- CURRENT AFFAIRS – 12/12/2023
- The future of healthcare is in our Genes
- MNRE plans long-term exemption for green hydrogen projects for Solar PV
- Supreme Court upholds the abrogation of Article 370
- Harvest the Odisha story to ensure food security
- Can Bihar increase its reservation pool?
- What are the FSB’s concerns about crypto asset intermediaries?
- President’s actions during State Emergency open to scrutiny: SC
- Source : TH
CURRENT AFFAIRS – 12/12/2023
The future of healthcare is in our Genes
(General Studies- Paper III)
Source : The Indian Express
The Indian healthcare system is facing significant challenges, particularly in dealing with genetic disorders and the formidable burden of diseases like Thalassemia and Sickle Cell Anaemia.
- Traditional treatments involve lifelong management, such as regular blood transfusions, but a paradigm shift towards gene therapy is considered imperative for addressing the root cause — genetic mutations.
- Genetic Disorders in India:
- Over 40 million individuals in India suffer from haemoglobinopathies, including Thalassemia and Sickle Cell Anaemia.
- These conditions have a profound impact on individuals and families, necessitating a shift from symptom management to genetic intervention.
- Promise of Gene Therapy:
- Gene therapy offers a transformative solution by rewriting the genetic code responsible for these conditions.
- By introducing functional genes and repairing faulty ones, gene therapy holds the potential not only for treatment but also for a cure.
- The imperative is to invest in research and infrastructure to make these therapies accessible to the millions affected.
- Targeted therapies for rare diseases, including genetic disorders, are crucial in transforming individual lives and addressing a critical gap in healthcare.
- The focus should be on making these transformative therapies accessible to those who need them.
- Cancer Landscape in India:
- Cancer poses a formidable challenge in India, with over 1.16 million new cases reported annually.
- Traditional treatment approaches at affordable costs are insufficient, necessitating a shift towards gene and cell therapy.
- Precision medicine, particularly Chimeric Antigen Receptor T-cell therapy (CAR-T therapy), offers a tailored approach to cancer treatment.
- By modifying a patient’s own immune cells to target cancer cells, CAR-T therapy presents new frontiers in personalized cancer treatment.
- India’s genetic diversity adds complexity to cancer treatment, making gene and cell therapy an attractive option.
- Customizing treatments to an individual’s unique genetic profile holds the potential to enhance effectiveness and reduce side effects associated with conventional approaches.
- Infectious diseases, exemplified by the Covid-19 pandemic, pose significant challenges to public health in subtropical India.
- The nation has a history of grappling with infections such as dengue and tuberculosis.
- The ground-breaking nature of mRNA vaccines, considered gene-therapy products, has set the stage for exploring innovative approaches to combat infectious diseases.
- Gene Therapy for Immunodeficiency and Viral Diseases:
- Gene therapy holds promise in treating conditions like Severe Combined Immunodeficiency (SCID), offering a potential cure for genetic mutations that compromise immune function.
- CAR-T cell therapy is investigated for viral diseases like dengue, HIV/AIDS, CMV, and EBV, enhancing the immune system’s ability to recognize and eliminate viral threats.
- Anticipating Future Health Challenges:
- As demographic and lifestyle changes bring new health challenges, gene and cell therapies extend beyond treatment to embody a vision for the future of healthcare in India.
- These therapies anticipate a future where precise and personalized treatments become the norm.
- Gene therapy has the potential to alleviate economic burdens associated with chronic genetic conditions.
- By moving towards curative solutions, long-term healthcare costs can be reduced, paving the way for a more sustainable and inclusive healthcare model.
- Challenges and Opportunities in Integration:
- The integration of gene and cell therapy into mainstream healthcare in India faces challenges, including infrastructure limitations and ethical considerations.
- Collaborative efforts involving scientific communities, industries, policymakers, and healthcare providers are essential.
- Investments in research and development, regulatory frameworks, and a supportive biotechnology ecosystem are crucial for successful integration.
- The biopharmaceutical industry needs a paradigm shift in business models and strategy to develop and market gene and cell therapies.
- This transformation is vital for realizing the full potential of these innovative treatments.
- Enhancing awareness among healthcare professionals and the public is crucial for the successful integration of gene and cell therapy into the broader healthcare landscape.
- Education plays a key role in ensuring acceptance and understanding of these transformative treatments.
- The Health Revolution:
- The promise of cures for genetic disorders, precision cancer treatments, and innovative solutions for infectious diseases signals a health revolution.
- India has the opportunity to position itself at the forefront of medical innovation, setting the stage for a healthier and more resilient nation.
- Gene and cell therapy are not just treatments; they represent the future of healthcare.
What is Haemoglobinopathies?
- Haemoglobinopathies are a group of genetic disorders characterized by abnormalities in the structure or production of hemoglobin, the protein responsible for carrying oxygen in red blood cells.
- Hemoglobinopathies can result from mutations in the genes that encode for hemoglobin, leading to abnormal or insufficient production of the protein.
- The two most common types of haemoglobinopathies are Thalassemia and Sickle Cell Anaemia.
- Thalassemia is a group of inherited blood disorders that affect the synthesis of hemoglobin.
- Individuals with thalassemia produce fewer hemoglobin molecules, leading to anemia.
- There are two main types of thalassemia, alpha thalassemia and beta thalassemia, depending on which part of the hemoglobin molecule is affected.
- Sickle Cell Anaemia:
- Sickle Cell Anaemia is another haemoglobinopathy characterized by the presence of abnormal hemoglobin called hemoglobin S.
- This abnormal hemoglobin causes red blood cells to take on a rigid, sickle-like shape, leading to various complications such as pain, organ damage, and an increased risk of infections.
- Both Thalassemia and Sickle Cell Anaemia are genetic conditions, meaning they are passed down from parents to their children.
- Individuals with these conditions often require ongoing medical care and treatment to manage symptoms and complications.
What is Gene therapy?
- Gene therapy is a medical approach that involves the introduction, alteration, or replacement of genetic material within an individual’s cells to treat or prevent disease.
- The goal of gene therapy is to correct or compensate for genetic mutations that cause diseases by introducing functional genes into the patient’s cells.
- This can be achieved by delivering therapeutic genes directly into the patient’s cells, either in vivo (inside the body) or ex vivo (outside the body, with subsequent reintroduction).
MNRE plans long-term exemption for green hydrogen projects for Solar PV
(General Studies- Paper III)
Source : The Indian Express
The Ministry of New and Renewable Energy (MNRE) in India is taking significant steps to accelerate the growth of the green hydrogen sector by proposing exemptions for developers.
- The move aims to facilitate the import of crucial equipment, particularly solar PV modules and wind turbine models from China, while also considering exemptions from duties and taxes until 2035 for equipment imports related to export-oriented green hydrogen projects.
- Exemptions for Green Hydrogen Developers:
- MNRE has suggested exempting green hydrogen developers from its list of authorized manufacturers, allowing them to import solar PV modules and wind turbine models from China.
- This exemption is designed to enhance the competitiveness of green hydrogen exports.
- Presently, Chinese manufacturers are not included in MNRE’s Approved List of Models and Manufacturers (ALMM) and Revised List of Models and Manufacturers (RLLM) due to the ministry’s emphasis on boosting domestic manufacturing of renewable energy equipment.
- Temporary Suspension of ALMM Adherence:
- To address the demand-supply gap in domestic manufacturing of solar PV modules, MNRE has temporarily suspended the ALMM adherence requirement for the current fiscal year.
- Solar energy projects commissioned by March 31, 2024, are exempt from the obligation to procure solar PV modules from approved manufacturers.
- Green hydrogen developers are advocating for a long-term exemption, contrasting the current one-year grace period.
- Implications for Central PSUs and Export-Oriented Projects:
- The proposed exemptions open the door for companies to import renewable energy equipment, especially from China, at competitive prices.
- Central Public Sector Undertakings (PSUs) like Indian Oil Corporation Ltd and NTPC Ltd, engaged in green hydrogen projects, stand to benefit by procuring equipment from China.
- The exemptions, coupled with the proposal to waive duties and taxes on equipment imports for export-oriented green hydrogen projects, position Indian developers to offer competitive prices in the global green hydrogen market.
- The exemptions and incentives align with the objectives of the National Green Hydrogen Mission, emphasizing India’s determination to achieve ambitious targets in the green hydrogen sector.
About National Green Hydrogen Mission
- The Union Cabinet has approved the National Green Hydrogen Mission with an outlay of ₹19,744 crore from FY 2023-24 to FY 2029-30.
- To make India a global hub for production, usage, and export of Green Hydrogen and its derivatives.
- Components of the Mission:
- Facilitating demand creation through exports and domestic utilization;
- Strategic Interventions for Green Hydrogen Transition (SIGHT) programme, which includes incentives for manufacturing of electrolysers and production of green hydrogen;
- Pilot Projects for steel, mobility, shipping etc.;
- Development of Green Hydrogen Hubs;
- Support for infrastructure development;
- Establishing a robust framework of regulations and standards;
- Research & Development programme;
- Skill development programme; and
- Public awareness and outreach programme.
- Expected Outcomes (By 2030):
- India’s Green Hydrogen production capacity to reach 5 MMT per annum.
- Contribution to the reduction in dependence on fossil fuel imports.
- Expected reduction of ₹1 lakh crore worth of fossil fuel imports by 2030.
- CO2 Emissions:
- Averting nearly 50 MMT per annum of CO2 emissions through the production and use of the targeted quantum of Green Hydrogen.
What is Green Hydrogen?
- Green hydrogen refers to hydrogen that is produced through a process called electrolysis, using renewable energy sources such as solar, wind, or hydropower.
- Unlike traditional methods of hydrogen production, which often rely on fossil fuels and emit greenhouse gases, green hydrogen is considered environmentally friendly and sustainable.
- Since the energy used in the electrolysis process comes from clean, renewable sources, the production of green hydrogen does not contribute to greenhouse gas emissions.
Supreme Court upholds the abrogation of Article 370
(General Studies- Paper II and III)
Source : TH
A Constitution Bench, led by Chief Justice of India (CJI) D.Y. Chandrachud, has unanimously upheld the Central government’s 2019 decision to abrogate Article 370 of the Constitution, which granted special status to Jammu and Kashmir (J&K).
- Article 370, termed as a ‘temporary provision,’ was enacted during wartime conditions in the state and was intended for transitional purposes.
- The Bench, comprising CJI DY Chandrachud, Justices Gavai, Surya Kant, SK Kaul, and Sanjiv Khanna, pronounced three verdicts.
- The court ruled that J&K lost internal sovereignty after integration, and the State Government’s concurrence wasn’t required to apply the Indian Constitution.
- The validity of the reorganization into Union Territories wasn’t adjudicated, but the creation of Ladakh as a Union Territory was upheld.
- Solicitor General Tushar Mehta’s assurance to restore J&K’s statehood led the court not to delve into the reorganization’s validity.
- The Election Commission of India was directed to conduct elections to the J&K Legislative Assembly by September 30, 2024.
- Establishment of Truth and Reconciliation Commission:
- Justice S.K. Kaul, in his concurring judgment, recommended the creation of an impartial Truth and Reconciliation Commission.
- The Commission is tasked with investigating and reporting on human rights violations by both the State and non-state actors in J&K since the 1980s.
- It aims to suggest time-bound measures for reconciliation, addressing historical grievances and promoting justice.
- Key Implications:
- Article 370’s abrogation is affirmed, emphasizing its transitional and temporary nature during wartime conditions.
- J&K’s loss of internal sovereignty after integration is emphasized, negating the need for State Government concurrence in applying the Indian Constitution.
- Ladakh’s status as a Union Territory is upheld.
- The court refrains from ruling on the reorganization’s validity, focusing on the restoration of J&K’s statehood by the government.
- The directive for elections to the J&K Legislative Assembly by September 30, 2024, signifies a step towards democratic processes in the region.
- The establishment of the Truth and Reconciliation Commission aims to address human rights violations, fostering reconciliation in a time-bound manner.
Key takeaways from CJI’s conclusion verdict
- J&K lost internal sovereignty after the proclamation of November 22, 1949.
- President and Parliament are not impeded to take over as Governor/State Legislature after proclamation under Article 356.
- Article 370 is a temporary provision, rejecting the argument that it is permanent and beyond Parliament’s amending powers.
- Power of the President to notify the abrogation of Article 370 exists even after the dissolution of the Constituent Assembly of Jammu and Kashmir.
- Article 370 was a transitional provision for the transition from a princely State to the Union, serving as an interim arrangement during wartime.
- Concurrence of the State legislature is not required to apply all provisions of the Indian Constitution to Jammu and Kashmir.
- The Constitution of J&K is now inoperative, serving no purpose after the abrogation of Article 370 and the application of the entire Indian Constitution to the State.
- The need to examine the J&K Reorganization Act is not required after the assurance that the Union Territory of J&K would be returned to Statehood.
- Elections to Jammu and Kashmir Assembly directed to be held before September 30, 2024.
Harvest the Odisha story to ensure food security
(General Studies- Paper II)
Source : TH
As global leaders gather for COP28, the 2023 United Nations Climate Change Conference, Odisha’s commendable journey in transforming agriculture is highlighted as a model for ensuring food security amidst the escalating climate crisis.
- Challenges and Projections:
- Disasters projected to increase to 560 per year, equivalent to 1.5 per day.
- Hunger and malnutrition expected to grow by 20% if climate change impact remains unchecked.
- Anticipated decline of 21% in food productivity due to global warming.
- Odisha’s Transformational Journey:
- Odisha transitioned from importing rice to producing 13.606 million tonnes of food grains in 2022, marking its highest production on record.
- Majority of farmers are small/marginal, and productivity has tripled despite stable crop area.
- Rice yield, Odisha’s main crop, increased from 10.41 quintals per hectare in 2000-01 to 27.30 quintals per hectare in 2020-21.
- Kalahandi district, once known as the “land of hunger,” transformed into Odisha’s rice bowl.
- Odisha Chief Minister Naveen Patnaik emphasized the state’s commitment to achieving the ‘Zero Hunger’ goal of Sustainable Development Goal (SDG) 2.
- Emphasis on increasing income for small and marginal farmers, contributing to strengthened food security and resilient livelihoods.
- Key Initiatives and Schemes:
- Implementation of flagship schemes like Krushak Assistance for Livelihood and Income Augmentation (KALIA).
- Dissemination of scientific crop management practices through conventional and digital extension services.
- Promotion of non-paddy crop cultivation and diversification through schemes like the Odisha Millet Mission.
- Commitment to achieving climate resilience in agriculture.
- Climate Change Action Plan:
- Odisha, due to its vulnerability to climate change, proactively developed a comprehensive Climate Change Action Plan.
- Encompasses sectors like agriculture, coastal protection, energy, fisheries, health, industries, mining, transport, and water resources.
- Formulated by experts and incorporates inputs from civil society.
- Implemented and monitored by various departments and agencies, overseen by a committee headed by the Chief Secretary.
- Climate Resilience in Agriculture:
- Bottom-up approach to climate resilience.
- Crop Weather Watch Group conducts weekly meetings, field visits, and video conferences for monitoring and timely responses to adverse weather conditions.
- District-level crop planning with consideration for agro-climatic zones.
- Adoption of climate-resilient cultivation practices, including integrated farming, zero-input-based natural farming, non-paddy crops, and water management.
- Farmer training in crop-specific techniques, integrated nutrient and pest management.
- Social Protection and Agricultural Surplus:
- Odisha, once vulnerable, is now a surplus state for paddy production.
- Contributes significantly to the Food Corporation of India’s paddy pool, producing 9% of India’s total rice.
- Collaborative initiatives with the United Nations World Food Programme (WFP) focus on improving food and nutrition security schemes.
- Application of innovative approaches, such as biometric technology in the Targeted Public Distribution System and rice fortification.
- Recognition and Collaboration:
- Odisha tops the State Ranking Index for the National Food Security Act for 2022, according to the Department of Food and Public Distribution, Government of India.
- Collaboration with the WFP on food security, livelihood, and climate resilience initiatives.
- Odisha’s journey from food scarcity to surplus, climate-proofing agriculture, protecting smallholders’ interests, and ensuring food and nutrition security is a unique development model.
- Presents a valuable example for other states facing the challenges of global climate change.
- Odisha’s success was also shared at the United Nations World Food Programme headquarters, highlighting its commitment to SDG 2 and ‘Zero Hunger.’
About Krushak Assistance for Livelihood and Income Augmentation (KALIA) Scheme
- KALIA is a comprehensive financial assistance scheme launched by the Government of Odisha, India, to provide support to the state’s farmers and cultivators.
- The scheme focuses on improving the livelihoods and income of agricultural households by addressing various aspects of their well-being.
- Key Provisions under the scheme:
- Financial Assistance of Rs.12,500/- for each landless Agricultural Household for Agricultural allied activities, such as small goat rearing unit, mini-layer unit, duckery units, fishery kits for fishermen, mushroom cultivation, and bee-keeping.
- Particularly benefits SC & ST population in the state.
- Vulnerable cultivators/landless agricultural labourers receive financial assistance of Rs. 10,000/- per family per year for sustenance, especially those in old age, with disabilities/diseases, or facing vulnerability for other reasons.
- Life insurance cover of Rs. 2.00 lakh provided to savings bank account holders aged 18-50 years at a nominal premium of Rs.330/-.
- Government of Odisha bears farmers’ share of annual premium.
- Personal accident cover of Rs. 2.00 lakh at a nominal annual premium of Rs.12/- for savings bank account holders aged 18-50 years, with the government covering farmers’ share.
- For beneficiaries aged 51-70 years, the entire Rs.12/- annual premium is borne by the Government of Odisha.
- Vulnerable landless labourers, cultivators, sharecroppers, and agricultural families identified by Gram Panchayats eligible for crop loans up to Rs 50,000 at 0% interest.
- The scheme aims to combat poverty by responsibly lending to relevant borrowers, fostering development and growth in agriculture
- The applicant must be a permanent resident of Odisha.
- The applicant must be engaged in agricultural activities, such as farming, cultivation, horticulture, or animal husbandry, either as a landowner, tenant farmer or sharecropper.
- The applicant’s household should be categorized as “deprived” or “vulnerable” under the Socio-Economic Caste Census (SECC) 2011 or any other state government survey.
- The applicant must either own cultivable land or be a sharecropper/tenant farmer cultivating someone else’s land.
- There is no age limit for applying for the KALIA Scheme.
- The applicant’s annual income should be less than Rs. 2.00 lakhs per annum.
- The applicant must have a bank account in his/her name and a valid Aadhaar number linked to the account.
- The applicant must not have any criminal record or involvement in any illegal activities.
What are agro-climatic zones?
- Agro-climatic zones refer to geographic areas characterized by specific climatic conditions and soil types that influence agricultural practices and crop suitability.
- These zones are demarcated based on the combination of factors such as temperature, rainfall, humidity, soil composition, and other environmental variables that affect crop growth and agricultural productivity.
- The goal of identifying and classifying agro-climatic zones is to help farmers, researchers, and policymakers make informed decisions about crop selection, land use planning, and agricultural development strategies.
Can Bihar increase its reservation pool?
(General Studies- Paper II)
Source : TH
On November 17, Bihar’s Governor approved two laws increasing reservations in jobs and education to 75% in the state.
- The breakdown includes 20% for Scheduled Castes, 2% for Scheduled Tribes, 18% for Other Backward Classes, 25% for Extremely Backward Classes, and 10% for economically weaker sections (EWS).
- The 50% Rule:
- The Supreme Court historically maintains that reservations in jobs or education should not exceed 50% of total seats/posts.
- In the Mandal Commission case (IndraSawhney, 1992), a nine-judge bench reaffirmed the 50% limit, considering it a binding rule and not merely a matter of prudence.
- Evolution of the 50% Rule:
- In 1963 (M.R. Balaji case), a seven-judge bench characterized reservations as an “exception” or “special provision” under the constitutional scheme, limited to 50%.
- In 1976, a shift occurred, recognizing reservations as a facet of equality rather than an exception.
- Exceptions to the 50% Rule:
- The Mandal Commission case affirmed the 50% limit as a binding rule but allowed exceptions in exceptional circumstances.
- States can exceed the limit to provide reservations to communities from far-flung areas that have been excluded from the mainstream, focusing on a social rather than geographical test.
- 10% Reservation for EWS:
- The Supreme Court upheld the 103rd Constitutional Amendment, allowing 10% additional reservations for the economically weaker sections (EWS).
- Consequently, the 50% limit currently applies only to non-EWS reservations, permitting states to reserve a total of 60% of seats/posts, including EWS reservations.
- Debate on Reservation Limits:
- Bihar’s approval of 75% reservations has reignited the debate on the permissible limits of reservations.
- The move challenges the long-standing 50% rule, prompting discussions on adequacy versus proportionate representation.
- In January 2023, the Bihar government initiated a caste-based census, and the results, announced in October, led to the introduction of two Bills in the Legislative Assembly, subsequently becoming laws.
- Breach of Reservation Ceiling:
- The laws in Bihar breach the established 50% (now 60%) ceiling limit on reservations.
- The government must justify this breach by demonstrating that it falls within the exception carved out in the Mandal Commission case, focusing on communities from far-flung areas or those kept out of the social mainstream.
- Government Justification and Legal Challenges:
- Chief Minister Nitish Kumar explicitly stated that the intent is to increase reservations based on the caste census results.
- The Supreme Court, however, has emphasized that reservations should aim at “adequate” representation, not “proportionate” representation to the population of reserved classes.
- The government faces a challenge in defending the motive behind exceeding the reservation limit.
- Precedents of Exceeding 50% Limit:
- Bihar is not the first state to surpass the 50% limit, with Chhattisgarh (72%), Tamil Nadu (69%), and several northeastern states exceeding the threshold.
- Lakshadweep has 100% reservations for Scheduled Tribes.
- Past attempts by Maharashtra and Rajasthan to exceed the limit have been struck down by the courts.
- Legal Implications and Potential Supreme Court Challenge:
- The Bihar government appears to be following the path of other states that breached the 50% ceiling.
- The validity of the two Bihar laws is likely to be challenged in the Supreme Court.
- The Court may be urged to reconsider the 50% ceiling limit entirely.
What are the FSB’s concerns about crypto asset intermediaries?
(General Studies- Paper III)
Source : TH
The Financial Stability Board (FSB) recently released a report on crypto-asset intermediaries (MCIs), emphasizing the need for enhanced cross-border cooperation and information sharing.
- The report cites the collapse of FTX in November 2022 and underscores potential risks associated with MCIs operating globally.
- Defining Multi-Function Crypto-Asset Intermediaries (MCIs):
- MCIs are individual firms or affiliated groups offering various crypto-based services, products, and functions, primarily centeredaround operating trading platforms.
- Examples include Binance, Bitfinex, and Coinbase, with revenue primarily derived from transaction fees generated through trading-related activities.
- Revenue Sources for MCIs:
- Primary revenue sources include transaction fees from trading-related activities and, indirectly, from other services like prepaid debit cards and lending.
- MCIs aspire to be “one-stop shops” for crypto-based services, extending beyond trading to various offerings.
- Visa and Mastercard’s withdrawal from partnerships with Binance raised regulatory concerns, highlighting the need for scrutiny.
- Transparency and Governance Challenges:
- MCIs often lack transparency about their corporate structure, being privately held entities.
- Limited publicly disclosed information makes it challenging to understand their economic models, vulnerabilities, and activities.
- The report suggests intentional opacity may be aimed at evading regulatory oversight and concealing risk and governance issues.
- The FTX collapse in December revealed governance failures, including fraud and undisclosed diversion of funds.
- SEC charges against FTX highlighted issues such as concealed information, special treatment for insiders, and undisclosed risks.
- Regulatory bodies like the SEC have scrutinized MCIs for misleading investors, inflating trading volumes, and engaging in manipulative trading.
- Binance faced allegations of concealing platform operators, manipulative trading, and custody-related concerns.
- Risk Management and Illiquidity Concerns:
- Poor risk management may enable insiders to engage in misconduct, magnifying vulnerabilities.
- Illiquidity and concentrated holdings, combined with opaque information, could inflate prices of self-issued crypto assets.
- Concentration Risk in Crypto Markets:
- The report identifies concentration risk as a potential vulnerability within the crypto-asset market, emphasizing the possibility of one or more Multi-Function Crypto-Asset Intermediaries (MCIs) becoming major sources of liquidity.
- This concentration could distort correct market prices and create an environment conducive to anti-competitive behaviour.
- High concentration might raise entry barriers, making it costlier for users to switch to alternative platforms, further amplifying vulnerabilities.
- Spillovers into the Traditional Financial System:
- The threat to global financial stability and the real economy from the failure of an MCI is presently deemed “limited” based on available evidence.
- However, recent incidents, such as the failure of “crypto-asset-friendly” banks like Silvergate Capital post-FTX collapse, reveal concentrated deposit exposures to firms heavily involved in crypto assets.
- Stress events in crypto-asset markets, like the FTX collapse, resulted in significant losses for investors and shook confidence in these markets.
- Case Study: Silvergate Bank’s Winding Down:
- In March of the current year, Silvergate Bank had to wind down its operations and voluntarily liquidate after experiencing a loss of confidence in crypto-assets following the FTX collapse.
- The bank faced significant outflows of deposits, necessitating measures to maintain cash liquidity.
- The closure followed the discontinuation of the flagship Silvergate Exchange Network, impacting quick and round-the-clock transfers between investors and exchanges.
- Emerging Vulnerabilities:
- Two primary vulnerabilities emerged, focusing on leverage and liquidity mismatch.
- Leverage-related risks stem from loans and credit lines provided to MCIs, backed by crypto-based collaterals with uncertain future values.
- MCIs rely on traditional banks and payment service providers for essential transaction services, introducing counterparty risks.
- If a trading venue stops operating or if a bank fails to provide real-time operations, risks may materialize.
What is Financial Stability Board (FSB)?
- The Financial Stability Board (FSB) is an international body that monitors and makes recommendations about the global financial system.
- It was established in 2009 in response to the global financial crisis of 2007-2008.
- The FSB operates as a collaboration between national financial authorities, international standard-setting bodies, and international financial institutions.
- The Board includes all G20 major economies, FSF members, and the European Commission.
- The board is hosted and funded by the Bank for International Settlements and the board is based in Basel, Switzerland.
About the FTX Collapse
- FTX, a Bahamas-based cryptocurrency exchange, initiated bankruptcy proceedings in November 2022.
- The collapse was triggered by a surge in customer withdrawals, revealing an $8 billion deficit in FTX’s accounts.
- Before the bankruptcy, FTX held the position of the third-largest cryptocurrency exchange by volume and boasted a user base exceeding one million.
President’s actions during State Emergency open to scrutiny: SC
(General Studies- Paper II)
Source : TH
The Supreme Court, on December 11, emphasized that the declaration of a State emergency under Article 356 and subsequent presidential actions should have a “reasonable nexus.”
- This ruling has implications for the events that transpired in Jammu and Kashmir in 2018-2019.
- Chronology of Events:
- June 19, 2018: Chief Minister Mehbooba Mufti resigned, leading to a political crisis in Jammu and Kashmir.
- June 20, 2018: The Governor issued a Proclamation under Section 92 of the Constitution of Jammu and Kashmir, assuming the powers of the State government in case of a failure of constitutional machinery.
- November 21, 2018: The Governor dissolved the State Legislative Assembly.
- December 2018: President invoked Article 356 based on the Governor’s report, leading to the imposition of President’s rule.
- August 5, 2019: The President issued the Constitution (Application to Jammu and Kashmir) Order, applying all Indian Constitution provisions to Jammu and Kashmir.
- August 5, 2019: Parliament abrogated Article 370 and reorganized the state into two Union Territories.
- Legal Challenge:
- The Supreme Court ruling opens the possibility for petitioners to question whether the State emergency declared in December 2018 had a reasonable nexus with the subsequent actions of the President and Parliament in August 2019.
- Key Points from the Ruling:
- The court asserted that there should be a “reasonable nexus” between the proclamation of a State emergency and the actions taken afterward.
- The actions of the President during a State emergency are subject to judicial scrutiny.
- The onus is on the party challenging the actions to establish prima facie evidence of a “mala fide or extraneous exercise of power.”
- If a prima facie case is established, the burden shifts to the Centre to justify that the exercise of power had a reasonable nexus with the object of the State emergency proclamation.
About Article 356 of the Indian Constitution
- Article 356 of the Indian Constitution pertains to the provision for the imposition of President’s Rule or the proclamation of a state of emergency in a state of India.
- This article is invoked when the President of India, on the advice of the Governor of the concerned state or otherwise, believes that the constitutional machinery in a state has broken down, and the state cannot be run according to the provisions of the Constitution.
- Proclamation of President’s Rule:
- If the President, after receiving a report from the Governor of the state or otherwise, is satisfied that a situation has arisen in which the government of the state cannot be carried on in accordance with the provisions of the Constitution, the President can issue a proclamation assuming the functions of the state government.
- Typically, before the President’s Rule is imposed, the Governor of the state submits a report to the President, detailing the situation that warrants the imposition of central rule.
- Constitutional Machinery Breakdown:
- The breakdown of constitutional machinery may occur due to reasons such as political instability, internal strife, failure of the state machinery to comply with constitutional provisions, or any other situation that hampers the governance of the state.
- The proclamation of President’s Rule should be approved in both Houses of Parliament within two months of its issue.
- The approval is through a simple majority.
- The President’s Rule is initially for a period of six months.
- Later, it can be extended for a period of three years with parliamentary approval, every six months.
- Revocation of President’s Rule:
- Once imposed, President’s Rule can be revoked by the President when satisfied that the situation in the state has improved, and the constitutional machinery can be restored.
- A proclamation of revocation does not require approval by the Parliament.