UPSC/STATE PSC
Curated by Experts For Civil Service Aspirants
The Hindu & Indian Express
News 1: Use of Web3 and AI in banking to detect fraud
Background:
- Union Minister for Finance and Corporate Affairs Nirmala Sitharaman on Friday asked banks to be more digital savvy and give immediate priority to use Web3 and artificial intelligence technology in fraud detection and to generate early warning signs in case of an unforeseen event.
Web3:
- Web3 embraces decentralization and is being built, operated, and owned by its users.
- Web3 puts power in the hands of individuals rather than corporations.
- Web3 uses blockchains, cryptocurrencies, and NFTs to give power back to the users in the form of ownership.
Core principles:
- Web3 is decentralized: instead of large swathes of the internet controlled and owned by centralized entities, ownership gets distributed amongst its builders and users.
- Web3 is permissionless: everyone has equal access to participate in Web3, and no one gets excluded.
- Web3 has native payments: it uses cryptocurrency for spending and sending money online instead of relying on the outdated infrastructure of banks and payment processors.
- Web3 is trustless: it operates using incentives and economic mechanisms instead of relying on trusted third parties.
Artificial intelligence:
- Artificial intelligence (AI) refers to the simulation of human intelligence in machines that are programmed to think like humans and mimic their actions. The term may also be applied to any machine that exhibits traits associated with a human mind such as learning and problem-solving.
- Narrow AI or Artificial Narrow Intelligence (ANI)—is AI trained and focused to perform specific tasks. Example: Apple’s Siri, Amazon’s Alexa, IBM Watson, and autonomous vehicles.
- Strong AI is made up of Artificial General Intelligence (AGI) and Artificial Super Intelligence (ASI). Artificial general intelligence (AGI), or general AI, is a theoretical form of AI where a machine would have an intelligence equaled to humans; it would have a self-aware consciousness that has the ability to solve problems, learn, and plan for the future.
- Artificial Super Intelligence (ASI)—also known as superintelligence—would surpass the intelligence and ability of the human brain.
- Machine learning, deep learning, and neural networks are all sub-fields of artificial intelligence. However, neural networks is actually a sub-field of machine learning, and deep learning is a sub-field of neural networks.
News 2: Sitharaman asks private firms to clear MSME dues in 45 days
Background:
- Finance Minister Nirmala Sitharaman on Friday asked the private sector to clear dues of micro, small and medium enterprises (MSMEs) within 45 days.
- The Centre revised the threshold for small firms’ paid-up capital to ₹4 crore from ₹2 crore.
- The turnover threshold has also been revised to “not exceeding ₹40 crore” from ₹20 crore.
MSMEs definition:
- Micro enterprises: Not more than Rs.1 crore and Annual Turnover; not more than Rs. 5 crore
- Small enterprises: Not more than Rs.10 crore and Annual Turnover; not more than Rs. 50 crore
- Medium enterprises: Not more than Rs.50 crore and Annual Turnover; not more than Rs. 250 crore
News 3: Front-loaded rate hikes needed to tame inflation: RBI
Background:
- Inflation has remained above the RBI’s tolerance level since January, prompting it to raise interest rates by a total of 140 basis points in the current cycle.
Reason behind high inflation:
- Resurgence of food price pressures, mainly from cereals, even as fuel and core components such as transport and manufacturing provided a modest measure of respite.
RBI:
- Established: 1935 established under RBI Act, 1934; Nationalized in 1949
- Headquarter: Mumbai
Objective:
- To regulate the issue of Bank notes and keeping of reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage;
- To have a modern monetary policy framework to meet the challenge of an increasingly complex economy, to maintain price stability while keeping in mind the objective of growth.
Function:
Monetary Authority:
- Formulates, implements and monitors the monetary policy.
- Objective: maintaining price stability while keeping in mind the objective of growth.
Regulator and supervisor of the financial system:
- Prescribes broad parameters of banking operations within which the country’s banking and financial system functions.
- Objective: maintain public confidence in the system, protect depositors’ interest and provide cost-effective banking services to the public.
Manager of Foreign Exchange
- Manages the Foreign Exchange Management Act, 1999.
- Objective: to facilitate external trade and payment and promote orderly development and maintenance of foreign exchange market in India.
Issuer of currency:
- Issues, exchanges and destroys currency notes as well as puts into circulation coins minted by Government of India.
- Objective: to give the public adequate quantity of supplies of currency notes and coins and in good quality.
Developmental role
- Performs a wide range of promotional functions to support national objectives.
Regulator and Supervisor of Payment and Settlement Systems:
- Introduces and upgrades safe and efficient modes of payment systems in the country to meet the requirements of the public at large.
- Objective: maintain public confidence in payment and settlement system
Related Functions
- Banker to the Government: performs merchant banking function for the central and the state governments; also acts as their banker.
- Banker to banks: maintains banking accounts of all scheduled banks.
News 4: Sri Lanka set to revive and upgrade FTA with India
Background:
- Sri Lanka will revive its Free Trade Agreement (FTA) with India and upgrade it to “a comprehensive economic and technological partnership”, President Ranil Wickremesinghe has said, signalling Colombo’s willingness to revisit a stalled pact.
Indo – Sri Lanka Free Trade Agreement:
- Indo-Sri Lanka Free Trade Agreement (ISFTA) came into effect in 2000 and several rounds of bilateral discussions later, Colombo and New Delhi are yet to reach an agreement on its upgraded version.
Areas of engagement:
- The power grid connection between India and Sri Lanka, offshore wind energy, the solar power plant at Sampur and the renewable energy projects on three islands of Jaffna Peninsula, Development of west terminal at Colombo airport.
Free Trade Agreement:
- India has signed 13 Free Trade Agreements (FTAs) with its trading partners, including the 3 agreements, namely India-Mauritius Comprehensive Economic Cooperation and Partnership Agreement (CECPA), India-UAE Comprehensive Partnership Agreement (CEPA) and India-Australia Economic Cooperation and Trade Agreement (IndAus ECTA) signed during the last five years.
- India shares preferential market access and economic cooperation through trade agreements with over 50 countries.
News 5: Bio-Diesel
Background:
- As part of efforts to reduce its carbon footprint, the Indian Air Force (IAF) is looking to fly an AN-32 transport aircraft modified to operate on 10% blended biodiesel for 200 flight hours in the next six months, Air Vice Marshal S. K. Jain, Assistant Chief of the Air Force (Maintenance Plans), said on Friday.
Biodiesel:
- Biodiesel is a liquid fuel derived from animal fats, vegetable oils, and waste cooking oil, which is a possible replacement for conventional diesel fuel.
- Bio-diesel is an eco-friendly, alternative diesel fuel prepared from domestic renewable resources ie. vegetable oils (edible or non- edible oil) and animal fats.
- These natural oils and fats are primarily made up of triglycerides.
- These triglycerides when it reacts chemically with lower alcohols in presence of a catalyst result in fatty acid esters.
- These esters show striking similarity to petroleum derived diesel and are called “Biodiesel”.
Benefits of biodiesel:
- It reduces vehicle emission which makes it eco-friendly.
- It is made from renewable sources and can be prepared locally.
- Increases engine performance because it has higher cetane numbers as compared to petro diesel.
- It has excellent lubricity.
- Increased safety in storage and transport because the fuel is nontoxic and biodegradable (Storage, high flash point)
- Production of bio diesel in India will reduce dependence on foreign suppliers, thus helpful in price stability.
- Reduction of greenhouse gasses at least by 3.3 kg CO2 equivalent per kg of biodiesel.
News 6: The cheetahs are coming
Background:
- Eight African cheetahs from Namibia — five females and three males between the ages of 4-6 years — will be flown 8,000 km over the Indian ocean to the Kuno National Park in Madhya Pradesh, where they will be released as part of India’s Rs 90-crore Cheetah Introduction project.
- This is the first time in the world that a large carnivore will be relocated from one continent to another.
Origin of Cheetah:
- The cheetah has an ancient history in the country, with a Neolithic cave painting of a ‘slender spotted feline being hunted’ having been found at Chaturbunj Nala in Mandasur, Madhya Pradesh.
- The name ‘cheetah’ is believed to have originated from Sanskrit word chitrak, which means ‘the spotted one’.
- In India, the cheetah population used to be fairly widespread.
- The animal was found from Jaipur and Lucknow in the north to Mysore in the south, and from Kathiawar in the west to Deogarh in the east.
- The cheetah is believed to have originated in South Africa and spread across the world through land connectivity.
Extinction:
- The cheetah was officially declared extinct by the Indian government in 1952.
- While over-hunting was a major contributing factor for the cheetah’s extinction, the decimation of its relatively narrow prey base species and the loss of its grassland-forest habitat also played a role.
- During the decades preceding independence, as well as those after, India’s emphasis on agriculture – which included acquiring and parcelling off grassland – led to a decline in the cheetah’s habitat.
Why is the cheetah being brought back?
- The aim behind the translocation is not only to restore India’s ‘historic evolutionary balance’, but also to develop a cheetah ‘metapopulation’ that will help in the global conservation of the animal.
- As it is a flagship species, the conservation of the cheetah will revive grassland-forests and its biome and habitat, much like Project Tiger has done for forests and all the species found in these forests.
- Project Tiger has also resulted in the conservation of 250 water bodies found in India’s 52 Tiger Reserves. The Cheetah Project is likely to have a similar impact.
Why was Kuno National Park chosen for settling of Cheetah:
- Kuno, which had been monitored since 2006, was found to be ready to receive the cheetah immediately, as it had already been prepared for the Asiatic Lion.
- Both animals share the same habitat – semi-arid grasslands and forests that stretch across Gujarat, Rajasthan and Madhya Pradesh.
- The upgradation of sites required investment on a large scale in terms of reducing anthropogenic pressures through relocation of villages, mitigating infrastructure (roadways and railway) and prey augmentation for the cheetah through translocation of blackbuck, chital, chinkara and wild boar, among other animals.
- While Kuno itself has a healthy prey base (with chital, sambhal, neel gai, wild pig, gazelle, langur, peafowl), 700 more such herbivores have also been introduced to the area.
- In Sheopur district, where Kuno is located, rainfall levels, temperatures, altitude, and conditions are similar to conditions in both South Africa and Namibia.
News 7: SCO summit in Uzbekistan
Resilient supply chains:
- Prime Minister Narendra Modi urged Shanghai Cooperation Organisation member states Friday to “give each other full right to transit”.
- Addressing the SCO summit that included China President Xi Jinping and Russia President Vladimir Putin in the Uzbekistan city of Samarkand, Modi framed the “right to transit” in the context of connectivity and how it could help establish reliable and resilient supply chains in the region.
- Lack of transit across Pakistan’s territory has been a challenge for India to access Central Asian markets, and Delhi has flagged this concern several times in the past.
India – Turkey:
- Economic and commercial relationship assumes an important dimension in bilateral relationship, diplomatic ties have been adversely impacted over Turkey’s public criticism of the revocation of Article 370 in Jammu and Kashmir and the February 2020 riots in north-east Delhi.
India – Iran:
- Reviewed the progress in the development of the Shahid Behesti terminal, Chabahar Port and underscored the importance of bilateral cooperation in the field of regional connectivity.
- India-Iran bilateral ties are marked by historic and civilizational connections, including strong people to people contacts.
Samarkand Declaration of SCO summit:
- Leaders of SCO member states sign Samarkand declaration which included a decision on the Comprehensive Action Plan for 2023-27 for the implementation of provisions of the treaty on long-term good neighbourliness, friendship and cooperation among the SCO member states.
- Varanasi was declared as the tourist and cultural capital of the SCO in 2022 – 23.
SCO:
- SCO is a permanent intergovernmental international organization, established in 2001
- aims to maintain peace, security and stability in the region.·
- Prior to creation of SCO in 2001, Shanghai Five was there which included the members China, Russia, Kazakhstan, Kyrgyzstan and Tajikistan
- Headquarter: Beijing
- Members: China, Russia, Kazakhstan, Kyrgyzstan,Tajikistan, Uzbekistan, India, Pakistan. India and Pakistan became members in 2017. In September 2021, it was announced Iran will become a full-time member.
Regional Anti-Terrorist Structure – Shanghai Cooperation
- Organization (RATS-SCO) : RATS is a permanent body of the SCO and is intended to facilitate coordination and interaction between the SCO member states in the fight against terrorism, extremism and separatism.
- SCO member countries contribute about 30 per cent of global GDP, and 40 per cent of the world’s population also lives in SCO countries.
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Steve Ovett, the famous British middle-distance athlete, won the 800-metres gold medal at the Moscow Olympics of 1980. Just a few days later, he was about to win a 5,000-metres race at London’s Crystal Palace. Known for his burst of acceleration on the home stretch, he had supreme confidence in his ability to out-sprint rivals. With the final 100 metres remaining,
[wptelegram-join-channel link=”https://t.me/s/upsctree” text=”Join @upsctree on Telegram”]Ovett waved to the crowd and raised a hand in triumph. But he had celebrated a bit too early. At the finishing line, Ireland’s John Treacy edged past Ovett. For those few moments, Ovett had lost his sense of reality and ignored the possibility of a negative event.
This analogy works well for the India story and our policy failures , including during the ongoing covid pandemic. While we have never been as well prepared or had significant successes in terms of growth stability as Ovett did in his illustrious running career, we tend to celebrate too early. Indeed, we have done so many times before.
It is as if we’re convinced that India is destined for greater heights, come what may, and so we never run through the finish line. Do we and our policymakers suffer from a collective optimism bias, which, as the Nobel Prize winner Daniel Kahneman once wrote, “may well be the most significant of the cognitive biases”? The optimism bias arises from mistaken beliefs which form expectations that are better than the reality. It makes us underestimate chances of a negative outcome and ignore warnings repeatedly.
The Indian economy had a dream run for five years from 2003-04 to 2007-08, with an average annual growth rate of around 9%. Many believed that India was on its way to clocking consistent double-digit growth and comparisons with China were rife. It was conveniently overlooked that this output expansion had come mainly came from a few sectors: automobiles, telecom and business services.
Indians were made to believe that we could sprint without high-quality education, healthcare, infrastructure or banking sectors, which form the backbone of any stable economy. The plan was to build them as we went along, but then in the euphoria of short-term success, it got lost.
India’s exports of goods grew from $20 billion in 1990-91 to over $310 billion in 2019-20. Looking at these absolute figures it would seem as if India has arrived on the world stage. However, India’s share of global trade has moved up only marginally. Even now, the country accounts for less than 2% of the world’s goods exports.
More importantly, hidden behind this performance was the role played by one sector that should have never made it to India’s list of exports—refined petroleum. The share of refined petroleum exports in India’s goods exports increased from 1.4% in 1996-97 to over 18% in 2011-12.
An import-intensive sector with low labour intensity, exports of refined petroleum zoomed because of the then policy regime of a retail price ceiling on petroleum products in the domestic market. While we have done well in the export of services, our share is still less than 4% of world exports.
India seemed to emerge from the 2008 global financial crisis relatively unscathed. But, a temporary demand push had played a role in the revival—the incomes of many households, both rural and urban, had shot up. Fiscal stimulus to the rural economy and implementation of the Sixth Pay Commission scales had led to the salaries of around 20% of organized-sector employees jumping up. We celebrated, but once again, neither did we resolve the crisis brewing elsewhere in India’s banking sector, nor did we improve our capacity for healthcare or quality education.
Employment saw little economy-wide growth in our boom years. Manufacturing jobs, if anything, shrank. But we continued to celebrate. Youth flocked to low-productivity service-sector jobs, such as those in hotels and restaurants, security and other services. The dependence on such jobs on one hand and high-skilled services on the other was bound to make Indian society more unequal.
And then, there is agriculture, an elephant in the room. If and when farm-sector reforms get implemented, celebrations would once again be premature. The vast majority of India’s farmers have small plots of land, and though these farms are at least as productive as larger ones, net absolute incomes from small plots can only be meagre.
A further rise in farm productivity and consequent increase in supply, if not matched by a demand rise, especially with access to export markets, would result in downward pressure on market prices for farm produce and a further decline in the net incomes of small farmers.
We should learn from what John Treacy did right. He didn’t give up, and pushed for the finish line like it was his only chance at winning. Treacy had years of long-distance practice. The same goes for our economy. A long grind is required to build up its base before we can win and celebrate. And Ovett did not blame anyone for his loss. We play the blame game. Everyone else, right from China and the US to ‘greedy corporates’, seems to be responsible for our failures.
We have lowered absolute poverty levels and had technology-based successes like Aadhaar and digital access to public services. But there are no short cuts to good quality and adequate healthcare and education services. We must remain optimistic but stay firmly away from the optimism bias.
In the end, it is not about how we start, but how we finish. The disastrous second wave of covid and our inability to manage it is a ghastly reminder of this fact.