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CURRENT AFFAIRS – 27/11/2023

CURRENT AFFAIRS – 27/11/2023

CURRENT AFFAIRS – 27/11/2023

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  1. CURRENT AFFAIRS – 27/11/2023

CURRENT AFFAIRS – 27/11/2023

Ayushman Bharat Health and Wellness Centres (AB-HWCs) to be called ‘AyushmanArogyaMandir’

(General Studies- Paper II)

Source : TH

The Union Government has decided to rename the existing Ayushman Bharat Health and Wellness Centres (AB-HWCs) to ‘AyushmanArogyaMandir’ with the tagline ‘ArogyamParmamDhanam.’

  • The Union Health Ministry has communicated this decision to all States and Union Territories, urging them to complete the rebranding process by the end of 2023.

Key Highlights

  • The rebranding initiative aims to further the transition from illness-focused healthcare to a holistic approach emphasizing wellness.
  • The National Health Mission (NHM) logo is to be retained in the rebranded centers, ensuring continuity in visual identity.
  • States are instructed to upload photographs of the rebranded primary health facilities on the AB-HWC portal.
  • New Name and Tagline:
    • The new name is ‘AyushmanArogyaMandir,’ and the tagline is ‘ArogyamParmamDhanam.’
    • The official letter emphasizes that if languages other than Devanagri (Hindi) or English are used for branding, the full title can be translated into the state language(s), but the tagline must be transliterated.
  • The funds required for renaming the existing facilities are proposed at Rs 3,000 per facility.
  • Current Healthcare Infrastructure:
    • India presently boasts more than 1.6 lakh AB-HWCs, which provide comprehensive primary healthcare services, including maternal and child health services.
    • Services include free essential drugs, diagnostic services, and screenings for various health conditions like hypertension, diabetes, oral, breast, and cervical cancer.

About Ayushman Bharat Scheme

  • Ayushman Bharat, launched by the Government of India, is a flagship healthcare initiative aimed at providing accessible and affordable healthcare to millions of Indians.
  • The scheme comprises two major components:
    • Pradhan Mantri Jan ArogyaYojana (PM-JAY) and Health and Wellness Centres.
  • Pradhan Mantri Jan ArogyaYojana (PM-JAY):
    • PM-JAY is the world’s largest government-funded healthcare program.
    • The objective is to move towards the goal of Universal Health Coverage by covering a significant portion of the population.
    • It provides health coverage of up to Rs 5 lakh per family per year for secondary and tertiary hospitalization.
    • Beneficiaries are identified based on the Socio-Economic Caste Census (SECC) data.
    • PM-JAY covers more than 10 crore vulnerable families, approximately 50 crore beneficiaries.
    • It includes hospitalization expenses for various medical and surgical treatments.
  • Health and Wellness Centres (HWCs):
    • To deliver comprehensive primary healthcare services.
    • To promote preventive and promotive healthcare.
    • The HWCs focus on maternal and child health services, free essential drugs, and diagnostic services.
    • They also offer screenings for conditions such as hypertension, diabetes, oral, breast, and cervical cancer.
  • Implementation Strategy
    • At the national level to manage, an Ayushman Bharat National Health Protection Mission Agency (AB-NHPMA) would be put in place.
    • States/ UTs would be advised to implement the scheme by a dedicated entity called State Health Agency (SHA).
    • They can either use an existing Trust/ Society/ Not for Profit Company/ State Nodal Agency (SNA) or set up a new entity to implement the scheme.

Fleet electrification to tackle urban pollution

(General Studies- Paper III)

Source : TH

The air quality index (AQI) in various Indian cities has consistently reached alarming levels, posing serious health risks to millions of people.

  • Key studies attribute urban smog to PM2.5 and PM10 pollution, primarily stemming from the transport and construction sectors.

Key Highlights

  • As per two seminal studies pertaining to Delhi, the Urban Emission (2015) and the TERI study (2018), a significant contributor to urban smog is PM2.5 and PM10 pollution, which is caused by the transport and construction sector.
  • Challenges in Transport Sector:
    • Approximately 9 lakh new trucks are added to Indian roads annually, compounding the existing fleet of 70 lakh trucks.
    • Trucks responsible for over 2 trillion tonne kilometres of freight, consuming a significant portion of Indian oil imports.
    • Over 90% of road transport CO2 emissions attributed to trucks.
  • Impact of Diesel-Powered Trucks:
    • Diesel-fired internal combustion engines in trucks contribute to the worsening PM2.5 pollution.
    • Concerns about the growing truck fleet exacerbating air quality issues in cities.
  • Electric Vehicle Scenario:
    • Rail freight transportation electrified, catering to about 20% of the country’s freight.
    • Electric vehicle penetration on roads surpasses 6%, but challenges persist in electrifying trucks.
    • Upfront costs and charging infrastructure constraints impede the adoption of electric trucks.
    • Contrast with the commendable electrification efforts in the bus fleet.
  • Government Initiatives and Recommendations:
    • Government aggressively electrifying the bus fleet and setting electrification targets for bus aggregators.
    • Emphasis on addressing diesel trucks and dust mitigation, identified as significant PM sources requiring immediate attention.
    • Importance stressed from both an energy security and sustainability perspective.
  • In the face of urgent environmental challenges, rapid deployment of solutions is crucial.
    • The recent call for 7,750 e-trucks in India by 2030 holds the potential to save over 800 billion litres of diesel until 2050.
    • However, with the Indian truck fleet projected to reach 1.7 crore by 2050, an accelerated transition to e-trucks is imperative.
    • Meeting the demand for e-trucks could result in significant diesel savings, contributing to a cleaner environment.
  • Challenges in Scale:
    • Acknowledgment that public funding alone cannot meet the scale required for transformation.
    • Call for a pipeline of well-structured, bankable projects to attract private and institutional capital.
    • Recognition that while the electrification of three-wheelers is a milestone, the truck electrification is pivotal for decarbonising the transport sector.
    • Urgency highlighted in aligning with the net-zero agenda for 2070.
    • Upfront cost of mid-range electric trucks in India is a significant hurdle, being approximately ₹1.5 crore compared to ₹40 lakh for diesel trucks.
    • Cost of charging logistics identified as another barrier.
  • Green Freight Corridors as a Solution:
    • Proposal to declare expressways and national highways as green freight corridors for demonstration purposes.
    • Emphasis on showcasing the viability and benefits of such corridors.
    • Suggestion to initiate green freight corridors on smaller stretches of 500 kilometres, particularly on routes with heavy truck movement.
    • Highlighting the potential for innovative financial instruments and incentivization of charging infrastructure.

About TERI

  • TERI is a New Delhi-based research institute focusing on energy, environment, and sustainable development.
  • TERI was established in 1974 by renowned environmentalist and former Director-General of the Indian Council of Scientific and Industrial Research (CSIR), Dr. R.K. Pachauri.
  • It was initially called the Tata Energy Research Institute.In 2003, it underwent a name change to become The Energy and Resources Institute, reflecting an expanded scope of activities.
  • Mission:
    • TERI’s mission is to work towards global sustainability, particularly in the fields of energy, environment, and sustainable development.
  • Focus Areas:
    • TERI conducts research and provides solutions in areas such as renewable energy, climate change, sustainable development, environmental management, and policy research.

Moulding the Himalayas needs caution

(General Studies- Paper III)

Source : TH

The ongoing efforts to rescue 41 trapped workers in a tunnel near Silkyara in Uttarakhand raise questions about the sustainability of the current model of infrastructure development in the Himalayas.

  • The focus is on the Char Dham Project, which links religious pilgrimages and is part of the larger development trajectory in the region.

Key Highlights

  • Issues in Current Development Model:
    • The viability of the current model, involving road widening, hydropower projects, and tourism promotion, is under scrutiny.
    • The ongoing rescue operation highlights the potential risks and challenges associated with such development initiatives.
    • Questions arise regarding the carrying capacity of the Indian Himalayan Region (IHR) and the appropriateness of the development model.
    • The Char Dham Project and all-weather roads bring attention to the need for a re-evaluation of the development approach in the region.
  • Environmental Clearances and Safety Protocols:
    • Processes related to environment clearances are questioned, emphasizing the need for a more stringent evaluation of safety protocols.
    • The urgency of development should not compromise safety measures, especially in a geologically sensitive region.
    • Impact of 2013 Flash Floods:
      • The irony of the Char DhamYatra project originating from the tragic 2013 flash floods is highlighted.
      • Tragedies like the floods are being used as a basis for further development, raising ethical and safety concerns.
    • Development and Nature:
      • The project fails to recognize the geological sensitivity of the Himalayas, a young and formative mountain range.
      • Geological and geotechnical studies suggest that the project is risky, particularly in an earthquake-prone area.
      • The National Highway Authority of India (NHAI) plans to inspect tunnels for safety after the incident, indicating a delayed realization of potential risks.
      • The lack of attention to mountain construction codes and Environmental Impact Assessment (EIA) is noted.
    • Paradoxes in Construction Practices:
      • The Char Dham Project’s fragmentation into 53 sections for a single EIA raises concerns about the accuracy of impact assessments.
      • Basic mountain construction codes have been overlooked, indicating a rush in construction without due diligence.
      • The need for a new form of architecture for monitoring and constructing infrastructure projects in the region is emphasized.
      • A comprehensive re-evaluation of the development model and safety protocols is crucial for sustainable progress.
    • Carrying Capacity Concerns in the IHR:
      • The Supreme Court of India has raised concerns about the carrying capacity of the Himalayas, prompting the need for a comprehensive dialogue on the matter.
      • The discussion extends beyond the number of people the ecosystem can sustain, encompassing the total carrying capacity from an infrastructure perspective.
    • Important considerations include the sustainability of hydropower projects, tourism, road construction, and the extent of road widening.
    • Environmental impacts, such as mountain cutting and debris dumping into water ecosystems, need careful evaluation.
    • Transformative Phase in the IHR:
      • The IHR is undergoing a transformative phase influenced by new geographies, bringing spatial and temporal changes.
      • Balancing integration with broader regions without jeopardizing the Himalayan aesthetic, culture, and building typologies is crucial.
      • The region faces recurring tragedies, and the cumulative impact is colossal and irreparable.
      • The urgency of addressing these issues is highlighted to prevent further environmental degradation.
    • Exception: Atal Tunnel Construction Safety:
      • The construction of the Atal tunnel in Kullu, Lahaul&Spiti districts of Himachal Pradesh serves as an exception.
      • The executing company prioritized safety measures, resulting in zero reported casualties during construction.
    • Safety Protocols and Way ahead
      • International Protocols and Legislative Architecture:
        • Advocacy for adopting efficient international protocols and monitoring processes for tunneling to enhance safety standards.
        • A call for a new legislative architecture allowing public monitoring and involving geological experts in project oversight.
      • Community Involvement:
        • Emphasis on including local communities, particularly those with longstanding mountain residency, in monitoring structures.
        • Civil society groups and community-driven organizations should play a role in monitoring exercises.
      • NHAI Responsibilities and Learning from Failures:
        • NHAI urged to acknowledge that road construction occurs on real soil and mountains, emphasizing the need for on-ground considerations.
        • Acknowledgment of learning from past failures, with a focus on preventing such incidents in the future.
      • Comparative Construction Protocols:
        • Recognition of the Better Roads Organization (BRO) and the Pradhan Mantri Gram SadakYojana (PMGSY) having more stable construction protocols.
        • Caution against overemphasizing meeting targets at the expense of stability and safety standards, contributing to disaster proneness.

About Indian Himalayan Region

  • The Indian Himalayan Region (IHR) spans across several northern states of India, including Jammu and Kashmir, Himachal Pradesh, Uttarakhand, Sikkim, and parts of Arunachal Pradesh.
  • It encompasses the entire stretch of the Himalayan mountain range within the Indian Territory.
  • Topography:
    • The IHR is characterized by its diverse topography, ranging from high mountain peaks to deep valleys.
    • It includes some of the world’s highest peaks, such as Mount Everest, Kanchenjunga, and Nanda Devi.
  • Biodiversity Hotspot:
    • Recognized as a global biodiversity hotspot, the region is known for its rich and unique flora and fauna.
    • The diverse ecosystems within the IHR contribute to its significance in terms of ecological diversity.
  • Rivers and Watersheds:
    • Several major rivers originate in the Himalayas, including the Ganges, Yamuna, Brahmaputra, and Indus.
    • The IHR serves as the source of numerous watersheds, influencing water supply and agriculture downstream.
  • Vegetation includes dense forests of oak, pine, rhododendron, and coniferous trees at different altitudes.
  • Notable fauna includes the Bengal tiger, snow leopard, red panda, Himalayan brown bear, and a variety of bird species.

Why has Binance been fined by the U.S.?

(General Studies- Paper III)

Source : TH

The U.S. government imposed a $4 billion fine on Binance, the world’s largest cryptocurrency exchange.

  • The fine was a result of serious protocol failures and frequent violations of U.S. sanctions.

Key Highlights

  • CEO’s Resignation:
    • Binance’s CEO, Changpeng Zhao, announced his resignation in the wake of the regulatory actions.
    • Zhao acknowledged making mistakes and deemed his resignation as the best decision for the company.
    • Zhao pleaded guilty to violating the Bank Secrecy Act and agreed to pay a $50 million fine as part of a legal deal.
    • His resignation is included in the terms of the agreement.
  • Successor Appointed:
    • Richard Teng, the former Global Head of Regional Markets at Binance, was named as the new CEO.
    • Teng brings over 30 years of financial services and regulatory experience to the role.
  • Legal Violations:
    • Zhao’s resignation follows the acknowledgment of Binance’s failure to maintain an effective anti-money laundering program.
    • The company faced charges of running an unlicensed money transmitting business and violating U.S. sanctions.
    • The exchange was accused of running an unlicensed money transmitting business and violating the International Emergency Economic Powers Act.
    • S. Treasury Secretary Janet Yellen stated that Binance did not report suspicious transactions and instructed employees to withhold information from law enforcement.
    • Binance’s failure to report transactions allowed criminal actors to operate freely, engaging in activities ranging from child sexual abuse to illegal narcotics and terrorism.
  • The imposed penalties, totaling over $4 billion, mark the largest enforcement action in the history of the U.S. Treasury.
  • CEO’s Future Role:
    • Zhao mentioned that he would likely become a passive crypto investor, with a focus on decentralized finance (DeFi).
    • He expressed interest in training future entrepreneurs after taking a break.
    • Despite stepping down, Zhao will remain a Binance shareholder, retaining considerable influence over the company he founded in 2017.
  • Binance’s History of Legal Challenges:
    • Binance has faced legal and compliance challenges in multiple countries.
    • Under CEO Changpeng Zhao’s leadership, the company navigated barriers and expressed support for regulation.
    • The U.S. Treasury alleged that Binance lied about exiting the U.S., retaining U.S. users and significant ties.
    • Binance swiftly moved past legal barriers in various jurisdictions but faced renewed scrutiny in the U.S.
    • In June, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Binance.
    • The SEC claimed Binance engaged in illegal conduct by comingling and diverting customer assets to a third party linked with Zhao.
  • Impact on Crypto Investors and the Sector:
    • Binance is ordered to exit the U.S., leading to restrictions for U.S.-based individuals on the platform.
    • The extent of enforcement under the new CEO remains uncertain, affecting BNB cryptocurrency and its blockchain ecosystem.
    • BNB cryptocurrency witnessed over a 10% decline to around $234 following Zhao’s resignation news.
  • Regulatory Pressures on Exchanges:
    • Crypto exchanges with U.S. customers may face regulatory pressure, leading to compliance or potential exits from the U.S.
    • Some exchanges may consider moving headquarters to foreign tax havens to evade legal actions.
  • Exploration of Alternatives:
    • Crypto investors concerned about centralized monitoring may explore riskier decentralized finance (DeFi) options.
    • Non-regulated decentralized exchanges (DEXs) may see increased traction as users seek alternatives.

What is Binance?

  • Binance is one of the world’s largest and most prominent cryptocurrency exchanges.
  • It was founded in 2017 by Changpeng Zhao (CZ), a well-known figure in the cryptocurrency space.
  • Binance provides a platform for users to buy, sell, and trade a wide range of cryptocurrencies.
  • The exchange quickly gained popularity for its user-friendly interface, a vast selection of supported cryptocurrencies, and competitive trading fees.

What is decentralized finance (DeFi)?

  • Decentralized Finance, often abbreviated as DeFi, refers to a set of financial services and applications that operate on blockchain technology, primarily on public and decentralized networks like Ethereum.
  • DeFi aims to recreate and innovate traditional financial systems, such as banking, lending, trading, and insurance, in a decentralized and permissionless manner.
  • Key characteristics and components of DeFi include:
    • Decentralization:
      • DeFi platforms operate on decentralized networks, usually blockchain, where no single entity or authority has control.
      • This eliminates the need for intermediaries like banks or financial institutions.
    • Smart Contracts:
      • DeFi applications often rely on smart contracts, which are self-executing contracts with the terms of the agreement written directly into code.
      • Smart contracts automate processes, enforce rules, and enable trustless interactions.
    • Permissionless Access:
      • Anyone with an internet connection and a compatible digital wallet can access and use DeFi services.
      • Users have full control over their funds without the need for traditional account creation or approval processes.
    • Interoperability:
      • Many DeFi projects are built on blockchain platforms like Ethereum, fostering interoperability.
      • Users can interact with multiple DeFi applications seamlessly using a single wallet.
    • Tokenization:
      • DeFi often involves the use of tokens representing real-world assets, such as stablecoins pegged to fiat currencies or tokenized versions of traditional financial instruments.

Bill bars courts from inquiring into ‘privileged communication’ between Ministers, President

(General Studies- Paper II)

Source : TH

The BharatiyaSakshya (BS) Bill aims to replace the Indian Evidence Act of 1872 and introduces a provision that restricts courts from inquiring into privileged communications between Ministers and the President of India.

Key Highlights

  • Legal Background:
    • Article 74(2) of the Constitution already mentions the bar on courts inquiring into privileged communication between Ministers and the President of India.
    • The Union government seeks to give legal backing to this provision by incorporating it into the evidence framework through the BharatiyaSakshya Bill.
  • Concerns and Lack of Clarity:
    • The proposed bill lacks a clear definition of “privileged communication,” leaving the provision open to interpretation.
    • The need for a precise definition to avoid ambiguity is being emphasized.
    • It has been highlighted by the legal experts that while the Constitution states the provision, the legal enforcement through the BharatiyaSakshya Bill could still be subject to interpretation due to the absence of a clear definition.
  • Bill’s Amendment to Section 165:
    • The BharatiyaSakshya Bill proposes adding a proviso to Section 165 of the Indian Evidence Act, which deals with the “production of documents” on court orders.
    • The proviso explicitly states that no court shall require the production of any privileged communication between Ministers and the President of India.
  • Proposed Legislative Changes in Criminal Codes
    • The BharatiyaSakshya Bill, along with two other criminal codes, the Bharatiya Nyaya Sanhita Bill, 2023, and the BharatiyaNagarik Suraksha Sanhita Bill, 2023, is set to replace the Indian Penal Code, 1860, and the Code of Criminal Procedure, 1898.
    • These bills are expected to be presented during the upcoming winter session of Parliament, commencing on December 4.
    • Introduced on August 11, the bills underwent examination by the Parliamentary Standing Committee on Home Affairs, resulting in the finalization of the report in November.
    • The BharatiyaSakshya Bill has omitted four sections of the Indian Evidence Act, 1872, which contained colonial references and outdated procedures.
  • Key Changes in BharatiyaSakshya Bill:
    • The bill eliminates references such as ‘Vakil,’ ‘Pleader,’ and ‘Barrister,’ replacing them uniformly with the term ‘Advocate.’
    • Section 166, related to the power of the jury, is removed due to the abolition of the jury system in India.
    • Outdated terms like ‘Parliament of the United Kingdom,’ ‘Lahore,’ ‘Commonwealth,’ and others are deleted.
    • Modern terms replace terms like ‘lunatic’ and ‘unsound mind.’
    • Expanded Definition of Documents:
      • The bill broadens the definition of “documents” to include electronic or digital records, encompassing emails, server logs, documents on computers, smartphones, websites, and more.
    • Inclusion of Electronic Evidence:
      • The definition of “evidence” is expanded to cover electronically provided information facilitating the appearance of witnesses, accused, experts, and victims through electronic means.

Why is Bihar demanding the Special Category Status?

(General Studies- Paper II)

Source : TH

On November 22, the Bihar Cabinet led by Chief Minister Nitish Kumar passed a resolution requesting the grant of Special Category Status (SCS) to Bihar.

  • This demand is rooted in the findings of the “Bihar Caste-based Survey, 2022,” revealing significant poverty levels in the state.

Key Highlights

  • Special Category Status: An Overview:
    • SCS is a classification granted by the central government to aid the development of states facing geographical or socio-economic disadvantages.
    • Introduced in 1969 based on the fifth Finance Commission’s recommendations, five factors, including hilly terrain, low population density, strategic location, economic and infrastructural backwardness, and non-viable state finances, are considered before granting SCS.
  • Benefits Attached to Special Category Status:
    • Financial Assistance:
      • SCS states used to receive grants under the Gadgil-Mukherjee formula, earmarking nearly 30% of total central assistance for these states.
      • However, after the abolition of the Planning Commission and recommendations of the 14th and 15th Finance Commission (FC), this assistance has been integrated into increased devolution of divisible pool funds for all states (increased to 41% in the 15th FC).
    • Centre-State Funding Ratio:
      • In SCS states, the Centre-State funding of centrally sponsored schemes follows a more favorable ratio of 90:10 compared to the general category states (60:40 or 80:20).
    • Additional Incentives:
      • SCS states enjoy concessions in customs and excise duties, income tax rates, and corporate tax rates, attracting investments for new industries.
    • Background and Historical Context:
      • Initially granted to three states in 1969 (Jammu & Kashmir, Assam, and Nagaland), SCS was later extended to eight more states, including Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Sikkim, Tripura, Himachal Pradesh, and Uttarakhand.
    • Why Bihar is Demanding Special Category Status (SCS):
      • Socio-economic Challenges:
        • Bihar faces poverty and backwardness, attributed to factors such as a lack of natural resources, water scarcity for irrigation, regular floods, and severe droughts in different regions.
      • Industrial Shift:
        • The bifurcation of the state led to the relocation of industries to Jharkhand, resulting in unemployment and a scarcity of investment opportunities.
      • Per-capita GDP and Poverty:
        • Bihar has a per-capita GDP of around ₹54,000 and is consistently ranked among the poorest states.
        • CM Nitish Kumar emphasizes that around 94 lakh poor families in the state would benefit from the grant of SCS, providing ₹2.5 lakh crore for welfare measures over the next five years.
      • Demand for SCS in Other States:
        • Andhra Pradesh: Since its bifurcation in 2014, Andhra Pradesh has sought SCS, citing revenue loss due to Hyderabad going to Telangana.
        • Odisha: Odisha requests SCS due to its vulnerability to natural calamities, such as cyclones, and a significant tribal population.
      • The Central government, referring to the 14th Finance Commission report, has consistently denied these demands, stating that no state should be accorded SCS.
      • Justification of Bihar’s Demand:
        • Meeting Criteria: Bihar meets most SCS criteria, except for hilly terrain and geographically difficult areas, crucial for infrastructural development.
        • RaghuramRajan Committee’s Recommendation: In 2013, the committee suggested a ‘multi-dimensional index’ for devolving funds instead of SCS, addressing Bihar’s socio-economic backwardness.

Bihar: An Overview

  • Bihar is situated in the eastern part of India, bordered by Nepal to the north, West Bengal to the east, Uttar Pradesh to the west, and Jharkhand to the south.
  • It enjoys strategic advantages like proximity to vast markets, access to ports (Kolkata and Haldia), and availability of raw materials and minerals from neighboring states.
  • Economic Overview:
    • Projected GSDP at current prices for 2023-24 is Rs. 8.59 trillion (US$ 104.62 billion), with a CAGR of 11.03% from 2015-16 to 2023-24.
    • Per capita NSDP at current prices grew at a CAGR of 8.45% from 2015-16 to 2021-22.
  • Agricultural Strength:
    • Bihar is a leading agricultural state, with around 80% of the population employed in agricultural production.
    • Ranks fourth in vegetable and eighth in fruit production in India.
  • Diverse Industries:
    • Fast-growing industries include food processing, dairy, sugar, manufacturing, and healthcare.
    • Initiatives for development in education, tourism, and incentives for information technology and renewable energy projects.
  • Industrial Labor Base:
    • Bihar boasts a large base of cost-effective industrial labor, making it an attractive destination for a variety of industries.
  • FDI Inflows:
    • Cumulative FDI inflows in Bihar, according to DPIIT, amounted to US$ 214.46 million between October 2019 and March 2023.
  • Merchandise Exports:
    • Total merchandise exports were US$ 2,308.60 million in 2021-22.

How DAOs are shaping the future of the digital world?

(General Studies- Paper III)

Source : TH

Decentralised Autonomous Organisations (DAOs) are groundbreaking entities operating at the convergence of blockchain technology and governance.

  • These digital entities operate without centralised control and are governed by smart contracts and consensus among members.

Key Highlights

  • Genesis of DAOs:
    • DAOs are organisations encoded as computer programs, transparent, controlled by members, and not influenced by a government.
    • Aims to create self-sustaining, community-driven entities governed by blockchain-based smart contracts.
    • Smart contracts execute predefined rules, ensuring trust through code without traditional intermediaries.
    • Enable global, borderless cooperation, allowing participants (token holders) to propose and vote on decisions.
  • Use Cases Across Industries:
    • Decentralised Finance (DeFi):
      • Platforms like Compound and MakerDAO provide lending and borrowing services, disrupting traditional banking systems.
    • Art and Intellectual Property:
      • Artists tokenise creations, using DAOs to manage royalties and retain control over intellectual property.
    • Supply Chain Management:
      • DAOs bring transparency and traceability to global supply chains, ensuring authenticity and quality.
    • Platforms like DAOstack facilitate decentralised governance structures for internet communities.
    • DAOs showcase versatility, reshaping industries across finance, art, supply chain, and online governance.
    • Potential to foster transparent, democratic, and self-executing systems, challenging traditional structures.
    • Redefining trust, governance, and collaboration in the digital world.
  • Principles Shaping Transformation:
    • DAOs shift power from centralised authorities to collective decision-making by token holders.
    • Promotes a democratic process, reducing the dominance of a single central entity.
    • Smart contracts underlying DAOs are transparent and immutable, fostering trust among participants.
    • Predefined rules and consensus reduce the need for intermediaries, disrupting traditional opacity.
    • DAOs champion inclusivity, democratising access to resources and opportunities.
    • Transcend geographical and socio-economic barriers, promoting diversity and fuelling innovation.
    • Facilitate global cooperation, enabling participants with shared goals to unite without intermediaries.
    • Fosters an environment of innovation and cooperation, unencumbered by hierarchical structures.
  • Challenges and Controversies:
    • DAO Hack of 2016:
      • The infamous DAO hack exposed vulnerabilities, leading to a contentious hard fork in the Ethereumblockchain.
      • Emphasised the need for rigorous security audits and raised questions about the immutability of blockchain systems.
    • Legal and Regulatory Uncertainty:
      • Legal systems are catching up with the decentralised nature of DAOs, causing uncertainty.
      • Regulatory challenges include classification, taxation, legal liability, and compliance with AML and KYC regulations.
    • Complexities in Legal Framework:
      • DAO tokens may be considered securities, introducing complex regulatory requirements and compliance challenges.
      • Legal liability is elusive due to decentralised decision-making and automated smart contracts.
      • Dispute resolution relies on code-based solutions, presenting challenges without traditional legal mechanisms.
    • Balancing Innovation with Compliance:
      • Stakeholders should collaborate to establish legal frameworks balancing innovation with compliance.
      • Address concerns related to governance, intellectual property, cross-border operations, and transparency in token-based decision-making.