DAILY CURRENT AFFAIRS IAS | UPSC Prelims and Mains Exam – 16th April 2022

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(Prelims Focus)

33% reservation for women in civic bodies in Nagaland

Part of: GS-II: Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

Context: Nagaland government is ready to implement a 33 per cent reservation for women in the civic body polls. 

• There is no longer any “impediment” in holding elections to the Urban Local Bodies (ULB), and Nagaland Election Commission can easily schedule dates.
• If implemented, ULB elections, a contentious subject in Nagaland, will be held in the state after more than a decade.

Background

ULB polls have been a subject of controversy in Nagaland

• The civic body elections were first held in the state in 2004, in accordance with the Nagaland Municipal Act of 2001.
• In 2006, the Nagaland Municipal Act of 2001 was amended to include a 33 per cent reservation for women in line with the 1992 Constitutional amendment.

• Reason for Opposition: Many Naga groups contend that the reservations are in contravention with Naga customary laws as enshrined in Article 371(A) of the Constitution — which accords the state special status and protects its traditional way of life.

• • Nagaland is a special state under Article 371 A.
  • It gives them special status to safeguard their traditional laws and according to their tradition, women are not allowed at administrative posts.

• In February 2017, as the Nagaland government tried holding the elections as per a Supreme Court directive (to hold elections with 33 per cent reservation for women), the state was convulsed by violent protests that led to two deaths, and ouster of the then chief minister T R Zeliang.

• Is everyone in Nagaland opposed to it?: Women’s groups like the Naga Mothers’ Association (NMA) stand on the other side of this debate, and have fought a long legal battle for elections to be held. They argue that reservations do not infringe upon Article 371(A) of the Constitution. Their rationale: Article 371 (A) related to laws made in the Parliament while the reservations had been effected through a Constitutional amendment.

The contention around the polls led the Nagaland government in December 2009 to indefinitely postpone municipal elections, which were due in 2010.

• Despite the high court directing the government to hold the elections in 2011, the Nagaland assembly, in 2012, adopted a resolution rejecting women’s reservation in ULBs.

• October 2021: A committee was formed by the state government to review the Municipality Act 2001.

• February 2022: The Supreme Court rapped the Nagaland state government for delaying the elections, saying that an “important aspect of gender equality seems to be getting postponed.”

• March 2022: The state government convened a meeting with all stakeholders, including civil society organisations, churches, tribal bodies, political parties and NGOs and “unanimously” adopted a resolution to hold ULB polls.

Important value additions:

• Article 371A deals with the special provisions with respect to the State of Nagaland.
• Article 371A (1) (b) – the Governor of Nagaland has special responsibility with respect to law and order in the state so long as internal disturbances caused by the hostile Nagas continue.
• For instance, under Article 371A (1) (b) of the Constitution, important functions like “transfer and posting of officials” entrusted with the maintenance of law and order of and above the district level will be with the approval of the Governor.

Twitter adopts ‘poison pill’

Part of: GS-III: Science & Tech 

Context: Twitter Inc. on April 15 adopted a limited-duration shareholder rights plan to protect itself from billionaire entrepreneur Elon Musk’s $43 billion cash takeover offer.

• Musk has offered to buy the company outright for more than $43 billion, saying it “needs to be transformed as a private company” in order to build trust with its users and do better at serving what he calls the “societal imperative” of free speech.

‘Poison pill’ Strategy

• Under the ‘poison pill’ strategy the rights will become exercisable if anyone acquires ownership of 15% or more of Twitter’s outstanding common stock in a transaction not approved by the Board.
• The move would allow existing Twitter shareholders — except for Musk — to buy additional shares at a discount, thereby diluting Musk’s stake in the company and making it harder for him to corral a majority of shareholder votes in favor of the acquisition.
• Twitter’s plan would take effect if Musk’s roughly 9% stake grows to 15% or more.
• This plan would reduce the likelihood that any one person can gain control of the company without either paying shareholders a premium or giving the board more time to evaluate an offer. Such defenses, formally called shareholder rights plans, are used to prevent the hostile takeover of a corporation by making any acquisition prohibitively expensive for the bidder.

Musk could try to fight the measure in court, but “no court has overturned a poison pill in the last 30 years.

Bernardinelli-Bernstein comet

Part of: GS-Prelims

Context: National Aeronautics and Space Administration’s (NASA) Hubble Space Telescope has confirmed that the huge Bernardinelli-Bernstein comet is indeed the largest icy comet nucleus ever seen by astronomers.

• The icy nucleus stretches about 80 miles (129 kilometers) across.

• While frigid, this temperature is warm enough to allow carbon monoxide to sublimate (a process during which solid material becomes gas) off the comet’s rocky surface, creating a “coma,” an envelope of dust and gas that surrounds a comet’s solid center.
• This comet, being so far from Earth and originating in the farthest-flung reaches of our solar system, is thought to travel on a 3-million-year-long elliptical orbit around the sun. Scientists think that it might travel about half a light-year away from the sun in the farthest parts of its orbit.

(Mains Focus)

ECONOMY/ GOVERNANCE

• GS-3: Indian Economy and its challenges
• GS-2: Government policies and interventions for development in various sectors and issues arising out of their design and implementation 

Economics of Oil Bonds

Context: Over the last one year, as retail prices of petrol, diesel and other petroleum products have surged there is mounting pressure on government to reduce taxes.

• As of now, taxes account for 50% of the total retail price for a litre of petrol, and 44% for a litre of diesel.
• Union Government has sought to counter such criticism by claiming that the current government cannot bring down taxes (and, as a consequence, prices) because it has to pay for the oil bonds issued by the previous government.

What are oil bonds? Why were they issued?

• When fuel prices were too high for domestic consumers, governments in the past often asked oil marketing companies (OMCs) to avoid charging consumers the full price.
• But if oil companies don’t get paid, they would become unprofitable. To address this, the government said it would pay the difference. 
• But again, if the government paid that amount in cash, it would have been pointless, because then the government would have had to tax the same people to collect the money to pay the OMCs.
• This is where oil bonds come in. An oil bond is a promissory note issued by the government to the OMCs, in lieu of cash that the government would have given them so that these companies don’t charge the public the full price of fuel.
• An oil bond says the government will pay the oil marketing company the sum of, say, Rs 1,000 crore in 10 years. And to compensate the OMC for not having this money straightaway, the government will pay it, say, 8% (or Rs 80 crore) each year until the bond matures.
• By issuing such bonds, a government can defer the full payment by 5 or 10 or 20 years, and in the interim just pay the interest costs.
• Therefore, through Oil Bonds the government of the day is able to protect/ subsidise the consumers without either ruining the profitability of the OMC or running a huge budget deficit itself.
• Oil bonds were issued by several governments in the past.

Is the UPA-era oil bonds large that is constraining current government?

• In 2014, there were bonds worth Rs 1.34 lakh crore that had to be paid between 2015 and 2026.
• Between 2014 and 2022, the BJP government has had to spend a total of Rs 93,686 crore towards interest as well as the principal.
• There are three ways to answer the question as to whether the amount is large enough to restrict a reduction in taxes.
• The first is to observe that total payout was just 7% of the total revenues in 2014-15. As the years progressed, this percentage has come down because taxes generated from this sector have soared.
• The second is to look at the total revenue earned by the government (both Centre and states) between 2014 and 2022 from taxing petroleum products. This amount is more than Rs 43 lakh crore and the total payout was just 2.2% of it.
• The third way is to note that the total amount of revenue earned by the Centre from just one kind of tax— excise tax — in just — 2014-15 — was more than Rs 99, 000 crore. 
• In other words, while the NDA government has had to pay for oil bonds, the payout is not big compared to revenues earned in this sector.

Still, isn’t it a bad idea to issue such bonds?

• Former PM Manmohan Singh noted that issuing bonds just pushed the liability to a future generation. 
• But to a great extent, most of the government’s borrowing is in the form of bonds. 
• Further, in a relatively poor country like India, all governments are forced to resort to the use of bonds of some kind. 
• Even the current NDA government has issued bonds worth Rs 2.79 lakh crore (twice the amount of oil bonds) to recapitalise public sector banks. These bonds will be paid by governments till 2036. 

Connecting the dots:

• Petrol, diesel under GST purview
• Rising Fuel Prices
•  Rising Natural Gas Price
•  India’s Coal Crisis

ECONOMY/ GOVERNANCE

• GS-3: Science and Technology- developments and their applications and effects in everyday life 
• GS-2: Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

TRAI’s spectrum recommendations

Context: TRAI has recommended a sharp 36 per cent cut in the pan-India reserve prices for 3300-3670 MHz, which will be used for 5G services, from ₹492 crore per MHz to ₹317 per MHz.

• TRAI has also recommended a further cut of 40 per cent in the reserve price for 700MHz spectrum, compared to the 2021 auction. The 700 MHz spectrum went unsold both in the 2016 and 2021 auctions due to high reserve prices.
• The pan-India reserve prices for other existing spectrum bands (800MHz to 2500MHz) have also been slashed in the range of 24-49 per cent compared to 2021 auctions. 

How significant is TRAI’s recommendation on spectrum price?

• The recommendations set the ball rolling for India to adopt 5G services.
• The 3300-3670 Mhz band and the 700 Mhz band are crucial for 5G services. 
• 5G rollout has been delayed in India because the operators could not buy spectrum in the last round of auction due to the high reserve price.
•  Therefore a 36-40 per cent cut in the reserve price should attract operators to buy spectrum this time. 

What are TRAI’s other proposals?

• TRAI has proposed to allow enterprises to take spectrum from the Government to run captive private wireless networks (CPWN). 
• This can be a gamechanger for enterprise communications as companies like TCS , Tata Motors and JSW Steel can take spectrum directly and manage their own network without relying on telecom operators.
• TRAI has recommended that the spectrum for the private networks can be assigned administratively on demand, through a widely publicised online portal-based process in a fair and transparent manner. 
• It has also made provisions to allocate spectrum for satellite-based broadband services. This is important, given that a number of satellite players including Sunil Mittal-backed OneWeb and Elon Musk-backed StarLink are gearing up to launch services in India

Will the auctions see strong bidding this time?

• There are only two strong operators — Airtel and Reliance Jio — in the fray to buy spectrum. 
• The overall auction may end at the reserve price because, apart from having just two players, there is more than an adequate supply of spectrum. 
• Unlike in 2010, when the government had put a limited amount of spectrum for sale, this time the regulator has proposed more than 1 lakh Mhz of spectrum for auction. 
• While Airtel and Jio are expected to acquire the airwaves for 5G services at these prices, it’s not clear how Vodafone Idea will play it out.
• Things could change if Vodafone Idea is able to find a strategic investor in the next 2-3 months. 

How much money will the operators have to spend to buy spectrum?

• Operators will have to be ready to spend at least ₹35,000 crore each to acquire pan-India 5G spectrum, going by the reserve price set by the telecom regulator.
• The operators will be eyeing spectrum in the 3500 Mhz band and the 700 Mhz band, but are likely to acquire more of the former since it is priced much lower — ₹320 crore per Mhz — compared with ₹3,900 crore per Mhz in the 3500Mhz band. 
• An operator will need at least 100 Mhz of spectrum to offer any meaningful 5G services. This means that an operator will need at least ₹32,000 crore to acquire pan-India spectrum in the 3500 Mhz band. 
• In addition, spectrum in the 700 Mhz band will be needed for high-density areas, where coverage will be crucial.

What does all of this mean for consumers? 

• Consumers can expect to experience 5G services by the end of this year or early 2023. 
• This will transform the wireless broadband market significantly as 5G brings higher speeds and lower latencies, which will enable services like telemedicine in addition to entertainment and video streaming. 
• The advent of private enterprise networks and satellite broadband services will infuse competition in a sector that currently has only two strong players. 
• So consumers, both retail and enterprise, will get more options for their communication needs. 

Conclusion

A reduction in spectrum price will enable the government to sell at least some of the available spectrum. The economic growth that will come as a result of digital tools and 5G infrastructure will be the real gain. 

Connecting the dots:

• 5G: Roadblocks & Way Ahead
• Parliamentary Committee and 5G
• UK shutting door on Huawei

(TEST YOUR KNOWLEDGE)

Model questions: (You can now post your answers in comment section)

Q.1) Which of the following pairs are correctly matched?

           Constitutional Articles       ::    Amendments

1. Article 371A – 13th Amendment Act, 1962
2. Article 371C – 27th Amendment Act, 1971
3. Article 371D – 28th Amendment Act, 1972

Select the correct code:

1. 1 Only
2. 1 and 2
3. 2 and 3
4. 1, 2 and 3

Q.2) Consider the following statements

1. Black Sea is connected to the Sea of Azov by the Kerch Strait.
2. Black Sea ultimately drains into the Mediterranean Sea, via the Turkish Straits and the Aegean Sea.

Select the correct code:

1. 1 Only
2. 2 Only
3. Both 1 and 2
4. Neither 1 nor 2

Q.3) Consider the following statements about ‘Poison Pill’?

1. It decreases the cost of acquisition which encourages the acquiring company from taking over.
2. Shareholders, except the acquirer, purchase additional shares at discount.
3. Shareholders of a target company buy shares of acquiring company after a hostile takeover becomes successful.

Select the correct code:

1. 1 and 2
2. 2 and 3
3. 1 and 3
4. All of the above

ANSWERS FOR 16TH APRIL 2022 – TEST YOUR KNOWLEDGE (TYK)

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