IAS UPSC Prelims and Mains Exam – 4th September 2019

(PRELIMS + MAINS FOCUS)

Mussels

Part of: GS Prelims and GS-III – Environment Conservation

In News

Mussels are a small, edible sea animal that has a dark shell with two parts that close tightly together
As they pump and filter the water through their gills in order to feed and breathe, mussels store almost everything else that passes through.
Mussels thus act as ‘super-filters’, taking in phytoplankton for nourishment along with microplastics, pesticides and other pollutants
Scientists are deploying mussels across the oceans to absorb microplastics and other pollutants in the fight against water pollution.
Mussels have long been used as “bio-indicators” of the health of the seas, lakes and rivers they inhabit.
A recent report by WWF said that humans ingest an average of five grams of microplastics a week, about the weight of a credit card.

Secondary market for corporate loans

Part of GS Prelims and Mains GS-II – Economy

In News

A task force set up by RBI and headed by Canara Bank chairman T.N. Manoharan submitted its report on the development of a secondary market for corporate loans
The committee noted that factors that impeded development of this market were absence of a systematic loan sales platform, lack of standardisation in documentation and legal factors and lack of active participants.
Some of the suggestions made by task force are:

- Setting up of a self-regulatory body (SRB), which will oversee the proposed secondary market.

- SRB’s role will be to standardize loan documentation and covenants, standardization of practices, and promote growth, liquidity, efficiency and transparency of the proposed secondary market
- The SRB may be set up as an association of market participants, and may be incorporated as a Section 8 company under the Companies Act, 2013.
- Setting up a central loan contract registry
- Setting up of an online loan sales platform to conduct auctions of secondary market loans.
- Amendments in regulations issued by SEBI, IRDA and PFRDA to enable participation of non-banking entities such as mutual funds, insurance companies and pension fund.

Do You Know?

Section 8 Company is a company registered under the Companies Act, 2013 for charitable or not-for-profit purposes.
In India, banks sell their stressed loans to the asset reconstruction companies, and has practically no other alternatives.
However, globally, there is a healthy secondary market for corporate loans where banks can offload their loans to a willing investor at appropriate price.

Ethanol

Part of: GS Prelims and GS Mains III – Economy

In News

The CCEA, chaired by PM, has given its approval for “fixing higher ethanol price derived from different raw materials” under the ethanol blended petrol (EBP) programme for the forthcoming sugar season 2019-20
The price of ethanol from C heavy molasses route be increased from Rs.43.46 per lit to Rs.43.75 per litre
The price of ethanol from sugarcane juice/sugar/sugar syrup route be fixed at Rs.59.48 per litre,
Remunerative price to ethanol suppliers will help in reduction of cane farmer’s arrears, in the process contributing to minimizing difficulty of sugarcane farmers.
Increased ethanol blending in petrol has many benefits including reduction in import dependency, support to agricultural sector, more environmental friendly fuel, lesser pollution and additional income to farmers.

Do You Know?

Differential price of ethanol based on raw material (started in 2018) has significantly improved the supply of ethanol to Public Sector OMCs – from 38 crore litre in 2013-14 to over 200 crore litre in 2018-19.

India, the world’s third-largest oil importer, witnessed a 25% year-on-year increase in its oil import bill in FY18 to $109 billion.
In March 2015, India has set a target of lowering import dependence in oil by 10 percentage points to 67% by 2022.
In July, the Union cabinet had approved the creation of a buffer stock of 4 million tonnes sugar at an estimated cost of ₹1,674 crore.
This was aimed at increasing the wholesale prices of sugar and improving cash flow to sugar mills, which in turn would help mill owners to clear the dues of farmers.

REPLAN (Reducing plastic in Nature)

Part of: GS Prelims and Mains GS-III – Environmental Conservation

In News

Khadi and Village Industries Commission’s (KVIC) REPLAN project has completed one year.
REPLAN project aims to remove existing waste plastic material from nature.
In this project, the waste plastic is collected, chopped, cleaned, beaten and treated for softness. After that, it is mixed with paper raw material i.e. cotton rags pulp in ratio of 80 % (pulp) and 20% (plastic waste)
The project was launched in September 2018 as part of KVIC’s commitment to Swachh Bharat Abhiyaan and has so far sold over 6 lakh handmade plastic mixed carry bags
KVIC manufactures plastic-mixed handmade paper at its Kumarappa National Handmade Paper Institute (KNHPI) in Jaipur, Rajasthan.
KVIC is statutory body established under the Khadi and Village Industries Commission Act of 1956.

KVIC works under Union Ministry of Micro, Small and Medium Enterprises

(MAINS FOCUS)

INTERNATIONAL RELATIONS

TOPIC: General studies 2

Policies of developed and developing countries and their impact on India’s interests.

Bilateral and multilateral agreements and their impact on India’s interests.

Putting the skids under border trade

Context:

The India-Pakistan face-off is having more repercussions than intended, with border economies the worst hit

Concerns:

In February 2019, in the wake of the Pulwama attack, India decided to withdraw the Most Favoured Nation (MFN) status to Pakistan; subsequently, it imposed 200% customs duty on all Pakistani goods coming into India
In April, India suspended trade across the Line of Control in Jammu and Kashmir citing misuse of the trade route by Pakistan-based elements
More recently, post the Jammu and Kashmir Reorganisation Bill, Pakistan cut off diplomatic and economic ties with India — expelling the Indian envoy, partially shutting airspace and suspending bilateral trade.

The impact :

In 2018-19, bilateral trade between India and Pakistan was valued at $2.5 billion — India’s exports to Pakistan accounted for $2.06 billion and India’s imports from Pakistan were at $495 million.
India’s decision vis-à-vis withdrawal of MFN status and imposition of 200% duty has hurt Pakistan’s exports to India, falling from an average of $45 million per month in 2018 to $2.5 million per month in the last four months.
The quantum of loss that has been incurred by traders in both India and Pakistan has varied according to the nature of trade and the trade route

Example: Amritsar is land-locked, is not a metropolis and traditionally has no significant industry. Hence, any decision on India-Pakistan trade has a direct impact on the local economy and the people of Amritsar. Since February, according to estimates on ground, 5,000 families have been directly affected in Amritsar because of breadwinner dependence on bilateral trade. Traders and their staff members, customs house agents (CHAs), freight forwarders, labour force, truck operators, dhaba owners, fuel stations, and other service providers are closing shop and going out of business.

With Pakistan deciding to completely suspend bilateral trade, exports of cotton from India to Pakistan are expected to be affected the most, eventually hurting Pakistan’s textiles;
The lawn industry which will now have to source pricier cotton from alternative markets in the United States, Australia, Egypt or Central Asia
There is a high possibility that Indian cotton, along with other products, will be routed through third countries such as the United Arab Emirates and Singapore, thereby increasing the share of indirect trade which is estimated to be more than double the direct trade between India and Pakistan.

Conclusion:

While the overall economies of the two countries may very well manage to stay afloat despite the suspension of economic ties, it is the local economies that will suffer the most and are already perishing. In this connection, there has been a loss in business, rise in prices, lack of alternative sources of livelihood, as well as an expected increase in bank defaults.
In the spirit of nationalism, the trade fraternity on both sides, by and large, has stood by their respective governments. But locals in border economies on both sides have mouths to feed, which calls for a solution.

Connecting the dots:

Discuss the impact of recent bilateral suspension of trade ties between India and Pakistan?
What is the ‘Most Favoured Nation’ status? Should India revoke the MFN status given to Pakistan? Critically examine.

(TEST YOUR KNOWLEDGE)

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Q.1) Who among the following headed the task force constituted by RBI for development of Secondary market for corporate loans?

Subhash Chandra Garg
Bimal Jalan
T.N. Manoharan
None of the above

Q.2) Consider the following statements

Scientists are deploying mussels (sea animal that has a dark shell) across the oceans to absorb microplastics and other pollutants in the fight against water pollution.
Mussels have been used as “bio-indicators” of the health of the seas, lakes and rivers they inhabit.

Which of the statement(s) given above is/are correct?