to ensure minimal disruption by not passing through any of these infra assets. This has saved a lot of time and cost overruns.

Hence, this is an example of how the Gati Shakti master plan is helping infra ministries plan their project better.

Source: This post is based on the article “Gati Shakti may enable faster implementation of dedicated freight corridors” published in Business Standard on 20th April 2022.

Multi-Level Marketing and Pyramid Scheme – Explained: The case against Amway

What is the News?

The Enforcement Directorate (ED) has provisionally attached assets worth Rs 757.77 crore belonging to M/s Amway India Enterprises Private Limited in connection with a money laundering case.

What is Amway case about?

Amway is a US-based company founded in 1959. It is a direct seller of FMCG products in health, nutrition, beauty and home products.

The company has been accused of running a pyramid fraud in the name of direct selling multi-level marketing network.

According to ED, Amway lured people into joining the company and buying their products at unreasonably high prices. People used to buy these expensive products, not for use, but to become a member of the company.

Hence, the main aim of Amway was to add more and more members to the company and not to sell products.

What is a Pyramid Scheme?

A pyramid scheme is a sketchy and unsustainable business model where a few top-level members recruit newer members.

Those members pay upfront costs up the chain to those who enrolled them. As newer members in turn recruit underlings of their own, a portion of the subsequent fees they receive is also kicked up the chain.

In a pyramid scheme, the major profit comes from the recruitment fees rather than the sale of the actual products.

Multi-Level Marketing operations(MLMs) are similar to pyramid schemes with one difference: they involve the sale of tangible goods.

Is Pyramid Scheme allowed in India?

As per the Consumer Protection (Direct Selling) Rules, 2021, the government bars direct selling companies from promoting pyramid schemes.

Source: This post is based on the article “Explained: The case against Amway” published in Indian Express on 20th April 2022.

PM lays the foundation stone of WHO Global Centre for Traditional Medicine in Jamnagar

What is the News?

The Prime Minister has laid the foundation stone of the WHO Global Centre for Traditional Medicine (GCTM) in Jamnagar, Gujarat.

Note: The first Ayurvedic University that was established in the world was also in Jamnagar.

What is WHO Global Centre for Traditional Medicine (GCTM)?

Setup by: Ministry of Ayush and World Health Organization(WHO).

Purpose: It will serve as a knowledge centre for traditional medicine.

Focus Areas: The center will focus on five main areas: 1) research and leadership, 2) evidence and learning, 3) data and analytics, 4) sustainability and equity and 5) innovation and technology,

Goals: The five goals for the new GCTM are:

First, to create a database of traditional knowledge system using technology;

Second, it can create international standards for testing and certification of traditional medicines so that confidence in these medicines improves.

Third, it should evolve as a platform where global experts of traditional medicines come together and share experiences.

Fourth, it should mobilize funding for research in the field of traditional medicines.

Finally, it should develop protocols for the holistic treatment of specific diseases so that patients could benefit from both traditional and modern medicine.

Significance: GCTM will be the first and only global outpost centre for traditional medicine across the world. It will emerge as an international hub of global wellness.

Source: This post is based on the article “PM lays the foundation stone of WHO Global Centre for Traditional Medicine in Jamnagar” published in PIB on 19th April 2022.

Plasma-based green disinfectants can limit spread of infectious diseases like COVID 19

What is the News?

Researchers have developed a plasma-based disinfectant generated with the help of cold atmospheric pressure plasma(CAP) which could act as a green decontaminant for Covid-19.

Background

The Covid-19 pandemic had brought forth the urgent need for decontaminants that can limit the spread of infectious diseases through contact.

However, most decontaminants consist of chemicals that are hazardous to the environment. This encouraged researchers to work towards greener alternatives.

What have the researchers developed?

Researchers have developed a plasma-based disinfectant generated with the help of cold atmospheric pressure plasma(CAP).

This disinfectant has the potential to deactivate SARS-CoV-2 spike protein which binds to human ACE2 receptors for inducing viral infection and subsequent Covid-19.

Note: Plasma, the fourth state of matter which makes up most of the universe when produced in controlled conditions in the lab is termed as Cold Atmospheric Pressure Plasma(CAP).

What is the significance of this method developed?

Firstly, this method is a better alternative to environmentally hazardous chemical-based decontamination methods.

Secondly, the CAP is environmentally safe since, during the entire decontamination process by plasma treatment, no chemical waste is produced.

Source: This post is based on the article “Plasma-based green disinfectants can limit spread of infectious diseases like COVID 19” published in PIB on 19th April 2022.

Experts question ‘star rating’ of food products likely to be recommended by FSSAI for packaged food

What is the News?

According to experts, the Health Star Rating system that the Food Safety Standards Authority of India(FSSAI) plans to adopt in order to help consumers reduce their intake of unhealthy foods is “not evidence-based” and has failed to alter buyer behaviour.

What is FSSAI Health Star Rating System for packaged food Products?

In February 2022, FSSAI decided to adopt the Health-Star Rating(HSR) system for food products.

Under this system, packaged foods will display the number of stars on the front of the pack, indicating how healthy or unhealthy it is depending upon the amount of salt, sugar and fat it has.

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Why have experts raised questions over FSSAI Health Star Rating System?

Firstly, the HSR system adopted in countries like Australia and New Zealand has not resulted in any meaningful behaviour change.

Secondly, the HSR system “misrepresents nutrition science”. This is because the underlying premise of the HSR is that positive ingredients such as fruits and nuts can offset negative nutrients such as calories, saturated fat and total sugar.

– However, the algorithm of adding and subtracting nutrients does not fit with the understanding of biology. For example, the presence of fruit in a fruit drink juice does not offset the impacts of added sugar in the body.

Thirdly, the HSR system can lead to a “health halo” which can confuse consumers as stars can be interpreted as an endorsement of a product.

What is the alternative to the HSR System suggested by experts?

The experts have suggested front-of-package warning labels such as black octagonal warnings that indicate when food and drink products are high in sodium, sugar, salt and fats as the most effective models to date in informing consumers of the nutritional quality of packaged products.

This suggestion is based on evidence from countries such as Canada, Israel, Chile, Perú, Brazil, Argentina and Mexico that have made FOP warning labels mandatory.

Source: This post is based on the article “Experts question ‘star rating’ of food products likely to be recommended by FSSAI for packaged food” published in The Hindu on 20th April 2022.

A new pandemic has struck the world: Food inflation

What is the News?

According to the Food and Agriculture Organization (FAO), Food prices have increased by almost 75% since mid-2020.

What has been the trend of Food Prices worldwide?

Food prices are increasing at an unprecedented rate worldwide.

For instance, the FAO World food price Index averaged 159.3 points in March 2022 breaking an earlier record of 137.6 points scaled 11 years ago in February 2011.

In India, rural consumer food prices have doubled in the year through March 2022.

Reason for High Food Prices: Two years of COVID-19 pandemic-induced disruption and the Russia-Ukraine war.

What is the impact of High Food Prices?

Impact on Food Relief Operations: The World Food Program(WFP) currently running one of its most expensive food relief operations has made a desperate appeal for further funding. This is because due to food inflation, FAO is paying $71 million (Rs 5.4 lakh crore) more per month now for the same operation level.

Impact on Poverty: The World Bank has warned that each percentage point increase in food prices would push an additional 10 million people into extreme poverty.

Impact on poor and developing countries: The impact of food inflation is impacting the world’s poor and developing countries the most. This is because most of these countries are also food importers. For instance, some 50 countries, mostly poor countries, depend on Ukraine and Russia for wheat, a staple grain.

Source: This post is based on the article “A new pandemic has struck the world: Food inflation” published in Down To Earth on 19th April 2022.

Govt eases certain norms under EPCG scheme to promote ease of doing biz

What is the News?

The Ministry of Commerce and Industry has relaxed various procedures under the Export Promotion Capital Goods(EPCG) scheme in order to reduce compliance requirements and facilitate ease of doing business.

What is the Export Promotion Capital Goods(EPCG) Scheme?

Nodal Ministry: Ministry of Commerce and Industry

Objective: To facilitate the import of capital goods for producing quality goods and services and enhance India’s manufacturing competitiveness.

Under the scheme, imports of capital goods are allowed duty-free, subject to an Export Obligation(EO).

The Export Obligation(EO) is that the exporter under the scheme has to export finished goods worth six times of the actual duty saved in value terms in six years. At least, 50% of the EO must be fulfilled within the first block of four years.

What are the changes made to the EPCG Scheme?

Extension in the time limit for submitting the Annual Report: The time limit for reporting the fulfilment of EO has been extended from April 30 to June 30. Further, late fees of Rs.5000 per authorization for each financial year would be levied for delay in submission of such report.

Export Obligation(EO): Requests for export obligation extension under the scheme should be made within six months of expiry instead of the earlier prescribed period of 90 days. However, applications made after six months and up to six years are subject to a late fee of Rs 10,000 per authorisation.

Payment of Customs Duty: The facility to pay customs duty through scrips (MEIS /RoDTEP /RoSCTL) for default under EPCG has been withdrawn.

Source: This post is based on the article “Govt eases certain norms under EPCG scheme to promote ease of doing biz” published in Business Standard on 15th April 2022.

Defence Secretary inaugurates two-day National Level Pollution Response Exercise of Indian Coast Guard off Mormugao harbour, Goa

What is the News?

Defence Secretary has inaugurated the 8th edition of the two-day National Level Pollution Response Exercise, ‘NATPOLREX-VIII’.

What is Exercise NATPOLREX?

Conducted by: Indian Coast Guard(ICG).

Purpose: It is a marine spill preparedness exercise.

Objective: To enhance the preparedness and response capability of all the stakeholders in combating marine spills.

– To validate the procedures and guidelines as contained in the National Oil Spill Disaster Contingency Plan (NOSDCP) at the national and regional levels under the aegis of South Asia Co-operative Environment Programme(SACEP).

During the exercise, various components of NOSDCP were invoked to validate and improve the contingency plans and evaluate the preparedness of the resource agencies as well as stakeholders to meet any marine spill disaster at sea.

Source: This post is based on the article “Defence Secretary inaugurates two-day National Level Pollution Response Exercise of Indian Coast Guard off Mormugao harbour, Goa” published in PIB on 19th April 2022.

National Highways Precast Concrete Policy

What is the News?

The Ministry of Road Transport & Highways(MORT&H) has released the National Highways Precast Concrete Policy.

What is Precast Concrete?

Precast concrete is reinforced concrete that is cast away from the building site and assembled on site.

Advantages of Precast Concrete: 1) All-weather and fast construction, 2) Reliable quality & enhanced performance durability, 3) Minimum user time delay and 4) Reduced carbon emission/reduced noise & air pollution due to reduced construction activities at the site.

National Highways Precast Concrete Policy

The Ministry of Road Transport & Highways(MORT&H) has made it mandatory to use factory-manufactured precast concrete elements in projects within a 100 km radius of the Precast factory.

The minimum mandatory usage should be 25% of total concrete volume other than the foundations & sub-structures of Bridges.

To start with, the Quality Council of India(QCI) will be responsible for certifying the precast concrete factories. At a later stage, more agencies like RDSOs/IITs would be entrusted for certification as well.

Source: This post is based on the article “National Highways Precast Concrete Policy” published in PIB on 19th April 2022.

Explained | ‘Poison pill’ and other corporate defence mechanisms to prevent hostile takeovers

What is the News?

Twitter is trying to thwart billionaire Elon Musk’s takeover attempt with a “Poison Pill”. This would make it much more expensive and complicated for the Tesla CEO to take control of Twitter. Acquirer

What is Poison Pill?

Poison Pill is a corporate defense strategy utilized by a target company to prevent or discourage hostile takeover attempts.

Under this mechanism, existing shareholders, excluding the acquiring entity purchase additional shares at a discounted rate making it difficult for the acquirer to establish a majority stake in the company.

What are the other corporate defence mechanisms?

Greenmail Defence: In this, the company will pay them to go away and stop threatening the company with a hostile takeover. It involves the target company repurchasing its own shares at a premium and in a quantity enough to prevent a hostile takeover.

Crown Jewel defence: The mechanism involves the target company spinning off its crown jewel unit, or its most valued asset, in order to make the acquisition less desirable for the acquirer. The asset could be the unit that is the most profitable unit in the company or is important for future profitability or produces the flagship product of the company.

Pac-man defence: In this, the company will prevent a hostile takeover by initiating a reverse takeover. It involves the target company making an offer to acquire the company that commenced the takeover bid. The target company could make use of its ‘war chest’ or secure finances from outside for the reverse takeover bid.

White Knight defence: In case a company’s board finds itself in a situation where it cannot prevent a hostile takeover, it seeks a more accommodative and cordial firm to acquire a controlling stake from the hostile acquirer.

Source: This post is based on the article “Explained | ‘Poison pill’ and other corporate defence mechanisms to prevent hostile takeovers” published in The Hindu on 18th April 2022.

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