14 November 2024 : Daily Current Affairs

1. RBI Retains SBI, HDFC Bank, and ICICI Bank as ‘Too Big To Fail’ Domestic Systemically Important Banks (D-SIBs) 

(Source: Indian Express; Section: Economy; Page: 17)

Topic: GS3 – Indian Economy

Context:

The Reserve Bank of India (RBI) has reaffirmed that State Bank of India (SBI), HDFC Bank, and ICICI Bank are Domestic Systemically Important Banks (D-SIBs) for 2024. D-SIBs, often deemed ‘Too Big To Fail,’ play a critical role in maintaining the stability of essential banking services and ensuring economic resilience.

Analysis of News:   

Why D-SIBs Are Important

• Certain banks are classified as D-SIBs due to their extensive size, complexity, cross-jurisdictional reach, and interconnectedness.
• The failure of such banks could disrupt essential financial services, potentially destabilizing the broader economy.
• The D-SIB framework thus aims to mitigate systemic risks and reduce the moral hazards associated with large banks, as their size often implies potential government support in times of financial distress.

Classification and Capital Requirements for D-SIBs

• D-SIBs are categorized into specific buckets based on their systemic importance, with SBI in bucket 4, HDFC Bank in bucket 3, and ICICI Bank in bucket 1.
• Each bucket has distinct additional Common Equity Tier 1 (CET1) capital requirements: SBI requires 0.80% of its risk-weighted assets, HDFC Bank 0.40%, and ICICI Bank 0.20%.
• These additional capital requirements are intended to increase the loss-absorbing capacity of these institutions.

Selection Process of D-SIBs

The RBI uses a two-step process to identify D-SIBs.

• First, it selects a sample of large banks (those exceeding 2% of GDP in size) for assessment.
• Next, the systemic importance of each bank in this sample is calculated using a range of indicators, and banks surpassing a specific threshold are classified as D-SIBs.
• Based on their systemic scores, these banks are placed in buckets, with higher systemic importance leading to a higher capital surcharge.

Global Systemically Important Banks (G-SIBs)

• Globally, the Financial Stability Board (FSB), with the Basel Committee, classifies major banks as Global Systemically Important Banks (G-SIBs) annually.
• The 2023 list, based on end-2022 data, includes 29 G-SIBs such as JP Morgan Chase, HSBC, and BNP Paribas, highlighting globally critical financial institutions.

Why was it Considered Essential to Establish SIBs?

During the 2008 crisis, problems faced by certain large and highly interconnected financial institutions hampered the orderly functioning of the global financial system. The failure of a large bank anywhere can have a contagion effect around the world. The impairment or failure of a bank will likely cause damage to the confidence in the banking system as a whole (chain effect) → affecting the domestic real economy → interconnectedness/globalisation → affect global economy. Therefore, government intervention was considered necessary to ensure financial stability in many jurisdictions. In 2010, the FSB recommended that all member countries should put in place a framework to reduce risks attributable to Systemically Important Financial Institutions (SIFIs) in their jurisdictions.

Practice Question:  Discuss the significance of Domestic Systemically Important Banks (D-SIBs) in India’s financial stability. What are the criteria for their classification, and how do additional capital requirements help in managing systemic risks associated with these institutions? (250 words/15 m)

2. India’s tea, sugar exports raise sustainability concerns at home

(Source – The Hindu, International Edition – Page No. – 7)

Topic: GS3 – Agriculture, GS3 – Indian Economy

Context

India’s booming agricultural exports, valued at $53.1 billion in 2022-23, raise concerns about sustainability. The production of high-demand commodities like tea and sugar presents ecological and social challenges, while alternative crops like millets offer sustainable solutions. Balancing economic growth with sustainability is crucial for India’s agrarian economy.

Introduction

• India’s agricultural exports reached $53.1 billion in 2022-23, showing a six-fold increase from 2004-05, highlighting the economic significance of exports for revenue and foreign exchange.
• The rapid growth of exports, however, raises concerns about the sustainability of production, processing, and distribution systems.

Defining Sustainability for Agricultural Commodities

• True Sustainability: An agricultural commodity is sustainable when it meets economic, ecological, and social criteria, supported by strong governance.
• Beyond Production: Sustainability should encompass pre-sowing, on-farm, and post-harvest stages, as seen in tea and sugar industries.

Sustainability Challenges in the Tea Industry

• Global Standing: India is the world’s fourth-largest tea exporter and second-largest producer, with major export markets in the UAE, Russia, and the U.S.
• Human-Wildlife Conflicts: About 70% of tea plantations border forests, leading to frequent interactions with wildlife, notably elephants, causing conflicts.
• Chemical Use: Heavy reliance on synthetic pesticides, with residues like DDT and Endosulfan found in tea, poses health risks to consumers.
• Labour Issues: Workers, primarily women, often face low wages, unsafe conditions, and inadequate protective gear despite regulations like the Plantations Labour Act, 1951.

Sustainability Issues in the Sugar Industry

• Production Scale: India is the second-largest sugar producer, exporting to over 121 countries; sugar exports increased by 291% from 2013-14 to 2021-22.
• Water Consumption: Sugar cane, a water-intensive crop, uses 1,500–2,000 kg of water per kg of sugar, depleting resources for other crops and stressing groundwater.
• Biodiversity Impact: Expanding sugarcane cultivation in Karnataka and Maharashtra has converted natural ecosystems, leading to biodiversity loss.
• Labour Concerns: Long working hours, harsh conditions, and rising temperatures exacerbate workers’ health issues and debt stress, necessitating stronger regulations.

Millets: A Sustainable Alternative

• Environmental Benefits: Millets are drought-resistant, promote soil health, and ensure nutritional security, serving as an example of sustainable agriculture.
• Export Growth: Millet exports grew significantly, reaching $75.45 million in 2022-23, indicating their potential for economic and environmental benefits.

Conclusion

• India’s agriculture operates within a dual domestic and export market, raising ecological and social sustainability concerns in the supply chain.
• Recommendation: Addressing environmental challenges, worker welfare, and consumer safety is crucial for an inclusive and sustainable agrarian economy that benefits both local and global markets.

Practice Question:  Discuss the challenges to sustainability posed by India’s growing agricultural exports. How can commodities like millets serve as models for sustainable agricultural practices? (150 Words /10 marks)

3. Supreme Court puts brakes on ‘bulldozer culture’

(Source – The Hindu, International Edition – Page No. – 1)

Topic: GS2 – Indian Polity – Judiciary

Context

The Supreme Court recently intervened in the issue of state-led demolitions targeting accused individuals, particularly in Uttar Pradesh, Madhya Pradesh, and Rajasthan, where families were punished without due process. The Court issued binding directives to ensure accountability and prevent arbitrary action by public officials.It emphasised the constitutional rights of the accused and their families.

Context and Concerns over “Bulldozer Culture”

• The Supreme Court addressed the issue of state-led demolitions that targeted homes of accused persons awaiting trial, particularly criticising instances where demolitions were executed without due process.
• This judgement followed petitions from states such as Uttar Pradesh, Madhya Pradesh, and Rajasthan, where affected citizens alleged that demolitions were performed to punish the accused, often with communal undertones.

Directives Issued by the Supreme Court

• The Court, using its powers under Article 142 of the Constitution, laid out strict, binding directives for state authorities involved in demolitions.
• Key directives include a mandatory 15-day prior notice to occupants, specifying unauthorised construction violations and reasons for demolition.
• Occupants must be given an opportunity to contest demolition actions through a designated authority, and any final decision must be accompanied by detailed reasoning.
• The entire demolition process must be videographed, and violators of these guidelines would face prosecution and contempt action.

Ensuring Accountability of Public Officials

• Public officials who fail to adhere to these guidelines would be held accountable, facing contempt action, prosecution, and potential restitution of destroyed property.
• The Court emphasised the importance of public trust in executive actions, stressing that higher power mandates greater responsibility to act fairly and justly.

Rule of Law and the Rights of the Accused

• The Supreme Court reiterated the principle that an accused is innocent until proven guilty, emphasising the separation of powers where only the judiciary has the authority to convict.
• Collective punishment, such as demolishing family homes to penalise the accused, was deemed unconstitutional and against the “rule of law,”which is part of the Basic Structure of the Constitution.

Protecting the Innocent and Maintaining Accountability

• The Court noted that innocent family members residing with the accused should not be subjected to punishment, questioning the fairness of penalising families uninvolved in alleged crimes.
• Officials must prove in court that a demolition was not a punitive measure against an accused person; selective demolitions could suggest a possible misuse of power.

Importance of Home and Dignity

• For many, building a home represents years of hard work and a source of dignity and security.
• The Court observed that demolishing homes should only occur as a last resort after thorough assessment, underscoring the sanctity and personal significance of family homes.

Practice Question:  Discuss the Supreme Court’s intervention in the “bulldozer culture” of demolitions by state authorities. Examine the constitutional principles upheld in the Court’s directives and their implications for the rule of law and human rights. (250 Words /15 marks)

Prelims Facts

1. INDIAN NAVY TO CONDUCT FOURTH EDITION OF COASTAL DEFENCE EXERCISE ‘SEA VIGIL-24’

(Source – https://pib.gov.in/PressReleseDetail.aspx?PRID=2073000&reg=3&lang=1 )

Context

Sea Vigil-24 is a large-scale coastal defence exercise led by the Indian Navy to strengthen and assess India’s maritime security. It involves multiple ministries, organisations, and communities, highlighting national efforts to secure India’s extensive coastline.

Exercise “Sea Vigil-24”:

• The Indian Navy will conduct the fourth edition of the Coastal Defence Exercise “Sea Vigil-24” on November 20 and 21, 2024.
• This edition will span an extensive scale with participation from six ministries and 21 organizations/agencies.
• The exercise involves all maritime stakeholders, including the fishing community, coastal populace, and NCC and Bharat Scouts and Guides.
• The exercise aims to protect coastal assets like ports, oil rigs, and critical infrastructure, with support from the Army and Air Force.
• Originally designed in 2018 post the 26/11 Mumbai attacks, Sea Vigil covers the 11,098 km coastline and 2.4 million sq km Exclusive Economic Zone.
• Serving as a precursor to the Theatre Level Readiness Operational Exercise (TROPEX), it strengthens India’s maritime security framework.

2. ‘Unwieldy’ first draft at COP29 sets 2030 goal of $5 trillion

(Source – The Hindu, International Edition – Page No. – 14)

Context

The 29th COP negotiations focus on setting a new climate finance goal (NCQG) to aid developing countries in meeting emission targets. With varied funding options proposed, achieving consensus remains challenging, reflecting divergent priorities among participating nations.

Analysis of the news:

• The 29th Conference of Parties (COP) has released an initial negotiating text, outlining options for climate finance commitments by 190 countries.
• The key issue in focus is the New Collective Quantified Goal (NCQG) on Climate Finance, proposing at least $5-6.8 trillion by 2030 for developing countries to meet their climate targets.

• This funding would assist developing nations in achieving Nationally Determined Contributions (NDCs) by reducing emissions and transitioning to renewable energy.
• Multiple options for NCQG amounts are included in the text, ranging from a blanket $5-7 trillion to other structured annual estimates.
• Clauses call for developed countries to recognize unmet commitments from the previous $100 billion annual goal set for 2020-2025.
• The document will need streamlining over the two-week COP period for feasible agreements to be reached.

3. Alarming rate of decrease in African elephant count

(Source – The Hindu, International Edition – Page No. – 7)

Context

A recent study highlights the severe decline of African elephant populations, with savannah and forest elephants facing significant threats from poaching and habitat loss. While northern regions have been hit hardest, conservation efforts in southern Africa show some population recovery.

Analysis of the news:

• A comprehensive study has revealed a sharp decline in African elephant populations over the past 50 years, focusing on savannah and forest elephants.
• Using data from 475 sites in 37 African countries, researchers found savannah elephant populations fell by about 70% and forest elephant populations by around 90% at the surveyed sites.
• On average, the total elephant population at these sites dropped by 77%, largely due to poaching and habitat loss.
• Some regions, particularly northern and eastern Africa, have seen local extinctions, with pressures highest in areas like the Sahel.
• However, certain areas in southern Africa, such as Botswana, Zimbabwe, and Namibia, have seen population increases due to effective conservation efforts and active management.
• The study did not calculate a total population but observed trends at surveyed locations, with previous estimates placing the combined population between 415,000 and 540,000 elephants as of 2016.

African Elephant

Scientific Name: Loxodonta africana (savanna elephant) and Loxodonta cyclotis (forest elephant) Habitat: Found in various ecosystems across sub-Saharan Africa, including savannas, forests, deserts, and marshes. Physical Characteristics: Largest land animals; savanna elephants have larger ears and are larger than forest elephants. Social Structure: Matriarchal groups led by a female, with strong family bonds; males often live solitary or in bachelor groups. Diet: Herbivorous, consuming up to 300 pounds of vegetation daily. Conservation Status: The African forest elephant is critically endangered, while the African savanna elephant is endangered. Conservation Efforts: African Elephant Action Plan and CITES Appendix I protection.

African Elephant Vs  Indian Elephant
Feature	Indian Elephant	African Elephant
Scientific Name	Elephas maximus indicus	Loxodonta africana (savanna) / cyclotis (forest)
Size	Smaller, up to 3.5 m tall	Larger, up to 4 m tall
Ears	Smaller, rounded	Larger, fan-shaped
Head Shape	Twin-domed, with an indent in the middle	Single-domed
Tusks	Only males have tusks	Both males and females may have tusks
Habitat	Forests and grasslands of South and Southeast Asia	Savannas, forests, and deserts across Africa
Conservation Status	Endangered (IUCN)	Endangered for savanna; Critically Endangered for forest
Social Structure	Smaller family units	Larger herds led by matriarch

4. Novo Nordisk Urges FDA to Halt Compounded Versions of Wegovy and Ozempic, Citing Safety Risks

(Source: Indian Express; Section: Explained; Page: 11)

Context:

Novo Nordisk, the Danish pharmaceutical firm behind Wegovy and Ozempic, has raised safety concerns regarding the compounded versions of these drugs, especially due to increased demand and shortages in the US. Compounded versions of these drugs, created by independent pharmacies, are often less regulated and may differ in formulation, posing potential risks to patients.

Analysis of News:   

What are Ozempic and Wegovy

• These two weight loss drugs have been prescribed by doctors in the West to patients with weight-related co-morbidities since last year but have made more headlines for rumours of celebrities using them. 
• Even though Wegovy, Ozempic or any other such drugs have not been approved for use in India yet (they are available as oral formulations, but not in injectible form), there is a thriving black market already for them across the country, especially in the big cities.   

Complex Formulation Challenges

• Semaglutide, the active ingredient in Wegovy and Ozempic, has a complex structure produced through yeast and recombinant DNA technology.
• This makes accurate replication difficult, and synthetic versions may vary in purity, stability, and efficacy.
• Differences in the drug’s structure and components, such as its fatty acids, affect how long it remains effective in the body.

Issues with Drug Delivery Mechanism

• The delivery mechanism plays a crucial role in the safety and efficacy of semaglutide.
• FDA-approved versions use a single-use pen injector, ensuring a precise dose. However, compounded versions, often provided in multi-dose vials or prefilled syringes, lack such precision and carry a higher risk of dosing errors.
• Novo Nordisk has highlighted cases of patients overdosing on compounded semaglutide due to inconsistent dosing instructions.

Concerns Over Bioavailability

• Novo Nordisk has raised concerns that compounded semaglutide may have poor bioavailability, affecting the drug’s effectiveness.
• Semaglutide has naturally low bioavailability, meaning the compounded versions might not reach the bloodstream adequately, reducing treatment efficacy for obesity and diabetes and potentially leading to severe health issues.

Risks of Contamination and Stability

• Compounded versions of semaglutide require specialized facilities to avoid contamination.
• The company cited FDA reports of sterility issues at certain compounding pharmacies, leading to recalls of over 15,000 units of compounded semaglutide.
• Novo Nordisk has also noted that semaglutide is temperature-sensitive, and improper storage conditions can impact its stability and effectiveness.

5. India Accounts for a Quarter of the World’s Diabetes Cases, Highlighting Urgent Need for Effective Management and Prevention

(Source: Indian Express; Section: The Second Page; Page: 02)

Context:

India has the highest number of adults with diabetes, constituting a quarter of the global diabetic population, with 212 million out of the total 828 million cases worldwide, as reported in a Lancet study. This figure positions India above China, the U.S., Pakistan, Indonesia, and Brazil in terms of diabetes prevalence.

Analysis of News:   

What is Diabetes?

• Diabetes is a chronic disease that occurs when the pancreas can no longer make insulin, or the body cannot make good use of the insulin it produces.
• Insulin is a hormone that regulates blood glucose.
• Not being able to produce or use insulin effectively leads to raised glucose levels in the blood, known as hyperglycaemia.
• Over the long-term high glucose levels are associated with damage to the body and failure of various organs and tissues.
• Diabetes is a major cause of blindness, kidney failure, heart attacks, stroke, and lower limb amputation.

Factors Influencing High Diabetes Rates in India

• Measurement Criteria: The study used HbA1c and fasting glucose tests, which likely raised prevalence estimates. HbA1c can be unreliable in populations with high rates of anaemia or blood disorders, potentially inflating diabetes cases. Earlier studies in India, using the Oral Glucose Tolerance Test (OGTT), reported lower diabetes rates.
• Anaemia Impact: Anaemia and iron deficiency, common in India, are known to elevate HbA1c levels, increasing the chance of misdiagnosis. Experts recommend using glucose-based measurements in countries where anaemia is widespread to avoid these errors.

Key Risk Factors for Diabetes in India

• Diet and Lifestyle: Obesity and unhealthy diets are primary risk factors. Experts emphasize the need for policies to limit access to unhealthy foods and promote access to nutritious foods, especially in lower-income regions.
• Measures such as free or subsidized healthy meals in schools, safe public spaces for exercise, and free access to fitness facilities could help curb the rise in diabetes.

Treatment Gaps and Health Risks

• Lack of Access to Medication: Globally, nearly 59% of diabetics above age 30 were untreated in 2022, a marked increase from 1990. India has a significant number of untreated cases, with 64 million men and 69 million women without diabetes medication.
• This lack of treatment heightens the risk of severe complications like heart disease, kidney damage, and vision loss, and can lead to premature death, especially as many cases occur at younger ages in low-income countries.

6. Samantha Harvey Wins Booker Prize for Space-Set Novel Orbital

(Source: Indian Express; Section: The World; Page: 16)

Context:

British writer Samantha Harvey won the prestigious Booker Prize for her novel Orbital, a short yet profound story set on the International Space Station. The novel, written during the isolation of the COVID-19 pandemic, follows six astronauts observing Earth’s beauty from space while reflecting on human existence and the environment.

Analysis of News:   

About Booker Prize

• It is the world’s leading literary award for a single work of fiction.
• Founded in the UK in 1969, the Booker Prize initially rewarded Commonwealth writers and now spans the globe: it is open to anyone regardless of origin.
• It aims to promote the finest in fiction by rewarding the best novel of the year written in English.

Eligibility:

• The Booker Prize awards any novel originally written in English and published in the UK and Ireland in the year of the prize, regardless of the nationality of their author.
• The novel must be an original work in English (not a translation)
• It must be published by a registered UK or Irish imprint; self-published novels are not eligible.
• The winner receives £50,000 and each of the shortlisted authors will be given £2,500.

The Booker Prize Foundation: It is a registered charity established in 2002. Since then it has been responsible for the award of the Man Booker Prize for Fiction, and for the Man Booker International Prize since its inauguration in 2005.