Current Affairs 03 February 2024

Contents:

1. SpaceX’s Super Heavy rockets
2. Assembly Speaker calls for probe against Cabinet Minister
3. Windfall Tax on petroleum crude
4. Government’s Disinvestment strategy
5. UK’s recognition of the Palestine state
6. Elephant Deaths

SpaceX’s Super Heavy rockets

Context:

SpaceX, led by Elon Musk recently released the images of four of its Starship Super Heavy booster as the company readies itself for the next few launches.

Relevance:

GS-III Science and Technology

Dimensions of the Article:

1. Preparing for the launch of Starship
2. Stages of Starship
3. What is SpaceX?
4. SpaceX’s Achievements
5. The significance of private industry in space
6. Private Participation Concerns

Preparing for the launch of Starship:

• Starship, the most powerful rocket ever built, is ready for its launch in February 2024 after getting necessary clearances from the country’s Federal Aviation Authority.
  • The Launch Vehicle has already completed two test launches.
•  “Starship” refers to the combination of the Super Heavy booster, and the Starship spacecraft.
• They form the next generation of SPaceX’s launch systems.
• Function:
  • This multi-function launch system is designated to carry both astronauts and cargo into Earth’s  orbit, the Moon, and other planets in the solar system.

Stages of Starship:

• First stage:
  • The Super Heavy booster is the first stage of Starship.
  • It is about 69 metres tall and 9 metres wide and will have the capacity to hold around 3,400 tons of propellant.
  • It is powered by 33 Raptor engines that together provide close to 7,600 tons of thrust.
  • It is designed to be completely reusable. After launch, it should re-enter the planet’s atmosphere and land back at the launch site.
• Second stage:
  • The Starship spacecraft is the second stage of the system.
  • It has an integrated payload section designed to carry both crew and cargo.
  • It is also capable of point-to-point transport on Earth.
  • The 50-metre tall and 9-metre wide spacecraft will have a payload capacity of between 100 tonnes and 150 tonnes.

What is SpaceX?

• Space Exploration Technologies Corp., trading as SpaceX, is an American aerospace manufacturer and space transportation services company.
• It was founded in 2002 by Elon Musk with the goal of reducing space transportation costs to enable the colonization of Mars.
• SpaceX has developed several launch vehicles, the Starlink satellite constellation, the Dragon cargo spacecraft, and flown humans to the International Space Station on Dragon 2.

SpaceX’s Achievements

• The first privately funded liquid-propellant rocket to reach orbit (Falcon 1 in 2008).
• The first private company to successfully launch, orbit, and recover a spacecraft (Dragon in 2010).
• The first private company to send a spacecraft to the International Space Station (Dragon in 2012).
• The first reuse of an orbital rocket (Falcon 9 in 2017).
• The first private company to send astronauts to the International Space Station (Dragon 2 in 2020). – Launching Humans into orbit is a feat achieved only by the US, Russia & China in the past.

The significance of private industry in space

• Increase demand: ISRO’s annual budget has surpassed Rs 10,000 crores and is growing. However, India’s demand for space-based services far outstrips what ISRO can provide. As a result, private investments can fill this void.
• Capture global market: The government intends to rapidly increase India’s share of the global commercial space sector from 2% to 8% in the coming years. It can only be done by enlisting the help of private-sector companies.
• Will bring in physical-financial-human resources: ISRO has a limited pool of resources such as land, labour, and capital, among other things. The participation of the private sector will generate a new pool of resources and talent.
  • Private sector participation could capitalise on the country’s talent (demographic dividend), significantly improving India’s space efforts.
  • It will also contribute more funds and experience to space exploration initiatives.
• Share cost factor risk: Each launch carries a number of risks. The private sector can contribute, and failure costs can be allocated.
• Innovation: The commercialization of innovations by the private sector will result in the development of critical superior technologies.
  • It will allow for the incorporation of a plethora of new technologies, such as artificial intelligence, into space exploration efforts.
  • The private sector can use the knowledge gained from space activities to expand the use of technology in other fields.
• Cost-effectiveness: By replicating and adapting existing technology, India creates a cost-effective model. This can be aided by critical private-sector innovations.
• Collaboration: ISRO has a close relationship with the industry, particularly with PSUs such as Hindustan Aeronautics Limited (HAL) and private sector firms such as Godrej & Boyce, Larsen & Toubro, and others, which can be strengthened by bringing in more private firms.
  • For example, a large number of private companies, including Boeing, Lockheed Martin, Northrop Grumman, Airbus, and Space X, were recently involved in the US Artemis project to return to the Moon.
• Developing alternative assets: India can classify numerous satellites and spacecraft assets shared by ISRO and industry to ensure continuity even if an attack disables one or more of our satellites.
  • For example, while the US is vulnerable in space due to its reliance on thousands of satellites, it is also best positioned to deal with a potential attack on its space assets due to its ability to transition to alternative assets.

Private Participation Concerns

• National security: In the hands of the private sector, ISRO’s sensitive data poses a risk of data exploitation or misapplication, raising security concerns.
  • It may also result in private parties profiteering from the disclosure of sensitive information to foreign governments and corporations.
• Cartelization: Allowing the private sector to pursue space projects or launch any satellite for profit, according to some defence analysts, may result in lobbying and unfair means.

-Source: the Indian Express, the Hindu

Assembly Speaker calls for probe against Cabinet Minister

Context:

The speaker of Goa Legislative Assembly accused the Art and Culture Minister Govind Gaude of his alleged involvement in misappropriation of funds.

• The Speaker asked for an inquiry to be conducted and the report for the same to be submitted at the earliest.
• This may be the first case wherein the Speaker has exposed a member of his own party involved in corruption.

Relevance:

GS-II: Polity and Constitution (Constitutional Provisions, Legislature)

Dimensions of the article:

1. Speaker of the Legislative Assembly
2. Origin and Evolution of the Office of the Speaker
3. Election and Term of Office of the Speaker
4. Rules in states and Constitution regarding election of the Speaker
5. The powers and functions of the Speaker in the Indian context and the challenges therein:

Speaker of the Legislative Assembly

The presiding officer of the state legislative assembly is also known as the Speaker who is elected by the members of the assembly.

The members of the assembly also elect the Deputy Speaker.

All the Powers and Functions etc., of a Speaker of the State Legislative Assembly, are akin to that of the Speaker of Lok Sabha.

Speaker of Lok Sabha

• The Speaker is the head of the Lok Sabha (Or the Legislative Assemblies of the States), and its representative and his/her decision in any Parliamentary matter is final.
• He is the guardian of powers and privileges of the members, apart from being the principal spokesman of the House.
• The Speaker of the Lok Sabha derives his powers and duties from three sources:
  • The Constitution of India,
  • The Rules of Procedure and Conduct of Business of Lok Sabha, and
  • Parliamentary Conventions (residuary powers that are unwritten or unspecified in the Rules).
• Usually, a member belonging to the ruling party is elected Speaker. The process has evolved over the years where the ruling party nominates its candidate after informal consultations with leaders of other parties and groups in the House.
• This convention ensures that once elected, the Speaker enjoys the respect of all sections of the House.

Origin and Evolution of the Office of the Speaker:

• The Speaker’s office originated in medieval Britain when the House of Commons required a representative in dealings with the King.
• Until the 17th century, the Speaker was often seen as a representative of the Crown.
• However, since the mid-19th century, the Speaker has been considered an impartial Chairman of the House of Commons, responsible for safeguarding the House’s rights, privileges, and those of its members.

Election and Term of Office of the Speaker

• The Speaker of the lower house is chosen by the members of lower house from among themselves, after the first meeting, by a simple majority of members present and voting in the Lower house.
• Although there are no specific qualifications prescribed for being elected the Speaker, an understanding of the Constitution and the laws of the country is considered a major asset for the holder of the Office of the Speaker.
• The Speaker of lower house generally remains in office during the life of lower house. However, to remain in office, he/she needs to remain a member of the Lower house.
• Whenever the Lower house is dissolved, its speaker continues to remain in office until immediately before the first meeting of lower house after it is reconstituted.

 Rules in states and Constitution regarding election of the Speaker

• Article 178 of the Constitution states: “Every Legislative Assembly of a State shall, as soon as may be, choose two members of the Assembly to be respectively Speaker and Deputy Speaker thereof and, so often as the office of Speaker or Deputy Speaker becomes vacant, the Assembly shall choose another member to be Speaker or Deputy Speaker, as the case may be.”
• The Constitution does not specify the process of holding these elections; that is left to the state legislatures. It also does not set a timeframe other than to say the elections should be held “as soon as may be”.
• As per Rule 6 of the Maharashtra Legislative Assembly Rules, “The Governor shall fix a date for the holding of the election and the Secretary shall send to every member notice of the date so fixed.” A former Secretary of the state Assembly said the election of the Speaker can take place only after the Governor fixes the date for it.
• Some states lay down timeframes:
  • In Haryana for example, the election of the Speaker must be held as soon as possible after the Assembly election, and the Deputy Speaker must be elected within another seven days.
  • In Uttar Pradesh, the Speaker’s election is required to be held within 15 days if the post falls vacant during the term of the Assembly.

The powers and functions of the Speaker in the Indian context and the challenges therein:

-Source: The Indian Express

Windfall Tax on Petroleum Crude

Context:

The windfall tax on petroleum crude has been increased to ₹3,200 per tonne from ₹1,700 per tonne, effective February 3.

• However, the windfall tax on diesel and aviation turbine fuel (ATF) also known as jet fuel remains unchanged at zero.
• The Government has introduced Windfall tax on crude oil producers from July 2022 in response to the escalating price of crude oil.
  • This tax is imposed by governments when an industry unexpectedly generates substantial profits, typically attributed to an unprecedented event.
• The government revises this tax every two weeks.

Relevance:

GS III: Indian Economy

Dimensions of the Article:

1. What is a windfall tax?
2. Why are countries levying windfall taxes now?
3. What are the issues with imposing such taxes?

What is a windfall tax?

• Windfall taxes are designed to tax the profits a company derives from an external, sometimes unprecedented event — for instance, the energy price-rise as a result of the Russia-Ukraine conflict.
• These are profits that cannot be attributed to something the firm actively did, like an investment strategy or an expansion of business.
  • The U.S. Congressional Research Service (CRS) defines a windfall as an “unearned, unanticipated gain in income through no additional effort or expense”.
• Governments typically levy this as a one-off tax retrospectively over and above the normal rates of tax.
• One area where such taxes have routinely been discussed is oil markets, where price fluctuation leads to volatile or erratic profits for the industry.
• There have been varying rationales for governments worldwide to introduce windfall taxes, from redistribution of unexpected gains when high prices benefit producers at the expense of consumers, to funding social welfare schemes, and as a supplementary revenue stream for the government.

Why are countries levying windfall taxes now?

• Prices of oil, gas, and coal have seen sharp increases since last year and in the first two quarters of the current year, although they have reduced recently.
• Pandemic recovery and supply issues resulting from the Russia-Ukraine conflict shored up energy demands, which in turn have driven up global prices.
• The rising prices meant huge and record profits for energy companies while resulting in hefty gas and electricity bills for households in major and smaller economies. Since the gains stemmed partly from external change, multiple analysts have called them windfall profits.

What are the issues with imposing such taxes?

Brew uncertainty in the market about future taxes:

• Analysts say that companies are confident in investing in a sector if there is certainty and stability in a tax regime. Since windfall taxes are imposed retrospectively and are often influenced by unexpected events, they can brew uncertainty in the market about future taxes.

IMF’s Advice Note:

• The International Monetary Fund (IMF), which released an advice note on how windfall taxes need to be levied also said that taxes in response to price surges may suffer from design problems—given their expedient and political nature.
  • It added that “introducing a temporary windfall profit tax reduces future investment because prospective investors will internalise the likelihood of potential taxes when making investment decisions”.

CRS report:

• There is another argument about what exactly constitutes true windfall profits; how can it be determined and what level of profit is normal or excessive.
•  A CRS report, for instance, argues that if rapid increases in prices lead to higher profits, in one sense it can be called true windfalls as they are unforeseeable but on the other hand, companies may argue that it is the profit they earned as a reward for the industry’s risk-taking to provide the end user with the petroleum product.

Another issue is who should be taxed:

• Only the big companies responsible for the bulk of high-priced sales or smaller companies as well— raising the question of whether producers with revenues or profits below a certain threshold should be exempt.

-Source: Livemint, Business Standards

Government’s Disinvestment Strategy

Context:

As per the statement issued by the secretary in the department of investment and public asset management (Dipam), the government will no longer include disinvestment and asset sales targets in the Union budget in future.

Relevance:

GS-III: Indian Economy (Growth and Development of Indian Economy, Fiscal Policy, Inclusive growth and issues therein, Budgeting)

Dimensions of the article:

1. What is Disinvestment?
2. What is Strategic Disinvestment?
3. Evolution of Disinvestment Policy in India
4. Privatization in 2019 and onwards
5. Issues related to Disinvestment
6. Significance of the disinvestment

What is Disinvestment?

• Disinvestment or divestiture refers to the government selling or liquidating its assets or stakes in PSE (public sector enterprise).
• The Department for investment and public asset management (DIPAM) under Ministry of finance is the nodal agency for disinvestment
• It is done when a PSU start incurring the loss of exchequer.
• Disinvestment proceeds can help the government fund its fiscal deficit.

What is Strategic Disinvestment?

• Strategic Disinvestment refers to the sale of a public sector holding/undertaking to a non-government entity and in most cases, to the private sector. It is done so by the government in order to relieve itself the burden of maintaining a non-performing public enterprise.
  • Unlike the simple disinvestment, strategic sale implies a kind of privatization.
• The disinvestment commission defines strategic sale as the sale of a substantial portion of the Government shareholding of a central public sector enterprises (CPSE) of upto 50%, or such higher percentage as the competent authority may determine, along with transfer of management control.
• Strategic disinvestment in India has been guided by the basic economic principle that the government should not be in the business to engage itself in manufacturing/producing goods and services in sectors where competitive markets have come of age.
• The economic potential of such entities may be better discovered in the hands of the strategic investors due to various factors, e.g. infusion of capital, technology up-gradation and efficient management practices etc

Main objectives of Strategic Disinvestment in India

• Meeting budgetary requirements
• Reduce fiscal burden
• Raise funds to finance growth and development projects
• Improve market competitiveness and discipline
• Transfer of commercial risks

Evolution of Disinvestment Policy in India

• The liberalization reforms undertaken in 1991 ushered in an increased demand for privatization/ disinvestment of PSUs.
• The new economic policy 1991 indicated that PSUs had shown a very negative rate of return on capital employed due to:
  • Subsidized price policy of public sector undertakings.
  • Under–utilization of capacity
  • Problems related to planning and construction of projects.
  • Problems of labour, personnel and management and lack of autonomy
• In the initial phase, this was done through the sale of a minority stake in bundles through auction. This was followed by a separate sale for each company in the following years, a method popularly adopted till 1999-2000.
• India adopted strategic sale as a policy measure in 1999-2000 with the sale of a substantial portion of government shareholding in identified Central PSEs (CPSEs) up to 50% or more, along with transfer of management control. This was started with the sale of 74 % of the Government’s equity in Modern Food Industries Limited (MFIL).
• Thereafter, 12 PSUs (including four subsidiaries of PSUs), and 17 hotels of Indian Tourism Development Corporation (ITDC) were sold to private investors along with transfer of management control by the Government.
• Another major shift in disinvestment policy was made in 2004-05 when it was decided that the government may “dilute its equity and raise resources to meet the social needs of the people”, a distinct departure from strategic sales.
• Department of Investment and Public Asset Management (DIPAM) has laid down comprehensive guidelines on “Capital Restructuring of CPSEs” in May 2016 by addressing various aspects, such as payment of dividends, buyback of shares, issues of bonus shares and splitting of shares.

Privatization in 2019 and onwards

• In November 2019, India launched its biggest privatization drive in more than a decade. An “in-principle” approval was accorded to reduce the government of India’s paid-up share capital below 51% in select Central Public Sector Enterprises (CPSEs).
• Among the selected CPSEs, strategic disinvestment of the Government’s shareholding of 53.29% in Bharat Petroleum Corporation Ltd (BPCL) was approved which led to an increase in value of shareholders’ equity of BPCL by INR 33,000 crore when compared to its peer Hindustan Petroleum Corporation Limited (HPCL) and this reflects an increase in the overall value from anticipated gains from consequent improvements in the efficiency of BPCL when compared to HPCL which will continue to be under Government control.

Issues related to Disinvestment

• It is against the socialist ideology of equal distribution of resources amongst the population.
• It will lead to monopoly and oligopolistic practices by corporates.
• Proceedings of disinvestment had been used to cater the fiscal deficit of the state which would lead unhealthy fiscal consolidation.
• Private ownership does not guarantee the efficiency (Rangarajan Committee 1993).
• Disinvestment exercise had been done by undervaluation of public assets and favoritism bidding, thereby, leading to loss of public exchequers.
• Private ownership might overlook developmental region disparity in order to cut the cost of operation.

Significance of the disinvestment

• Trade unionism and political interference often lead to halting of PSUs projects thereby hampering the efficiency in long run.
• Problem of disguised unemployment and outdated skill in PSUs employee are the major cause of inefficiency.
• Private prayers works out of Red Tapism bureaucratic mentality and focus on performance-driven culture and effectiveness (Disinvestment Commission 1996).
• More robust competitive bidding leads to competition in private sectors to participate in PSUs.
• Moreover, it ensuring that product service portfolio remains contemporary by developing/ acquiring technology.

-Source: The Hindu, Livemint

UK’s Recognition of the Palestine State

Context:

The UK state Department is reviewing options for possible recognition of the Palestine state. This suggests that the Palestine question is back at the centre of the political parleys of the major powers.

• Before the Israel-Hamas war of Oct 7, the Israel, its Arab partners and western allies thought they could ignore the Palestine question and go ahead building a new West Asia.
• However, the Hamas attacks and the subsequent Israeli invasion of Gaza show that finding a solution to the Palestine question is an imperative for peace and stability in a strife-stricken West Asia.
• One significant practical solution for peace in the region is a two-state solution — a viable, independent, sovereign Palestine state created with international recognition.

Relevance:

GS-II International Relations

Dimensions of the article:

1. Israel – Palestine Conflict
2. What is the Two-state Solution
3. The History of India’s stand in the Israel – Palestine conflict’
4. India’s stand in the Israel – Palestine conflict

Israel – Palestine Conflict

• The Israeli–Palestinian conflict is the ongoing struggle between Israelis and Palestinians that began in the mid-20th century.
• The origins to the conflict can be traced back to Jewish immigration and sectarian conflict in Mandatory Palestine between Jews and Arabs.
• Despite a long-term peace process and the general reconciliation of Israel with Egypt and Jordan, Israelis and Palestinians have failed to reach a final peace agreement.
• The key issues are mutual recognition and security, borders, water rights, control of Jerusalem, Israeli settlements, Palestinian freedom of movement, and Palestinian right of return.

What is the Two-state Solution

• The two-state solution to the Israeli–Palestinian conflict envisages an independent State of Palestine alongside the State of Israel, west of the Jordan River.
• The boundary between the two states is still subject to dispute and negotiation, with Palestinian and Arab leadership insisting on the “1967 borders”, which is not accepted by Israel.
• Many attempts have been made to broker a two-state solution, involving the creation of an independent Palestinian state alongside the State of Israel (after Israel’s establishment in 1948).
• In 2007, the majority of both Israelis and Palestinians, according to a number of polls, preferred the two-state solution over any other solution as a means of resolving the conflict.

The History of India’s stand in the Israel – Palestine conflict’

• In the early 1920s and amidst the Khilafat struggle, Indian nationalists made common cause with the Arabs of Palestine and adopted a position that was unsympathetic to the Jewish aspirations for a national home in Palestine.
• Mahatma Gandhi’s 1938 statement said “Palestine belongs to the Arabs in the same sense that England belongs to the English and France to the French”.
• Prime Minister Narasimha Rao hosted Arafat in 1992 for the first time and signalled India’s intention of abandoning its four decades old policy of non-relations with Israel.

India’s stand in the Israel – Palestine conflict:

• India has consistently voted in favour of those resolutions that promote the two-state solution with a Palestinian claim to East Jerusalem.
• Peace based on two-state solution is much needed in the face of international proposals that are in breach of these principles, and cannot be forged between Israel and a third country [U.S.], but can only come from Israel-Palestine talks, which India also supports.

-Source: The Hindu

Elephant Deaths

Context:

A Radio collared wild elephant that was captured from Mananthavady in Kerala dies at Bandipur in Karnataka. The jumbo was escaped from Bandipur forest in Karnataka, from where it had strayed into Kerala. It  entered human settlements and caused destruction to crops and created panic in the Mananthavady area in Wayanad, Kerala.

• The tusker was tranquillised to relocate but, it reportedly died after fainting as it reached Ramapura camp at Bandipur

Relevance:

GS II- Environment and Ecology

Dimensions of the article:

1. Asian Elephants
2. African Elephants
3. Threats
4. Human-Elephant Conflicts
5. What is Project Elephant?
6. Way Forwards to prevent Man – Animal Conflicts

Asian Elephants:

• The Asian elephant is divided into three subspecies: Indian, Sumatran, and Sri Lankan.
• The Indian subspecies has the largest territory and is home to the majority of the continent’s remaining elephants.
• The eldest and largest female elephant in the herd is in charge (known as the matriarch). The matriarch’s daughters and their children make up this herd.
• Elephants have the longest known gestation period of any mammal, extending up to 680 days (22 months).

Protection Status:

• IUCN Red List: Endangered.
• Wildlife (Protection) Act, 1972: Schedule I.
• CITES: Appendix I

African Elephants:

The Savanna (or bush) elephant and the Forest elephant are two subspecies of African elephants.

Protection Status:

IUCN Red List Status:

• African Savanna Elephant: Endangered.
• African Forest Elephant: Critically Endangered
• CITES: Appendix II

Threats:

• Escalation of poaching.
• Habitat loss.
• Human-elephant conflict.
• Mistreatment in captivity.
• Abuse due to elephant tourism.
• Rampant mining, Corridor destruction.

Human-Elephant Conflicts

• Elephant-human conflict is a result of habitat loss and fragmentation.
• When elephants and humans interact, there is conflict from crop raiding, injuries and deaths to humans caused by elephants, and elephants being killed by humans for reasons other than ivory and habitat degradation.
• Such encounters foster resentment against the elephants amongst the human population and this can result in elephants being viewed as a nuisance and killed.
• In addition to the direct conflicts between humans and elephants, elephants also suffer indirect costs like degradation of habitat and loss of food plants.

What is Project Elephant?

• Project Elephant is a Central Government sponsored scheme launched in February 1992.
• Through the Project Elephant scheme, the government helps in the protection and management of elephants to the states having wild elephants in a free-ranging population.
• It ensures the protection of elephant corridors and elephant habitat for the survival of the elephant population in the wild.
• This elephant conservation strategy is mainly implemented in 16 of 28 states or union territories in the country which includes Arunachal Pradesh, Assam, Andhra Pradesh, Chhattisgarh Jharkhand, Kerala, Karnataka, Meghalaya, Maharashtra, Nagaland, Orissa, Tamil Nadu, Uttaranchal, Uttar Pradesh, and West Bengal.
• The union government provides technical and financial help to these states to carry out and achieve the goals of project elephant. Not just that, assistance for the purpose of the census, training of field officials is also provided to ensure the mitigation and prevention of man-elephant conflict.

Way Forwards to prevent Man – Animal Conflicts

• Surveillance- Increased vigilance and protection of identified locations using hi-tech surveillance tools like sensors can help in tracking the movement of animals and warn the local population.
• Improvement of habitat- In-situ and ex-situ habitat conservation measures will help in securing animals their survival.
• Re-locating of animal habitats away from residential and commercial centres will serve to minimize animal-man conflict for illegal and self-interested motives
• Awareness Programmes- To create awareness among people and sensitize them about the Do’s and Don’ts in the forest areas to minimize the conflicts between man and animal.
• Training programs- Training to the police offices and local people should be provided for this purpose forest department should frame guidelines.
• Boundary walls- The construction of boundary walls and solar fences around the sensitive areas to prevent the wild animal attacks.
• Technical and financial support- For the development of necessary infrastructure and support facilities for immobilization of problematic animals through tranquilization, their translocation.
• Part of CSR- Safeguarding Tiger corridors, building eco-bridges and such conservation measures can be part of corporate social responsibility.   

Source: The Hindu