Daily Current Affairs, 9th July 2018
Topic: Indian culture will cover the salient aspects of Art Forms, Literature.
WORLD SANSKRIT CONFERENCE
Context: The 2018 World Sanskrit Conference (WSC) is being hosted by the Department of Asian Studies at the University of British Columbia in Vancouver, Canada. It is 17th such conference.
World Sanskrit Conference: The World Sanskrit Conference is the premier international forum for professional researchers and educators of the Sanskrit language and its literatures, and of the history, religion, and cultures of premodern South Asia.
- It is convened every three years under the auspices of the International Association of Sanskrit Studies.
- At the 29th International Congress of Orientalists, held in Paris in 1973, Sanskritists from various countries endorsed the formation of the International Association of Sanskrit Studies and drafted its constitution.
- The main task of the IASS was agreed to be the organizing of a World Sanskrit Conferenceat different venues around the world.
- The 1972 International Sanskrit Conference in New Delhi was recognised retrospectively as the First World Sanskrit Conference.
- Indologica Taurinensiais the journal of the IASS.
What’s important?For Prelims: WSC and IASS.
- For Mains: Significance of WSC.
Topic: Salient features of the Representation of People’s Act.
Context: During recent consultations with the Law Commission of India, as many as nine parties expressed their reservations while four parties supported holding of simultaneous elections.
Background:Simultaneous elections were held in the country during the first two decades after Independence up to 1967. Dissolution of certain Assemblies in 1968 and 1969 followed by the dissolution of the Lok Sabha led to the “disruption of the conduct of simultaneous elections.
Simultaneous elections: Why is it a good idea?
- This will help save public money.
- It will be a big relief for political parties that are always in campaign mode.
- It will allow political parties to focus more on policy and governance.
Need for simultaneous elections:
To reduce unnecessary expenditures: Elections are held all the time and continuous polls lead to a lot of expenditure. More than Rs1,100 crore was spent on the 2009 Lok Sabha polls and the expenditure had shot up to Rs4,000 crore in 2014.
To reduce the unnecessary use of manpower: Over a crore government employees, including a large number of teachers, are involved in the electoral process. Thus, the continuous exercise causes maximum harm to the education sector.
Security concerns: Security forces also have to be diverted for the electoral work even as the country’s enemy keeps plotting against the nation and terrorism remains a strong threat.
Way ahead:The time is ripe for a constructive debate on electoral reforms and a return to the practice of the early decades after Independence when elections to the Lok Sabha and state assemblies were held simultaneously. It is for the Election Commission to take this exercise forward in consultation with political parties.
Facts for Prelims:
- Law Commission of Indiais an executive body established by an order of the Government of India. Its major function is to work for legal reform. Its membership primarily comprises legal experts, who are entrusted a mandate by the Government.
- The Commission is established for a fixed tenure and works as an advisory body to the Ministry of Law and Justice
- The first Law Commission was established during the British Raj era in 1834 by the Charter Act of 1833. After that, three more Commissions were established in pre-independent India. The first Law Commission of independent India was established in 1955 for a three-year term.
What’s important? For Prelims: Law commission.
- For Mains: Simultaneous elections- need, challenges and solutions.
Topic: Issues related to health.
Context: Fish samples in Chennai test positive for formalin. This is the first time samples of fish in Tamil Nadu have tested positive for formalin.
Formalin- key facts:
- Formalin is a toxic, colourless solution that is derived by dissolving formaldehyde gas in water.
- It is a cancer-inducing chemical used to preserve fish is used as a disinfectant. It is used in the manufacture of pesticides, fertilisers, glue, paper and paint, among other products.
- Formalin causes irritation in the eyes, throat, skin and stomach. In the long run continued exposure causes harm to the kidneys, liver and can even cause cancers.
- Formaldehyde is a highly reactive, flammable gas, which means it can become a fire hazard when exposed to flame or heat.
- Formaldehyde solutions can be flammable when there are high concentrations of formaldehyde or methanol.
For Prelims: Formalin- effects on health.
Topic: Indian Economy and issues relating to planning, mobilization of resources, growth, development.
Context: The Multi Commodity Exchange of India (MCX), the country’s largest commodity bourse in terms of market share, is planning to enter the currency derivatives segment.
What are currency derivatives?
- Currency derivatives are exchange-based futures and options contracts that allow one to hedge against currency movements.
- Simply put, one can use a currency future contract to exchange one currency for an another at a future date at a price decided on the day of the purchase of the contract.
- In India, one can use such derivative contracts to hedge against currencies like dollar, euro, U.K. pound and yen. Corporates, especially those with a significant exposure to imports or exports, use these contracts to hedge against their exposure to a certain currency.
- While all such currency contracts are cash-settled in rupees, the Securities and Exchange Board of India (SEBI), early this year, gave a go-ahead to start cross currency contracts as well on euro-dollar, pound-dollar and dollar-yen.
Why were such derivatives introduced on exchange platforms?
Prior to the introduction of currency derivatives on exchanges, there was only the OTC – over the counter – market to hedge currency risks and where forward contracts were negotiated and entered into. It was kind of an opaque and closed market where mostly banks and financial institutions traded. Exchange-based currency derivatives segment is a regulated and transparent market that can be used by small businesses and even individuals to hedge their currency risks.
Facts for Prelims: What is MCX?
- Multi Commodity Exchange (MCX) as the name suggests is an exchange like BSE and NSE where commodities are traded.
- It is a platform for commodity traders that facilitate online trading, settlement and clearing of commodity futures transactions, thereby providing a platform for risk management (hedging).
- It was established in November 2003 under the regulatory framework of FMC (Forward Markets Commission).
- In 2016, the FMC was merged with SEBIand MCX as an exchange falls under the regulatory purview of SEBI.
What’s important? For Prelims: What are Currency derivatives and their features.
Topic: Science and Technology- developments and their applications and effects in everyday life.
Einstein’s Theory of Relativity
Context: Einstein’s Theory of Relativity Proven to Work Even in Three-star Systems. A study conducted by scientists proved that the legendary scientist was correct about gravity even in the most extreme scales.
The experiment: The researchers observed gravitational behaviour in a three-star system known as PSR J0337+1715. The massive system located 4,200 light years away consists of two white dwarfs and a neutron star, an ideal example of an extreme scale.
After years of study, the researchers reported finding no detectable difference indicating no alternative theories of gravity were in motion. The results were consistent with Einstein’s theory of relativity.
The theory of general relativity:
- In 1915, Albert Einstein presented his theory of general relativity, which proposed that gravity itself was the result of a warping of spacetime by massive objects like stars and planets.
- Einstein’s theory of relativity indicates that all objects fall the same way regardless of mass or composition.
Things predicted by General relativity include:
- As light gets closer to the sun, it bends towards the suntwice as much as classical physics (the system used before general relativity) predicts.
- The perihelion of the planet Mercury rotates along its orbit more than is expected under Newtonian physics. General relativity accounts for the difference between what is seen and what is expected without it.
- Redshift from gravity.When light moves away from an object with gravity (moving away from the center of the valley), it is stretched into longer wavelengths. This was confirmed by the Pound-Rebka experiment.
- The Shapiro delay.Light appears to slow down when it passes close to a massive object. This was first seen in the 1960s by space probes headed towards the planet Venus.
- Gravitational waves.They were first observed on 14 September 2015.
Alternatives to Einstein’s general theory of relativity:
Alternatives to Einstein’s general theory of relativity predict that compact objects with extremely strong gravity, like neutron stars, fall a little differently than objects of lesser mass. That difference, these alternate theories predict, would be due to a compact object’s so-called gravitational binding energy – the gravitational energy that holds it together.
However, to date, Einstein’s equations have passed all tests, from careful laboratory studies to observations of planets in our solar system.
For Prelims and Mains: Theory of general relativity and related predictions.
Topic: Awareness in space.
Kepler space telescope
Context: Scientists at NASA are preparing to download the latest bit of data stored in its plant-hunting Kepler space telescope as the spacecraft is now running “very low” on fuel. NASA has placed the spacecraft in a no-fuel-use safe mode to save the remaining fuel so that data extraction can be completed.
About Kepler telescope:
Launched in 2009, the Kepler mission is specifically designed to survey our region of the Milky Way galaxy to discover hundreds of Earth-size and smaller planets in or near the habitable zone and determine the fraction of the hundreds of billions of stars in our galaxy that might have such planets.
- Since the launch of the observatory in 2009, astronomers have discovered thousands of extra-solar planets, or exoplanets, through this telescope alone. Most of them are planets that are ranging between the size of Earth and Neptune (which itself is four times the size of Earth). Most of these planets were discovered in a small region of the constellation Cygnus, at which Kepler was pointed for the first four years of its mission.
- As of March 2018, Kepler had found 2,342 confirmed planets; add potential planets, and its find of exoworlds stands at 4,587.
For Prelims: Kepler space telescope, habitable zones.
Topic: Awareness in space.
RAMA (Reconstituting Asteroids into Mechanical Automata)
Context: NASA has announced it would give funds to Made In Space’s project- RAMA (Reconstituting Asteroids into Mechanical Automata), for finding ways to turn asteroids into giant, autonomous spacecrafts, which could fly to outposts in space.
About RAMA (Reconstituting Asteroids into Mechanical Automata):
Project RAMA, Reconstituting Asteroids into Mechanical Automata, has been designed to leverage the advancing trends of additive manufacturing (AM) and in-situ resource utilization (ISRU).
- The project aims to enable asteroid rendezvous missions in which a set of technically simple robotic processes convert asteroid elements into very basic versions of spacecraft subsystems (GNC, Propulsion, Avionics).
- Upon completion, the asteroid will be a programmed mechanical automata carrying out a given mission objective; such as relocation to an Earth-Moon liberation point for human rendezvous.
- This technique could some day create an affordable and scalable way for NASA to achieve future roadmap items for exploring the solar system.
- These techniques could be beneficial to scientific goals for understanding the solar system and its formation, as it is estimated that an order of magnitude increase in NEO targets could be explored for the same mission cost compared to the SOA.
- RAMA would enable this by removing the need to launch all spacecraft subsystems and instead converting the asteroid material in-situ.
What’s important? For Prelims and Mains: RAMA Project and its significance.
Facts for Prelims:
Civil Aviation Research Organization at Begumpet Airport, Hyderabad:
- What? State-run Airports Authority of India (AAI) will set up a Civil Aviation Research Organisation (CARO).
- Where? CARO will be set up at Begumpet Airport, Hyderabad.
- Why? CARO is aimed at “finding indigenous solutions” to meet the challenges posed by the growing air traffic.
What Is Aphelion?
Context: On July 6, Earth was at aphelion, officially at its farthest from the sun, orbiting at a distance of 94,507,803 miles, as opposed to its usual 93 million miles.
What is it? Aphelion Day is a special event that takes place once a year. On this date, the Earth is at its biggest distance from the sun. This point is called the aphelion. At aphelion, Earth receives about 7% less sun than it does in January.
A relook at the Indian financial structure
Context: The Reserve Bank of India (RBI) has said in its latest Financial Stability Report that Indian banks will continue to be under pressure because of their bad loans.
Stress tests conducted by the central bank show that bad loans will continue to increase in the current financial year while capital adequacy will decline.
Most of the current policy attention has quite naturally been focused on the first three of four components of arecovery in financial sector health—what has been described with alliterative flourish as
- Recapitalization and
The new plan unveiled recently also focuses on the resolution problem.
Even as the challenges of recognition, resolution and recapitalization continue to dominate the public debate, there is also a need for a debate on the financial structure that India needs in its next round of economic growth.
Financial Structures that India followed: nThere have been two different financial structures till now.
- The first came up during the era of planned industrialization.
- The government of the day set up specialist financial institutions like Industrial Finance Corporation of India, Industrial Credit and Investment Corporation of India and Industrial Development Bank of India to provide funds to new projectsat a time when local financial markets were not developed enough to provide long-term finance for new industrial projects.
- These financial institutions focused on project financewhile the commercial banks provided working capital.
- The second erain the Indian financial structure began after the radical economic reforms of 1991.
- The two committeesheaded by former RBI governor M. Narasimham produced seminal reports, in 1991 and 1998, which provided a road map for a complete overhaul of the Indian financial system.
The underlying logic was that a financial system that had evolved within a system of credit planning would be out of sync with a market economy.
The two Narasimham committees pushed India in the direction of universal banking, as the specialist financial institutions either converted themselves into commercial banks or withered into insignificance.
The experience of the past decade clearly shows that commercial banks have struggled to profitably lend to long-term projects. They are now weighed down with soured loans to steel, telecom, power and infrastructure projects.
One part of the problem is that public sector banks were forced to lend to these projects during the previous credit bubble, as fiscal constraints meant that infrastructure could not be built using budgetary resources.
The deeper problem is that commercial banks have been unable to convert their short-term liabilities to long-term assets for a variety of reasons. The limitations of universal banking are evident now.
What next? Creating a new generation of development finance institutions is easier said than done. The old financial institutions could lend cheaply because they had access to subsidized capital either from international agencies or directly from RBI.
These options are neither possible nor recommended now. The old model made sense only as part of a broader framework of planned industrialization as well as centralized credit allocation. To blindly transplant the old financial structure into a market economy is not a good idea.
Indian Financial Sector to take a new generation reform:
What India perhaps needs is a newer generation of financial agencies that can help build national infrastructure without landing in a balance sheet mess. The other alternative is deeper bond markets to provide finance to large projects.
In fact, one possibility that is often discussed is a financial structure in which large companies borrow from the bond markets while smaller companies get their funding from commercial banks.
The Indian bond market has shown some signs of life in recent years, especially after banks went slow on fresh lending because of their balance sheet troubles. However, most bonds are held to maturity, and the secondary market is still underdeveloped.
The ongoing problems in the banking sector mean that much of the policy focus is on the trio of recognition, resolution and recapitalization.
The reform debate is largely stuck on the issue of who should own banks—the government or private investors?
There is a more profound problem that needs to be addressed. What financial structure is needed over the next two or three decades?
The recent moves by RBI to give differentiated licences to payment banks, small finance banks and local banks should be seen as a move away from the earlier commitment to universal banking.
The Indian central bank has also, in an April 2017 discussion paper, floated the idea of specialist wholesale and long-term finance banks that would largely fund infrastructure projects. They would not only lend directly but also securitize priority sector loans originated by other banks as well as do takeout financing.
The funds for these specialist lenders would come from wholesale deposits, long-term deposits, debt/equity capital raised from primary market issues or private placements, and term borrowings from banks and other financial institutions.
Way forward: What India perhaps needs is a newer generation of financial agencies that can help build national infrastructure without landing in a balance sheet mess. The other alternative is deeper bond markets to provide finance to large projects.
There is a need for a financial structure in which large companies borrow from the bond markets while smaller companies get their funding from commercial banks.
Much of this is still in the realm of ideas. The risks of depending on commercial banks to fund large projects are now evident. The Narendra Modi government should—in the spirit of the two Narasimham committees—begin a broader discussion on the sort of financial structure India needs for its next stage of development.