30 August 2022

DAILY CURRENT AFFAIRS ANALYSIS

1 – Forest Fires: GS III Topic Environment Conservation

About:

• In a natural setting, such as a forest, grassland, brush land, or tundra, any unrestrained and uncontrolled combustion or burning of plants that consumes the available fuels and spreads based on environmental conditions is known as a wildfire. It is also known as a blaze, wildfire, or vegetation fire (e.g., wind, topography).
• Human activities like removing land for construction, extended droughts, or, in rare instances, lightning, can spark forest fires.
• Three factors are required for a wildfire to start burning: fuel, oxygen, and heat.

The Potential for Forest Fires in India:

• The India State of Forest Report 2019 (ISFR), issued by the Forest Survey of India (FSI), Dehradun, estimates that as of 2019, more than 21.67 percent (7,12,249 sq km) of the country’s geographic area is classified as forest.
• 89 percent more land is covered in trees (95, 027 sq km).
• The Northeast and central India areas’ woodlands are the most susceptible to forest fires, according to historical fire events and data.
• Assam, Mizoram, and Tripura’s forested areas have been identified as being “particularly prone.”
• Andhra Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Odisha, Maharashtra, Bihar, and Uttar Pradesh are the states that are classified as “extremely highly prone.” There are significant woody areas in several states as well.
• Western Maharashtra, Southern Chhattisgarh, portions of Telangana and Andhra Pradesh, along with central Odisha, are all evolving into “highly prone” forest fire hotspots, according to the MoEFCC’s 2020–2021 annual report.
• 1,72,374 square kilometres, or around 26.2 percent of the entire forest cover, are classified as “extremely prone” or “moderately prone” areas.

Forest fire causes:

• Although there are many distinct natural causes of forest fires, human action is mostly to blame for the majority of significant fires in India.
• Recent research has linked global warming to an increase in fires, particularly the devastating Amazon forest fires that have destroyed large portions of Brazil and Australia during the past two years.
• The severity, duration, frequency, and highly combustible nature of fires are all correlated with climate change.
• Due to the abundance of dried wood, logs, dead leaves, stumps, dry grass, and weeds that are readily ignited by a spark, forest fires in India are most frequently reported in the months of March and April.
• The dry soil in Uttarakhand is a serious problem as well. Rainfall in the 2019 and 2020 monsoon seasons fell 18 and 20% short of the seasonal average, respectively.
• The majority of fires are caused by people, sometimes even intentionally. Peasants in Odisha, which experienced a significant fire in the Simlipal forest last month, are known to set dry leaves on fire in order to collect mahua flowers, which are used to produce a regional beverage.

Forest fire consequences:

• The soil, tree development, vegetation, and overall flora and fauna can all be negatively impacted by forest fires.
• Multiple hectares of woodland are destroyed by fires, and the ash they leave behind prevents any vegetation from regrowing.
• Animal habitats are destroyed by fire’s heat.
• When soil compositions differ, the quality of the soil declines.
• Fertility and soil moisture are also impacted.
• Forests may shrink in size.
• Usually, trees that survive a fire have severely stunted growth.

Forests are important because:

• For reducing climate change and adapting to it, forests are crucial.
• They serve as a carbon source, sink, and reservoir.
• More carbon may be stored and sequestered by a healthy forest than by any other terrestrial ecosystem.
• A large number of people in India, where 1.70 lakh villages dwell in close proximity to forests, rely on fuelwood, bamboo, fodder, and sparse amounts of lumber for their subsistence (Census 2011).

Forest fire prevention efforts:

• The Forest Fire Alert System was created in 2004 by the FSI (Forest Survey of India) in order to track forest fires in real-time.
• The upgraded version of the system, which was made available in January 2019, now uses satellite data acquired from NASA and ISRO.
• The Forest Fire Prevention and Management Scheme and the 2018 National Action Plan on Forest Fires (NAPFF).

Source The Down To Earth Magazine

2 – Eco Sensitive Zones: GS III Topic Environment Conservation

Eco-sensitive zones: what are they?

• State governments were obligated to designate land as eco-fragile zones or eco-sensitive zones (ESZs) within 10 kilometers of the boundaries of national parks and wildlife sanctuaries by the National Wildlife Action Plan (2002-2016) of the Ministry of Environment, Forest, and Climate Change. The Environmental (Protection) Act of 1986 required this (MoEFCC).

Purpose:

• ESZs are created around protected areas like national parks, woods, and wildlife sanctuaries to act as a form of “shock absorber” for the natural landscape.
• These locations would serve as a transition between areas with strong security and those with lower protection.
• Commercial wood use, industrial mining, sawmills, companies that emit pollution, and the creation of large HEPs are all forbidden.
• Examples of tourism-related activities include taking a hot air balloon ride in a national park, releasing effluents or other solid waste, or creating hazardous materials.
• All activities that are subject to regulation include cutting down trees, building hotels and resorts, using natural water for commercial purposes, installing electrical lines, drastically changing the agriculture system through the use of heavy machinery, insecticides, etc., and expanding roads.
• Regular horticultural or agricultural practises, the application of green technology, the utilisation of renewable energy sources, and organic farming are all permitted activities.

Significance:

• Reduce the negative effects of development activities.
• Regions close to protected areas have been designated as Eco-Sensitive Zones to lessen the effects of urbanisation and other development activities.
• The preservation of an endangered species in its natural habitat is referred to as in-situ conservation. The preservation of the One-horned Rhino at Kaziranga National Park in Assam is one instance of this.
• Reduce logging and conflict between people and animals.
• Ecosensitive regions reduce conflict between people and animals and prevent the loss of forests.
• The core and buffer method of management, which helps and protects the neighbouring communities as well, is the foundation upon which the protected areas are created.

What challenges do Eco-Sensitive Zones need to face?

• Development projects: Construction activities in the ESZ, such as the construction of roads, dams, and other forms of urban and rural infrastructure, interact with the ecosystem, harm it, and disrupt the natural order.
• new legislation and administration:
• The rights of forest people are disrespected by the Environmental Protection Act of 1986 and the Animal Protection Act of 1972, both of which do nothing to stop wildlife poaching. This is done to aid ESZs in their development efforts.
• Tourism: The land around parks and sanctuaries is being removed through deforestation, the eviction of communities, etc., in order to meet the growing demand for eco-tourism.

Foreign species introduction:

• Eucalyptus and Acacia auricularis plantations, among others, are stressing the environment’s natural woods.
• Climate change has a negative impact on the environment, water, and land in the ESZs. For instance, the Assam floods and periodic forest fires have had a significant negative impact on the fauna and habitat of Kaziranga National Park.
• Local communities: Changing farming practises, an ageing population, and a rise in the need for firewood and other forest products are some of the stresses on protected areas.

Steps to Take:

• In order to foster long-term sustainable development, the States should act as a trustee for the benefit of the general public in relation to natural resources.
• By limiting its function to that of an economic stimulator, the government shouldn’t immediately improve the state’s fortunes.
• It is possible to increase carbon footprints, revive extinct habitats, and restore degraded forests.
• encouraging conservation practises and educating people about the negative effects of overusing resources.

Source The Down To Earth Magazine

3 – Non Performing Assets:GS III Topic Economy related issues

The definition of a non-performing asset (NPA) is:

• You may have observed that one of a bank’s assets is considered to be its loans. As a result, an asset would be considered a non-performing asset if a loan’s principle, interest, or both components were not being paid back to the lender (a bank) (NPA).
• Any asset that ceases to provide returns for its investors for a fixed period of time is considered non-performing (NPA).
• That period of time is normally 90 days in the majority of countries and among the several lending organisations. The terms and circumstances that the borrower and the financial institution agree upon may cause it to vary, as they are not a defined standard.

An example of NPA:

• Let’s imagine that a business is given a loan by the State Bank of India (SBI) for Rs. 10 crores (Eg: Kingfisher Airlines). Think about the agreed-upon interest rate of, say, 10% annually. Let’s assume that initially everything proceeded without a hitch and that the airline industry was favoured by market forces, allowing Kingfisher to pay the interest because of this. Let’s imagine that later on, for whatever reason—administrative, technological, or corporate—the company is unable to pay the interest rates for 90 days. Because of this, a loan made to Kingfisher Airlines is a good candidate to be labelled as a non-performing asset (NPA).

What could be the possible causes of NPAs?

• Investing cash in shady or unrelated businesses.
• Losses incurred by businesses as a result of regulatory environment changes.
• Particularly after government loan forgiveness programmes, morale is low.
• Companies’ profit margins contract as a result of global, regional, or national financial crises, placing pressure on their balance sheets and ultimately preventing them from paying loan and interest payments. the general slowing of the entire economy, like in the case of India after 2011, which led to NPAs rising more swiftly (for instance, the global financial crisis of 2008).
• Businesses there suffer as a result of the slump in a specific industrial sector, and some may even fail.
• NPAs are the result of loans that were first accepted at cheap rates but later serviced at high rates, as well as unplanned corporate house expansion during the boom period.
• due to poor management in the workplace, including intentional incompetence and defaulters.
• Poor governance and policy paralysis cause loans to become non-performing assets (NPAs), which slow down projects’ timelines and rates of progress. using the infrastructure sector as an illustration.
• ferocious competition in any given commercial industry. Consider the telecom sector in India as an illustration.
• Due to social, political, cultural, and environmental factors, land acquisition is being delayed.
• a dishonest lending strategy that entails secretive loan transactions.
• due to natural catastrophes like earthquakes, tsunamis, disease outbreaks, floods, and droughts, among others.
• Dumping results in inexpensive imports, which damage domestic companies. Consider the steel industry in India.

What results do NPAs produce?

• Profit margins for lenders are diminished.
• Stress in the banking sector reduces the amount of money available to fund other projects, which has a negative impact on the entire national economy.
• Interest rates were raised by banks to maintain their profit margin.
• moving funds from advantageous initiatives to unfavourable ones.
• It’s possible that unemployment occurred as a result of stagnant investments.
• Poor performance by the public sector banks diminishes shareholder returns, which lowers the amount of dividends paid to the Indian government. As a result, it may slow down the distribution of funding for social and infrastructural development, which would have negative social and political repercussions.
• The proper rewards are not given to investors.
• Investment-led development is halted by the balance sheet syndrome with Indian characteristics, which is characterised by stressed balance sheets in both the banking and corporate sectors.
• Cases involving NPAs put more strain on the judiciary’s already-heavy caseload.

Which strategies are being used to tackle NPAs?

• The GOI has made numerous attempts to improve the judicial, financial, and policy environment. However, India’s experience with NPAs is not a recent one. To address NPAs, the Narsimham Committee issued a number of reform suggestions in 1991. Some of them were used in actual situations.

The DRTs (Debt Recovery Tribunals) of 1993:

• to hasten the case-resolution process. They are covered by the Recovery of Debt Due to Banks and Financial Institutions Act of 1993. However, there aren’t enough of them, thus in many regions cases frequently drag on for longer than two to three years.

The Credit Information Bureau of 2000:

• A good information system is required to avoid loans from falling into the wrong hands and, as a result, NPAs. It helps banks by maintaining and disseminating information on particular defaulters and willful defaulters.

The Lok Adalats of 2001:

• They are helpful in handling and recovering small loans, but are only allowed for loans up to 5 lakh rupees, under RBI standards published in 2001. They are helpful since fewer cases are consequently brought before the courts.

The SARFAESI Act of 2002:

• The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act of 2002 The Act permits banks and other financial institutions to recover their non-performing assets (NPAs) without the help of a court by buying and selling the secured assets in NPA accounts with an outstanding value of Rs. 1 lakh or more. Banks are required to first post a notice. Then, in the event that the borrower defaults, they may:

Corporate Debt Restructuring in 2005:

• It tries to decrease the burden of debts on the business by reducing the rates paid and stretching the time the company has to repay the obligation.

5:25 rule – 2014:

• Also known as Flexible Structuring of Long Term Project Loans to Infrastructure and Core Industries Because the project schedule is prolonged and they do not receive the money back into their books for a sizable amount of time, it was suggested that loans every 5-7 years and refinancing for long-term projects be needed in order to protect the cash flow of such enterprises.

Joint Lenders Forum 2014:

• It was brought about by include all PSBs with stressed loans. It exists to stop loans from several banks from going to the same individual or company. It was established to prevent instances in which someone would borrow money from one bank and then lend it to another.

Mission Indradhanush 2015:

• The Indradhanush framework for transforming PSBs has been the most substantial reform project implemented by ABCDEFG to modernise PSBs and improve their general performance since banking was nationalised in 1970.

Strategic debt restructuring (SDR) in 2015:

•  According to this idea, banks that have loaned money to corporate borrowers have the choice to convert all or a portion of that money into equity stakes in the company that they lent it to. Its principal objective is to give banks better capabilities for initiating a change of ownership when necessary and to ensure that promoters have a larger share in recovering stressed accounts.

The Bankruptcy and Insolvency Code of 2016:

• It was developed in response to the Chakravyuaha Challenge (Economic Survey) of the exit conundrum in India. This law aims to encourage entrepreneurship, credit availability, and a balance between the interests of all stakeholders by consolidating and amending the laws relating to the reorganisation and insolvency resolution of corporate persons, partnership firms, and individuals in a timely manner and for the maximisation of value of such persons’ assets.

In 2017, private ARC against public ARC:

• The bad banks of 2017
• Another subject highlighted in Economic Survey 16-17 is the establishment of a bad bank that will take on all stressed loans and manage them in accordance with adaptable regulations and methods. It will make it simpler for PSBs to manage their balance sheets, enabling them to fund more development initiatives and launch new ones.

Source The Economic Times

4 – Defence Exports of India: GS III Topic Internal Security-related issues

 What are the main points?

• The private sector accounted for 70% of exports, while public sector companies produced the remaining 20%.
• Historically, the private sector accounted for 90% of the economy; however, more public sector organisations are now engaged in the military.
• Despite the fact that India’s defence imports from the US have expanded significantly in recent years, Indian businesses are increasingly becoming a part of the supply chains of American defence companies.
• What recent efforts have been taken to boost exports of defence products?
• In January 2022, India and the Philippines agreed on a deal worth USD 374.96 million for the sale of three batteries of the shore-based anti-ship BrahMos supersonic cruise missile.
• India has gradually prohibited the import of 310 different weapons and systems over the previous two years, which has increased export.
• These weapons and platforms will be incrementally produced domestically over the course of the following five to six years.
• Defense exports have increased dramatically as a result of better communication with the private sector.

How are India’s exports of defence doing?

• Defense exports are a crucial part of the government’s strategy to achieve self-sufficiency in the production of defence.
• Among the countries that more than 30 Indian defence corporations have shipped weapons and equipment to include Italy, the Maldives, Sri Lanka, Russia, France, Nepal, Mauritius, Sri Lanka, Israel, Egypt, the United Arab Emirates, Bhutan, Ethiopia, Saudi Arabia, the Philippines, Poland, Spain, and Chile.
• Among the exports are avionics suites, radio systems, radar systems, offshore patrol boats, engineering machinery, advanced light helicopters, and defence electronics.
• India’s defence exports, meanwhile, continue to fall short of expectations.
• India was ranked as the 23rd highest exporter of weapons by the Stockholm International Peace Research Institute between 2015 and 2019. (SIPRI).
• However, India barely contributes 0.17 percent of the global exports of weapons.
• The poor track record of India’s defence exports is due to the lack of a dedicated agency within the Ministry of Defense to promote exports.
• By 2024, India wants to export $5 billion worth of defence goods.

 What programmes are there for defence?

 The Defense Production and Export Promotion Policy (DPEPP 2020):

• The DPEPP 2020 is intended to serve as a thorough roadmap for the country’s defence production capabilities, giving them a concentrated, organised, and significant push for exports and self-reliance.
• The goal of the modifications is to give the private sector more authority.
• A new category for the DPP 2016 is Indian IDDM (Indigenously Designed, Developed, and Manufactured):
• If any Indian enterprises picked it, Indian IDDM was given the advantage over all other categories.

Strategic Partnership:

• Indian companies can collaborate with foreign original equipment manufacturers (OEMs) through a strategic partnership method to acquire technology transfer, the ability to construct and produce in India, and the capability to maintain those projects in India.
• The first conventional submarine RFP is currently operational.

Source  The Press Information Bureau