Daily Current Affairs : 3rd February 2022

Daily Current Affairs for UPSC CSE

Topics Covered

1. Electoral Bonds
2. Capital Expenditure
3. Motion of Thanks
4. RAMSAR site
5. NATO
6. Facts for Prelims

1 . Electoral Bonds

Context : Electoral bonds worth ₹1,213 crore were sold by the State Bank of India (SBI) in January, with most of them (₹784.84 crore) being encashed in the New Delhi branch, pointing towards national parties, while the Mumbai branch sold the most (₹489.6 crore worth), according to a Right to Information reply this week.

About Electoral Bonds

• An electoral bond is like a promissory note that can be bought by any Indian citizen or company incorporated in India from select branches of State Bank of India.
• The citizen or corporate can then donate the same to any eligible political party of his/her choice.
• The bonds are similar to bank notes that are payable to the bearer on demand and are free of interest.
• An individual or party will be allowed to purchase these bonds digitally or through cheque. 

When was electoral bond introduced

• The electoral bonds were introduced with the Finance Bill (2017). On January 29, 2018 the Narendra Modi-led NDA government notified the Electoral Bond Scheme 2018. 

How to use electoral bonds

• The bonds will be issued in multiples of Rs 1,000, Rs 10,000, Rs 100,000 and Rs 1 crore (the range of a bond is between Rs 1,000 to Rs 1 crore).
• These will be available at some branches of SBI. A donor with a KYC-compliant account can purchase the bonds and can then donate them to the party or individual of their choice.
• Now, the receiver can encash the bonds through the party’s verified account. The electoral bond will be valid only for fifteen days. 

When are the bonds available for purchase

• The electoral bonds are available for purchase for 10 days in the beginning of every quarter.
• The first 10 days of January, April, July and October has been specified by the government for purchase of electoral bonds.
• An additional period of 30 days shall be specified by the government in the year of Lok Sabha elections. 

Electoral bonds: Conditions 

• Any party that is registered under section 29A of the Representation of the Peoples Act, 1951 (43 of 1951) and has secured at least one per cent of the votes polled in the most recent General elections or Assembly elections is eligible to receive electoral bonds.
• The party will be allotted a verified account by the Election Commission of India (ECI) and the electoral bond transactions can be made only through this account. 
• The electoral bonds will not bear the name of the donor. Thus, the political party might not be aware of the donor’s identity. 

Are electoral bonds taxable

• In February 2017, the then finance minister Arun Jaitley said that the donations would be tax deductible. Hence, a donor will get a deduction and the recipient, or the political party, will get tax exemption, provided returns are filed by the political party. 

Reasons for introduction of electoral Bonds

• Electoral bonds were being introduced to ensure that all the donations made to a party would be accounted for in the balance sheets without exposing the donor details to the public. 
• The government said that electoral bonds would keep a tab on the use of black money for funding elections. In the absence of electoral bonds, donors would have no option but to donate by cash after siphoning off money from their businesses, the government

Controversy over electoral bond

• Experts are of the view that if the electoral bonds scheme had been introduced to bring about greater transparency, the government must not restrain from allowing details of such donations to be made public. 
• Experts and several politicians say that since neither the purchaser of the bond nor the political party receiving the donation is required to disclose the donor’s identity, the shareholders of a corporation will remain unaware of the company’s contribution.
• Voters, too, will have no idea of how, and through whom, a political party has been funded. 
• Opponents of the electoral bond scheme argue that since the identity of the donor has been kept anonymous, it could lead to an influx of black money.
• Some others allege that the scheme was designed to help big corporate houses donate money without their identity being revealed.
• According to civil rights societies, the concept of donor “anonymity” threatens the very spirit of democracy. The Congress party said that the donations made through electoral bonds were equivalent to money laundering.

Restrictions that were done away with after the introduction of the electoral bond scheme 

• Earlier, no foreign company could donate to any political party under the Companies Act
• A firm could donate a maximum of 7.5 per cent of its average three year net profit as political donations according to Section 182 of the Companies Act 
• As per the same section of the Act, companies had to disclose details of their political donations in their annual statement of accounts. The government moved an amendment in the Finance Bill to ensure that this proviso would not be applicable to companies in case of electoral bonds. Thus, Indian, foreign and even shell companies can now donate to political parties without having to inform anyone of the contribution. 

What does the Supreme Court have to say on electoral bonds

• Supreme Court asked all the political parties to submit details of donations received through electoral bonds to the ECI.
• It also asked the Finance Ministry to reduce window of purchasing electoral bonds from 10 days to five days. The apex court is yet to fix a date for hearing other pleas against the electoral bonds. 

On what grounds has the scheme been challenged in court?

• The petitioners have stated that the Electoral Bonds Scheme has “opened the floodgates to unlimited corporate donations to political parties and anonymous financing by Indian as well as foreign companies which can have serious repercussions on the Indian democracy”.
• The scheme, they have said, has “removed the caps on campaign donations by companies and have legalised anonymous donations”. This poses a “serious danger to the autonomy of the country and are bound to adversely affect electoral transparency, encourage corrupt practices in politics, and have made the unholy nexus between politics and corporate houses more opaque and treacherous and is bound to be misused by special interest groups and corporate lobbyists”.

The petitioners have raised four major objections:

• Ordinary citizens will not be able to know who is donating how much money to which political party, and the bonds “increase the anonymity of political donations”.
• The requirement to disclose in the profit and loss account the name of the political party to which a donation has been made, has also been removed.
• With the removal of the 7.5% cap on the net profits of the last three years of a company, corporate funding has increased manifold, as there is now no limit to how much a company, including loss-making ones, can donate. This opens up the possibility of companies being brought into existence by unscrupulous elements primarily for routing funds to political parties through anonymous and opaque instruments like electoral bonds.
• The contribution received by any eligible political party in the form of electoral bonds will be exempt from income-tax as per Section 13A of the Income Tax Act

What does the Election Commission think of electoral bonds?

• In its affidavit to the Supreme Court filed the EC said that “any donation received by a political party through an electoral bond has been taken out of the ambit of reporting under the Contribution Report”, and if information on the money received through such bonds is not reported, “it cannot be ascertained whether the political party has taken any donation in violation of provisions” of the Representation of the People Act, which “prohibits the political parties from taking donations from government companies and foreign sources
• The Commission also flagged the issue of laws being changed to allow political parties to receive contributions from foreign companies, which would “allow unchecked foreign funding of political parties in India which could lead to Indian policies being influenced by foreign companies”.
• In its affidavit to the Supreme Court filed on March 25, the EC said that it had written to the Union Ministry of Law and Justice in April 2017 that “certain provisions of the Finance Act, 2017 and corresponding amendments carried out in the Income-Tax Act, the Representation of the People Act, and the Companies Act will have serious repercussions/ impact on the transparency aspect of political finance/ funding of political parties

What are the government’s arguments on these issues?

• The government has been defending the scheme on the ground that it limits the use of cash in political funding, thus bringing more transparency, and provides a shield to donors by granting them anonymity.
• It told the Supreme Court in its affidavit that the introduction of the scheme “has brought in a marked shift from the old electoral system which suffered from many lacunas” as “massive amounts of political donations were being made in cash, by individuals/corporates, using illicit means of funding” and identity of the donors was not known and “the ‘system’ was wholly opaque and ensured complete anonymity”.
• It argued that “all payments made for the issuance of the electoral bonds are accepted only by means of a demand draft, cheque or through the Electronic Clearing System or direct debit to the buyers’ account”; “no black money can, therefore, be used for the purchase of these bonds”.
• The goverment underlined that buyers must comply with KYC requirements, and the beneficiary political party has to “disclose the receipt of this money and must account for the same”. Also, limiting the time for which the bond is valid “ensures that the bonds do not become a parallel currency”.
• According to the government, “non-disclosure of the identity of the donor is the core objective of the scheme, in order to safeguard the donor from political victimisation”, and “the records of the purchaser are always available in the banking channel and may be retrieved as and when required by enforcement agencies”.

 Reserve Bank of India on electoral bonds scheme 

• RBI was critical of the scheme. The central bank had warned the government that the bonds would “undermine the faith in Indian banknotes and encourage money laundering.

2 . Capital Expenditure

Context : The government has announced a sharp jump of 35.4 per cent in capital expenditure to fund various infrastructure projects in 2022-23. In her Budget speech, Finance Minister Nirmala Sitharaman said capital investment holds the key to speedy and sustainable revival and public spending is required to take the lead.

About Capital Expenditure

• Capital expenditure is the money spent by the government on the development of machinery, equipment, building, health facilities, education, etc.
• It also includes the expenditure incurred on acquiring fixed assets like land and investment by the government that gives profits or dividend in future. 
• Capital spending is associated with investment or development spending, where expenditure has benefits extending years into the future. Capital expenditure includes money spent on the following:
  • Acquiring fixed and intangible assets
  • Upgrading an existing asset
  • Repairing an existing asset
  • Repayment of loan

Importance

• Capital expenditure, which leads to the creation of assets are long-term in nature and allow the economy to generate revenue for many years by adding or improving production facilities and boosting operational efficiency.
• It also increases labour participation, takes stock of the economy and raises its capacity to produce more in future. 
• Along with the creation of assets, repayment of loan is also capital expenditure, as it reduces liability. 
• The targeted focus on capital expenditure, with its resulting multiplier effects, will be vital in sustaining the economic growth

How is capital expenditure different from revenue expenditure

• Unlike capital expenditure, which creates assets for the future, revenue expenditure is one that neither creates assets nor reduces any liability of the government. Salaries of employees, interest payment on past debt, subsidies, pension, etc, fall under the category of revenue expenditure. It is recurring in nature. 

3 . Motion of Thanks

About Motion of Thanks

• In the days following the President’s address, a motion is moved in the two Houses thanking the President for his address.
• The Prime Minister replies to the motion of thanks in both Houses, and responds to the issues raised by MPs.
• The motion is then put to vote and MPs can express their disagreement by moving amendments to the motion.
• Opposition MPs have been successful in getting amendments passed to the motion of thanks in Rajya Sabha on five occasions (1980, 1989, 2001, 2015, 2016). They have been less successful in Lok Sabha.
• The President’s address is one of the most solemn occasions in the Parliamentary calendar. It is the only occasion in the year when the entire Parliament, i.e. the President, Lok Sabha, and Rajya Sabha come together.

4 . RAMSAR Sites

Context : Two new Ramsar sites — Khijadiya wildlife sanctuary in Gujarat and Bakhira wildlife sanctuary in Uttar Pradesh — were announced on the occasion of World Wetlands Day at Sultanpur national park in Gurgaon Wednesday.

About Khijadiya wildlife sanctuary

• Khijadiya, which is part of the Central Asian Flyway, has become the fourth wetland of Gujarat to get the Ramsar tag. Nalsarovar Bird Sanctuary, Thol Wildlife Sanctuary and Wadhwana wetland are the other Ramsar sites in the state. The last two were included in April last year.
• It is one of the important waterbird habitats in North-West India, the Site provides breeding, feeding and roosting grounds for a wide range of resident aquatic and also land-based birds. It provides habitat for over 310 bird species, including 125 waterbirds; over 165,000 individual waterbirds have been counted.
• These include the endangered Pallas’s fish-eagle (Haliaeetus leucoryphus) and Indian skimmer (Rynchops albicollis), and the vulnerable common pochard (Aythya ferina).
• The Site also regularly supports more than 1% of the south and south-west Asian population of Dalmatian pelican (Pelecanus crispus), more than 2% of greylag goose (Anser anser) and more than 20% of common crane (Grus grus).”
• Khijadia Wildlife Sanctuary (Ramsar site No. 2464), a freshwater wetland near the coast of the Gulf of Kutch, was formed following the creation of a bund (dike) in 1920 by the then ruler of the erstwhile princely state of Nawanagar to protect farmlands from saltwater ingress. The sanctuary is now part of Marine National Park, Jamnagar, the first marine national park in the country.
• “More than 180 plant species are present, including the critically endangered Indian bdellium-tree (Commiphora wightii). The Site contributes to the maintenance of hydrological regimes, erosion protection and nutrient cycling. It is used for recreation and tourism, and scientific and educational activities

About Bakhira Wildlife Sanctuary

• Bakhira Wildlife Sanctuary is a freshwater marsh in the Sant Kabir Nagar district, is the largest natural floodplain wetland of eastern Uttar Pradesh. The Sanctuary was established in 1980 and is protected under the Wildlife Protection Act (1972); an “eco-sensitive zone” extends up to a kilometre around its boundary.
• The wetland is internationally important for its birdlife as it supports over 80 species.
• It provides a wintering ground for over 25 species that migrate on the Central Asian Flyway, some of which are threatened or near-threatened such as the endangered Egyptian vulture (Neophron percnopterus), the vulnerable greater spotted eagle (Aquila clanga), common pochard (Aythya ferina) and swamp francolin (Francolinus gularis), and the near-threatened oriental darter (Anhinga melanogaster) and woolly-necked stork (Ciconia episcopus)

About Wetlands & Ramsar Convention

• The Convention on Wetlands of International Importance, better known as the Ramsar Convention, is an international agreement promoting the conservation and wise use of wetlands. It is the only global treaty to focus on a single ecosystem.
• The convention was adopted in the Iranian city of Ramsar in 1971 and came into force in 1975. Traditionally viewed as a wasteland or breeding ground of disease, wetlands actually provide freshwater and food, and serve as nature’s shock absorber.
• Wetlands, critical for biodiversity, are disappearing rapidly, with recent estimates showing that 64% or more of the world’s wetlands have vanished since 1900.
• Major changes in land use for agriculture and grazing, water diversion for dams and canals and infrastructure development are considered to be some of the main causes of loss and degradation of wetlands.
• February 2 is celebrated as World Wetlands Day. It was on this date in 1971 that the Ramsar Convention on Wetlands was adopted in Ramsar, Iran.

Why the focus on wetlands?

• The Ramsar Convention definition for wetlands includes marshes, floodplains, rivers and lakes, mangroves, coral reefs and other marine areas no deeper than 6 metres at low tide, as well as human-made wetlands such as waste-water treatment ponds and reservoirs.
• The IPBES (Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services) the global assessment identified wetlands as the most threatened ecosystem.
• This impacts 40% of the world’s plant and animal species that live or breed in wetlands, according to UNESCO. Thirty per cent of land-based carbon is stored in peatland; one billion people depend on wetlands for their livelihoods; and wetlands provide $47 trillion in essential services annually, according to the Wetlands Day official website.
• This year’s Wetlands Day theme is Wetlands and Biodiversity.

What is the status of wetlands in India?

• India has over 7 lakh wetlands and rules for their protection; yet not one of the wetlands has been notified under domestic laws
• Wetlands are regulated under the Wetlands (Conservation and Management) Rules, 2017. The 2010 version of the Rules provided for a Central Wetland Regulatory Authority; the 2017 Rules replace it with state-level bodies and created a National Wetland Committee, which functions in an advisory role. The newer regulations removed some items from the definition of “wetlands” including backwaters, lagoon, creeks, and estuaries.
• “The 2010 Rules required States to identify and prepare Brief Documents, submit them to the Union Ministry of Environment and Forests, which was to notify them. Under the 2017 regulations, the whole process has been delegated to States
• In February 2017, the Court extended protection to 2,01,503 of these under Rule 4 of the 2010 Rules, and ordered authorities to notify sites. The wetlands were supposed to have been notified by March 25, 2019, 180 days after the 2017 Rules went into force (September 26, 2017). Yet so far, not a single wetland has been notified,” Arya said. The 2,01,503 wetlands, measuring over 2.25 hectares, were identified using ISRO’s satellite imagery..
• In October 2017, the Supreme Court expressed concern over the disappearance of wetlands, and observed, “If there are no wetlands left, it will affect agriculture and several other things. It is a very, very important issue.”

What does being a Ramsar Site mean?

• The designation is for “Wetlands of International Importance”. “They are recognised as being of significant value not only for the country or the countries in which they are located, but for humanity as a whole… The inclusion of a wetland in the list embodies the government’s commitment to take the steps necessary to ensure that its ecological character is maintained.
• The Convention includes various measures to respond to threats to the ecological character of Sites
• Selection is made on the basis of various criteria defined under the convention. Article 2.2 says: “Wetlands should be selected for the List on account of their international significance in terms of ecology, botany, zoology, limnology or hydrology.”
• There are currently over 2,300 Ramsar Sites around the world, covering over 2.1 million square km.

5 . NATO

Background

• Ukraine shares borders with both the EU and Russia, but as a former Soviet republic it has deep social and cultural ties with Russia and Russian is widely spoken there.
• Russia has long resisted Ukraine’s move towards European institutions, and its key demand is that it never joins Nato or has the military alliance’s offensive weapons on its soil.
• When Ukrainians deposed their pro-Russian president in 2014, Russia seized and then annexed the southern Crimean peninsula from Ukraine and Russian-backed separatists captured large swathes of Ukraine’s two eastern regions collectively known as the Donbas.

What is happening now?

• As Russia moves a large number of troops towards the border, Russia seeks assurances from the US that Ukraine will not be inducted into NATO.
• However, US President Joe Biden has made it clear that he is not prepared to give any such assurance. This has left the countries in a stand-off, with tens of thousands of Russian troops ready to invade Ukraine at short notice, and the West not budging on Russia’s demands.

About NATO

• The North Atlantic Treaty Organization (NATO) is an alliance of 30 countries that border the North Atlantic Ocean. The Alliance includes the United States, most European Union members, the United Kingdom, Canada, and Turkey.
• The North Atlantic Treaty Organization is a military alliance between the United States, Canada, and their European allies. It was formed in the wake of World War II to keep the peace and encourage political cooperation on both sides of the Atlantic Ocean.

Member Countries

• NATO’s 30 members are Albania, Belgium, Bulgaria, Canada, Croatia, Czech Republic, Denmark, Estonia, France, Germany, Greece, Hungary, Iceland, Italy, Latvia, Lithuania, Luxembourg, Montenegro, the Netherlands, North Macedonia, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Turkey, United Kingdom, and the United States.
• Each member designates an ambassador to NATO as well as officials to serve on NATO committees and discuss NATO business. These designees could include a country’s president, prime minister, foreign affairs minister, or head of a defense department.
• On December 1, 2015, NATO announced its first expansion since 2009, offering membership to Montenegro. Russia responded by calling the move a strategic threat to its national security. Russia is worried by the number of Balkan countries along its border that have joined NATO.

How Does NATO Work?

• NATO’s mission is to protect the freedom of its members and the stability of their regions. Its targets include weapons of mass destruction, terrorism, and cyber-attacks.
• A key aspect of the alliance is Article 5, which states that “an armed attack against one Ally is considered an attack against all Allies.” In other words, if someone attacks one NATO nation, all NATO nations will retaliate. The only time NATO invoked Article 5 was after the 9/11 terrorist attacks.
• NATO’s protection does not extend to members’ civil wars or internal coups. During a 2016 coup attempt in Turkey, for example, NATO did not intervene on either side of the conflict. As a NATO member, Turkey would receive its allies’ support in the case of an attack, but not in case of a coup.
• NATO is funded by its members. The United States contributes roughly three-fourths of NATO’s budget. Only 10 countries have reached the target spending level of 2% of gross domestic product (GDP).

Historical background

• After World War II in 1945, western Europe was economically exhausted and militarily weak (the western Allies had rapidly and drastically reduced their armies at the end of the war), and newly powerful communist parties had arisen in France and Italy.
• By contrast, the Soviet Union had emerged from the war with its armies dominating all the states of central and eastern Europe, and by 1948 communists under Moscow’s sponsorship had consolidated their control of the governments of those countries and suppressed all noncommunist political activity.
• What became known as the Iron Curtain, a term popularized by Winston Churchill, had descended over central and eastern Europe.
• Further, wartime cooperation between the western Allies and the Soviets had completely broken down.
• Each side was organizing its own sector of occupied Germany, so that two German states would emerge, a democratic one in the west and a communist one in the east.
• In 1948 the United States launched the Marshall Plan, which infused massive amounts of economic aid to the countries of western and southern Europe on the condition that they cooperate with each other and engage in joint planning to hasten their mutual recovery.
• As for military recovery, under the Brussels Treaty of 1948, the United Kingdom, France, and the Low Countries—Belgium, the Netherlands, and Luxembourg—concluded a collective-defense agreement called the Western European Union. It was soon recognized, however, that a more formidable alliance would be required to provide an adequate military counterweight to the Soviets.
• By this time Britain, Canada, and the United States had already engaged in secret exploratory talks on security arrangements that would serve as an alternative to the United Nations (UN), which was becoming paralyzed by the rapidly emerging Cold War.
• In March 1948, following a virtual communist coup d’état in Czechoslovakia in February, the three governments began discussions on a multilateral collective-defense scheme that would enhance Western security and promote democratic values.
• These discussions were eventually joined by France, the Low Countries, and Norway and in April 1949 resulted in the North Atlantic Treaty

6 . Facts for Prelims

EXIM Bank

• Export-Import Bank of India (EXIM Bank) is a specialized financial institution, wholly owned by Government of India.
• It was set up in 1982, for financing, facilitating and promoting foreign trade of India.
• The headquarters is in Mumbai.
• EXIM Bank extends Lines of Credit (LOCs) to overseas financial institutions, regional development banks, sovereign governments and other entities overseas, to enable buyers in those countries to import developmental and infrastructure projects, equipments, goods and services from India, on deferred credit terms. 

Other Effective Area-based Conservation Measures

• Aravalli Biodiversity Park located at Delhi-Gurgaon border, has been declared as India’s first other effective area-based conservation measures’ (OECM) site.
• ‘Other effective area-based conservation measures’ (OECMs) is a conservation designation for areas that are achieving the effective in-situ conservation of biodiversity outside of protected areas.
• The proposal to declare Aravalli Biodiversity Park as an OECM site was by the National Biodiversity Authority to IUCN in December 2020.
• The tag designates the area as a biodiversity hot spot on the global map.