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Daily Current affairs 13 NOVEMBER 2018

UPSC - Daily Current Affair

[op-ed snap] A much-needed revamp for rating agencies



Mains Paper 3: Economy | Mobilization of resources

From the UPSC perspective, the following things are important:

Prelims level: Credit ratings

Mains level: Problems being faced by the credit rating sector in India & need for revamping the market structure for same


Flaws in credit ratings

  1. The bonds of Infrastructure Leasing & Financial Services Ltd (IL&FS) were rated investment grade as late as July 2018
  2. The firm started defaulting on its debt in September
  3. IL&FS is not unique and it is found that firms that eventually default on their bank loans have an average rating somewhere between BB- and B+ one month before they default

Why does rating matter?

  1. According to Reserve Bank of India’s (RBI’s) capital norms, banks have to set aside more capital to cover for losses only if a firm’s rating goes below B-
  2. So, above B-, banks can allocate less capital to cover losses

Sources of the problems

  • Conflicts of interest from non-rating business
  1. To be effective, rating agencies have to be impartial judges of credit quality
  2. This is not possible if they have other non-rating businesses that they are marketing to the same corporates who they are rating
  • Issuer-pay model
  1. According to current practice, the borrower picks the rating agency that will rate their debt
  2. Thus, instead of an impartial judge, the rating agency is a seller trying to entice the buyer (the borrower) into buying its rating service
  3. Rating agencies will compete with one another to offer the best possible service
  4. Such rating shopping is formalized in some rating agency websites wherein the process of how a company can dispute its rating and obtain redressal is explained
  • Over-reliance on ratings in regulations
  1. The main source of power for the rating agencies are regulations that are tied to ratings
  2. For example, the Basel capital adequacy norms (which India has adopted) allow banks to decide on their capital allocation based on loan ratings
  3. Following India’s adoption of these norms, there has been a multifold increase in the number of firms with credit ratings
  4. Thus, regulators reward rating agencies with more business

Solutions to these problems

  • Rating agencies should be forced to divest from non-rating business
  1. This is an easy solution
  2. The Securities and Exchange Board of India (SEBI) is already trying to implement this
  • The regulator should pick the rating agency or greater disclosure
  1. The drastic solution is for a regulator (say RBI or SEBI) to pick the rating agency
  2. This can be easily automated with the help of a computer programme
  3. The programme will pick the agency randomly while ensuring a target market share for the different agencies
  4. The target market share, in turn, should depend on the accuracy of the ratings in the past
  5. Evaluating rating accuracy is easily done and the agencies do this on an annual basis already
  6. The target market shares should be decided in such a way that it rewards good performance and penalizes bad performance
  7. The less drastic solution is to encourage unsolicited ratings, and also to ensure that the borrowers disclose all ratings and not just the ratings they end up accepting
  8. This will give greater confidence to the rating agencies to tell the truth and not have to cater to the borrower
  • Provide alternatives to ratings
  1. One should try to reduce the reliance on ratings in regulation
  2. For example, banks should have a minimum amount of capital based on the total assets, and not just on risk-weighted assets
  3. This will reduce the importance of ratings for bank capital
  4. The RBI should also insist that bank borrowers obtain multiple ratings with the regulator picking the agency
  5. Competition combined with a reward for good performance will enhance the quality of ratings

Way forward

  1. Credit ratings for bank loans in India are a ticking time bomb
  2. With credit ratings threatening to disrupt markets, the systemic issues with rating agencies must be urgently fixed



[op-ed snap] Terms of disclosure



Mains Paper 2: Governance | Important aspects of governance, transparency & accountability

From the UPSC perspective, the following things are important:

Prelims level: Global RTI rankings by CLD

Mains level: Loopholes in RTI act and the urgent need to fix them


India slips in RTI rankings

  1. In the recent global RTI ratings, India has slipped a rung further this year to the sixth position
  2. India has slipped from its second position (2011) to fourth, fifth and sixth in 2016, 2017 and 2018 respectively
  3. Ironically, India ranks lower than smaller nations like Afghanistan — which adopted the RTI later than India

About RTI rankings

  1. It is a programme founded by the Centre for Law and Democracy (CLD), a Canada-based non-governmental organisation, along with Access Info Europe
  2. According to CLD, the global RTI rating is a system for assessing the strength of the legal framework for guaranteeing the right to information in a given country
  3. It is, however, limited to measuring the legal framework only and does not gauge the quality of implementation

Where did India’s rating fall?

Out of the 61 indicators, there are nine indicator categories under which India’s points have been downgraded

  • The presumption for access subject to limited exceptions is indicator number two.
  1. Section 8(2) of Indian RTI Act specifically overrides Official Secrets Act 1923 and has made disclosure a rule and secrecy an exception
  2. Yet, India was given one instead of two points
  • The seventh indicator is the non-exclusion of executive and administrative units like ministries, local bodies, police, armed forces and bodies controlled or owned by the above
  1. Our public authority definition covered these aspects, but CLD says that jurisdiction exclusion of the state of Jammu and Kashmir and broad exemption to 18 bodies under Section 24 reduced India’s points
  • The 22nd indicator was of a clear maximum timeline for processing requests
  1. India got one out of two points
  2. Our Act states that information should be given as soon as possible, with a maximum limit of 30 days
  3. Two points were given to Afghanistan which also said the same — “as soon as possible” — without a maximum limit
  • India and Sri Lanka prescribe fees for information
  1. On this, the 24th indicator, India was given one while Sri Lanka got two points
  • No charges and limitations on the reuse of information obtained under RTI was the 27th criterion
  1. The Indian Act does not prohibit it, and the courts have said it can be used as evidence
  2. Still, India was given zero out of two
  • For the 30th criterion, pertaining to the “harm test”, India was given only one point while Afghanistan was awarded four points for equally applying the harm test to all clauses of exemption
  1. In India, Section 8(2) says that notwithstanding the Official Secrets Act 1923, nor any of the exemptions in Section 8(1), access to information cannot be denied if public interest in disclosure outweighs the harm to the protected interest
  2. It is clear that the mandate of the International Agency for meeting this indicator is fully met by the Indian RTI Act
  • Criterion 51 deals with a system for redressing the problem of public authorities which systematically fail to disclose information or underperform
  1. India provides for sanction against officers and compensation against authorities, which is ignored
  2. Afghanistan gets two points here, though it does not mention anything in law, while India was given one
  • Legal protections against imposing sanctions on those who, in good faith, release information which discloses wrongdoing (whistleblowers) is criterion 53
  1. The rating agency maintains that in India there are no such protections, while Afghanistan and Serbia do have them
  2. Section 21 of the Indian RTI Act says, “No suit, prosecution or other legal proceedings shall lie against any person for anything which is in good faith done or intended to be done under this Act or any rule made thereunder”
  3. This gives immunity to all persons who give information under this Act. But this is ignored
  4. The agency overlooked the fact that the Whistleblowers Protection Act was actually passed by the Parliament in 2014

Effect of biased approach on India’s ranking

  1. It is evident that had the rating agency gone through the RTI Act and the legal framework of India more closely, India would have got 140 of 150 points
  2. It would have retained its position on the top, if not among the top three

Way forward

  1. The point which needs reconsideration at present is the blanket exemption of some organisations from furnishing information under Section 24 of the Act
  2. The preamble of the RTI aims at promoting accountability and minimising corruption
  3. Then how can a premier police agency like the CBI, which aims to fight corruption, be exempt from furnishing information on corruption?
  4. This is an anomaly which we must seriously seek to ponder on



[op-ed snap] Raja Mandala: New ripples in Andaman Sea



Mains Paper 2: IR | Bilateral, regional & global groupings & agreements involving India &/or affecting India’s interests

From the UPSC perspective, the following things are important:

Prelims level: SIMBEX exercise, ShangriLa Dialogue

Mains level: Rising importance of the Andaman Sea and the need to step up efforts in the region’s development


SIMBEX exercise & PM’s visit to Singapore

  1. PM Modi’s second visit to Singapore this year is nicely framed by the largest ever naval exercise between the two nations in the Andaman Sea and the Bay of Bengal
  2. The exercises, called the Simbex, began 25 years ago as India embarked on the so-called Look East Policy that sought a renewed economic, political and military engagement with South East Asia
  3. The two sides hope that these bilateral exercises will eventually involve the participation of other South East Asian nations and form the basis for a cooperative security framework in the heart of the Indo-Pacific

India’s view of Indo-Pacific

  1. The PM’s speech on the Indo-Pacific given in the Shangri La Dialogue helped bring the new geopolitical construct to the centre of India’s worldview
  2. But with it has come the traditional Indian tendency to debate the meta-narrative rather than the specific sub-regions of the Indo-Pacific
  3. The novelty of the Indo-Pacific lies in recognising the growing strategic and economic interdependence of the Pacific and Indian Ocean littorals that we saw as separate theatres until recently
  4. The Indo-Pacific is also a sum of its many sub-regions that include the East China Sea, the South China Sea and South Pacific to the east of the Malacca Straits as well as the Bay of Bengal, Arabian Sea and the waters of Africa to the west
  5. What India does in these sub-regions is far more important than the abstract debates on the Indo-Pacific

Focus on the Andaman Sea

  1. One such sub-region — the Andaman Sea — is likely to preoccupy India in the coming years
  2. Long seen as a political backwater, the Andaman Sea is rapidly regaining its strategic salience
  3. The Andaman Sea is flanked by the Andaman and Nicobar chain of islands in the West, Myanmar to the north, the Thai-Malay peninsula to the east, and the Sumatra island to the south
  4. It funnels into the Straits of Malacca that connects the Indian and Pacific Oceans
  5. The large amount of shipping that enters the Andaman Sea from the east heads to Singapore, from where it turns the Pacific Ocean

Rising intervention of China in the Andaman Sea

  1. Beijing has signed an agreement with Naypyidaw on building a deep-water port at Kyaukpyu on Myanmar’s Arakan coast in the Bay of Bengal
  2. The port will form an important part of the China-Myanmar Economic Corridor, which would connect Kyaukpyu to the Yunnan province in southwestern China via rail and highways
  3. China has already built an oil and gas pipeline system that moves hydrocarbons from Kyaukpyu to inland China
  4. Thailand has also ordered a feasibility study of the Kra Canal, which has been debated for more than three centuries
  5. The canal will cut through the Kra Isthmus and link the Andaman Sea to the Gulf of Thailand
  6. While the cost and sustainability of the project have always deterred investors, there seems to be a fresh push from China to launch the project
  7. The rising Chinese profile in the Andaman Sea is not limited to building strategic infrastructure like China-Myanmar Economic Corridor and the Kra Canal that allow Beijing reduce its current dependence on the Malacca Straits and access the Indian Ocean directly
  8. China’s military profile is also rising
  9. Beijing has sold submarines to Thailand and Bangladesh and its military cooperation with other littoral states of the Andaman Sea has grown steadily
  10. China has also conducted naval exercises with Thailand and Malaysia

Way forward for India

  1. As the waters of the Andaman Sea turn turbulent, India too has begun to accelerate the development of civilian and military infrastructure in the Andaman and Nicobar Island Chain
  2. It has also stepped up political engagement with the Andaman littoral states
  3. But Delhi’s pace might turn out to be too slow to cope with the rapid strategic transformation of the Andaman Sea
  4. Seeing the growing strategic and economic importance of the Andaman Sea, New Delhi must speed up its efforts in coping with this transformation



World’s largest brain-like supercomputer switched on for first time



Mains Paper 3: Science & Technology |Indigenization of technology & developing new technology

From UPSC perspective, the following things are important:

Prelims level: Artificial Neuron Network, SpiNNaker

Mains level: Applications of ANN in Super Computing


  • The world’s largest supercomputer designed to work in the same way as the human brain has been switched on for the first time.


  1. A neuron or a nerve cell is an electrically excitable cell that receives, processes, and transmits information through electrical and chemical signals.
  2. Neurons are the primary components of the central nervous system, which includes the brain and spinal cord.
  3. To give an idea of scale, a mouse brain consists of around 100 million neurons and the human brain is 1,000 times bigger than that.

What is Artificial Neuron Network?

  1. An artificial neuron is a mathematical function conceived as a model of biological neurons, a neural network.
  2. Artificial neural networks are computing systems vaguely inspired by the biological neural networks that constitute animal brains.
  3. The network is based on a collection of connected units or nodes called artificial neurons, which loosely model the neurons in a biological brain.
  4. The neural network itself is not an algorithm, but rather a framework for many different machine learning algorithms to work together and process complex data inputs.
  5. Such systems “learn” to perform tasks by considering examples, generally without being programmed with any task-specific rules.
  6. For example, in image recognition, they might learn to identify images that contain cats by analyzing example images that have been manually labeled as “cat” or “no cat”.

Spiking Neural Network Architecture (SpiNNaker)

  1. The SpiNNaker machine, designed and built in The University of Manchester in the UK, can model more biological neurons in real time than any other machine on the planet.
  2. The newly formed million-processor-core SpiNNaker machine is capable of completing more than 200 million actions per second, with each of its chips having 100 million transistors.
  3. Biological neurons are basic brain cells present in the nervous system that communicate primarily by emitting ‘spikes’ of pure electro-chemical energy.
  4. Neuromorphic computing uses large scale computer systems containing electronic circuits to mimic these spikes in a machine.

Features of SpiNNaker

  1. SpiNNaker completely re-thinks the way conventional computers work.
  2. SpiNNaker is unique because, unlike traditional computers, it does not communicate by sending large amounts of information from point A to B via a standard network.
  3. Instead it mimics the massively parallel communication architecture of the brain, sending billions of small amounts of information simultaneously to thousands of different destinations.
  4. Researchers eventually aim to model up to a billion biological neurons in real time and are now a step closer.

Utility of SpiNNaker

  1. One of the fundamental uses for the supercomputer is to help neuroscientists better understand how our own brain works.
  2. It does this by running extremely large scale real-time simulations which simply aren’t possible on other machines.
  3. For example, SpiNNaker has been used to simulate high-level real-time processing in a range of isolated brain networks.
  4. This includes an 80,000 neuron model of a segment of the cortex, the outer layer of the brain that receives and processes information from the senses.
  5. It also has simulated a region of the brain called the Basal Ganglia – an area affected in Parkinson’s disease, meaning it has massive potential for neurological breakthroughs in science such as pharmaceutical testing.

Projects under SpiNNaker

  1. The power of SpiNNaker has even recently been harnessed to control a robot, the SpOmnibot.
  2. This robot uses the SpiNNaker system to interpret real-time visual information and navigate towards certain objects while ignoring others.
  3. Neuroscientists can now use SpiNNaker to help unlock some of the secrets of how the human brain works by running unprecedentedly large scale simulations.
  4. It also works as real-time neural simulator that allows roboticists to design large scale neural networks into mobile robots so they can walk, talk and move with flexibility and low power.

ADB grants EESL $13 million to promote efficient energy usage in the country



Mains Paper 3: Economy | Infrastructure: Energy, Ports, Roads, Airports and Railways etc.

From UPSC perspective, the following things are important:

Prelims level: ADB, EESL

Mains level: Demand-Side Energy Efficiency Sector Project


  • The Asian Development Bank (ADB) has said it would provide USD 13 million loans to Energy Efficiency Services Ltd. (EESL) to promote efficient energy usage in India.

Demand-Side Energy Efficiency Sector Project

  1. ADB and the EESL signed a USD 13 million grant to be provided by the Global Environment Facility (GEF), for the additional financing of an ongoing ADB-supported project that is promoting end-use energy efficiency.
  2. The grant to be administered by ADB is tied to the USD 200 million ADB-financed Demand-Side Energy Efficiency Sector Project.
  3. It was approved by the bank in 2016 to finance the installation of millions of energy-efficient lights on streets and homes as well as energy-efficient water pumps across India.
  4. The ADB funding is helping to establish energy-efficient technologies such as light-emitting diode (LED) street-lights with municipalities while exploring newer technologies and their self-sustaining business models.
  5. The existing loan aims to achieve energy savings of around 3,800 gigawatt-hours annually.

Additional Financing

  1. The additional financing for the project through GEF grant will be used by EESL for making investments in new and emerging technologies, including trigeneration, efficient motors and air-conditioners, smart meters/grids, and associated new business models.
  2. This will support the overall objective of the project that is aligned with the goals of the government’s National Mission for Enhanced Energy Efficiency (NMEEE).
  3. It aims to expand the market for energy-efficient technologies and reduce greenhouse gas emissions.

National body set up to study rare form of diabetes



Mains Paper 2: Governance | Issues relating to development & management of Social Sector/Services relating to Health, Education, Human Resources

From UPSC perspective, the following things are important:

Prelims level: Monogenic Diabetes

Mains level:  Efforts for preventing diabetes in India


What is monogenic diabetes?

  1. Monogenic diabetes is a rare condition resulting from mutations (changes) in a single gene.
  2. In contrast, the most common types of diabetes—type 1 and type 2—are caused by multiple genes (and in type 2 diabetes, lifestyle factors such as obesity).
  3. Most cases of monogenic diabetes are inherited.
  4. Monogenic diabetes appears in several forms and most often affects young people.
  5. In most forms of the disease, the body is less able to make insulin, a hormone that helps the body use glucose (sugar) for energy.
  6. Rarely, the problem is severe insulin resistance, a condition in which the body cannot use insulin properly.

National Monogenic Diabetes Study Group

  1. A National Monogenic Diabetes Study Group has been formed to identify cases of monogenic diabetes across the country.
  2. At national level it is coordinated by the Indian Council of Medical Research (ICMR), the Madras Diabetes Research Foundation (MDRF) and Dr. Mohan’s Diabetes Specialities Centre (DMDSC).
  3. ICMR already has a young diabetic’s registry. As an off-shoot, a National Monogenic Diabetes Study Group has been formed with MDRF as the nodal centre.
  4. As of now, 33 doctors from across the country are ready to collaborate for this initiative.

Activities under the Group

  1. MDRF would provide guidelines to the collaborators for identifying monogenic diabetes.
  2. They need to look out for certain parameters such as children below six months of age.
  3. They will also look for those diagnosed as Type 1 diabetes but have atypical features such as milder forms of diabetes, and strong family history of diabetes going through several generations.
  4. The collaborators will identify cases of monogenic diabetes and send their details.
  5. They will collect blood samples and following the test results they will be given the treatment.


How RCEP negotiations hinge on a single phrase



Mains Paper 2: IR | Bilateral, regional & global groupings & agreements involving India &/or affecting India’s interests

From UPSC perspective, the following things are important:

Prelims level: RCEP, TPP etc.

Mains level: How India will gain from being a part of RCEP


Meet for a “Substantial Conclusion”

  1. The Union Minister for Commerce & Industry is leading the delegation for the meeting for trade Ministers of RCEP member countries which is taking place in Singapore.
  2. The ministerial meeting will be followed by the 2nd RCEP Leaders Summit.

Fine-tuning the negotiations

  1. As the East Asia Summit nears this week, negotiations for the RCEP (Regional Comprehensive Economic Partnership) are going down to the wire.
  2. India is expected to take the final decision negotiating its stance more deeply.
  3. In the previous round of discussions in September, the countries had reached a “substantial conclusion” before reaching a final agreement by 2019.

India’s stance

  1. This “substantial conclusion” undermines the principle of “single undertaking”, which means nothing is done until it is completely done.
  2. In addition, only five of the 18 chapters in the RCEP are actually done, leaving the rest with many debating points.
  3. Many countries want India to be part of this deal as a way of balancing China’s outsized presence.
  4. India is having a hard time battling perceptions that it is the only laggard on RCEP negotiations.
  5. From a position of being fearful of letting the RCEP become a back door for Chinese entry into India, India has evolved its position considerably believing it has a lot to gain from the agreement.


Regional Comprehensive Economic Partnership

  1. The RCEP is a pact that aims to cover goods, services, investments, economic and technical cooperation, competition and intellectual property rights.
  2. The RCEP members include 10 ASEAN members – Brunei Cambodia, Indonesia, Malaysia, Myanmar, Singapore, Thailand, the Philippines, Laos and Vietnam and their 6 free trade agreement partners – India, China, Japan, South Korea, Australia and New Zealand.
  3. The chief negotiators had recently concluded the 24th round of meeting in Auckland, New Zealand, last month.
  4. India already has a free trade agreement with Association of Southeast Asian Nations (ASEAN), Japan and South Korea and it is negotiating similar pacts with Australia and New Zealand.
  5. India is pushing for liberalizing norms to promote services trade as the sector accounts for about 55 % of India’s GDP.

Regional Comprehensive Economic Partnership (RCEP)

[pib] Bilateral Naval Exercise ‘Samudra Shakti’



Mains Paper 2: IR | Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests

The following things are important from the UPSC perspective:

Prelims Level: Samudra Shakti

Mains Level: India-ASEAN strategic relations


  • Indian Navy and Indonesian Navy has scheduled Bilateral Exercise ‘Samudra Shakti’.

Exercise ‘Samudra Shakti’

  1. The aim of the exercise is to strengthen bilateral relations, expand maritime co-operation, enhance interoperability and exchange best practices.
  2. The exercise would start with a Harbour Phase encompassing planning and briefing on various activities, professional interactions, cross deck visits, sports fixtures and social interactions.
  3. This would progress to a Sea Phase which include operations such as Joint Maneuvers, Helicopter Operations, Surface Warfare exercise, ASW exercise and Anti Piracy exercises.
  4. The exercise seeks to promote India’s solidarity with Indonesia towards ensuring good order in the maritime domain and to strengthen existing bonds between the navies of the two nations.