Daily Current Affairs for UPSC IAS: 20th January 2021

Supreme Court Directive on Quota in Promotions

The Supreme Court asked the Attorney General to compile the various issues being raised by States with regard to the application of a Constitution Bench judgment of 2006 in the M. Nagaraj case.

The directive is based on a plea by the Centre to refer to a seven-judge Bench the question of whether creamy layer should apply or not to the Scheduled Caste/Scheduled Tribe community while providing them reservation in government promotions.

The court in M. Nagaraj case had upheld the application of the creamy layer principle to members of the Scheduled Caste/Scheduled Tribe communities in promotions.

Creamy Layer:

• The term ‘Creamy layer’ was first mentioned in the Supreme Court’s landmark judgment in the Indra Sawhney case (1992).
• This term is used to describe some members of a backward class who are socially, economically as well as educationally advanced as compared to the rest of the members of that community.
• They lap up all the benefits of reservations meant for that class, without allowing benefits to reach the truly backward members of that class.

The issues raised by the states regarding application of creamy layer principle to members of the SC/ST communities in promotions are not common, hence such issues should be compiled before considering referral to a seven-judge bench.

M. Nagaraj Case (2006):

Reversed the stance in the Indra Sawhney case: In this case applying the creamy layer concept in SC/ST reservation in promotions, the Supreme court reversed its earlier stance in the Indra Sawhney case (1992), in which it had excluded the creamy layer concept on SCs/STs (that was applicable on OBCs).

Directives to the states: The five-judges Bench in Nagaraj case upheld the constitutional validity of all 77th, 81st, 82nd, and 85th constitutional amendments enabling reservation of SC/ST communities in promotions, but made certain directives for the states:

State is not bound to make reservations for SC/ST in the matter of promotions.

If a State wants to provide reservation to the SC/ST communities in promotions:

• It has to collect quantifiable data showing backwardness of the class.
• Show inadequacy of representation of that class in public employment in addition to compliance of Article 335.
• State needs to ensure that its reservation provision does not lead to excessiveness- breaching the ceiling-limit of 50%, or destroying the creamy layer principle.

Constitutional Validity of the Insolvency and Bankruptcy Code

The Supreme Court (SC) has upheld the constitutional validity of the Insolvency and Bankruptcy Code (IBC) (Amendment) Act, 2020.

• In its August 2019 order, the SC had upheld the government decision to grant home-buyers the status of financial creditors.
• Financial creditor: It means any person to whom a ‘financial debt’ is owed and includes a person to whom such debt has been legally assigned or transferred to.
• Subsequently, the government introduced the IBC (Amendment) Act, 2020, that mandated a threshold of at least 10% of home-buyers (or allottees) in a project or 100 of the total allottees for initiating insolvency proceedings against the real estate developer.
• It means that a single home-buyer is barred from approaching the National Company Law Tribunal (NCLT) under Section 7 of the IBC to initiate insolvency proceedings against the real estate developer/builder.
• Section 3 of the Amendment Act allows home-buyers to seek the Corporate Insolvency Resolution Process
• (CIRP) against builders only when 100 allottees or at least 10% of allottees make a joint application to NCLT.
• The allottees should be from the same real estate project. Aggrieved allottees drawn from different projects of the same developer cannot form the 100.
• A 30-day deadline was given for existing applicants to find the requisite number of supporters to meet the threshold of 100, else their plea pending in the tribunal even before the commencement of the 2020 Act would be deemed as withdrawn.
• This was done to prevent real estate projects from being stalled by few disappointed home-buyers/investors.

SC’s Ruling:

Threshold:

• SC said that insisting on a threshold in regard to these categories of creditors would stop indiscriminate litigation.
• The court agreed with the legislature that having a single allottee approach the tribunal would be risky, considering that a corporate insolvency resolution may also entail a complete overhaul or replacement of the developer’s company management.
• Such an initiative by a lone allottee would derail the plans of other allottees, who still had faith in the existing developer or were pursuing other legal remedies.
• The amendment reflects an attempt at shielding corporate debtors (Real Estate Developers) from what it considers would be either for frivolous or avoidable applications.

The consensus of Creditors:

• The amendment is likely to ensure that the filing of the application is preceded by a consensus at least by a minuscule percentage of similarly placed creditors.

Allotment:

• It does not matter whether a person has one or more allotments in his name or in the name of his family members.
• As long as there are independent allotments made to him or his family members, all of them would qualify as separate allottees and they would count both in the calculation of the total allotments, as also in reckoning the figure of hundred allottees or one-tenth of the allottees.

About Insolvency and Bankruptcy Code:

• The IBC was enacted in 2016.
• Objective:
  • To streamline and speed up the resolution process of failed businesses.
  • To consolidate provisions of the existing legislative framework to form a common forum for debtors and creditors of all classes to resolve insolvency.
  • To stipulate that the resolution process of a stressed company will have to be completed in a maximum of 270 days.
• Threshold Amount for Invoking Insolvency:
  • In March 2020, the government raised the threshold for invoking insolvency under the IBC to Rs. 1 crore from Rs. 1 lakh with a view to preventing triggering of such proceedings against small and medium enterprises that are facing the heat of the Covid-19 pandemic.

Systemically Important Banks (SIBs):

The Reserve Bank of India (RBI) has retained State Bank of India, ICICI Bank and HDFC Bank as Domestic Systemically Important Banks (D-SIBs) or banks that are considered as “too big to fail”.

Systemically Important Banks (SIBs):

• Some banks, due to their size, cross-jurisdictional activities, complexity, lack of substitutability and interconnectedness, become systemically important.
• SIBs are perceived as banks that are ‘Too Big To Fail (TBTF)’. This perception of TBTF creates an expectation of government support for these banks at the time of distress.
• SIBs are subjected to additional policy measures to deal with the systemic risks and moral hazard issues posed by them.
• Systemic risk can be defined as the risk associated with the collapse or failure of a company, industry, financial institution, or an entire economy.
• A moral hazard is a situation in which one party gets involved in a risky event knowing that it is protected against the risk and the other party will incur the cost.
• The disorderly failure of these banks has the potential to cause significant disruption to the essential services they provide to the banking system, and in turn, to the overall economic activity.

Background:

• G-SIBs: The Financial Stability Board (FSB), in consultation with the Basel Committee on Banking Supervision (BCBS) and national authorities, has identified Global Systemically Important Banks (G-SIBs) since 2011.
• Financial Stability Board (FSB) is an international body that monitors and makes recommendations about the global financial system.
• It was established in 2009.
• India is a member.
• BCBS publishes the methodology for assessing and identifying G-SIBs.
• BCBS is the primary global standard setter for the prudential regulation of banks. RBI is its member.
  G-SIIs: The FSB, in consultation with the International Association of Insurance Supervisors (IAIS) and national authorities, began identifying Global Systemically Important Insurers (G-SIIs) in 2013.
• IAIS, established in 1994, is a voluntary membership organization of insurance supervisors and regulators from more than 200 jurisdictions, constituting 97% of the world’s insurance premiums.
• Insurance Regulatory and Development Authority of India (IRDAI) and the International Financial Services Centres Authority (IFSCRA) are its members.

Shadow Entrepreneurs:

There has been a global rise of shadow entrepreneurship, in various sectors such as education (certificates), finance (for easy loans), the betting economy (online games) and healthcare (e-pharmacies).

• Shadow entrepreneurs are individuals who manage a business that sells legitimate goods and services but they do not register their businesses.
• This means that they do not pay tax, operating in a shadow economy where business activities are performed outside the reach of government authorities.
• Types of businesses include unlicensed taxicab services, roadside food stalls and small landscaping operations.
  In a study of 68 countries, the Imperial College Business School found that after Indonesia, India has the second highest rate of shadow entrepreneurs.

Causes for Rise in Shadow entrepreneurs:

• Taxation & Enforcement: High tax rates accompanied by loose enforcement induces tax avoidance, discourage investment informal businesses, and drive entrepreneurial activity toward the informal sector.
• Impact of Covid-19: Shadow entrepreneurs, offering technology-mediated services, bring complementary services that traditional service providers may be constrained to offer or consumers might not be able to access due to lockdown constraints.
• Technological Advancements: Shadow entrepreneurship is also promoted through technology-enabled new markets and also entry of new and tech savvy consumers.

Benefits:

• Increase in employment: Most of Informal sector jobs come under shadow entrepreneurship.
• Driver of economic development
• Reduction in Poverty
• Removes pressure on agriculture by providing non agricultural jobs.
• Diversified options for consumers

1st National Conference of States on Logistics:

Union Minister of Commerce & Industry Piyush Goyal addressed the 1st National Conference of States on Logistics.

• He said that National Logistics Policy, which is under consultation, along with the National Logistics Council and State Logistics Coordination Committee, will work as a template for better coordination and integrated development for the logistics center.
• The Minister said that Logistics is all about 5R’s: Getting the Right product – In the Right condition – At the Right place – At the Right time – To the Right customer.
• India has a $200 billion logistics ecosystem.
• A good part of it is supported by the Indian Railways.
• Citing studies, the minister said that about 13-14 per cent cost of a product is logistics, and “we wish to bring it down to about 8 per cent”.

Carbon Sequestration:

There has been increasing investments to develop technology in the field of Carbon Sequestration and fight the menace of climate change.

As Global Warming accelerates and society continues to emit greenhouse gases, the idea is gaining of investing in artificial techniques of Carbon Sequestration.

According to the Intergovernmental Panel on Climate Change, nations may need to remove between 100 billion and 1 trillion tonnes of carbon dioxide from the atmosphere this century to avert the worst effects of climate change, far more than can be absorbed by simply planting more trees.

Carbon sequestration :

It is the long-term storage of carbon in plants, soils, geologic formations, and the ocean. Carbon sequestration occurs both naturally and as a result of anthropogenic activities and typically refers to the storage of carbon.

Types:

• Terrestrial Carbon Sequestration:
  • Terrestrial carbon sequestration is the process through which CO2 from the atmosphere is absorbed by trees and plants through photosynthesis and stored as carbon in soils and biomass (tree trunks, branches, foliage, and roots)
• Geologic Carbon Sequestration:
  • CO2 can be stored, including oil reservoirs, gas reservoirs, unmineable coal seams, saline formations and shale formations with high organic content.
• Ocean Carbon Sequestration:
  • Oceans absorb, release and store large amounts of CO2 from the atmosphere.
  • This can be done in two ways- enhancing productivity of ocean biological systems through Iron fertilization, and injecting CO2 into the deep ocean.
  • The dumping of iron stimulates phytoplankton production, which in turn leads to enhanced photosynthesis from these microorganisms, helping in CO2 absorption.

Open-RAN (Radio Access Network):

Telecom Regulatory Authority of India (TRAI) Chairman said that use of Open-RAN (Radio Access Network) and software-defined telecom networks will open new opportunities for Indian entities to enter into the network equipment market.

• Open-RAN is not a technology, but rather an ongoing shift in mobile network architecture that allows networks to be built using subcomponents from a variety of vendors.
• O-RAN has an open, multi-vendor architecture for deploying mobile networks, as opposed to the single-vendor proprietary architecture.
• O-RAN uses software to make hardware manufactured by different companies work together.
• The key concept of Open RAN is “opening” the protocols and interfaces between the various subcomponents (radios, hardware and software) in the RAN.

Radio Access Network (RAN):

• It is the part of a telecommunications system that connects individual devices to other parts of a network through radio connections.
• A RAN resides between user equipment, such as a mobile phone, a computer or any remotely controlled machine, and provides the connection with its core network.
• As a technical matter this is what the industry refers to as a disaggregated RAN.

Elements of RAN:

• The Radio Unit (RU) is where the radio frequency signals are transmitted, received, amplified and digitized.
• The RU is located near, or integrated into,the antenna.
• The Distributed Unit (DU) is where the real-time, baseband processing functions reside. The DU can be centralized or located near the cell site.
• The Centralized Unit (CU) is where the less time-sensitive packet processing functions typically reside.

The functioning of Open RAN:

• It is the interface between the RU, DU, and the CU that are the main focus of Open RAN.
• By opening and standardizing these interfaces (among others in the network), and incentivizing the implementation of the same, networks can be deployed with a more modular design without being dependent upon a single vendor.
• Making these changes can also allow the DU and CU to be run as virtualized software functions on vendor-neutral hardware.

Indo-French Joint Exercise Desert Knight-21:

• Indian Air Force (IAF) and French Air and Space Force will conduct a bilateral Air exercise, Ex Desert Knight-21 at Air Force Station Jodhpur from 20 to 24th Jan 2021.
• The exercise is unique as it includes fielding of Rafale aircraft by both sides and is indicative of the growing interaction between the two premiers Air Forces.
• Presently, the French detachment for Ex Desert Knight-21 is deployed in Asia as part of their ‘SKYROS Deployment’.
• Rafale fighter jets of India and France are carrying out wargames codenamed Exercise SKYROS.
• Beginning September 2020, the IAF has inducted and operationalised eight Rafale fighter jets of the 36 jets contracted from France in a 7.87-billion euro deal in 2016.
• Defence Exercises between India and France:
  • Varuna – Naval exercise
  • Garuda – Air exercise
  • Shakti – Army exercise
• Gagan Shakti is conducted by the Indian Air Force to showcase its air dominance over the entire extended area of the Indian Ocean Region.
  • It includes all terrain operations – desert, high altitude, maritime scenarios and special operations – in real time with specific focus on key areas like aerial combat, air to surface combat, paratrooper assault and medical evacuation.
• Garuda Shakti is the joint military exercise between India and Indonesia.
• Mitra Shakti is the joint military exercise between India and Sri Lanka.

PARAKRAM DIWAS:

The government of India has decided to celebrate the birthday of Netaji Subhas Chandra Bose on the 23rd day of January every year as ‘PARAKRAM DIWAS’.

The objective is to remember Netaji’s indomitable spirit and selfless service to the nation and to inspire people of the country, especially the youth, to act with fortitude in the face of adversity as Netaji did.

Gazette Notification for declaring 23rd January as “Parakram Diwas” has been published.

The government of India has decided to celebrate the 125th Birth Anniversary year of Netaji Subhas Chandra Bose in a befitting manner at the national and international level, beginning from 23rd January 2021.

A High-Level Committee, headed by Prime Minister Shri Narendra Modi, has been constituted for deciding the programs, and to supervise and guide the commemoration.