Current Affairs Reverse Engineering – CARE (20-05-2024)
| News at a Glance |
| Economy: RBI keeping an eye on gold loans |
| Polity and Governance: NIA’s allegations against NSCN |
| Science and Technology: Nucleosynthesis in news |
| Environment: India faces severe decline in farmland trees, major losses in Maharashtra and Telangana |
| FSSAI warns fruit traders against using of calcium carbide |
RBI keeping an eye on gold loans
Source: The Hindu
UPSC Syllabus Relevance: GS 3- Banking Sector, Reserve Bank of India, Economy
Context: RBI norms on gold loans
Why in News
- The Reserve Bank of India (RBI) recently asked gold loan lenders to stick to regulatory norms while lending in a bid to tighten its grip over Non-Banking Financial Companies (NBFCs).
Key Highlights
- The RBI has increased its scrutiny of NBFCs after it found certain NBFCs to be flouting regulatory norms.
- In March, the RBI banned IIFL Finance from issuing fresh gold loans after the firm was found violating lending norms.
What are the RBI’s gold loan norms?
- The RBI stipulates lenders to comply with certain norms while lending money in lieu of gold. For instance, lenders are not allowed to lend any amount of money that is greater than 75% of the value of the gold that is submitted as collateral by the borrower.
- This is to ensure that banks have sufficient cushion to absorb any losses by selling the gold in case the borrower defaults on the loan.
- And in order to comply with income tax rules, the RBI also mandates that when a loan is disbursed to a borrower, no more than ₹20,000 can be disbursed in the form of cash; the remaining loan amount needs to be deposited in the borrower’s bank account.
- It also instructs lenders to conduct the auction of any gold (in case a borrower defaults) in a fair and transparent manner in locations that are accessible to the borrowers.
- It is believed that the RBI is working on detailed guidelines for gold loans that lenders will have to follow.
Why does the RBI want to reinforce these norms now?
- The RBI says it has found some NBFCs to be violating regulations linked to gold-based lending.
- IIFL Finance was disciplined in March for violating norms related to the size and form of loan disbursals, the evaluation and assaying of gold, the levying of charges, and irregularities in the auction process.
- For instance, the RBI found that there were loan-to-value irregularities in over two-thirds of defaulted accounts in the case of IIFL Finance.
- It should be noted that NBFCs may want to increase the size of their loan book at an aggressive pace in an attempt to grow their business, and thus may be willing to offer loans of value that exceed 75% of the value of the underlying collateral.
- To do this, NBFCs may try to deliberately overestimate the value of the gold that the borrowers submit as collateral.
- It is thus not surprising that the RBI has raised concerns about the way in which gold is assayed and valued by NBFCs.
- Lenders such as IIFL Finance were using internal assayers to evaluate the value and the purity of the gold offered as collateral by borrowers.
- This is in contrast to gold loans extended by banks wherein external assayers determine the value and purity of the gold.
- It should be noted that the gold loan portfolio of NBFCs has increased at an aggressive pace since the pandemic, growing over four-fold.
- The RBI may fear that such aggressive lending by NBFCs is happening in widespread violation of lending norms and that this could potentially cause systemic trouble in the future as the gold loan industry grows in size rapidly.
How will the RBI’s scrutiny affect NBFCs?
- The NBFCs expect the RBI’s scrutiny of their lending practices to affect their growth and profitability.
- The RBI’s insistence that no more than ₹20,000 shall be disbursed as cash when a loan is approved, for instance, is expected to make NBFC gold loans less attractive.
- The NBFCs have taken pride in offering emergency cash to borrowers at short notice unlike banks, particularly to those who are not part of the banking system and deal primarily in cash.
- Many NBFCs might also have to become less aggressive in their lending practices as the RBI enforces the loan-to-value rules more strictly.
- It should be noted that the RBI had temporarily allowed lenders to make loans up to 90% of the value of the underlying gold collateral during the pandemic to help borrowers, and this also helped NBFCs expand their loan books aggressively.
- Further, measures to make the auction process more transparent and accessible to borrowers could increase the cost of doing business for NBFCs and lead to higher borrowing rates for lenders.
- The RBI, on the other hand, may believe that its lending norms will make the gold loan business more sustainable and help avoid systemic risks in the long run.
What is a Non-Banking Financial Company (NBFC)?
- A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 1956.
- It is engaged in the business of loans and advances, acquisition of shares/stocks/bonds/debentures/securities issued by Government or local authority or other marketable securities of a like nature, leasing, hire-purchase, insurance business, chit business.
- It does not include any institution whose principal business is that of agriculture activity, industrial activity, purchase or sale of any goods (other than securities) or providing any services and sale/purchase/construction of immovable property.
- A non-banking institution which is a company and has principal business of receiving deposits under any scheme or arrangement in one lump sum or in instalments by way of contributions or in any other manner, is also a non-banking financial company (Residuary non-banking company).
| CARE MCQ | UPSC PYQ |
Q1. Which of the following statements is/are not correct about Non-Banking Financial Company (NBFC)?
Select the correct answer using the code given below.
|
Q. With reference to the Non-banking Financial Companies (NBFCs) in India, consider the following statements: (2010)
Which of the statements given above is/are correct?
Ans: (B) |
| Answer 1- A
Explanation:
|
What are the NIA’s allegations against NSCN?
Source: Indian Express
UPSC Relevance: GS2- Polity and Governance, GS 3- Internal Security
Context: NIA alleged that Naga insurgency groups were exploiting the current ethnic unrest in Manipur.
Why in News
- On March 7, the National Investigation Agency (NIA) filed a charge sheet in a Guwahati court where it accused the “China-Myanmar module” of the Isak-Muivah faction of the National Socialist Council of Nagaland (NSCN) of supporting cadres of two banned Meitei outfits, the People’s Liberation Army (PLA) and Kanglei Yaol Kanba Lup (KYKL), to infiltrate India.
Which are the main ethnic groupings?
- The Meitei, Naga and Kuki-Zomi-Mizo are the three main ethnic groupings in Manipur.
- The Meiteis, the largest community, account for about 53% of the State’s total population of 27.21 lakh (2011 Census).
- The Nagas and the Kuki-Zo which are categorised into 34 Scheduled Tribes constitute 17% and 26% of the population respectively. India and Myanmar share a 1,643 km unfenced border of 398 km along Manipur.
- In January, the Government decided to fence the entire border and end the Free Movement Regime (FMR) which allowed people to cross over without any documents or passport.
- People on both sides of the border share ethnic ties prompting the arrangement since 1968.
What is the significance of the chargesheet?
- The charge sheet was filed against five persons, M. Anand Singh, A. Kajit Singh, Keisham Johnson, L. Michael Mangangcha and K. Romojit Meitei, and is the first official statement of links between the NSCN-IM and Imphal valley-based insurgent groups during the current ethnic crisis.
- The accused were arrested on September 16, 2023 by the Manipur Police while travelling in a vehicle dressed in camouflage, resembling uniforms worn by security personnel.
- Three weapons and ammunition looted from police armouries were recovered.
- Following the arrests, Meira Paibi, the women’s collective in Manipur, staged protests and clashed with the police demanding their release.
- A court granted them bail, but Anand Singh was picked up by the NIA and brought to Delhi.
- The PLA was formed in 1978 and continues to be one of the most violent terror outfits in the northeast and is currently led by M.M. Ngouba.
- The NIA said the accused “criminally conspired with intent to carry out violent terror attacks targeting the rival Kuki-Zo community with prohibited arms and ammunition which were looted from various government sources.”
Are there other active insurgent groups?
- In 2008, 24 Kuki-Zo insurgent groups under the umbrella of the United Peoples’ Front (UPF) and the Kuki National Organisation (KNO) signed a tripartite suspension of operations pact with the MHA and the Manipur government.
- On February 29 this year, when the pact came up for an annual extension, the Manipur government refused to send a representative, leaving the agreement in a limbo.
- Manipur Chief Minister N. Biren Singh has accused the groups of violating the ground rules and instigating violence in the State.
- According to the ground rules, after a peace pact is signed, camps are earmarked for cadres and their weapons are accounted for through regular checks conducted by a security force decided by the government.
- The agreement was signed in the wake of the Kuki-Naga clashes in the 1990s where hundreds were killed.
- The insurgent groups demanded an independent land for the Kuki-Zo people.
- The clashes and killings happened after the NSCN demanded that Kuki-Zo-inhabited areas be included in its proposed ‘Greater Nagaland’ project in the 1980s.
What is the NSCN’s stand?
- In 2008, 24 Kuki-Zo insurgent groups under the umbrella of the United Peoples’ Front (UPF) and the Kuki National Organisation (KNO) signed a tripartite suspension of operations pact with the MHA and the Manipur government.
- On February 29 this year, when the pact came up for an annual extension, the Manipur government refused to send a representative, leaving the agreement in a limbo.
- Manipur Chief Minister N. Biren Singh has accused the groups of violating the ground rules and instigating violence in the State.
- According to the ground rules, after a peace pact is signed, camps are earmarked for cadres and their weapons are accounted for through regular checks conducted by a security force decided by the government.
- The agreement was signed in the wake of the Kuki-Naga clashes in the 1990s where hundreds were killed.
- The insurgent groups demanded an independent land for the Kuki-Zo people.
- The clashes and killings happened after the NSCN demanded that Kuki-Zo-inhabited areas be included in its proposed ‘Greater Nagaland’ project in the 1980s.
What is the NSCN’s stand?
- After The Hindu reported the NIA findings, the NSCN issued a statement, accusing the Indian security forces of helping the Kuki militant groups to wage war against the Meitei revolutionary groups in Myanmar.
- It is sensitive to the propaganda war waged by the Government of India against NSCN who had signed a ceasefire with GOI and engaged in political talks for the last 27 years.
- Distancing itself from the violence in Manipur, the NSCN had said in a statement in August 2023 that no ethnic blood should flow in Naga areas in the name of Meitei- Kuki-Zo ethnic conflicts.
When did the NSCN-IM sign a ‘framework agreement’?
- NSCN-IM, one of the largest groups representing the Naga tribes, is engaged in peace talks with the Union Government.
- After signing a ceasefire agreement with the Government in 1997, the group signed a “framework agreement” on August 3, 2015 to find a political solution to the Naga issue.
- The NSCN-IM, has been demanding ‘Greater Nagaland,’ an extension of Nagaland’s borders by including Naga-dominated areas in neighbouring Assam, Manipur and Arunachal Pradesh, to unite more than 1.2 million Nagas, other than a separate flag and constitution.
- The Centre has repeatedly said there will be no disintegration of the States of Assam, Arunachal Pradesh and Manipur.
- More than hundred rounds of talks spanning over 24 years have taken place so far.
- NSCN founders Isak Chishi Swu and Thuingaleng Muivah formed the group in 1980 to oppose the Shillong Accord signed by the then Naga National Council (NNC) with the Union Government to bring peace in Nagaland. After Swu died in 2016, the talks are being spearheaded by Mr. Muivah.
- Former Special Director, Intelligence Bureau (IB), A.K Mishra, who was appointed adviser in the Ministry of Home Affairs (MHA) in 2020, is currently holding the peace talks, which appears to be in a limbo.
About Free Movement Regime (FMR)
- The FMR came into existence in 2018 as a part of India’s Act East policy. It allows cross-border movement up to 16 km without a visa.
- The agreement was brought to facilitate local border trade, improve access to education and healthcare for border residents, and strengthen diplomatic ties.
- Under the agreement, individuals were also allowed up to two weeks in the neighbouring country by getting a one-year border pass.
- The FMR is a mutually agreed arrangement between the two countries that allows tribes living along the border on either side to travel up to 16 km inside the other country without a visa.
- It was implemented in 2018 as part of the Narendra Modi government’s Act East policy, at a time when diplomatic relations between India and Myanmar were on the upswing.
- In fact, the FMR was to be put in place in 2017 itself but was deferred due to the Rohingya refugee crisis that erupted that August.
| CARE MCQ | UPSC PYQ |
Q2. Consider the following statements:
Which of the statements given above are correct?
|
Q. With reference to India’s projects on connectivity, consider the following statements: (2023)
1. East-West Corridor under Golden Quadrilateral Project Dibrugarh and Surat. connects How many of the above statements are correct?
Answer: (D) |
| Answer 2– A
Explanation:
|
What is Nucleosynthesis?
Source: The Hindu
UPSC Relevance: GS 3- Science and Technology
Context: Nucleosynthesis is the creation of new atomic nuclei, the centers of atoms that are made up of protons and neutrons.
Why in News
- Process and working of Nucleosynthesis was in news recently
What is nucleosynthesis?
- Stellar nucleosynthesis is the process by which stars forge elements inside their cores.
- Nucleosynthesis is the creation of new atomic nuclei, the centers of atoms that are made up of protons and neutrons.
- Nucleosynthesis first occurred within a few minutes of the Big Bang.
- At that time, a quark-gluon plasma, a soup of particles known as quarks and gluons, condensed into protons and neutrons.
Formation of elements through nucleosynthesis
- The only element not formed in this way is hydrogen, the most abundant and lightest element in the universe: it was formed in the initial aftermath of the Big Bang.
- The cores of stars have crushing pressures and temperature.
- The hydrogen nucleus is just one proton. Inside the core, these nuclei come together to form helium nuclei (two protons and two neutrons).
- This is the p-p (short for proton-proton) process.
- In more massive stars, however, stellar nucleosynthesis treads a different path — one dictated by the availability of energy.
- More massive stars have a higher core temperature.
- There, in the so-called carbon-nitrogen-oxygen (CNO) cycle, the nuclei of these elements come together in different ways to form elements from helium onwards.
- When a star runs out of nuclei to fuse, its core contracts.
- This in return increases its temperature, triggering nuclear fusion yet again.
- This process goes back and forth until the star starts to produce iron in its core.
- Iron is the lightest element for which fusion consumes more energy than it releases.
- Elements heavier than iron can only be synthesized outside a star when it goes supernova.
| CARE MCQ | UPSC PYQ |
Q3. Consider the following statements with regards to Nucleosynthesis:
Which of the statements given above is/are correct?
|
Q. Consider the following statements: (2021)
1. Adenoviruses have single-stranded DNA genomes whereas retroviruses have double-stranded DNA genomes. 2. Common cold is sometimes caused by an adenovirus whereas AIDS is caused by a retrovirus. Which of the statements given above is/are correct?
Ans 7. B |
| Answer 3 A
Explanation
|
India faces severe decline in farmland trees, major losses in Maharashtra and Telangana
Source: Down to Earth
UPSC Syllabus Relevance: GS 3- Deforestation, Environment and Ecology
Context: Study notes that trees such as jackfruit, jamun, mahua, neem and others offer shade and other livelihood to small farmers
Why in News
- Millions of large trees across Indian farms have vanished in the past decade, new research has found, raising concerns about the impact on the environment and agricultural practices.
Key highlights of Study
- The paper, Severe decline in large farmland trees in India over the past decade, published in the journal Nature Sustainability, analysed satellite imagery from 2010 to 2022.
- The researchers noted that farmlands in many regions lost up to half of their large trees between 2010 and 2018.
- The study identified regions in central India, particularly Maharashtra and Telangana, as hotspots for tree disappearance.
- These areas lost nearly 2.5 million trees between 2011 and 2018. The highest densities were observed in Rajasthan and Chhattisgarh, with 22 trees per hectare.
- The paper revealed a worrying trend: Over 5 million large trees (5.6 million to be exact), with a crown size of about 67 square metres, disappeared from farmlands between 2018 and 2022 alone.
- The information is unsettling given that agroforests play a crucial role in offering socio ecological benefits and are a potential climate solution as a carbon sink.
Agroforest trees in India
- Agroforest trees in India are remnant trees from forests cleared for agricultural use, offer shade, soil fertilisation and other benefits to the land, the researchers noted.
- Trees such as mahua, coconut, sangri, neem, babul, shisham, jamun, vegetable hummingbird, karoi and jackfruit in farmlands provide fruits, fuelwood, sap, medicine, mulch, fibre, fodder and wood for animal and human use.
- Citing an example, researchers said that neem trees can grow tall, have canopies of up to 20 metres in diameter and can survive for hundreds of years.
Forest Area
- According to India’s land-cover map, 56 per cent of India is carpeted by farmland and about 20 per cent is covered by forest.
- The analysis found that some regions lost up to 50 trees per square kilometre.
- The revelation has worried scientists as these trees had crown sizes of more than 67 square metres, with some even reaching 96 square metres and 150 square metres.
- The information was also verified on the ground via field visits to 1,000 random trees, with an uncertainty of disappearance estimated to be 21 per cent, the study notes.
- The researchers observed that a 5-10 percent tree mortality rate owing to wildfires, fungi, insects, and droughts is expected.
- To understand the reasons, the researchers interviewed farmers from Telangana, Haryana, Kerala, Maharashtra, Andhra Pradesh, Uttar Pradesh, and the Kashmir and Jammu regions, all marking tree disappearance on the maps.
Significant Impact
- Fungi and climate change did not have a negative impact on the trees. In such a scenario, trees play a crucial role in assisting their livelihoods.
- The study noted that the findings only highlight the disappearance of large farmland trees between 2010 and 2022.
- At a first glance, this may contradict official reports and recent studies stating that tree cover in India has increased considerably in recent years.
- It is important to note that we report only gross losses and do not consider tree gains as a separate class.
- The researchers also refrained from including block plantations and do not provide information on net tree changes.
- Our results do not contradict reports concluding that there has been a net increase in planted trees outside forests as a result of tree planting being encouraged and actively carried out in India.
Impact of Climate Change
- They note that anthropogenic climate change and human mismanagement also exacerbate tree loss.
- The scientists analysed the possibility of climate change and high temperatures in central and southern India resulting in poor rainfall and drought conditions behind the losses in the past decade.
- However, those regions were found to have above-average precipitation.
Impact on Agriculture
- The study noted that farmers mainly removed the trees due to their perception of poor benefits from the trees and with the purpose of boosting crop yields.
- For instance, farmers removed trees to establish bore wells for groundwater extraction for additional water supply and to expand paddy fields to improve yields.
- They also said that trees with large canopies, such as neem, negatively affected crop yields.
| CARE MCQ | UPSC PYQ |
Q4. Consider the following statements:
Which of the statements given above is/are correct?
|
Q. With reference to ‘Global Climate Change Alliance’, which of the following statements is/are correct? (2017)
Select the correct answer using the code given below:
Ans: (A) |
| Answer 4 D
Explanation
|
FSSAI warns fruit traders against using of calcium carbide
Source: Indian Express
UPSC Syllabus Relevance: GS 3- Science and Technology
Context: FSSAI asks fruit traders, food biz not to use banned product ‘calcium carbide’ for fruit ripening
Why in news
- Food regulator FSSAI has asked traders and food business operators not to use the banned product ‘calcium carbide’ for ripening of fruits.
Key Highlights
- The Food Safety and Standards Authority of India (FSSAI) said it has alerted traders’/fruits handlers/Food Business Operators (FBOs) operating ripening chambers to strictly ensure compliance with the prohibition on calcium carbide for artificial ripening of fruits, particularly during the mango season.
- FSSAI has also advised Food Safety Departments of states/UTs to remain vigilant and take serious action and deal stringently against person(s) indulging in such unlawful practices as per the provisions of the FSS Act, 2006, and rules/regulations made thereunder.
- This regulation explicitly states, No person shall sell or offer or expose for sale or have in his premises for the purpose of sale under any description, fruits which have been artificially ripened by use of acetylene gas, commonly known as carbide gas.
Ban on use of Calcium Carbide
- Calcium carbide is commonly used for ripening fruits like mangoes, releases acetylene gas, which contains harmful traces of arsenic and phosphorus.
- These substances, also known as ‘Masala’, can cause serious health issues such as dizziness, frequent thirst, irritation, weakness, difficulty in swallowing, vomiting and skin ulcers, etc.
- Additionally, acetylene gas is equally hazardous to those handling it.
- There are chances that calcium carbide may come in direct contact with fruits during application and leave residues of arsenic and phosphorus on fruits.
- Due to these dangers, the use of calcium carbide for ripening fruits has been banned under the Regulation of the Food Safety and Standards (Prohibition and Restrictions on Sales) Regulations, 2011.
Use of Ethylene Gas
- Considering the issue of rampant use of banned calcium carbide, FSSAI has permitted the use of ethylene gas as a safer alternative for fruit ripening in India.
- Ethylene gas can be used at concentrations up to 100 ppm, depending upon the crop, variety and maturity.
- Ethylene, a naturally occurring hormone in fruits, regulates the ripening process by initiating and controlling a series of chemical and biochemical activities.
- The treatment of unripe fruits with ethylene gas triggers the natural ripening process until the fruit itself starts producing ethylene in substantial quantities.
About the Food Safety and Standards Authority of India (FSSAI)
- It is an autonomous body established under the Ministry of Health and Family Welfare, Government of India.
- The FSSAI was established under the Food Safety and Standards Act, 2006, which is a consolidating statute related to food safety and regulation in India.
- Vision: Build a new India by enabling citizens to have safe and nutritious food, prevent diseases, and lead a healthy and happy life.
- Mission: Set globally benchmarked standards for food, encourage and ensure that food businesses adhere to these standards, adopt good manufacturing and hygiene practices, and ultimately enable citizens to access safe and right food.
Functions of FSSAI
- FSSAI is responsible for protecting and promoting public health through the regulation and supervision of food safety.
- It lays down standards and guidelines in relation to articles of food and provides for licensing, registration, and accreditation for food business operators.
- Anyone selling or importing food in India needs a food licence issued by FSSAI.
- FSSAI also directly monitors compliance of food regulations, especially in the area of food imports to India.
- FSSAI officers carry out food import controls and ensure that they contain no harmful ingredients. To do this, they send selected test products from the import to accredited laboratories for inspection.
- The FSSAI is also responsible for the accreditation of food testing laboratories throughout India.
- The FSSAI is responsible for the Food Certification in India.
- It is mandated to specify systems for enforcing its standards, for accreditation of certification systems, and for certification of food safety management systems for food businesses.
| CARE MCQ | UPSC PYQ |
Q5. Consider the following statements regarding FSSAI :
Which of the statements given above are correct?
|
Q. Consider the following statements: (2018)
Which of the statements given above is/are correct?
Ans: (A) |
| Answer 5 C
Explanation
|