UPSC Key— 2nd April, 2024: 90 years of RBI, Kodaikanal solar observatory, Level playing field and more

Syllabus: 

Preliminary Examination: Economic and Social Development

Mains Examination: GS-III: Indian Economy

• What’s the ongoing story- The Reserve Bank of India (RBI), which was established on April 1, 1935, is responsible for monetary stability, currency management, inflation targeting, regulating the banking system, and setting interest rates. The central bank’s story of the last 90 years includes ups and downs, but has generally been one of stellar achievement.

• Historical Tidbits:

Legislation to set up the Reserve Bank of India was enacted in March 1934, and the provisions relating to the constitution of the bank, issue of share capital, and establishment of central and local boards became operative from January 1, 1935.

The first Governor of the RBI was the Australian Sir Osborne Arkell Smith, one of the two managing governors of the Imperial Bank of India. Sir C D Deshmukh was the first Indian to become Governor.

Following Partition, it was agreed that the RBI would cease to be the currency authority for Pakistan, and Indian notes would cease to be legal tender in Pakistan.

The RBI’s relationship with the government has been testy at times. But the bank has been steadfast in defending its turf whenever the government has tried to interfere.

• From the front page:

PRIME MINISTER Narendra Modi Monday told the Reserve Bank of India to think of ways to support new emerging sectors such as space, green energy, digital technology and tourism in the coming days, because a lot of work will come its way once the new government takes oath.

Key takeaways from Prime Minister’s speech: 

India is aiming to make the rupee a global currency. Last year, an RBI-appointed Inter-Departmental Group (IDG) had recommended a slew of measures, including inclusion of the rupee in the Special Drawing Rights (SDR) basket and recalibration of the foreign portfolio investor (FPI) regime to accelerate the pace of internationalisation of the rupee.

The Insolvency and Bankruptcy Code (IBC) alone has helped to resolve bad loans worth Rs 3.25 lakh crore. Over 27,000 applications with an underline default of over Rs 9 lakh crore, were resolved before admitting to the IBC, he said.

The gross NPAs (non-performing assets) of banks, which were at around 11.25 per cent in 2018, has dropped to below 3 per cent at the end of September 2023.

He said the transformation of the banking sector in the last 10 years was difficult but it could be achieved because there was clarity in the government’s policies, intentions and decisions. It was also possible as the government made concerted efforts, and with honesty.

He highlighted that there are 52 Jan Dhan accounts today, with more than 55 per cent accounts belonging to women and over 7 crore Kisan Credit Cards have been given to farmers, fisherman and others, which has given a push to the rural economy.

Talking about Unified Payments Interface (UPI), the real-time payment system, Modi said it has become a globally recognised platform with more than 1,200 crore transactions taking place per month. The RBI is also working on the Central Bank Digital Currency (CBDC).

To curb higher inflation, the government provided the RBI the inflation targeting framework, on which the RBI’s six-member Monetary Policy Committee (MPC) has been successful

Under the inflation targeting framework, the government has mandated the RBI to keep inflation at 4 per cent with a band of +/- 2 per cent. The RBI has been targeting to bring consumer price-based inflation to 4 per cent on a sustainable basis.

In February, consumer price-based inflation (CPI) or retail inflation stayed flat at 5.09 per cent against 5.1 per cent recorded in January.

• Points to ponder: 

With reference to  RBI, discuss the important challenges and steps taken in the past two decades.

(Thought Process: Include reforms of 1991, 2008 global financial crisis, twin balance sheet problem, demonetisation, Internationalisation of Rupee, MPC, bad loans, IBC, Covid 19 pandemic, adopting inflation targeting, introduction of UPI etc.)

Why SC barred unregulated soil extraction for linear projects

Syllabus:

Preliminary Examination: Current events of national and international importance

Mains Examination: GS-III: Infrastructure

• What’s the ongoing story-  The Supreme Court has set aside a notification issued by the Environment Ministry three years ago that exempted extraction of ordinary earth for linear projects, such as road and railways construction, from obtaining Environmental Clearance (EC).

The exemption, offered in March 2020, was challenged before the National Green Tribunal (NGT), which asked the Ministry in October 2020 to review it within three months. As the Ministry dragged its feet, the matter reached the top court, which on March 21 this year struck down the “blanket” and “arbitrary” exemption.

• Acts to focus:

The Environment (Protection) Act, 1986

Mines and Minerals (Development and Regulation) Act, 1957

• KEY TAKEAWAYS: What the SC said

First, the court held that “completely unguided and blanket exemption” was arbitrary and violative of Article 14 because the 2020 notification did not define ‘linear projects’ or specify the quantum and the extraction area.

“It is also not provided that only that quantity of ordinary earth, which is required to implement the linear projects, is exempted,” the court said, adding that exemption granted without incorporating any safeguards defeats the purpose of the EP Act.

Second, the court held that the Ministry offered no justification for concluding “that in the public interest, the requirement of public notice should be dispensed with” at any stage — neither in the notification itself nor in its submissions to the NGT and SC. The decision was made without any application of the mind, it said.

Third, even the August 2023 notification, the court said, failed to elaborate on the concept of linear projects, specify the authority responsible for environmental safeguards or provisions for the same, or impose restrictions on the quantum of extraction.

“The notification was issued two days after the nationwide lockdown was imposed… The work of linear projects, such as roads, pipelines, etc, had come to a grinding halt… We fail to understand the undue haste shown by the Central Government in issuing the impugned notification,” the court said.

• For Your Information: 

The National Green Tribunal, established in 2010, as per the National Green Tribunal Act is a specialised judicial body equipped with expertise solely for the purpose of adjudicating environmental cases in the country.

• Points to ponder: What is the National Green Tribunal’s composition? Who may submit cases to the Tribunal and what sort of cases are heard? Are decisions of the Court binding? Are decisions of the Tribunal final?

How India’s first solar observatory was set up in Kodaikanal 125 yrs ago

Syllabus:

Preliminary Examination: History and Science

Mains Examination: GS III: Achievements of Indians in science & technology; indigenization of technology and developing new technology.

• What’s the context- Since ancient times, seafarers, mathematicians, astronomers and physicists have all extensively studied and followed the Sun and its activities. In 1792, the British East India Company established the Madras Observatory, a first of its kind in this part of the world. Here, astronomical observations of the Sun, the Moon, bright stars and planets recorded during 1812-1825 were preserved in two large data volumes. The first dedicated solar observations were recorded later in 1878 from the Trigonometrical Survey Office in Dehradun. Back then, astronomy was largely limited to special events like eclipses or planetary transits that drew huge interest from foreign astronomers to visit India. Some of these visitors later settled here and laid a foundation for observatory-based astronomy in the country.

• Why did the Great Drought in the 1870s become the reason for choosing Kodaikanal as the ideal location for a solar observatory?

(Historical Tidbit: Scanty rainfall over south India during the winter monsoon of 1875 triggered one of the worst droughts the country had experienced till then. Multiple failed crops over the famine-stricken peninsular India killed 12.2 to 29.3 million people across the Madras and Mysore Provinces during 1875-1877. India, along with China, Egypt, Morocco, Ethiopia, southern Africa, Brazil, Columbia and Venezuela, suffered concurrent multi-year droughts during 1876-1878, later named the Great Drought, and an associated global famine that killed nearly 50 million. The drought was thought to be due to multiple reasons – solar activity; cool Pacific Ocean conditions followed by a record-breaking El Nino (1877-1878); strong Indian Ocean Dipole and warm North Atlantic Ocean conditions.)

• What was the role of Charles Michie Smith?

• What are the Bhavnagar Telescope and White light Active Region Monitor (WARM) ?

• For Your Information: 

The Government of India separated Astrophysics from the India Meteorological Department (IMD) in April 1971. The KoSO was brought under the Indian Institute of Astrophysics (IIA), Bengaluru on April 1, 1971.

From solar data recorded on basic photographic plates or films, the 125-year-old KoSO boasts a mammoth digital repository containing 1.48 lakh digitised solar images of 10 terabytes. These include 33,500 white-light images (showing sunspots) and thousands of other images of the Sun recorded every day since the start of the 20th century.

KoSO is the only observatory offering high-resolution digitised images for such a long period (with coverage of more than 75 per cent).

• Point to ponder: Why studying the Sun’s historical past is important to predict the future?

( Thought Process:The Sun is the primary source of energy and the reason for the existence of most life on Earth. Even minor changes on the solar surface or its periphery can significantly affect the Earth’s atmosphere and influence the space weather. For instance, powerful solar storms, solar flares, are potentially harmful for satellite-based operations, power grids, and navigational networks.

In this context, historical data on the Sun help solar physicists understand and predict its future, and its impact on life on Earth. Digitisation of the historical data, earlier available only as photographic plates or films, has removed the difficulties of handling and maintenance, and opened up a voluminous trove to solar physicists around the world.)

THE EDITORIAL PAGE

The choice before EC

Syllabus:

Preliminary Examination: Indian Polity and Governance

Mains Examination: GS-II: Salient features of the Representation of People’s Act (Elections and Election Commission of India)

• What’s the ongoing story- Former Election Commissioner Ashok Lavasa writes:

One of the heartening features of the press briefing by the Election Commission of India (EC) on the day general elections 2024 were announced was its emphasis on level playing field (LPF). The CEC said that the EC had circulated the Model Code of Conduct (MCC) to all political parties, requesting them to bring it to the notice of their star campaigners. It would be ruthless in dealing with complaints of action that disturbed the LPF, he said.

• The Central Question: Why should LPF be a sacred precept for free and fair elections? What is the relevance of MCC?

• Key Takeaways:

LPF should be a sacred precept for free and fair elections.  One reason could be that an election in a democracy is neither a war nor an amorous contest. It is the most crucial event of a democracy where different parties and independent candidates vie with each other to earn the voters’ mandate to represent them in the House of elected representatives. A vote is meant to be a social contract based on faith and facts.

In order for this contest to be fair, the availability of LPF is considered a sine qua non during elections even if it is acknowledged that the contestants might not be equal otherwise. It is neither for the political parties nor for the candidates themselves to even out the field by not trying to be one-up on each other. If inherent inequality is recognised as part of the game, it is the responsibility of the regulator to ensure that there is LPF during elections when they endeavour to influence the voters in their favour.

Although there are common laws to govern ordinary civic behaviour in normal times, political parties and candidates are expected to observe a certain decorum during elections, which they have voluntarily agreed to under the superintendence of the EC. Not all the prescribed restraint is strictly inscribed in law. Sometimes it is a mark of their commitment to decent public behaviour; at others, it is a display of the EC’s even-handed approach. That indeed is the genesis of the MCC that the EC is expected to enforce during elections.

A scrutiny of the MCC shows that there are four principal players covered by the Code; candidates, political parties, ruling party and bureaucracy. The last two are part of the ruling dispensation but the code applies to them separately too. The bulk of the code covers violations otherwise covered in law, such as, not to “aggravate existing differences or create mutual hatred or cause tension between different castes and communities”, or not to level “unverified allegations” and launch personal criticism, or not appealing “to caste or communal feelings for securing votes”, or parties and candidates not resorting to “corrupt practices”. The Code stipulates that parties and their workers will not disrupt the activities of rival parties. There are sections on campaign meetings, processions, polling booths
and election manifestos.

The noteworthy thing, however, is that the MCC devotes a separate section on the “party in power whether in the Centre or state”, enjoining it to “ensure that no cause is given for any complaint that it has used its official position for the purposes of its election campaign”. The misuse, as covered by the Code, is essentially pertaining to the use of government facilities such as guest houses, transport or public infrastructure, and the use of its authority to utilise public funds for issuing advertisements or granting new sanctions. The MCC doesn’t go beyond this.

The routine functioning of the state machinery and the legal system is in no way restricted by the letter of the current MCC. It is a moot point if it is even desirable for the EC to interfere in the due process of law such as court hearings, or whether routine investigation by law enforcement agencies be subject to adjudication by the EC, as it might make the situation more untenable. Perhaps, misuse of authority by state agencies was not even conceived or flagged by the stakeholders when the MCC was initially drafted.

The MCC is an evolving document just as human behaviour is. Discuss. 

• For Your Information: 

(a) What is the Model Code of Conduct?

The MCC of ECI is a set of guidelines issued to regulate political parties and candidates prior to elections. The rules range from issues related to speeches, polling day, polling booths, portfolios, the content of election manifestos, processions, and general conduct, so that free and fair elections are conducted. (eci.gov.in)

(b) When does the Model Code of Conduct come into effect?

The MCC comes into force from the date the election schedule is announced until the date that results are out. 

• Points to Ponder: 

Is the Model Code of Conduct legally binding? 

What restrictions does the Model Code of Conduct impose?

• Other Important Article Covering the same topic:

Model Code of Conduct comes into force for 2024 Lok Sabha elections: What does it mean?   

THE IDEAS PAGE

The importance of hope

Syllabus:

Preliminary Examination: Current events of national and international importance.

Mains Examination: GS I: Population and associated issues

• What’s the ongoing story- Vikram Patel writes: Not so long ago, we were fed with terrifying projections of a population “time bomb” which would overwhelm our country, and the world, depleting all its resources and leaving everyone impoverished. We were exhorted to trim our family size for the sake of the country — no more than two children and just one would be truly patriotic. China went further: Those who had more than one child were subjected to shame and stiff penalties. It is remarkable how the narrative has flipped. The publication of a paper on global population trends in the Lancet last week is only the latest to project that the population “time bomb” staring us in the face is in the exact opposite direction. Now, it appears that the world’s population is likely to shrink precipitously in most countries, including India. China is projected to lose up to half its current population by 2100. Only sub-Saharan Africa will buck this trend — in this not-too-distant future, one in two children born in the world will be African, ironically much like our remote past when people from the continent dominated our planet.

If we don’t do anything to understand and address the factors behind declining fertility, populations are going to shrink. This is alarming primarily because the losses will be entirely due to fewer births. This, in turn, paints a dystopic picture — a world increasingly populated by old people.

• The Central Question: Why don’t young people want to have children and how to fix that?

What are the various theories on falling fertility?

What is the most important reason for declining fertility according to the writer?

• Key terms: Total Fertility Rate, Replacement level fertility rate.

• For Your Information: Reports on your tips

India will turn into an ageing society in the next three decades, according to a report in the Lancet. The medical journal has flagged that India’s TFR — the average number of children born to a woman — will fall to 1.29 in 2050. One in five persons in India will be above the age of 60 in 2050.

The UN Population Fund’s (UNPF) India Ageing Report projected that the number of elderly in India will more than double from 149 million in 2022 to 347 million by mid-century. 

The India Employment Report 2024 describes the bleak scenario for young people: Nearly 90 per cent are informally employed, facing a future which offers no income security and low wages. 

The World Inequality Lab reports that in 2022-23, the richest one per cent of Indians had cornered 40 per cent of the wealth of the nation. Such an astonishing level of inequality, which is inimical to societal solidarity and connectedness, is unparalleled in our history.

India was ranked 126th out of 143 nations in the World Happiness Report 2024, behind even Pakistan and the country’s youth were amongst the unhappiest of all. 

• Point to ponder: Lancet report India should alert policymakers to ageing population’s needs. Discuss.

(Thought Process: Policymakers will also have to ensure adequate social security and healthcare provisions for the growing elderly population and create opportunities to harness their skills effectively. The varying TFR rates across states in India could present the country’s planners with a somewhat unique challenge — in fact, there are already signs that parts of south India and west India are greying faster than those in the north. Policymakers must be ready to understand the demographic shift in all its dimensions, and prepare for the change.)

• Other Important Article Covering the same topic:

Express View on India’s falling fertility rate: A wake-up call

For any queries and feedback, contact manas.srivastava@indianexpress.com