Daily Current Affairs for UPSC CSE
Topics Covered
- Internationalization of Rupees
- Data Protection Bill
- International Court of Justice
- CMV and TOMV
- High Seas Treaty
- Permanent court of arbitration
- Facts for Prelims
1 . Internationalization of Rupees
Context : As the Government of India presses ahead with internationalisation of the Indian Rupee (INR), an Inter Departmental Group (IDG) of the Reserve Bank of India (RBI) in a report has said that internationalization may result in potential increased volatility in the rupee’s exchange rate in the initial stages.
What does internationalization of the rupee mean?
- Internationalisation is a process that involves increasing the use of the rupee in cross-border transactions.
- It involves promoting the rupee for import and export trade and then other current account transactions, followed by its use in capital account transactions. These are all transactions between residents in India and non-residents. The internationalization of the currency, which is closely interlinked with the nation’s economic progress, requires further opening up of the currency settlement and a strong swap and forex market.
- More importantly, it will require full convertibility of the currency on the capital account and cross-border transfer of funds without any restrictions. India has allowed only full convertibility on the current account as of now.
- Currently, the US dollar, the Euro, the Japanese yen and the pound sterling are the leading reserve currencies in the world. China’s efforts to make its currency renminbi has met with only limited success so far.
The relevance
- Currently, the US dollar is said to enjoy an ‘Exorbitant Privilege’, which refers to the innumerable benefits that accrue to the US on account of all other countries of the world using the US dollar as their currency in most of their international transactions, among global currencies.
- The dollar’s position is supported by a range of factors, including the size of the US economy, the reach of its trade and financial networks, the depth and liquidity of US financial markets, and a history of macroeconomic stability and currency convertibility. Dollar dominance has also benefited from the lack of viable alternatives.
- According to the RBI’s working group, the obvious challenger to the US dollar dominance is the Chinese Renminbi. However, its ability to rival the US dollar will depend on future policies in both the US and China and the ability of the Chinese economy and its financial system to demonstrate the same long-term resilience, integrity, transparency, openness and stability, which are characteristics of the US economy.
- In the wake of the sanctions imposed on the Russian government, its public sector and even individuals linked to the government, many countries have become cautious of the price they may have to pay if they are subjected to similar sanctions by the Western governments. China, Russia and a few other countries have become more vocal in questioning the US dollar-dominated global currency system.
- They would like to reduce their reliance on the US dollar and its financial markets as well as their dependence on dominant international payment mechanisms based on the Society for Worldwide Interbank Financial Telecommunications (SWIFT) messaging system.
- While the Asian crisis of 1997-1998 underscored the necessity of emerging market economies having strong foreign exchange reserves to manage external shocks, in an increasingly polarised world, it no longer seems a sufficient defence against the threat of economic sanctions.
- The RBI-appointed group feels that it is imperative for India to continue exploring alternatives to both the USD and the Euro.
Advantages of internationalization of the rupee
- The use of the rupee in cross-border transactions mitigates currency risk for Indian businesses. Protection from currency volatility not only reduces the cost of doing business, it also enables better growth of business, improving the chances for Indian businesses to grow globally.
- While reserves help manage exchange rate volatility and project external stability, they impose a cost on the economy. Internationalisation of the rupee reduces the need for holding foreign exchange reserves. Reducing dependence on foreign currency will make India less vulnerable to external shocks.
- As the use of the rupee becomes significant, the bargaining power of Indian businesses would improve, adding weight to the Indian economy and enhancing India’s global stature and respect.
Key recommendation from the report
- Internationalization would have monetary implications as the obligation of a country to supply its currency to meet the global demand may come in conflict with its domestic monetary policies, popularly known as the Triffin dilemma
- Internationalisation of a currency may accentuate an external shock, given the open channel of the flow of funds into and out of the country and from one currency to another,
- Stating that costs also emanate from the additional demand for money and also an increase in the volatility of the demand, it said with the advances in statistical reporting, most central banks can separate foreign demand for money, but with regard to some components, such as cash, uncertainty remains.
- “International currency use can also have an impact on financing conditions in a way that is, at times, undesired,
- However the group felt overall that the benefits of internationalisation in terms of limited exchange rate risk, lower cost of capital due to better access to international financial markets, high seigniorage benefits and reduced requirement of foreign exchange reserves far outweigh the above concerns.
- In accordance with the Terms of Reference, the IDG has recommended a roadmap to achieve the internationalization of the rupee.
- For the short term, the group has suggested adoption of a standardised approach for examining the proposals on bilateral and multilateral trade arrangements for invoicing, settlement and payment in the rupee and local currencies, encouraging the opening of the rupee accounts for non-residents both in India and outside India and integrating Indian payment systems with other countries for cross-border transactions.
- It suggested strengthening the financial market by fostering a global 24×5 rupee market and recalibration of the FPI (foreign portfolio investor) regime.
- Over the next two to five years, the group has recommended a review of taxes on masala (rupee-denominated bonds issued outside India by Indian entities) bonds, international use of Real Time Gross Settlement (RTGS) for cross-border trade transactions and inclusion of Indian Government Bonds in global bond indices.
- For the long term, the group has recommended that efforts should be made for the inclusion of the rupee in IMF’s (International Monetary Fund) SDR (special drawing rights). The SDR is an international reserve asset created by the IMF to supplement the official reserves of its member countries. The value of the SDR is based on a basket of five currencies — the U.S. dollar, the euro, the Chinese renminbi, the Japanese yen, and the British pound sterling.
2 . Data Protection Bill
Context : Nearly six years after the Supreme Court held privacy to be a fundamental right, the Centre has made a second attempt at framing legislation for protection of data. The Digital Personal Data Protection Bill, 2022, a draft of which was floated in November, is expected to be tabled in Parliament’s Monsoon Session that begins on July 20. The Union Cabinet approved the draft Bill.
Key Provisions of the 2022 draft Bill
- The Bill will apply to the processing of digital personal data within India where such data is collected online, or collected offline and is digitised. It will also apply to such processing outside India, if it is for offering goods or services or profiling individuals in India.
- Personal data may be processed only for a lawful purpose for which an individual has given consent. Consent may be deemed in certain cases.
- Data fiduciaries will be obligated to maintain the accuracy of data, keep data secure, and delete data once its purpose has been met.
- The Bill grants certain rights to individuals including the right to obtain information, seek correction and erasure, and grievance redressal.
- The central government may exempt government agencies from the application of provisions of the Bill in the interest of specified grounds such as security of the state, public order, and prevention of offences.
- The central government will establish the Data Protection Board of India to adjudicate non-compliance with the provisions of the Bill.
- Government withdrew from Parliament the data protection Bill that had been almost four years in the making, after it had gone through multiple iterations and a review by a Joint Committee of Parliament, and faced pushback from a range of stakeholders including tech companies and privacy activists.
What is the significance of a privacy law?
- The Digital Personal Data Protection Bill, 2022, is a crucial pillar of the overarching framework of technology regulations the Centre is building, which also includes the Digital India Bill — the proposed successor to the Information Technology Act, 2000, the draft Indian Telecommunication Bill, 2022, and a policy for non-personal data governance.
- The proposed law will apply to processing of digital personal data within India; and to data processing outside the country if it is done for offering goods or services, or for profiling individuals in India.
- It requires entities that collect personal data — called data fiduciaries — to maintain the accuracy of data, keep data secure, and delete data once their purpose has been met.
- Bill is expected to allow “voluntary undertaking” — meaning that entities violating its provisions can bring it up with the data protection board, which can decide to bar proceedings against the entity by accepting settlement fees. Repeat offences of the same nature could attract higher financial penalties, the official said.
- The highest penalty — to be levied for failing to prevent a data breach — has been prescribed at Rs 250 crore per instance, it is learnt. Government officials have said in informal conversations that the definition of “per instance” is subjective — and could mean either a single instance of a data breach, or account for the number of people impacted, and multiply it by Rs 250 crore. All of this is, however, open to interpretation by the data protection board on a case-by-case basis.
What are the concerns around the draft Bill?
- The Bill approved by the Cabinet is understood to have largely retained the contents of the original version that was proposed in November 2022. This is especially true of some of the proposals that privacy experts had flagged earlier.
- Wide-ranging exemptions for the central government and its agencies, which were among the most criticised provisions of the previous draft, are understood to have been retained unchanged. The Bill is learnt to have prescribed that the central government can exempt “any instrumentality of the state” from adhering to the provisions on account of national security, relations with foreign governments, and maintenance of public order among other things.
- The control of the central government in appointing members of the data protection board — an adjudicatory body that will deal with privacy-related grievances and disputes between two parties — is learnt to have been retained as well. The chief executive of the board will be appointed by the central government, which will also determine the terms and conditions of their service.
- There is also concern that the law could dilute the Right to Information (RTI) Act, as personal data of government functionaries is likely to be protected under it, making it difficult to be shared with an RTI applicant.
What changes are likely?
- A key change in the final draft is learnt to have been made in the way it deals with cross-border data flows to international jurisdictions — moving from a ‘whitelisting’ approach to a ‘blacklisting’ mechanism.
- The Indian Express had earlier reported that the proposed law could allow global data flows by default to all jurisdictions other than a specified ‘negative list’ of countries — essentially an official blacklist of countries where transfers would be prohibited.
- The draft that was released for public consultation in November said the central government will notify countries or territories where personal data of Indian citizens can be transferred — that is, a ‘whitelist’ of jurisdictions where data transfers would be allowed.
- A provision on “deemed consent” in the previous draft could also be reworded to make it stricter for private entities, while allowing government departments to assume consent while processing personal data on grounds of national security and public interest.
How does India’s proposal compare with other countries?
- An estimated 137 out of 194 countries have put in place legislation to secure the protection of data and privacy, according to the United Nations Conference on Trade and Development (UNCTAD), an intergovernmental organisation within the United Nations Secretariat.
- Africa and Asia show 61% (33 countries out of 54) and 57% (34 countries out of 60) adoption respectively. Only 48% of Least Developed Countries (22 out of 46) have data protection and privacy laws.
- EU model: The GDPR focuses on a comprehensive data protection law for processing of personal data. It has been criticised for being excessively stringent, and imposing many obligations on organisations processing data, but it is still the template for most of the legislation drafted around the world.
- US model: Privacy protection is largely defined as “liberty protection” focused on the protection of the individual’s personal space from the government. It is viewed as being somewhat narrow in focus, because it enables collection of personal information as long as the individual is informed of such collection and use.
- China model: New Chinese laws on data privacy and security issued over the last 12 months include the Personal Information Protection Law (PIPL), which came into effect in November 2021. It gives Chinese data principals new rights as it seeks to prevent the misuse of personal data.
3 . Cucumber mosaic virus (CMV) & Tomato Mosaic Virus
Context : Tomato growers in Maharashtra and Karnataka have blamed two different viruses for the loss of yields earlier this year. Farmers in Maharashtra have said their tomato crop was impacted by attacks of the cucumber mosaic virus (CMV), while growers in Karnataka and other South Indian states have blamed the tomato mosaic virus (ToMV) for crop losses. Over the last three years, growers of tomato have complained of increased infestation with these two viruses, leading to partial to complete crop losses.
What are CMV and ToMV?
- The two plant pathogens have similar names and cause similar damage to crops, but they belong to different viral families, and spread differently.
- ToMV belongs to the Virgaviridae family and is closely related to the tobacco mosaic virus (TMV). ToMV hosts include tomato, tobacco, peppers, and certain ornamental plants.
- CMV has a much larger host pool that includes cucumber, melon, eggplant, tomato, carrot, lettuce, celery, cucurbits (members of the gourd family, including squash, pumpkin, zucchini, some gourds, etc.), and some ornamentals. CMV was identified in cucumber in 1934, which gave the virus its name.
How do these two viruses spread?
- ToMV spreads mainly through infected seeds, saplings, agricultural tools and often, through the hands of nursery workers who have failed to sanitise themselves properly before entering the fields. It would require only a few infected saplings for the virus to take over an entire field in a matter of days.
- CMV is spread by aphids, which are sap-sucking insects. CMV too can spread through human touch, but the chances of that are extremely low.
- Conditions of high temperature followed by intermittent rain, which allow aphids to multiply, are conducive to the spread of CMV, Dr M Krishna Reddy, a former head of crop protection at Indian Institute of Horticulture (IIHR), Bengaluru, said. These conditions were seen in Maharashtra — the late rabi crop (planted in January-February) faced a sudden bout of rain followed by extreme heat.
- For ToMV, farmers in Maharashtra have blamed seed manufacturers and nurseries. Tomato growers plant 3-4-inch saplings in their fields, which they buy from nurseries. It is very important to ensure that nurseries maintain bio safety, and restrict entry into the premises. “Seed treatment at the nursery is necessary to prevent future spread of the virus,” Dr Reddy said.
How do the viruses affect the crop?
- Both viruses can cause almost 100 per cent crop loss unless properly treated on time. The foliage of plants infected with ToMV shows alternating yellowish and dark green areas, which often appear as blisters on the leaves. Distortion of leaves and twisting of younger leaves are also symptoms. The fruit develops necrotic spots, which leads to overripening. Younger plants are dwarfed, and fruit setting is affected.
- CMV too causes distortion of leaves, but the pattern is different. Often leaves at the top and bottom are distorted while those in the middle remain relatively blemish-free. In cucumber, the virus causes a mosaic-like pattern of alternating yellow and green spots. In tomato, fruit formation is affected, and in some cases the fruit is distorted and small.
- While specific effects vary depending on the host, overall, CMV causes stunting and lower production.
How can the viruses be controlled?
- Dr Reddy stressed the importance of following biosafety standards in nurseries, and compulsory seed treatment to stop the spread of ToMV. Farmers who buy trays of saplings should check before planting, and discard any visible infected material, he said. They should also look out for signs of infection throughout the cropping cycle, and remove infected plants without allowing it to touch healthy ones.
- ToMV can remain dormant in weeds and plant remains around the field, and come back later. Fields must, therefore, be cleared of weeds and plant material before fresh planting. Plants cannot be cured of ToMV, but the infection can be controlled with good agricultural practices. “Earlier we had reports about the virus mostly from Maharashtra, but reports are now coming from Karnataka, Andhra Pradesh, and other states,” Dr Reddy said.
4 . International Court of Justice
Context : The United Kingdom, Canada, Sweden and Ukraine launched a case against Iran at the United Nations’ highest court Wednesday over the downing in 2020 of a Ukrainian passenger jet and the deaths of all 176 passengers and crew.
About ICJ
- The International Court of Justice (ICJ) is the principal judicial organ of the United Nations (UN). It was established in June 1945 by the Charter of the United Nations and began work in April 1946.
- The seat of the Court is at the Peace Palace in The Hague (Netherlands).
- Of the six principal organs of the United Nations, it is the only one not located in New York (United States of America).
- The Court’s role is to settle, in accordance with international law, legal disputes submitted to it by States and to give advisory opinions on legal questions referred to it by authorized United Nations organs and specialized agencies.
- The Court is composed of 15 judges, who are elected for terms of office of nine years by the United Nations General Assembly and the Security Council.
- It is assisted by a Registry, its administrative organ.
- Its official languages are English and French.
- All members of the UN are automatic parties to the statute, but this does not automatically give ICJ jurisdiction over disputes involving them. The ICJ gets jurisdiction only on the basis of consent of both parties.
Where does India stand vis-a-vis dispute resolution at ICJ?
- In September 1974, India declared the matters over which it accepts the jurisdiction of the ICJ. This declaration revoked and replaced the previous declaration made in September 1959.
- Among the matters over which India does not accept ICJ jurisdiction are: “disputes with the government of any State which is or has been a Member of the Commonwealth of Nations”, and “disputes relating to or connected with facts or situations of hostilities, armed conflicts, individual or collective actions taken in self-defence…”.
- The declaration, which includes other exceptions as well, has been ratified by Parliament.
5 . High Seas Treaty
Context : On June 19, the UN adopted the Marine Biodiversity of Areas Beyond National Jurisdiction (BBNJ) or the High Seas Treaty. It became the third agreement to be approved under UNCLOS, after the 1994 and 1995 treaties, which established the International Seabed Authority and the Fish Stocks agreement.
When did the process start?
- The idea of protecting the marine environment emerged in 2002. By 2008, the need for implementing an agreement was recognised, which led to the UNGA resolution in 2015 to form a Preparatory Committee to create the treaty. The Committee recommended the holding of intergovernmental conferences (IGC) and after five prolonged IGC negotiations, the treaty was adopted in 2023. The treaty’s objective is to implement international regulations to protect life in oceans beyond national jurisdiction through international cooperation.
What does the treaty entail?
- The treaty aims to address critical issues such as the increasing sea surface temperatures, overexploitation of marine biodiversity, overfishing, coastal pollution, and unsustainable practices beyond national jurisdiction.
- The first step is establishing marine protected areas to protect oceans from human activities through a “three-quarterly majority vote,” which prevents the decision from getting blocked by one or two parties. On the fair sharing of benefits from marine genetic resources, the treaty mandates sharing of scientific information and monetary benefits through installing a “clear house mechanism.” Through the mechanism, information on marine protected areas, marine genetic resources, and “area-based management tools” will be open to access for all parties. This is to bring transparency and boost cooperation.
- The last pillar of the treaty is capacity building and marine technology. The Scientific and Technical Body will also play a significant role in environmental impact assessment.
- The body will be creating standards and guidelines for assessment procedures, and helping countries with less capacity in carrying out assessments. This will facilitate the conference of parties to trace future impacts, identify data gaps, and bring out research priorities.
Why did it take so long to sign?
- The marine genetic resources issue was the treaty’s most contended element. The parties to the treaty must share and exchange information on marine protected areas and technical, scientific and area-based management tools to ensure open access of knowledge. The negotiations on the subject were prolonged due to the absence of a provision to monitor information sharing. In IGC-2, small island states supported the idea of having a licensing scheme for monitoring, but was opposed by the likes of the U.S., and Russia, stating its notification system would hinder “bioprospecting research.”
- Another debate was over definition. The use of the phrases “promote” or “ensure” in different parts of the treaty, especially with respect to the sharing of benefits from marine genetic resources, was heavily debated over. And finally, there was the prolonged negotiation over the adjacency issue. This was specifically applicable to coastal states whose national jurisdictions over the seas may vary. This meant it required special provisions where it can exercise sovereign rights over seabed and subsoil in the jurisdiction beyond. It prolonged the decision-making as it affects the interests of landlocked and distant states.
Who opposed the treaty?
- Many developed countries opposed the treaty as they stand by private entities which are at the forefront of advanced research and development in marine technology (patents relating to marine genetic resources are held by a small group of private companies). Russia and China also are not in favour of the treaty. Russia withdrew from the last stage of reaching a consensus in IGC-5, arguing that the treaty does not balance conservation and sustainability.
6 . Facts for Prelims
Permanent Court of Arbitration (PCA)
- The Permanent Court of Arbitration (PCA) is a non-UN intergovernmental organization located in The Hague, Netherlands. Unlike a judicial court in the traditional sense, the PCA provides services of arbitral tribunal to resolve disputes that arise out of international agreements between member states, international organizations or private parties.
- The cases span a range of legal issues involving territorial and maritime boundaries, sovereignty, human rights, international investment, and international and regional trade. The PCA is constituted through two separate multilateral conventions with a combined membership of 122 states. It is not a United Nations agency, but a United Nations observer.
- The PCA was created at the first Hague Peace Conference of 1899. The Peace Palace was built from 1907 to 1913 for the PCA in The Hague. In addition, the building houses The Hague Academy of International Law, Peace Palace Library and the International Court of Justice.
- PCA tribunals have jurisdiction for disputes based on the PCA founding documents (the Conventions on Pacific Settlement of International Disputes), or based on bilateral and multilateral treaties. Its Secretary General furthermore acts as an appointing authority for arbitration.
International Conference on Women In Physics (ICWIP)
- The 8th International Union of Pure and Applied Physics (IUPAP) International Conference on Women In Physics (ICWIP), jointly organised by the Gender in Physics Working Group (GIPWG) of Indian Physics Association (IPA) and the Tata Institute of Fundamental Research (TIFR), started in online mode from Mumbai .
- The conference is being hosted by the Homi Bhabha Centre for Science Education (HBCSE) – TIFR, Mumbai, in an online mode, from 10-14 July 2023.
- This is the first time an international conference on gender issues in physics is being held in India.
- The ICWIP 2023 in India is an opportunity to further India’s commitment to the cause of promoting diversity, equity and inclusion in physics and Science in general. The conference is supported by the National Institute for Science Education and Research (NISER), all three national science academies, Indian Association of Physics Teachers (IAPT) and the office of the Principal Scientific Advisor, Government of India.