Daily Current Affairs : 12th and 13th March 2023

Daily Current Affairs for UPSC CSE

Topics Covered

1. SVB Bank crisis
2. Crypto trade within PMLA
3. High-powered Committee on import, transfer, procurement, rescue and rehabilitation of wild animals, including those in captivity
4. Same sex marriage
5. Net Zero Waste
6. Facts for Prelims

1 . Silicon Valley Bank crisis

Context: U.S. banking regulators closed the SVB Financial Group, putting the tech-heavy lender into receivership, moving quickly to protect depositors as a crisis rippled through global markets and hit banking stocks.

About the News

• The financial institution best known for its relationships with high-flying world technology startups and venture capital, Silicon Valley Bank, experienced one of the oldest problems in banking — a bank run — which led to its failure.
• Its downfall is the largest failure of a financial institution since Washington Mutual collapsed at the height of the financial crisis more than a decade ago.

What is Silicon Valley Bank?

• Rated as the 16th largest bank in the United States until the crash, Silicon Valley Bank (SVB) is a regional bank in the US, headquartered in Santa Clara, California. Incorporated in 1983, SVB was reckoned as quite trendsetting because it was among the early banks to set focus on start-ups and venture capitalists. In December 2022, 56 per cent of its loans were to VCs and PEs secured by their limited partners. SVB is held by SVB Financial Group, which has operations beyond the US across ten countries, including India.

How did it fail?

• The fall of SVB is rather unique because it’s a case of asset liability management (ALM) mismatch concerns, which manifested into solvency issues for the bank. From the end of 2019 to March 2022, the bank’s deposits more than tripled to $198 billion; growth outstripped the industry average of 37 per cent. But hit by Covid, the deployment opportunities for funds were quite limited. Hence, deposits were channelised towards investments where there are two types of instruments – shorter duration investments classified as available for sale (AFS) and longer duration instruments classified as held to maturity.
• Meanwhile, the cost of deposits for SVB rose to 1.19 per cent against the industry payout of 0.04 per cent by end of 2022. Hence, to manage the yields and mark-to-market (MTM) losses, the bank chose to have a higher proportion of HTM instruments vis-à-vis AFS, something which banks across the globe, including India, are opting for.
• The HTM was deployed into mortgage-backed securities and when interest rates started increasing, it hurt the yield significantly, and the unrealised losses from the book shot to $16 billion (from 0) by September 2022. As against the equity base of over $11 billion that quarter, the losses technically drove the bank to insolvency that quarter. Alongside this, depositors were also pulling out money for better deployment as rates started moving up; something that the US hadn’t seen in decades.
• In December, the SVB revealed its plans to sell part of its AFS portfolio and raise capital. While the former went through and helped garner $21 billion, Silvergate Capital’s voluntary insolvency announcement on March 9, made it impossible for SVB to tap the market and the run on the bank became inevitable.

What were the immediate effects of Silicon Valley Bank’s failure?

• Some startups that had ties to the bank scrambled to pay their workers and feared they might have to pause projects or lay off or furlough employees until they could access their funds.

What is the next course of action?

• On March 10, Deposit Insurance National Bank of Santa Clara was immediately set up to absorb SVB’s business. It has been formally placed in receivership under the Federal Deposit Insurance Corporation (FDIC); equivalent of imposing a moratorium on banks, in the Indian context.
• Depositors up to $250,000 will be eligible for insurance covered by FIDC; for the rest, a formula is being worked out. Ironically, catering to the creamy layer of the Bay area, 85 per cent of the bank’s deposits aren’t uninsured. Meanwhile, being a regional bank, views are divided on whether the Fed should step in to bail it out. The US government has ruled out bailout of SVB.

What is its impact on Indian startups?

• The failure of SVB is likely to have a ripple effect on Indian startups, many of which have significant amounts of funds deposited with the bank. It will also dent the fundraising ability of Indian startups as the US-based bank was a key source of funding for tech startups.
• The closure has sent shock waves in the Indian startups’ sector, which was already facing a funding problem. Several Indian startups such as Bluestone, PayTM, One97 Communications & Bharat Financial Inclusion, who have exposure to SVB’s investments may now be worried that their raised funds may now be stuck. This could lead to a cash crunch for many companies, which may be forced to cut costs, delay projects, or lay off employees’
• SVB has been a major player in the Indian startup ecosystem, providing banking services and funding to many of the country’s most successful startups, including Flipkart, Ola, and Zomato. SVB has also been instrumental in helping Indian startups expand into the US market, by providing them with the necessary infrastructure and support to set up operations in Silicon Valley.

2 . Crypto trade within PMLA

Context: To further tighten the loosely regulated crypto market, the Finance Ministry said that all virtual digital assets (VDAs) will come within the ambit of the Prevention of Money Laundering Act, 2002 (PMLA).

What is the PMLA?

• The anti-money laundering legislation was passed by the National Democratic Alliance government in 2002, and came into force on July 1, 2005. The PMLA was showcased as India’s commitment to the Vienna Convention on combating money laundering, drug trafficking, and countering the financing of terror (CFT). The law was aimed at curbing the process of converting illegally earned money into legal cash. The Act empowered the Enforcement Directorate (ED) to control money laundering, confiscate property, and punish offenders.

What does this move mean for crypto?

• The gazette notification by the Ministry brings cryptocurrency transactions within the ambit of PMLA. This means that Indian crypto exchanges will have to report any suspicious activity related to buying or selling of cryptocurrency to the Financial Intelligence Unit – India (FIU-IND). This central agency is responsible for receiving, processing, analysing, and disseminating information related to suspicious financial transactions to law enforcement agencies and overseas FIUs. In its analysis, if the FIU-IND finds wrongdoing, it will alert the ED. Under Section 5 and 8(4) of the Act, the ED has discretionary powers to search and seize suspected property without any judicial permission

Why is the government tightening the legislative grip on digital trade?

• For a little more than a decade, cryptocurrencies, non-fungible tokens (NFT) and other digital assets enjoyed a regulation-free environment. But, in the past couple of years, as the use of digital assets has gone mainstream, regulators have turned hawkish. The value of all existing cryptocurrency is about $804 billion as of January 3, 2023, according to cryptocurrency price-tracking site CoinMarketCap.com. That is about twice the GDP of Singapore in 2021. In India, according to a survey conducted by crypto exchange KuCoin, over 10 crore Indians have invested in cryptocurrencies.
• Separately, according to a report by blockchain analytics firm Chainalysis, illegal use of cryptocurrencies hit a record $20.1 billion last year. Transactions associated with sanctioned entities jumped over 1,00,000-fold, making up 44% of last year’s illegal activity.

What tools can be used to track money laundering via crypto transactions?

• Tracking money trail in cryptocurrency transactions may require new tools and approaches as such transfers differ fundamentally from traditional banking channels. FIUs may be familiar with Know Your Customer (KYC) or Customer Due Diligence (CDD) norms. But the technological nature of VDAs presents a new challenge in gathering information. This requires the intelligence unit to broaden its intelligence framework.
• The Egmont Group that facilitates cooperation between FIUs to prevent money laundering recommends the analysis of crypto wallets, its associated addresses and blockchain records, and hardware identifiers like IMEI (International Mobile Equipment Identity), IMSI (International Mobile Subscriber Identity) or SEID (Secure Element Identifier) numbers, as well as MAC addresses.

What about regulation in other countries?

• According to PwC’s ‘Global Crypto Regulations Report 2023’, a large proportion of countries are at various stages of drafting regulations around crypto. Most countries have already brought digital assets under anti-money laundering laws. Singapore, Japan, Switzerland, and Malaysia have legislations on regulatory framework. The U.S., U.K., Australia, and Canada have initiated plans on regulating. So far, China, Qatar, and Saudi Arabia have issued a blanket ban on cryptocurrency. The EU is also preparing a cross-jurisdictional regulatory and supervisory framework for crypto-assets. The framework seeks to provide legal clarity, consumer and investor protection, and market integrity while promoting innovation in digital assets

3 . High Powered Committee on Import, Transfer, procurement, rescue and rehabilitation of wild animals including those in captivity

Context: The Supreme Court has increased the jurisdiction and powers of a high-powered committee led by its former judge, Justice Deepak Verma, to conduct necessary checks and undertake fact-finding exercises concerning the import, transfer, procurement, rescue and rehabilitation of wild animals, including those in captivity, across India.

About the News

• The Supreme Court expanded the scope of a high-powered committee dealing with the transfer and transportation of elephants bred in captivity in the North-East, giving it a pan-India mandate to deal with any approval or grievance regarding the transfer, import into India, or procurement of wild animals by any rehabilitation centre or zoo in the country.
• The order by a bench of justices Krishna Murari and Ahsanuddin Amanullah came on an application filed in the context of transporting elephants bred in captivity from Karnataka to Radha Krishna Temple Elephant Welfare Trust in Gujarat.

About the supreme court direction

• The supreme court directed that it is appropriate to extend the jurisdiction and scope of HPC as constituted by the High Court of Tripura, with the modification that the Chief Wild Life Warden(s) of the State(s) to which the issue relates will be the co-opted as Members of the said Committee in place of the Chief Wildlife Wardens of Tripura and Gujarat, throughout the territory of India.
• Giving this committee a pan-India character, the bench allowed the committee to deal with “all requests for approval, dispute or grievance, concerning transfer or import into India or procurement or welfare of wild animals by any rescue or rehabilitation centre or zoo, by taking assistance and co-operation whenever needed from all departments and authorities across India.”
• The court further directed that all complaints in this regard may be forwarded forthwith to the HPC for consideration and recommending appropriate action.
• Further, the bench directed all state and central authorities to report seizure of wild animals or abandonment of captive wild animals to the committee. “The committee shall be at liberty to recommend transfer of ownership of captive animals or of seized wild animals to any willing rescue centre or zoo for their immediate welfare, care and rehabilitation.
• The committee’s chairman was allowed to determine the honorarium and the expenses for carrying out their daily functions.
• High Powered Committee headed by Justice Verma, as its Chairman, and members including the Director General of Forest, Head of Project Elephant Division (MoEF), Member Secretary (Central Zoo Authority of India), Chief Wild Life Warden (State of Tripura) for Elephants from State of Tripura and Chief Wild Life Warden (State of Gujarat).

4 . Same Sex Marriage

Context: The Centre in the Supreme Court frowned upon same-sex marriage while invoking the “accepted view” that a marriage between a biological man and woman is a “holy union, a sacrament and a sanskar” in India.

What is the central government stands on same sex marriage?

• According to the Central Government ”The institution of marriage has a sanctity attached to it and in major parts of the country, it is regarded as a sacrament, a holy union, and a sanskar”. In a country like India, despite statutory recognition of the relationship of marriage between a biological man and a biological woman, marriage necessarily depends upon age-old customs, rituals, practices, cultural ethos and societal values.
• Any “deviation” from this “statutorily, religiously and socially” accepted norm in “human relationship” can only happen through the legislature and not the Supreme Court.
• The government argued that the Court had only decriminalised sexual intercourse between same-sex persons in its 2018 judgment in Navtej Singh Johar, and not legitimised this “conduct. The court, while decriminalising homosexuality, had never accepted same-sex marriage as part of the fundamental right to life and dignity under Article 21 of the Constitution.
• Registration of marriage of same-sex persons would also result in violation of existing personal as well as codified law provisions.
• The Parliament has designed and framed the marriage laws in the country, which are governed by the personal laws and codified laws relatable to customs of various religious communities, to recognise only the union of a man and a woman to be capable of legal sanction, and thereby claim legal and statutory rights and consequences. Any interference with the same would cause a complete havoc with the delicate balance of personal laws in the country and in accepted societal values,”
• It said statutory recognition of hetrosexual marriage was the norm throughout history and are “foundational to both the existence and continuance of the state
• The government said there was a “compelling interest” for the society and the state to limit recognition to heterosexual marriages only.
• The affidavit came in response to the Court’s decision to examine petitions to allow solemnisation of same-sex marriage under the Special Marriage Act.
  • The Special Marriage Act of 1954 provides a civil form of marriage for couples who cannot marry under their personal law.

What about other countries?

• A total of 32 countries around the world have legalised same-sex marriages, some through legislation while others through judicial pronouncements. Many countries first recognised same-sex civil unions as the escalatory step to recognise homosexual marriage. Civil unions or partnerships are similar arrangements as marriages which provide legal recognition of unmarried couples of the same or opposite sex in order to grant them some of the rights that come with marriage — such as inheritance, medical benefits, employee benefits to spouses, managing joint taxes and finances, and in some cases even adoption. The Netherlands was the first country in 2001 to legalise same-sex marriage by amending one line in its civil marriage law. In some countries, the decriminalisation of homosexuality was not followed for years by the recognition of same-sex marriage, for instance, in the U.S. the former happened in 2003 while the latter in 2015

About Navtej Johar judgment of 2018

• In the landmark Navtej Johar judgment of 2018, the five-judge Supreme Court Bench, which CJI Chandrachud was also a part of, had decriminalised homosexuality and unanimously held that the criminalisation of private consensual sexual conduct between adults of the same sex under the more than 150-year-old Section 377 of the Indian Penal Code was unconstitutional.
• The judgment had apologised to the LQBTQ+ community for the wrongs of history and had also stated: “Sexual orientation is natural. Discrimination on the basis of sexual orientation is violation of freedom of speech and expression”. Besides decriminalising consensual homosexuality, the judgment had also made other important observations. It had noted that homosexuals had the right to live with dignity and were “entitled to protection of equal laws, and are entitled to be treated in society as human beings without any stigma being attached to any of them.” It had stated that a person’s bodily autonomy be constitutionally protected and that sharing intimacy in private with a person of choice formed a part of the individual’s right to privacy. CJI Chandrachud had also emphasised that the case was not solely about striking down Section 377 but also about the rights of the LGBTQ+ community.

5 . Net Zero Waste

Context: All upcoming housing societies and commercial complexes in the country will soon mandatorily have to ensure net zero waste and have their liquid discharge treated, as part of the government’s push for reforming and modernising the sewage disposal system.

Net zero Waste

• Zero waste is a set of principles focused on waste prevention that encourage redesigning resource life cycles so that all products are repurposed. The goal of the movement is to avoid sending trash to landfills, incinerators, the ocean, or any other part of the environment. Currently, only 9% of global plastic is recycled. In a zero-waste system, materials would be reused until the optimum level of consumption is reached.
• Achieving Net Zero Waste means reducing, reusing, and recovering waste streams to convert them to valuable resources with zero solid waste sent to landfills over the course of the year.

Cradle-to-cradle approach

• The cradle-to-grave is a linear material model that begins with resource extraction, moves to product manufacturing, and ends with a “grave” or landfill where the product is disposed of.
• Cradle-to-grave is in direct contrast to cradle-to-cradle materials or products, which are recycled into new products at the end of their lives so that ultimately there is no waste.
• Cradle-to-cradle focuses on designing industrial systems so that materials flow in closed-loop cycles, which means that waste is minimized and waste products can be recycled and reused.
•  Cradle-to-cradle goes beyond dealing with waste issues after it has been created by addressing problems at the source and redefining problems by focusing on design.
• The cradle-to-cradle model is sustainable and considerate of life and future generations

What are the benefits of Net Zero Waste?

• Impact on climate change– Reducing, reusing and recycling can be a key part of a climate change strategy to reduce greenhouse gas emissions.
• Resource conservation and minimise pollution– Zero waste approach conserves natural resources and reduces pollution from extraction, manufacturing and disposal of resoures
• A zero-waste approach can build community capacity, support marginalized communities and protect community health.
• Creation of Jobs- Zero waste supports a local circular economy and creates jobs.
• Saving money– Since waste is a sign of inefficiency, the reduction of waste can reduce costs.
• Faster Progress– A zero-waste strategy improves upon production processes and improves environmental prevention strategies which can lead to taking larger, more innovative steps.
• Supports sustainability– A zero-waste strategy supports all three of the generally accepted goals of sustainability – economic well-being, environmental protection, and social well-being.
• Improved material flows– A zero-waste strategy would use far fewer new raw materials and send no waste materials to landfills. Any material waste would either return as reusable or recycled materials or would be suitable for use as compost.

 Waste to energy technologies

• Incineration is the process of burning hazardous materials at temperatures high enough to destroy contaminants.
• Gasification is a process that converts biomass or fossil fuel-based carbonaceous materials into gases, including as the largest fractions: nitrogen (N₂), carbon monoxide (CO), hydrogen (H₂), and carbon dioxide (CO₂). This is achieved by reacting the feedstock material at high temperatures (typically >700 °C), without combustion, via controlling the amount of oxygen and/or steam present in the reaction
• The pyrolysis process is the thermal decomposition of materials at elevated temperatures, often in an inert atmosphere.
• Anaerobic digestion is a sequence of processes by which microorganisms break down biodegradable material in the absence of oxygen.

About the Central Government directives

• The Ministry of Housing and Urban Affairs will be sending a directive, likely by the end of March, to all State governments to make this part of the building by-laws and ensure implementation.
• The Ministry is also looking at integrating septic tank design into the building by-laws and adherence to standard specifications, geo-tagging all septic tanks and manholes for proper tracking, and reducing GST on mechanised cleaning vehicles.
• The directives are part of the government’s effort to implement the Manhole to Machine-hole scheme for complete removal of manual scavenging.
• Some of the other guidelines include asking urban local bodies like municipalities to explore the potential of commercial use of processed sludge as fertiliser and empanelling all agencies providing sanitation services in both the organised and unorganised sectors.
• Apart from this, the government will also review the Indian standards for mechanised cleaning equipment and consider differential tariffs rates for residential and commercial de-sludging. A Make in India start-up for promoting low-cost technological solutions like mechanical spades as well as sensor sticks for gas detection is also being considered.
• For proper implementation, the Centre will ask the States to impose a legal penalty if buildings do not adhere to the bylaws and standard operating procedures
• Directives have being formulated as a convergence of programmes like Swachch Bharat, NAMASTE (National Action Plan for Mechanised Sanitation Ecosystem), and AMRUT (Atal Mission for Rejuvenation and Urban Transformation.

Significance

• While the government’s intent is to end manual scavenging, with the Ministry of Social Justice and Empowerment estimating 400 people have died while cleaning sewers and septic tanks since 2017, experts believe a mechanised sewage system coupled with the mandatory zero net waste clause for housing and commercial complexes was important for achieving the Sustainable Development Goals (SDGs) as well.
• The United Nations SDG 6.3 aims at “halving the proportion of untreated wastewater and substantially increase recycling and safe reuse globally” by 2030.
• India currently generates 72,368 million litres per day of urban wastewater of which only 28% is treated, as per the ministry in data from 2023. This implies that 72% of untreated wastewater may be entering rivers, lakes, or groundwater.
• According to a 2021 Ministry of Housing and Urban Affairs’ report titled ‘Circular Economy in Municipal Solid and Liquid Waste’, the country’s economy could also be boosted if the sale of treated sewage is institutionalised. At a conservative estimation, it has the potential to add close to ₹3,285 crore annually.

About Manhole to Machine Hole Scheme

• Finance Minister Nirmala Sitharaman had announced, as part of her budget speech for 2023-24, that all cities and towns will be enabled for 100% transition of sewers and septic tanks from manhole to machine-hole mode.

6 . Facts for Prelims

Sickle cell disease

• Sickle cell disease (SCD) is a group of inherited red blood cell disorders. Red blood cells contain haemoglobin, a protein that carries oxygen. Healthy red blood cells are round, and they move through small blood vessels to carry oxygen to all parts of the body. In someone who has SCD, the haemoglobin is abnormal, which causes the red blood cells to become hard and sticky and look like a C-shaped farm tool called a “sickle.”
• The sickle cells die early, which causes a constant shortage of red blood cells. Also, when they travel through small blood vessels, they get stuck and clog the blood flow.
• This can cause pain and other serious complications (health problems) such as infection, acute chest syndrome and stroke.
• Cause of SCD- SCD is a genetic condition that is present at birth. It is inherited when a child receives two genes—one from each parent—that code for abnormal haemoglobin.
• Treatment- Management of SCD is focused on preventing and treating pain episodes and other complications. Prevention strategies include lifestyle behaviours as well as medical screening and interventions to prevent SCD complications.

Adenoviruses

• Adenoviruses are common viruses that typically cause mild cold or flu-like illness and are usually spread from an infected person to others by close personal contact.
• The virus is transmitted through the air by coughing and sneezing and also by touching an object or surface with adenoviruses on it. While the virus can affect people of any age group, children with low and compromised immunity are at a higher risk.
• The symptoms of the viral infection, other than common cold or flu-like symptoms, include acute bronchitis, pneumonia, pink eye (conjunctivitis) and acute gastroenteritis.

Japanese encephalitis

• Japanese encephalitis is a viral brain infection that’s spread through mosquito bites. It’s most common in rural areas in southeast Asia, the Pacific islands and the Far East, but is very rare in travellers.
• The virus is found in pigs and birds and is passed to mosquitoes when they bite infected animals. It cannot be spread from person to person.
• There’s currently no cure for Japanese encephalitis. Treatment involves supporting the functions of the body as it tries to fight off the infection.
• The person usually needs to be admitted to hospital so they can be given fluids, oxygen and medication to treat any symptoms.
• Japanese Encephalitis can be prevented by taking two shots of JE vaccine. This is recommended to be given in areas where Japanese Encephalitis is endemic and is very common
• Symptoms- Most people infected by the Japanese encephalitis virus have either no symptoms or mild short-lived symptoms, which are often mistaken for flu. Some of the symptoms are
  • high temperature (fever)
  • seizures (fits)
  • a stiff neck
  • confusion
  • the inability to speak
  • uncontrollable shaking of body parts (tremor)
  • muscle weakness or paralysis

Blood Donor Selection Criteria of the Guidelines for Blood Donor Selection and Blood Donor Referral

• The governing body of NBTC in its 26th meeting on June 1, 2017, approved the Guidelines to bring in a Blood Transfusion Service which offers a “safe, sufficient and timely supply of blood and blood components to those in need.” The guidelines were designed to promote best practices in BTS to ensure donations from the “lowest risk donors possible”

General criteria

Any healthy adult, both male and female, can donate every three months

Good health of the donor must be fully ensured. The universally accepted criteria for donor selection are:

• Age between 18 and 60 years
• Haemoglobin – not less than 12.5 g/Dl
• Pulse – between 50 and 100/minute with no irregularities
• Blood Pressure -Systolic 100-180 mm Hg and Diastolic 50 – 100 mm Hg
• Temperature – Normal (oral temperature not exceeding 37.50C)

Body weight – not less than 45 Kg

Health conditions: The donor should be in a healthy state of mind and body.

They should fulfill the following criteria:

• Past one year – not been treated for Rabies or received Hepatitis B immune globulin.
• Past six months – not had a tattoo, ear or skin piercing or acupuncture, not received blood or blood products, no serious illness or major surgery, no contact with a person with hepatitis or yellow jaundice.
• Past three months – not donated blood or been treated for Malaria.
• Past one month – had any immunizations.
• 5. Past 48 hours – taken any antibiotics or any other medications (Allopathic or Ayurveda or Sidha or Homeo)
• Past 24 hours – taken alcoholic beverages
• Past 72 hours – had dental work or taken Aspirin
• Present – not suffering from cough, influenza or sore throat, common cold
• Women should not be pregnant or breast feeding her child
• Women donor should not donate during her menstrual cycles
• Free from Diabetes, not suffering from chest pain, heart disease or high BP, cancer, blood clotting problem or blood disease, unexplained fever, weight loss, fatigue, night sweats, enlarged lymph nodes in armpits, neck or groin, white patches in the mouth etc.
• Ever had TB, bronchial asthma or allergic disorder, liver disease, kidney disease, fits or fainting, blue or purple spots on the skin or mucous membranes, received human pituitary – growth hormones etc

Disaster covered under SDRF

• A few States have demanded that “lightning” be declared as a “natural disaster” because deaths caused by it surpass any other disaster in the country.
• According to present norms, cyclone, drought, earthquake, fire, flood, tsunami, hailstorm, landslide, avalanche, cloudburst, pest attack, frost and cold waves are considered as disasters that are covered under the State Disaster Response Fund (SDRF), 75% of which is funded by the Centre.