DNA [Daily News Analysis] – 01 Nov 2022

News 1: RBI’s digital rupee pilot for wholesale starts today

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Background

• The first pilot for the digital rupee, wholesale segment (e₹-W) will commence on November 1, the Reserve Bank of India said.
• Nine banks — State Bank of India, Bank of Baroda, Union Bank of India, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Yes Bank, IDFC First Bank and HSBC — have been identified for participation in the pilot.

Importance of e₹-W

• The use case for this pilot is settlement of secondary market transactions in government securities.
• Use of e₹-W is expected to make the inter-bank market more efficient.
• Settlement in central bank money would reduce transaction costs by pre- empting the need for settlement guarantee infrastructure or for collateral to mitigate settlement risk.
• Going forward, other wholesale transactions, and cross-border payments will be the focus of future pilots, based on the learnings from this pilot.

Central Bank Digital Currency

• The central bank says e-rupee, or CBDC, can be structured as token-based or account-based.

E-rupee

E-rupee is the same as a fiat currency and is exchangeable one-to-one with the fiat currency. Only its form is different. It can be accepted as a medium of payment, legal tender and a safe store of value. The digital rupee would appear as liability on a central bank’s balance sheet.

Wholesale digital rupee

Wholesale CBDC is designed for restricted access to select financial institutions. It has the potential to transform the settlement systems for financial transactions undertaken by banks in the government securities (G-Sec) segment, inter-bank market and capital market more efficiently and securely in terms of operational costs, use of collateral and liquidity management.

Token based CBDC

• A token-based CBDC would be a bearer instrument like banknotes, meaning whosoever holds the tokens at a given point in time would be presumed to own them.
• In a token-based CBDC, the person receiving a token will verify that his ownership of the token is genuine.
• A token-based CBDC is viewed as a preferred mode for CBDC-R as it would be closer to physical cash.

Account Based CBDC

• An account-based system would require maintenance of record of balances and transactions of all holders of the CBDC and indicate the ownership of the monetary balances.
• In this case, an intermediary will verify the identity of an account holder. This system can be considered for CBDC-W.
• There are two models for issuance and management of CBDCs under the RBI’s consideration — direct model (single tier model) and indirect model (two-tier model).

Direct model of issuance and management of CBDCs

• In the direct model, the central bank will be responsible for managing all aspects of the digital rupee system such as issuance, account-keeping and transaction verification.

Indirect model of issuance and management of CBDCs

• An indirect model would be one where the central bank and other intermediaries (banks and any other service providers), each play their respective role.
• In this model, the central bank will issue CBDC to consumers indirectly through intermediaries and any claim by consumers will be managed by the intermediary.

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News 2: Decentralize MGNREGS for better implementation

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Background

An internal study commissioned by the Ministry of Rural Development has argued for decentralisation of the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), allowing for more “flexibility” at the ground level.

Findings of the internal study

There should be a greater diversification of permissible works instead of listing the types of permissible works, broad categories of works may be listed out and flexibility should be given at ground level to select the type of works as per broad categories.

Problems in implementation of MGNREGS

• Activists and academics working in the field are of the view that the fund management in last few years, has been centralised instead of paying the gram sabhas an advance enabling them to decide the work they want to undertake.
• The gram sabhas can take into account the local conditions and the community’s requirement instead of chasing a target set for them.
• The internal study also flagged the frequent delay in fund disbursal, and to deal with it suggested a “revolving fund that can be utilised whenever there is a delay in the Central funds”.
• The study also noted that the MGNREGS wages were far below the market rate in many States, defeating the purpose of acting as a safety net.

For instance –

•  In Lower Subansiri district of Arunachal Pradesh, for example, the surveyors found that because of the delay in the material component, the beneficiaries ended up buying the construction material themselves to complete the projects.
• In Himachal Pradesh and Gujarat, the delay in wages was by three or four months and the material component by six months.

MGNREGA

• Enacted: The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), also known as Mahatma Gandhi National Rural Employment Guarantee Scheme (MNREGS) is Indian legislation enacted on August 25, 2005.
• Ministry and implementation: The Ministry of Rural Development (MRD), Govt of India is monitoring the entire implementation of this scheme in association with state governments
• Objective: The MGNREGA provides a legal guarantee for one hundred days of employment in every financial year to adult members of any rural household willing to do public work-related unskilled manual work at the statutory minimum wage.

Reason behind launching of this act

• This act was introduced with an aim of improving the purchasing power of the rural people, primarily semi or un-skilled work to people living below poverty line in rural India.
• It attempts to bridge the gap between the rich and poor in the country. Roughly one-third of the stipulated work force must be women.

Features of MGNREGA

1. Within 15 days of submitting the application or from the day work is demanded, wage employment will be provided to the applicant.
2. Right to get unemployment allowance in case employment is not provided within fifteen days of submitting the application or from the date when work is sought.
3. Receipt of wages within fifteen days of work done.
4. Variety of permissible works which can be taken up by the Gram Panchayaths.
5. MGNREGA focuses on the economic and social empowerment of women.
6. MGNREGA provides “Green” and “Decent” work.
7. Social Audit of MGNREGA works is mandatory, which lends to accountability and transparency.
8. MGNREGA works address the climate change vulnerability and protect the farmers from such risks and conserve natural resources.
9. The Gram Sabha is the principal forum for wage seekers to raise their voices and make demands. It is the Gram Sabha and the Gram Panchayat which approves the shelf of works under MGNREGA and fix their priority.

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News 3: Scientists welcome clearance to GM mustard for farming

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Background

Scientists associated with the National Academy of Agricultural Sciences (NAAS) and the Trust for Advancement of Agricultural Sciences (TAAS) have welcomed the recent approval by the Ministry of Environment, Forests and Climate Change for the environmental release of genetically modified (GM) mustard hybrid for cultivation. Terming the decision, a landmark, the scientists said it will break a logjam on the release of GM food crops.

Benefit of introducing GM mustard

• Reduce the edible oil import burden
• Moving towards self-sufficiency in edible oil production
• Encourage more research and innovations to reduce the environmental footprint of agriculture
• Develop climate resilient crops, and thereby assure food and nutritional security of the country.

Edible oil scenario in India

• India had a deficit production of edible oils by almost 55-60% of the total consumption. “In the financial year 2020-21, 13.35 million tonnes of edible oils were imported at a total cost of around ₹1,17,000 crore in foreign exchange.”
• Trials had shown that the variety had a yield advantage of 28% over the mega variety Varuna and 37% over the zonal checks.

Impact of introducing genetically modified organisms or crops

• Genetically modified (GM) crops are a new addition to crop varieties developed through traditional methods such as breeding, selection and mutation.
• Given their novelty, there are safety concerns among the public, scientists, and regulators, although the benefits outweigh the risks.
• Among the potential risks are pests becoming resistant, crops gaining weediness and GM foods posing safety issues to both human and animals and these are studied extensively.

What are Genetically Modified Organisms?

• Genetically modified organisms (GMOs) can be defined as organisms (i.e. plants, animals or microorganisms) in which the genetic material (DNA) has been altered in a way that does not occur naturally by mating and/or natural recombination. 
• The technology is often called “modern biotechnology” or “gene technology”, sometimes also “recombinant DNA technology” or “genetic engineering”.

Why are GM crops produced?

• One of the objectives for developing plants based on GM organisms is to improve crop protection.
• The GM crops currently on the market are mainly aimed at an increased level of crop protection through the introduction of resistance against plant diseases caused by insects or viruses or through increased tolerance towards herbicides.
• Resistance against insects is achieved by incorporating into the food plant the gene for toxin production from the bacterium Bacillus thuringiensis (Bt). This toxin is currently used as a conventional insecticide in agriculture and is safe for human consumption.
• Virus resistance is achieved through the introduction of a gene from certain viruses which cause disease in plants. Virus resistance makes plants less susceptible to diseases caused by such viruses, resulting in higher crop yields.

Main issues of concern for human health

Allergenicity

As a matter of principle, the transfer of genes from commonly allergenic organisms to non-allergic organisms is discouraged unless it can be demonstrated that the protein product of the transferred gene is not allergenic.

Gene transfer

Gene transfer from GM foods to cells of the body or to bacteria in the gastrointestinal tract would cause concern if the transferred genetic material adversely affects human health.

This would be particularly relevant if antibiotic resistance genes, used as markers when creating GMOs, were to be transferred. Although the probability of transfer is low, the use of gene transfer technology that does not involve antibiotic resistance genes is encouraged.

Outcrossing

The migration of genes from GM plants into conventional crops or related species in the wild (referred to as “outcrossing”), as well as the mixing of crops derived from conventional seeds with GM crops, may have an indirect effect on food safety and food security.

Cases have been reported where GM crops approved for animal feed or industrial use were detected at low levels in the products intended for human consumption. Several countries have adopted strategies to reduce mixing, including a clear separation of the fields within which GM crops and conventional crops are grown.

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News 4: SC to examine law depriving undertrials the right to vote

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Background

The Supreme Court recently decided to examine a petition challenging a provision in the election law that imposes a blanket ban on undertrials, persons confined in civil prisons and convicts serving their sentence in jails from casting their votes.

Right to vote for undertrials

• A Bench led by Chief Justice of India (CJI) U.U. Lalit issued notice to the Union of India, the Union Home Ministry and the Election Commission on a petition filed by Aditya Prasanna Bhattacharya, a student of the National Law School of India University, Bengaluru, who said that while convicts out on bail could vote, undertrials, whose innocence or guilt has not been conclusively determined, and those confined in civil persons were deprived of their right to vote.
• Mr. Bhattacharya, represented by advocate Zoheb Hossain, argued that Section 62(5) of the Representation of the People Act, 1951, mandates that “no person shall vote at any election if he is confined in a prison, whether under a sentence of imprisonment or transportation or otherwise, or is in the lawful custody of the police”.
• The right to vote is a constitutional right under Article 326.

UPSC 2017 Prelims question

Right to vote and to be elected in India is a

1. Fundamental Right
2. Natural Right
3. Constitutional Right
4. Legal Right

Answer – Option C (Official UPSC Answer key)

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News 5: The ambiguity over Economically Weaker Section and its validity

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Background

On September 27, a Constitution Bench led by CJI U. U. Lalit heard multiple petitions against reservations based solely on economic criteria introduced by the Constitution (103rd) Amendment Act, 2019.

After extensive hearings, the Bench reserved its judgment in the case. 

103rd Constitutional Amendment Act, 2019

• The 103rd Constitution Amendment Act introducing special measures and reservations for ‘economically weaker sections’ (EWS) has been perceived as being obviously unconstitutional.
• The strongest constitutional challenge might not be to the amendment itself but to the manner in which governments implement it.

Special measures

• Article 15 stands amended enabling the state to take special measures (not limited to reservations) in favour of EWS generally with an explicit sub-article on admissions to educational institutions with maximum 10% reservations.
• The amendment to Article 16 allows 10% reservations (and not special measures) for EWS in public employment and does so in a manner that is different from reservations for Scheduled Caste/Scheduled Tribes and Other Backward Classes.
• The amendment leaves the definition of ‘economically weaker sections’ to be determined by the state on the basis of ‘family income’ and other economic indicators.
• Also critical to this amendment is the exclusion of SC/STs, OBCs and other beneficiary groups under Articles 15(4), 15(5) and 16(4) as beneficiaries of the 10% EWS reservation.

Indra Sawhney judgement

• A good point to start the constitutional examination is the Supreme Court’s view on reservations based purely on economic criteria.

Eight of the nine judges in Indra Sawhney (November 1992) held that the Narasimha Rao government’s executive order (and not a constitutional amendment) providing for 10% reservations based purely on economic criteria was unconstitutional.

• Their reasons included the position that income/property holdings cannot be the basis for exclusion from government jobs, and that the Constitution was primarily concerned with addressing social backwardness.

Challanges

• However, the decision in Indra Sawhney involved testing an executive order against existing constitutional provisions.
• In the current situation, we are concerned with a constitutional amendment brought into force using the constituent power of Parliament.
• Under Article 16(4), reservations for backward classes (SC/STs, OBCs) are dependent on beneficiary groups not being ‘adequately represented’ but that has been omitted in the newly inserted Article 16(6) for EWS.

The issue before supreme court is simple, whether to make economic classification a criterion for reservation.

UPSCTREE Opinion: Our argument is simple in this regard. If economy can be a criterion to get out of a group for e.g. for all the existing reservation, there exist creamy layer which are mostly based on economic criteria.

Questions and challenges

• In many of the responses to the amendment, breaching the 50% ceiling on reservations has been cited as its greatest weakness. It is hard to see the merit of that argument because the amendment by itself does not push the reservations beyond 50%.
• While it might be a ground to challenge the subsequent legislative/executive actions, the amendment itself is secure from this challenge. But even beyond this narrow technical response, the 50% ceiling argument is far from clear.
• In Indra Sawhney , the majority of judges held that the 50% ceiling must be the general rule and a higher proportion may be possible in ‘extraordinary situations’.
• Fundamentally this argument stems from an unresolved normative tension in Indra Sawhney. While committing to the constitutional position that reservations are not an ‘exception’ but a ‘facet’ of equality, the majority in Indra Sawhney also invokes the idea of balancing the equality of opportunity of backward classes ‘against’ the right to equality of everyone else.
• When governments implement the EWS reservations and push quotas beyond 50%, the Supreme Court will be forced to confront this normative tension. If reservations further equality, what then are the justifications to limit it to 50% when the identified beneficiaries constitute significantly more than 50%?
• The answer to that question might lie in Indra Sawhney’s position that the constitutional imagination is not one of ‘proportional representation’ but one of ‘adequate representation’.
• However, as discussed above, if abandoning the ‘adequacy’ requirement per se is upheld for EWS reservations, the basis for a 50% ceiling becomes unclear.
• While the constitutional amendment by itself might survive the ‘basic structure’ test, the hardest test for governments will be the manner in which they give effect to the amendment.
• The definition of ‘economically weaker sections’ will be a major hurdle because the political temptation will be to go as broad as possible and include large sections of citizens. But broader the definition, greater will be the constitutional risk.

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News 6: Regulating Social Media (The amendments to the IT Rules, 2021)

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Background

• The Ministry of Electronics and IT (MeitY) has notified amendments to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 (IT Rules, 2021) on October 28.

What are the IT Rules, 2021?

• World over, governments are grappling with the issue of regulating social media intermediaries (SMIs).
• In a bid to keep up with these issues, India in 2021, replaced its decade old regulations on SMIs with the IT Rules, 2021 that were primarily aimed at placing obligations on SMIs to ensure an open, safe and trusted internet.

What was the need to amend the IT Rules, 2021?

• As per the press note accompanying the draft amendments in June 2022, the stated objectives of the amendments were three-fold.
• First, there was a need to ensure that the interests and constitutional rights of netizens are not being contravened by big tech platforms
• Second, to strengthen the grievance redressal framework in the Rules.
• Third, that compliance with these should not impact early-stage Indian start-ups.
• This translated into a set of proposed amendments that can be broadly classified into two categories.
• The first category involved placing additional obligations on the SMIs to ensure better protection of user interests while the second category involved the institution of an appellate mechanism for grievance redressal.

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News 7: SC puts an end to ‘two-finger’ test on rape survivors

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Background

• The Supreme Court declared that any person conducting the invasive ‘two-finger’ or ‘three-finger’ vaginal test on rape or sexual assault survivors will be found guilty of misconduct.

Judgement

• In a judgment, a Bench led by Justice D.Y. Chandrachud said the sole reason behind using the “regressive” test on traumatized sexual assault survivors is to see whether the woman or girl was “habituated” to sexual intercourse.
• Such a “concern” was irrelevant to fact whether she was raped or not. “Previous sexual experience is immaterial to the question of conduct,” he held.
• The faulty logic behind the test was that “a woman cannot be believed when she said she was raped merely for the reason that she was sexually active”, the court said.
• “This so-called test has no scientific basis and neither proves nor disproves allegations of rape. It instead re-victimises and re-traumatises women who may have been sexually assaulted, and is an affront to their dignity. The ‘two-finger’ test or pre-vaginum test must not be conducted,” the Bench, also comprising Justice Hima Kohli, directed.
• The court pointed out the 2013 amendment of Section 53A in the Indian Evidence Act. “…the evidence of a victim’s character or her previous sexual experience with any person shall not be relevant to the issue of consent or the quality of consent in the prosecution of sexual offences,” the court held.
• The Bench noted that the Ministry of Health and Family Welfare had issued guidelines for health providers in cases of sexual violence. “These guidelines have proscribed the application of the two-finger test,” the judgment noted.

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News 8: China launches third and final module for Tiangong space station

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• China successfully launched the final module of its Tiangong space station inching closer to its completion by the end of the year.
• The module, named Mengtian — or “dreaming of the heavens” — was launched on a Long March 5B rocket from the Wenchang launch centre on China’s tropical island Hainan.

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