Daily Current Affairs for UPSC CSE
Topics Covered
- Laws applicable to Social Media Platforms
- Bad bank
- Currency swap
- Glacial Lake outburst
- Facts for Prelims
1 . Laws applicable to Social Media Platforms
Context : The Centre has issued notice to Twitter after the micro-blogging site restored more than 250 accounts that had been suspended earlier on the government’s ‘legal demand’.
Background
- The government wants the platform to comply with its earlier order of January 31 by which it was asked to block accounts and a controversial hashtag that spoke of an impending ‘genocide’ of farmers for allegedly promoting misinformation about the protests, adversely affecting public order.
- Twitter reinstated the accounts and tweets on its own and later refused to go back on the decision, contending that it found no violation of its policy.
Are platforms required to comply with government requests?
- Cooperation between technology services companies and law enforcement agencies is now deemed a vital part of fighting cybercrime, and various other crimes that are committed using computer resources. These cover hacking, digital impersonation and theft of data.
- The potential of the Internet and its offshoots such as mail and messaging services and social media networks to disseminate potentially harmful content such as hate speech, rumours, inflammatory and provocative messages and child pornography, has led to law enforcement officials constantly seeking to curb the ill-effects of using the medium.
- Therefore, most nations have framed laws mandating cooperation by Internet service providers or web hosting service providers and other intermediaries to cooperate with law and order authorities in certain circumstances.
What does the law in India cover?
- In India, the Information Technology Act, 2000, as amended from time to time, governs all activities related to the use of computer resources.
- It covers all ‘intermediaries’ who play a role in the use of computer resources and electronic records.
- The term ‘intermediaries’ includes providers of telecom service, network service, Internet service and web hosting, besides search engines, online payment and auction sites, online marketplaces and cyber cafes.
- It includes any person who, on behalf of another, “receives, stores or transmits” any electronic record. Social media platforms would fall under this definition.
What are the Centre’s powers vis-à-vis intermediaries?
- Section 69 of the Act confers on the Central and State governments the power to issue directions “to intercept, monitor or decrypt…any information generated, transmitted, received or stored in any computer resource”.
- The grounds on which these powers may be exercised are: in the interest of the sovereignty or integrity of India, defence of India, security of the state, friendly relations with foreign states, public order, or for preventing incitement to the commission of any cognisable offence relating to these, or for investigating any offence.
How does the government block websites and networks?
- Section 69A, for similar reasons and grounds on which it can intercept or monitor information, enables the Centre to ask any agency of the government, or any intermediary, to block access to the public of any information generated, transmitted, received or stored or hosted on any computer resource. Any such request for blocking access must be based on reasons given in writing.
- Procedures and safeguards have been incorporated in the rules framed for the purpose.
What are the obligations of intermediaries under Indian law?
- Intermediaries are required to preserve and retain specified information in a manner and format prescribed by the Centre for a specified duration. Contravention of this provision may attract a prison term that may go up to three years, besides a fine.
- When a direction is given for monitoring, interception or decryption, the intermediary, and any person in charge of a computer resource, should extend technical assistance in the form of giving access or securing access to the resource involved, and must comply with the request to intercept or monitor or decrypt the information concerned. Failure to extend such assistance may entail a prison term of up to seven years, besides a fine.
- Failure to comply with a direction to block access to the public on a government’s written request also attracts a prison term of up to seven years, besides a fine.
- The Act also empowers the government to collect and monitor data on traffic. When an authorised agency asks for technical assistance in this regard, the intermediary must comply with the request. Non-compliance may lead to a prison term of up to three years, besides a fine.
Is the liability of the intermediary absolute?
- No. Section 79 of the Act makes it clear that “an intermediary shall not be liable for any third-party information, data, or communication link made available or hosted by him”.
- This protects intermediaries such as Internet and data service providers and those hosting websites from being made liable for content that users may post or generate.
- However, the exemption from liability does not apply if there is evidence that the intermediary abetted or induced the commission of the unlawful act involved. Also, the provision casts a responsibility on intermediaries to remove the offensive content or block access to it upon getting “actual knowledge” of an unlawful act being committed using their resources, or as soon as it is brought to their notice.
- In Shreya Singhal vs U.O.I (2015), the Supreme Court read down the provision to mean that the intermediaries ought to act only “upon receiving actual knowledge that a court order has been passed, asking [them] to expeditiously remove or disable access to certain material”. This was because the court felt that intermediaries such as Google or Facebook may receive millions of requests, and it may not be possible for them to judge which of these were legitimate.
- The role of the intermediaries has been spelt out in separate rules framed for the purpose in 2011. In 2018, the Centre favoured coming up with fresh updates to the existing rules on intermediaries’ responsibilities, but the draft courted controversy. This was because one of the proposed changes was that intermediaries should help identify originators of offensive content. This led to misgivings that this could aid privacy violations and online surveillance. Also, tech companies that use end-to-end encryption argued that they could not open a backdoor for identifying originators, as it would be a breach of promise to their subscribers.
- Other proposed changes, which have not been acted upon, include rules that intermediaries should deploy automated tools for proactively removing or disabling public access to unlawful information, and to have a 24×7 mechanism to deal with requisitions of law enforcement.
2 . Bad Bank
Context : Finance Minister Nirmala Sitharaman in her Budget speech revived the idea of a ‘bad bank’ by stating that the Centre proposes to set up an asset reconstruction company to acquire bad loans from banks.
What is a ‘bad bank’?
- A bad bank is a financial entity set up to buy non-performing assets (NPAs), or bad loans, from banks.
- The aim of setting up a bad bank is to help ease the burden on banks by taking bad loans off their balance sheets and get them to lend again to customers without constraints.
- After the purchase of a bad loan from a bank, the bad bank may later try to restructure and sell the NPA to investors who might be interested in purchasing it.
- A bad bank makes a profit in its operations if it manages to sell the loan at a price higher than what it paid to acquire the loan from a commercial bank. However, generating profits is usually not the primary purpose of a bad bank — the objective is to ease the burden on banks, holding a large pile of stressed assets, and to get them to lend more actively.
What are the pros and cons of setting up a bad bank?
- A supposed advantage in setting up a bad bank, it is argued, is that it can help consolidate all bad loans of banks under a single exclusive entity. The idea of a bad bank has been tried out in countries such as the United States, Germany, Japan and others in the past.
- The troubled asset relief program, also known as TARP, implemented by the U.S. Treasury in the aftermath of the 2008 financial crisis, was modelled around the idea of a bad bank. Under the program, the U.S. Treasury bought troubled assets, such as mortgage-backed securities, from U.S. banks at the peak of the crisis, and later resold them when market conditions improved. According to reports, it is estimated that the Treasury through its operations earned nominal profits.
- Many critics, however, have pointed to several problems with the idea of a bad bank to deal with bad loans. Former RBI governor Raghuram Rajan has been one of the critics, arguing that a bad bank backed by the government will merely shift bad assets from the hands of public sector banks, which are owned by the government, to the hands of a bad bank, which is again owned by the government. There is little reason to believe that a mere transfer of assets from one pocket of the government to another will lead to a successful resolution of these bad debts, when the set of incentives facing these entities is essentially the same.
- Other analysts believe that unlike a bad bank set up by the private sector, a bad bank backed by the government is likely to pay too much for stressed assets. While this may be good news for public sector banks, which have been reluctant to incur losses by selling off their bad loans at cheap prices, it is bad news for taxpayers, who will once again have to foot the bill for bailing out troubled banks.
Will a ‘bad bank’ help ease the bad loan crisis?
- A key reason behind the bad loan crisis in public sector banks, some critics point out, is the nature of their ownership. Unlike private banks, which are owned by individuals who have strong financial incentives to manage them well, public sector banks are managed by bureaucrats who may often not have the same commitment to ensuring these lenders’ profitability. To that extent, bailing out banks through a bad bank does not really address the root problem of the bad loan crisis.
- There is a huge risk of moral hazard. Commercial banks that are bailed out by a bad bank are likely to have little reason to mend their ways. After all, the safety net provided by a bad bank gives these banks more reason to lend recklessly, and thus, further exacerbate the bad loan crisis.
Will it help revive credit flow in the economy?
- Some experts believe that by taking bad loans off the books of troubled banks, a bad bank can help free capital of over ₹5 lakh crore that is locked in by banks as provisions against these bad loans. This, they say, will give banks the freedom to use the freed-up capital to extend more loans to their customers. This gives the impression that banks have unused funds lying in their balance sheets that they could use if only they could get rid of their bad loans. It is, however, important not to mistake banks’ reserve requirements for their capital position. This is because what may be stopping banks from lending more aggressively may not be the lack of sufficient reserves, which banks need to maintain against their loans.
- Instead, it may simply be the precarious capital position that many public sector banks find themselves in at the moment. In fact, many public sector banks may be considered to be technically insolvent as an accurate recognition of the true scale of their bad loans would show their liabilities as far exceeding their assets. So, a bad bank, in reality, could help improve bank lending not by shoring up bank reserves, but by improving banks’ capital buffers.
- To the extent that a new bad bank set up by the government can improve banks’ capital buffers by freeing up capital, it could help banks feel more confident to start lending again.
3 . Currency Swap
Context : The Central Bank of Sri Lanka (CBSL) settled a $400 million currency swap facility from the Reserve Bank (RBI) of India last week, meeting the terms that the two countries had agreed upon.
About the News
- The Reserve Bank of India has agreed to a $400 million currency swap facility for Sri Lanka till November 2022
- It was a part of bilateral ‘technical discussion’ on rescheduling Colombo’s outstanding debt repayment to India.
- Sri Lanka owes $960 million to India.
About Currency Swap
- In the swap arrangement, a country provides dollars to a foreign central bank, which, at the same time, provides the equivalent funds in its currency to the former, based on the market exchange rate at the time of the transaction.
- The parties agree to swap back these quantities of their two currencies at a specified date in the future, which could be the next day or even two years later, using the same exchange rate as in the first transaction. In Sri Lanka’s case, it’s more than two years.
- The RBI also offers similar swap lines to central banks in the SAARC region within a total corpus of $2 billion. Under the framework for 2019-22, the RBI will continue to offer a swap arrangement within the overall corpus of $2 billion. Other countries can withdraw funds in the US dollar, the euro, or the Indian rupee. This facility originally came into operation on November 15, 2012 to provide a backstop line of funding for short-term foreign exchange liquidity requirements or balance of payment crises until longer term arrangements were made.
- India already has a $75 billion bilateral currency swap line with Japan, which has the second highest dollar reserves after China.
Benefits
- These swap operations carry no exchange rate or other market risks, as transaction terms are set in advance. The absence of an exchange rate risk is the major benefit of such a facility.
- This facility provides the country, which is getting the dollars, with the flexibility to use these reserves at any time in order to maintain an appropriate level of balance of payments or short-term liquidity.
4 . Glacial Burst
Context : Seven persons were killed and over 125 reported missing after a “glacial burst” on Nanda Devi triggered an avalanche and caused flash floods in Rishiganga and Dhauliganga rivers in Chamoli district of Uttarakhand.
What are Glacial Lake Outburst Floods and how vulnerable are the Himalayas?
- When glaciers melt, the water in glacial lakes accumulates behind loose, natural “glacial/ moraine dams” made of ice, sand, pebbles and ice residue.
- A GLOF refers to the flooding that occurs when the water dammed by a glacier or a moraine is released suddenly.
- Unlike earthen dams, the weak structure of the moraine dam leads to the abrupt failure of the dam on top of the glacial lake, which holds large volume of water. A failure of the dam has the potential of releasing millions of cubic metres of water in a short period, causing catastrophic flooding downstream. Peak flows as high as 15,000 cubic metre per second have been recorded in such events.
- According to NDMA, glacial retreat due to climate change occurring in most parts of the Hindu Kush Himalaya has given rise to the formation of numerous new glacial lakes, which are the major cause of GLOFs. Since glaciers in the Himalayas are in a retreating phase, glacial lakes are growing and pose a potentially large risk to downstream infrastructure and life.
- An “Inventory and Monitoring of Glacial Lakes / Water Bodies in the Himalayan Region of Indian River Basins”, sponsored by Climate Change Directorate, Central Water Commission, and done by National Remote Sensing Centre during 2011-15, found that there are 352, 283 and 1,393 glacial lakes and water bodies in the Indus, Ganga and Brahmaputra basins respectively.
How can the risk be reduced?
- The NDMA guidelines say that risk reduction has to begin with identifying and mapping such lakes, taking structural measures to prevent their sudden breach, and establishing mechanism to save lives and property in times of a breach.
- Potentially dangerous lakes can be identified based on field observations, records of past events, geomorphologic and geotechnical characteristics of the lake/dam and surroundings, and other physical conditions.
- NDMA has recommended use of Synthetic-Aperture Radar imagery to automatically detect changes in water bodies, including new lake formations, during the monsoon months. It has said methods and protocols could also be developed to allow remote monitoring of lake bodies from space.
- To manage lakes structurally, the NDMA recommends reducing the volume of water with methods such as controlled breaching, pumping or siphoning out water, and making a tunnel through the moraine barrier or under an ice dam.
How well is India prepared?
- While some work on identification of such lakes has been done by CWC, other aspects are still a work in progress: a robust early warning system, and a broad framework for infrastructure development, construction and excavation in vulnerable zones.
- “In contrast to other countries, there are no uniform codes for excavation, construction and grading codes in India. Restricting constructions and development in GLOF/LLOF prone areas is a very efficient means to reduce risks at no cost,” the NDMA guidelines say.
- The guidelines say construction of any habitation should be prohibited in the high hazard zone. “Existing buildings are to be relocated to a safer nearby region and all the resources for the relocation have to be managed by Central/State governments. New infrastructures in the medium hazard zone have to be accompanied by specific protection measures.”
- The guidelines emphasise the importance of land use planning: “There are no widely accepted procedures or regulation in India for land use planning in the GLOF/LLOF prone areas. Such regulations need to be developed… There should be monitoring systems prior to, during, and after construction of infrastructure and settlements in the downstream area.”
Are there early warning systems in place?
- The number of implemented and operational GLOF EWS is still very small, even at the global scale. In the Himalayan region, there are at three reported instances (two in Nepal and one in China) of implementation of sensor- and monitoring-based technical systems for GLOF early warning.
- India, though, has a remarkable history of successful warnings in relation to Landslide Lake Outburst Floods (LLOFs), dating back to the 19th century. In 1894, a landslide in Gohna, Uttarakhand dammed the main river. On July 5 that year, the engineer in charge estimated the lake would overflow the dam in mid-August, which eventually happened.
- Despite the devastating impact of the flood, including washing away of most buildings along the river and severe destruction in Srinagar, no victims were reported, thanks to the precise prediction and the early warning to the population. This was made possible by the installation of a telephone line between the lake and the downstream towns of Chamoli, Srinagar etc
5 . Facts for Prelims
Dhauliganga river
- Dhauliganga river is a tributary of the Alakananda.
- It originates from Vasudhara Tal and merges with the Alaknanda at Vishnuprayag.
One-person company
- As the name suggests, a one-person company is a company that can be formed by just one person as a shareholder.
- These companies can be contrasted with private companies, which require a minimum of two members to get going. However, for all practical purposes, these are like private companies.
- It is not as if there was no scope for an individual with aspirations in business prior to the introduction of OPC as a concept. As an individual, a person could get into business through a sole proprietorship mode, and this is a path that is still available.