Daily Current Affairs : 7th and 8th June 2022

Daily Current Affairs for UPSC CSE

Topics Covered

1. Bad Banks
2. Places of Worship Act
3. Food Safety Index
4. NSG
5. Facts for Prelims
   1. CDS
   2. Agni Missile
   3. Gait Test
   4. Samarth Portal
   5. Defence Acquisition Council
   6. Fishing Cat

1 . Bad Banks

Context : The National Asset Reconstruction Company Ltd. (NARCL), set up to take over large bad loans of more than ₹500 crore from banks, will pick up the first set of such non-performing assets (NPAs) in July.

What are Bad Banks?

• A bad bank is a bank that is set up to buy the bad loans and other illiquid holdings of another financial institution. 
• The entity holding significant nonperforming assets will sell these holdings to the bad bank at market price. 
• By transferring such assets to the bad bank, the original institution may clear its balance sheet—although it will still be forced to take write-downs.
• A bad bank structure may also assume the risky assets of a group of financial institutions, instead of a single bank.
• Bad banks were also considered during the financial crisis of 2008 as a way to shore up private institutions with high levels of problematic assets.

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 U.S., Germany, Japan and others in the past. Eg troubled asset relief program, also known as TARP, implemented by the U.S. Treasury in the aftermath of the 2008 financial crisis
• Many critics, however, have pointed to several problems with the idea of a bad bank to deal with bad loans. 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.
• Contra opinion states 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 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.
• Further, 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 to be 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.

2 . Places of Worship Act

Context : Jamiat Ulama-i-Hind has moved the Supreme Court seeking the dismissal of a petition which challenges the validity of the Places of Worship (Special Provisions) Act, 1991, a law which prohibits the conversion of any religious place.

What is the law about?

• Passed in 1991 by the P V Narasimha Rao-led Congress government, the law seeks to maintain the “religious character” of places of worship as it was in 1947 — except in the case of Ram Janmabhoomi-Babri Masjid dispute, which was already in court.

Background

• When the Babri Masjid-Ram Janmabhoomi dispute was at its height, in the early 1990s, the Vishwa Hindu Parishad (VHP) and other Hindu organisations also laid claim to two other mosques — the Gyanvapi mosque in Varanasi and the Shahi Idgah in Mathura.
• Although the radicals in the Hindu camp often spoke of reclaiming 3,000 mosques across the country, they threatened to start agitations only in respect to these two places of worship.
• In this backdrop, the P.V. Narasimha Rao government enacted, in September 1991, a special law to freeze the status of places of worship as they were on August 15, 1947.
• The law kept the disputed structure at Ayodhya out of its purview, mainly because it was the subject of prolonged litigation.
• It was also aimed at providing scope for a possible negotiated settlement.

Objective of the Act

• The aim of the Act was to freeze the status of any place of worship as it existed on August 15, 1947.
• It was also to provide for the maintenance of the religious character of such a place of worship as on that day.
• It was intended to pre-empt new claims by any group about the past status of any place of worship and attempts to reclaim the structures or the land on which they stood.
• It was hoped that the legislation would help the preservation of communal harmony in the long run.

Main features

• The Act declares that the religious character of a place of worship shall continue to be the same as it was on August 15, 1947.
• It says no person shall convert any place of worship of any religious denomination into one of a different denomination or section.
• It declares that all suits, appeals or any other proceedings regarding converting the character of a place of worship, which are pending before any court or authority on August 15, 1947, will abate as soon as the law comes into force. No further legal proceedings can be instituted.
• However, there is an exception to the bar on instituting fresh proceedings with regard to suits that related to conversion of status that happened after August 15, 1947. This saves legal proceedings, suits and appeals regarding chance of status that took place after the cut-off date.
• These provisions will not apply to ancient and historical monuments and archaeological sites and remains that are covered by the Ancient Monuments and Archaeological Sites and Remains Act, 1958; a suit that has been finally settled or disposed of; and any dispute that has been settled by the parties or conversion of any place that took place by acquiescence before the Act commenced.
• The Act does not apply to the place of worship commonly referred to as Ram Janmabhoomi-Babri Masjid in Ayodhya. 

Penal provision in the Act

• Anyone who defies the bar on conversion of the status of a place of worship is liable to be prosecuted.
• The Act provides for imprisonment up to three years and a fine for anyone contravening the prohibition.
• Those abetting or participating in a criminal conspiracy to commit this offence will also be punished to the same extent, even if the offence is not committed in consequence of such abetment or as part of the conspiracy.

What does it say about Ayodhya, and what else is exempted?

• Section 5 says: “Act not to apply to Ram Janma Bhumi Babri Masjid. Nothing contained in this Act shall apply to the place or place of worship commonly known as Ram Janma Bhumi-Babri Masjid situated in Ayodhya in the State of Uttar Pradesh and to any suit, appeal or other proceeding relating to the said place or place of worship.”
• Besides the Ayodhya dispute, the Act also exempted:
  • any place of worship that is an ancient and historical monument or an archaeological site, or is covered by the Ancient Monuments and Archaeological Sites and Remains Act, 1958;
  • a suit that has been finally settled or disposed of;
  • any dispute that has been settled by the parties or conversion of any place that took place by acquiescence before the Act commenced.

Why is the law under challenge?

• The law has been challenged on the ground that violates secularism.
• It is also argued that the cut-off date of August 15, 1947 is “arbitrary, irrational and retrospective” and prohibits Hindus, Jains, Buddhists, and Sikhs from approaching courts to “re-claim” their places of worship which were “invaded” and “encroached” upon by “fundamentalist barbaric invaders”.
• The BJP had opposed the law even when it was introduced, arguing that the Centre has no power to legislate on “pilgrimages” or “burial grounds” which is under the state list. However, the government had said it could make use of its residuary power under Entry 97 of the Union List to enact this law.
• Entry 97 confers residuary powers to the Centre to legislate on subjects that are not enumerated in any of the three lists.
• Another criticism against the law is that the cut-off is the date of Independence, which means that status quo determined by a colonial power is considered final.

3 . Food Safety Index

Context : In an effort to galvanize States/UTs to work towards ensuring safe food for citizens, Union Minister for Health and Family Welfare Dr Mansukh Mandaviya released Food Safety and Standards Authority of India (FSSAI)’s 4th State Food Safety Index (SFSI)

About State Food Safety Index

• SFSI was started from 2018-19 with the aim of creating a competitive and positive change in the food safety ecosystem in the country. 
• FSSAI has developed State Food Safety Index to measure the performance of states on various parameters of Food Safety. 
• This index is based on performance of State/ UT on five significant parameters, namely, Human Resources and Institutional Data, Compliance, Food Testing – Infrastructure and Surveillance, Training & Capacity Building and Consumer Empowerment.
• The Index is a dynamic quantitative and qualitative benchmarking model that provides an objective framework for evaluating food safety across all States/UTs.
• The index will help in providing safe and nutritious food to our citizens.

Rankings

• This year, among the larger states, Tamil Nadu was the top ranking state, followed by Gujarat and Maharashtra.
• Among the smaller states, Goa stood first followed by Manipur and Sikkim.
• Among UTs, Jammu & Kashmir, Delhi and Chandigarh secured first, second and third ranks.

4 . Nuclear Supplier’s Group

Context : In a message aimed at China blocking India’s membership at the Nuclear Suppliers Group (NSG), External Affairs Minister S. Jaishankar on June 7 said that India looks forward to joining the NSG, overcoming “political impediments”.

Background

• The nuclear Non-proliferation Treaty (NPT) granted non-nuclear-weapon states access to nuclear materials and technology for strictly peaceful purposes. Several NPT nuclear supplier states sought to determine the conditions for sharing specific equipment and materials with non-nuclear-weapon states.
• In 1971, these supplier states formed the Zangger Committee in order to require states outside the NPT to institute International Atomic Energy Agency (IAEA) safeguards before importing certain items that could be used to pursue nuclear weapons—referred to as the “Trigger List.”
• India’s explosion of a nuclear device in 1974 reaffirmed the fact that nuclear materials and technologies acquired under the guise of peaceful purposes could be diverted to build weapons.
• In response to India’s action, several Zangger Committee members, along with France—who was not a member of the NPT at that time—established the NSG to further regulate nuclear-related exports.

About Nuclear Suppliers Group

• Established in 1975, the Nuclear Suppliers Group (NSG) is comprised of 48 states that have voluntarily agreed to coordinate their export controls to non-nuclear-weapon states.
• The NSG governs the transfers of civilian nuclear material and nuclear-related equipment and technology.
• The participants are: Argentina, Australia, Austria, Belarus, Belgium, Brazil, Bulgaria, Canada, China, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Kazakhstan, Latvia, Lithuania, Luxembourg, Malta, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Romania, Russia, Serbia, Slovakia, Slovenia, South Africa, South Korea, Spain, Sweden, Switzerland, Turkey, Ukraine, the United Kingdom, and the United States.
• The NSG aims to prevent nuclear exports for commercial and peaceful purposes from being used to make nuclear weapons.
• In order to ensure that their nuclear imports are not used to develop weapons, NSG members are expected to forgo nuclear trade with governments that do not subject themselves to confidence-building international measures and inspections.
• The NSG also added supplemental technologies to the original Zangger Committee’s “Trigger List,” becoming Part I of the NSG Guidelines. In addition, NSG members agreed to apply their trade restrictions to all states, not just those outside the NPT.
• The NSG has two sets of Guidelines listing the specific nuclear materials, equipment, and technologies that are subject to export controls.
  • Part I lists materials and technology designed specifically for nuclear use. These include fissile materials, nuclear reactors and equipment, and reprocessing and enrichment equipment. First published in 1978, Part I responded to India’s 1974 diversion of nuclear imports for supposedly peaceful purposes to conduct a nuclear explosion. To be eligible for importing Part I items from an NSG member, states must have comprehensive IAEA safeguards covering all their nuclear activities and facilities. In the case of Part II goods, IAEA safeguards are only required for the specific nuclear activity or facility designated for the import.
  • Part II identifies dual-use goods; non-nuclear items with legitimate civilian applications that can also be used to develop weapons. Machine tools and lasers are two types of dual-use goods. NSG members adopted Part II in 1992 after discovering how close Iraq came to realizing its nuclear weapons ambitions. Iraq had illicitly employed dual-use imports in a covert nuclear weapons program before the 1991 Persian Gulf War.

Membership Criteria: Factors taken into account for membership include the following:

• The ability to supply items (including items in transit) covered by the annexes to Parts 1 and 2 of the NSG Guidelines
• Adherence to the Guidelines and action in accordance with them
• Enforcement of a legally based domestic export control system which gives effect to the commitment to act in accordance with the Guidelines
• Full compliance with the obligations of one or more of the following: the Treaty on the Non-Proliferation of Nuclear Weapons (NPT), the Treaties of Pelindaba, Rarotonga, Tlatelolco, Bangkok, or an equivalent international nuclear nonproliferation agreement
• Support of international efforts towards nonproliferation of weapons of mass destruction and of their delivery vehicles

Importance of NSG Membership for India

• Access to technology for a range of uses from medicine to building nuclear power plants for India from the NSG which is essentially a traders’ cartel. India has its own indigenously developed technology but to get its hands on state of the art technology that countries within the NSG possess, it has to become part of the group.
• With India committed to reducing dependence on fossil fuels and ensuring that 40% of its energy is sourced from renewable and clean sources, there is a pressing need to scale up nuclear power production. This can only happen if India gains access to the NSG. Even if India today can buy power plants from the global market thanks to the one time NSG waiver in 2008, there are still many types of technologies India can be denied as it is outside the NSG.
• India could sign the Nuclear non proliferation treaty and gain access to all this know how but that would mean giving up its entire nuclear arsenal. Given that it is situated in an unstable and unpredictable neighbourhood India is unlikely to sign the NPT or accede to the Comprehensive Test Ban Treaty (CTBT) that puts curbs on any further nuclear tests
• With access to latest technology, India can commercialize the production of nuclear power equipment. This, in turn will boost innovation and high tech manufacturing in India and can be leveraged for economic and strategic benefits.
• Having the ability to offer its own nuclear power plants to the world means spawning of an entire nuclear industry and related technology development. This could give the Make in India programme a big boost.
• If India get membership to the NSG, it can block Pakistan from its membership as entry into the grouping is by consensus only. This is one of the reasons why China is pushing to include Pakistan as well as pointing out that India as a non signatory to the NPT cannot be a member.

5 . Defence Acquisition Council

Context : The Defence Acquisition Council (DAC), chaired by Defence Minister Rajnath Singh, on Monday accorded preliminary approval, the Acceptance of Necessity (AoN), for capital acquisition proposals of the armed forces amounting to ₹76,390 crore.

About Defence Acquisition Council

• Defence Acquisition Council (DAC) under the Defence Minister was constituted for overall guidance of the defence procurement planning process.
• It was constituted based on the Group of Ministers recommendations on “Reforming the National Security System,” 

Compostion

• Defence Minister: Chairman
• Minister of State for Defence: Member
• Chief of Army Staff: Member
• Chief of Naval Staff: Member
• Chief of Air Staff: Member
• Defence Secretary: Member
• Secretary Defence Research & Development: Member
• Secretary Defence Production: Member
• Chief of Integrated Staff Committees HQ IDS: Member
• Director General (Acquisition): Member
• Dy. Chief of Integrated Defence: Staff Member Secretary

Objective

• The objective of the Defence Acquisition Council is to ensure expeditious procurement of the approved requirements of the Armed Forces in terms of capabilities sought and time frame prescribed by optimally utilizing the allocated budgetary resources.

Functions

• The functions of the DACIn principle approval of 15 Years Long Terms Integrated Perspective Plan for Defence Forces
• Accord of Acceptance of Necessity to acquisition proposals;
• Categorization of the acquisition proposals relating to ‘Buy’, ‘Buy & Make’ and ‘Make’;
• Issues relating to Single vendor clearance;
• Decision regarding ‘offset’ provisions in respect of acquisition proposals above Rs. 300 crores;
• Decisions regarding Transfer of Technology under ‘Buy & Make’ category of acquisition proposals
• Field Trial evaluation.          

6 . Facts for Prelims

Samarth Portal

• Jan Samarth Portal is a one-stop digital portal linking government credit schemes.
• It is a first of its kind platform which directly connects beneficiaries to lenders.
• The main purpose of the portal is to encourage inclusive growth and development of various sectors by guiding and providing them with the right type of government benefits through simple and easy digital processes. The portal ensures end-to-end coverage of all the linked schemes.

Fishing Cat

• The fishing cat is a medium-sized wild cat of South and Southeast Asia. Since 2016, it is listed as Vulnerable on the IUCN Red List. Fishing cat populations are threatened by destruction of wetlands and have declined severely over the last decade.
• The Chilika Lake, Asia’s largest brackish water lagoon, has 176 fishing cats, according to a census done by the Chilika Development Authority (CDA) in collaboration with the Fishing Cat Project (TFCP). This is the world’s first population estimation of the fishing cat done outside the protected area network.
• Globally threatened cats are found in wetlands in major South and Southeast Asian river basins starting from the Indus in Pakistan till the Mekong in Vietnam and in Sri Lanka and Java. They are found in 10 Asian countries but have stayed undetected in Vietnam and Java since the last decade or so.

Agni Missile System

• Agni is a surface-to-surface missile launched from the ground to strike targets on land or sea. It can be fired from handheld weapons or ground installations, and can be mounted on to vehicles or ships. Since the launching platform is typically stationary or moving slowly, it is powered by a rocket engine or an explosive charge.
• Agni missiles have fins or wings for lift and stability, although hypervelocity or short-range missiles may use body lift or fly a ballistic trajectory.
• Recently India successfully tested the Intermediate Range Ballistic Missile (IRBM) Agni-4, which met all parameters. The missile, one of many in the Agni series of strategic missiles, has a range of over 3,500 km.
• Agni 1- covers a range of up to 1000 kms, Agni 2- 2000 kms, Agni 3- 2500 kms, Agni 4 more than 3500 kms and can be fired from a mobile launcher. Agni 5, with a range of 5000-8000 kms, is marked as an inter-continental ballistic missile while Agni 6: ICBM with a range of 8000 kms to 10,000 kms is classified MIRVed Warhead.

Chief of Defence Staff

• CDS acts as the permanent Chairman of the Chiefs of Staff Committee which will also have three service chiefs as members.
• He is also the head of the Department of Military Affairs (DoMA) in the Ministry of Defence.
  • The Department of Military Affairs was assigned specific tasks by notification of the Cabinet Secretariat issued on 30th December 2019.
  • The overarching principle of this arrangement is that work related to Military Affairs is to be done only by the ‘Department of Military Affairs’, while the Department of Defence will deal with issues related to the defence of the Country, including defence policy.
• He is also the member of National Security Council, Defence Acquisition Council, Defence Planning Committee, Nuclear Command Authority, Defence Cyber Agency, Defence Space Agency.
• The Ministry of Defence recently notified changes in the Army, Air Force and Navy Acts, making any serving or retired Lt General, Air Marshal and Vice Admiral under the age of 62 years eligible for appointment as CDS. Three-star officers are now in contention along with the serving Chiefs of the three services, who are four-star officers

Gait Analysis

• Gait is defined as a manner of walking or moving on foot. Gait analysis is a technique in podiatry medical care and the treatment of the foot, which is used to evaluate and diagnose conditions that affect walking and posture.
• The analysis can help experts zero in on the source of an injury or pain that determines the way in which an individual stands or walks. It can also be used by physiotherapists for treatment, and in athletics training so that athletes can perform better and in greater comfort.
• Gait analysis techniques have now been borrowed by forensic sciences experts to identify suspects in criminal cases. With footage from CCTV cameras becoming a crucial element in fighting and preventing a range of crimes especially in the cities, gait analysis has begun to be used as a tool for focusing on or eliminating individuals from a list of suspects.