Current Affairs 29 June 2024

CONTENTS

1. Record High Cotton Consumption
2. SEBI’s New Directives and Regulations
3. Inclusion of Indian Government Bonds in JP Morgan Indices
4. Call for Poverty Line Review
5. Ethanol
6. Motor Neuron Diseases
7. Rhisotope Project

Record High Cotton Consumption

Context:

The data recently released by the Ministry of Textiles shows that cotton consumption by the textile industry from October 2023 to September 2024 is one of the highest seen in this decade.

Relevance:

GS III: Agriculture

Dimensions of the Article:

1. Key Facts About Cotton Cultivation
2. Issues in the Cotton Sector in India
3. Way Forward

Key Facts About Cotton Cultivation:

• Significance and Production:
  • Cotton is a crucial commercial crop in India, representing about 25% of the global cotton production.
  • Often referred to as “White-Gold” due to its economic value.
  • Approximately 67% of India’s cotton is cultivated in rain-fed regions, while 33% is grown in irrigated areas.
• Climatic and Soil Requirements:
  • Requires a hot and sunny climate with a long frost-free period.
  • Thrives in warm and humid conditions.
  • Grows well in various soil types: well-drained deep alluvial soils in the north, black clayey soils in the central region, and mixed black and red soils in the south.
  • Sensitive to waterlogging despite some tolerance to salinity.
• Types of Cotton:
  • Hybrid Cotton: Created by crossing two parent strains with different genetic traits, often occurring naturally through open-pollination.
  • Bt Cotton: A genetically modified variety that is pest-resistant.
• Global and National Production:
  • As of November 2023, India is the leading cotton producer globally, followed by China and the United States.
  • The Central Zone (Gujarat, Maharashtra, Madhya Pradesh) is the largest producing region for 2022-23.

Issues in the Cotton Sector in India:

• Pest Infestation:
  • Pink bollworm (Pectinophora gossypiella) has historically been a major pest, affecting yield and quality.
  • Continuous cultivation of Bt hybrids has led to resistance in PBW populations.
• Agricultural Challenges:
  • Unpredictable cotton production due to factors like limited irrigation, declining soil fertility, and erratic weather patterns.
  • Predominantly small-scale farmers with limited access to modern farming technologies.
  • Market constraints compel many farmers to sell their produce at low prices to intermediaries.

Way Forward:

• Integrated Pest Management (IPM):
  • Adoption of IPM strategies to reduce pesticide dependency through natural controls, trap crops, and beneficial insects.
• Enhancing Yield:
  • Promoting best practices like High-Density Planting Systems (HDPS) through initiatives like the Large-Scale Demonstrations Project under NFSM.
• Modernization and Efficiency:
  • Utilizing schemes like the Technology Upgradation Fund Scheme (TUFS) and Mega Textile Parks (MITRA) to upgrade ginning, spinning, and weaving facilities.
• Financial Security:
  • Implementing a revised MSP formula (1.5 times the cost of production) based on NITI Aayog recommendations to ensure fair returns for farmers.
• Market Improvements:
  • Establishing robust procurement systems, price stabilization funds, and standardized cotton grading mechanisms to ensure better prices for farmers.
  • Initiatives like “Kasturi Cotton” to create a distinct identity for Indian cotton, ensuring quality assurance and traceability to attract premium prices and build international trust.

-Source: The Hindu

SEBI’s New Directives and Regulations

Context:

The Securities and Exchange Board of India (SEBI), the market regulator, has instructed brokers and mutual funds to cease using unregulated financial influencers for marketing and advertising purposes. In its regulatory update, SEBI has also introduced a fixed price process for delisting frequently traded shares and established a delisting framework specifically for Investment and Holding Companies (IHC).

Relevance:

GS III: Indian Economy

Dimensions of the Article:

1. New Rules by SEBI
2. What are Finfluencers?

New Rules by SEBI

Regulations on Financial Influencers:

• Brokers and mutual funds are now prohibited from employing unregulated financial influencers for marketing and advertising purposes.
• Financial influencers focused on investor education are exempt from these restrictions.
• Regulated entities must ensure that associated individuals comply with SEBI’s conduct rules, including avoiding assurances of guaranteed returns.

Derivative Products Criteria:

• SEBI has introduced new criteria to determine eligible stocks for derivative products like futures and options.
• The total number of stocks eligible for derivative trading is expected to slightly increase.

Changes to Delisting Rules:

• The regulator has eased delisting processes, making it simpler for companies to exit stock exchanges.
• Currently, delisting is done via reverse book-building, primarily used by companies wanting to delist their shares from a stock exchange.
• The aim is to find the exit price at which shareholders are willing to sell their shares back to the company or promoters.
• Companies can now offer shareholders fixed prices for shares as an alternative to reverse book-building.
• The fixed price must be at least 15% above a floor price set by the regulator.
• Financial disincentives for managing directors and chief technology officers of exchanges and other market infrastructure institutions (MIIs) will be removed in case of technical glitches.

What are Finfluencers?

• Definition:
  • Finfluencers are individuals with public social media platforms sharing advice and personal experiences about money and stock investments.
  • Their content often includes budgeting, investing, property buying, cryptocurrency advice, and financial trend tracking.
• Popularity and Earnings:
  • Finfluencers have large subscriber counts, often surpassing leading broking firms.
  • Successful finfluencers can earn between Rs 15 lakh to Rs 30 lakh per month.
  • The low entry barriers in this field expose it to potential bad actors and questionable advice.
• Rise of Unregistered Advisors:
  • There’s been a significant increase in unregistered investment advisors giving unsolicited stock tips on social media.
  • This rise is linked to India’s low financial literacy rate of 27% and the influx of new investors during the Covid-19 pandemic.
  • The democratization of trading through new-age broking apps and affordable smartphones has driven first-time investors to seek guidance from finfluencers.
  • A lack of financial education and insufficient market updates from business news channels have created a space filled by finfluencers.

Concerns and Criticism:

• Reports indicate that some companies use social media platforms to boost share prices through finfluencers.
• Online claims suggest finfluencers receive Rs 7 to 9 lakh per endorsement to promote financial products.
• Key concerns include:
  • The educational or professional qualifications of finfluencers to offer financial advice.
  • The nature of monetary transactions between finfluencers and the entities they promote.
• Criticism:
  • Critics argue that finfluencers provide advice under the Freedom of Expression guaranteed by the Constitution.
  • Followers are not compelled to act on finfluencer recommendations.
  • The practice of celebrities endorsing products without expertise, while accepting payment, is highlighted as a parallel.
  • Critics believe regulating finfluencers would be improper in this context.

-Source: Indian Express

Inclusion of Indian Government Bonds in JP Morgan Indices

Context:

The inclusion of Indian Government Bonds (IGBs) in JP Morgan’s emerging markets bond indices will commence from Friday (June 28) and will be spread over 10 months until March 31, 2025. This move is estimated to bring nearly $20-25 billion into the country. While the inflow will aid in managing India’s external finances and bolster foreign exchange reserves and the rupee, the Reserve Bank of India (RBI) will need to deploy various measures to address potential inflationary pressures.

Relevance:

GS III: Indian Economy

Dimensions of the Article:

1. JP Morgan’s Announcement
2. Eligible Indian Government Bonds
3. Expected Inflows to India
4. Impact of Bond Inclusion
5. Concerns for RBI
6. Inclusion in Other Global Indexes

JP Morgan’s Announcement

• Initial Announcement: In September of last year, JP Morgan announced that it would include Indian Government Bonds (IGBs) in its emerging markets bond index starting from June 2024. This decision followed the 2023 index governance review.

India’s Weight in the Index

• Expected Weight: India is projected to attain a maximum weight of 10 percent in the GBI-EM Global Diversified Index (GBI-EM GD). This higher allocation is expected to attract global investors to allocate more funds towards Indian debt, with analysts predicting monthly inflows of $2-3 billion.

Eligible Indian Government Bonds

• Eligibility Criteria: JP Morgan mentioned that 23 IGBs meet the index eligibility criteria, with a combined notional value of approximately Rs 27 lakh crore ($330 billion).
• Specific Route: Only IGBs designated under the Fully Accessible Route (FAR) are index-eligible. Introduced by the RBI in March 2020, the FAR allows non-residents to invest in specified Government of India securities.
• Criteria for Inclusion: Eligible instruments must have a notional outstanding amount above $1 billion and at least 2.5 years remaining maturity. Initially, only FAR-designated IGBs maturing after December 31, 2026, will be considered for eligibility. New FAR-designated IGBs issued during the phase-in period will also be included.

Expected Inflows to India

• Projected Inflows: Economists estimate that India may receive $2 billion to $2.5 billion monthly during the 10-month inclusion period starting June 28, 2024. This would total between $20 billion and $25 billion.
• Current Inflows: An HSBC report noted that IGBs have already seen $10.4 billion in inflows since the announcement on September 21, 2023. A significant portion of inflows is expected to materialize with benchmark issues.

Impact of Bond Inclusion

• Market Impact: According to Madhavi Arora, Lead Economist at Emkay Global Financial Services, this move could lead to fresh active flows in the debt market, which remains underpenetrated on external financing.
• Benefits: This inclusion is expected to lower risk premiums, aid in financing India’s fiscal and current account deficit (CAD), and enhance the liquidity and ownership base of government securities (G-secs).
• Current Account Balance: India’s current account balance recorded a surplus of $5.7 billion, or 0.6 percent of GDP, in the January-March 2024 quarter, compared to a current account deficit of $1.3 billion, or 0.2 percent of GDP, a year earlier.
• Rating Agency View: Fitch Ratings suggested that the inclusion of Indian sovereign bonds in key emerging-market bond indexes could diversify the investor base for Indian government securities, potentially lowering funding costs and fostering the development of domestic capital markets. Direct positive effects on India’s credit profile are expected to be marginal in the near term.

Concerns for RBI

• Inflation Concerns: While higher inflows will strengthen the rupee, inflation could increase due to the RBI’s need to mop up dollars and release an equivalent amount in rupees.
• RBI’s Preparedness: RBI Governor Shaktikanta Das stated that the central bank has several instruments to manage flow surges, emphasizing that such situations have been effectively managed in the past.

Inclusion in Other Global Indexes

• Bloomberg’s Announcement: Following JP Morgan’s announcement, Bloomberg reported in March that Indian government bonds would be included in the Bloomberg Emerging Market (EM) Local Currency Government Index and related indices starting January 31, 2025.
• Weight in Bloomberg Index: Indian FAR bonds will initially be included with a weight of 10 percent of their full market value on January 31, 2025.
• Scope for Inclusion: The indices include the Bloomberg EM Local Currency Government Index, the Bloomberg EM Local Currency Government Index 10% Country Capped Index, and all related sub-indices.

-Source: Indian Express, Times of India

Call for Poverty Line Review

Context:

Recently, PM’s Economic Advisory Council (PMEAC) chief Bibek Debroy pitched for a review of India’s official poverty line and suggested analyzing inequality at the state level.

Relevance:

GS II: Polity and Governance

Dimensions of the Article:

1. What is the Status of Poverty in India?
2. What is the Status of Inequality in India?
3. Way Forward

What is the Status of Poverty in India?

Definition and Global Benchmark:

• Poverty refers to a condition where people lack financial resources and essentials for a minimum standard of living.
• In September 2022, the World Bank set the International Poverty line at USD 2.15 (using 2017 prices), considering anyone living on less than this amount as living in extreme poverty.

Poverty Estimation in India:

• Tendulkar Committee (2005):
  • Reassessed poverty estimation methods, reporting 41.8% rural, 25.7% urban, and 37.2% pan-India poverty rate for 2004-05.
• Rangarajan Committee (2012):
  • Defined poverty as living on less than Rs 47/day in urban areas and Rs 32/day in rural areas.
  • Estimated higher poverty levels (19% higher in rural areas and 41% higher in urban areas) compared to the Tendulkar Committee.

Need for a New Official Poverty Line in India:

• The current poverty line is based on outdated data and methods from the Tendulkar Committee (2005).
• Inconsistencies:
  • World Bank’s 2022 report: 56 million more poor in India in 2020 due to the pandemic.
  • Pew Research Institute (2021): Indian poor increased by 75 million.
  • India has not officially acknowledged the impact of the pandemic or economic shocks from demonetization (2016) and GST (2017).
• Accuracy Issues:
  • Lack of comprehensive consumption and inflation data.
  • Reliance on survey-based data rather than actual consumption metrics.
  • Issues in India’s statistical system and ineffective communication by the Ministry of Statistics and Programme Implementation (MoSPI).

What is the Status of Inequality in India?

• Inequality Definition:
  • Refers to the unequal distribution of income and opportunities among different groups in society.
• Measuring Inequality:
  • Gini Coefficient: Measures income, wealth, or consumption inequality within a nation. A Gini index of 0 represents perfect equality, while 1 implies perfect inequality.
  • According to the Household Consumption Expenditure Survey 2022-23, the Gini coefficient decreased from 0.283 to 0.266 in rural areas and from 0.363 to 0.314 in urban areas.

Way Forward

• Develop a comprehensive communication plan to keep stakeholders and the public informed about MoSPI’s activities.
• Conduct periodic reviews of data collection methods to ensure relevance and accuracy.
• Expand data collection to include emerging issues like digital economy metrics, environmental statistics, and social welfare indicators.
• Form consultative committees with academia, industry, and civil society representatives for feedback on statistical methods.
• Implement mechanisms for public feedback on MoSPI’s publications and activities to ensure continuous improvement.

-Source: The Hindu

Ethanol

Context:

Recently, India has achieved higher ethanol production from grains, particularly maize, surpassing that from sugar-based feedstock.

Relevance:

GS-III: Environment and Ecology, GS-III: Industry and Infrastructure

Dimensions of the Article:

1. What is Ethanol fuel?
2. What is ethanol blending?
3. Advantages of Ethanol Blending
4. Ethanol Blended Petrol Programme (EBP)
5. Roadmap for Ethanol Blending in India by 2025

What is Ethanol fuel?

• Ethanol fuel is ethyl alcohol, the same type of alcohol found in alcoholic beverages, used as fuel.
• It is most often used as a motor fuel, mainly as a biofuel additive for gasoline.
• Ethanol is commonly made from biomass such as corn or sugarcane.
• Bioethanol is a form of renewable energy that can be produced from agricultural feedstocks.
• It can be made from very common crops such as hemp, sugarcane, potato, cassava and corn.
• There has been considerable debate about how useful bioethanol is in replacing gasoline.
• Concerns about its production and use relate to increased food prices due to the large amount of arable land required for crops, as well as the energy and pollution balance of the whole cycle of ethanol production, especially from corn.

What is ethanol blending?

• Blending ethanol with petrol to burn less fossil fuel while running vehicles is called ethanol blending.
• Ethanol is an agricultural by-product which is mainly obtained from the processing of sugar from sugarcane, but also from other sources such as rice husk or maize.
• Currently, 10% of the petrol that powers your vehicle is ethanol.
• Though we have had an E10 — or 10% ethanol as policy for a while, it is only this year that we have achieved that proportion.
• India’s aim is to increase this ratio to 20% originally by 2030 but in 2021, when NITI Aayog put out the ethanol roadmap, that deadline was advanced to 2025.
• Ethanol blending will help bring down our share of oil imports (almost 85%) on which we spend a considerable amount of our precious foreign exchange.
• Secondly, more ethanol output would help increase farmers’ incomes.
• The NITI Aayog report of June 2021 says, “India’s net import of petroleum was 185 million tonnes at a cost of $55 billion in 2020-21,” and that a successful ethanol blending programme can save the country $4 billion per annum. 

What are first generation and second generation ethanols?

• With an aim to augment ethanol supplies, the government has allowed procurement of ethanol produced from other sources besides molasses — which is first generation ethanol or 1G.
• Other than molasses, ethanol can be extracted from materials such as rice straw, wheat straw, corn cobs, corn stover, bagasse, bamboo and woody biomass, which are second generation ethanol sources or 2G.

Advantages of Ethanol Blending

• Use of ethanol-blended petrol decreases emissions such as carbon monoxide (CO), hydrocarbons (HC) and nitrogen oxides (NOx).
• The unregulated carbonyl emissions, such as acetaldehyde emission were, however, higher with E10 and E20 compared to normal petrol. However, these emissions were relatively lower.
• Increased use of ethanol can help reduce the oil import bill. India’s net import cost stands at USD 551 billion in 2020-21. The E20 program can save the country USD 4 billion (Rs 30,000 crore) per annum.
• The oil companies procure ethanol from farmers that benefits the sugarcane farmers.
• Further, the government plans to encourage use of water-saving crops, such as maize, to produce ethanol, and production of ethanol from non-food feedstock.

Ethanol Blended Petrol Programme (EBP)

• Ethanol Blended Petrol (EBP) programme was launched in 2003- and this initiative is pursued aggressively in the last 4 to 5 years to reduce import dependence of crude oil as well as mitigate environmental pollution.
• The Ethanol Blending Programme (EBP) seeks to achieve blending of Ethanol with motor sprit with a view to reducing pollution, conserve foreign exchange and increase value addition in the sugar industry enabling them to clear cane price arrears of farmers.
• Although the Government of India decided to launch EBP programme in 2003 for supply of 5% ethanol blended Petrol, it later scaled up blending targets from 5% to 10% under the Ethanol Blending Programme (EBP).
• The Government of India has also advanced the target for 20% ethanol blending in petrol (also called E20) to 2025 from 2030.
• Currently, 8.5% of ethanol is blended with petrol in India.

Roadmap for Ethanol Blending in India by 2025

• The central government has released an expert committee report on the Roadmap for Ethanol Blending in India by 2025 that proposes a gradual rollout of ethanol-blended fuel to achieve E10 fuel supply by April 2022 and phased rollout of E20 from April 2023 to April 2025.
• The Ministry of Petroleum & Natural Gas (MoP&NG) had instituted an Expert Group to study the issues such as pricing of ethanol, matching pace of the automobile industry to manufacture vehicles with new engines with the supply of ethanol, pricing of such vehicles, fuel efficiency of different engines etc.

How have other countries fared?

• Though the U.S., China, Canada and Brazil all have ethanol blending programmes, as a developing country, Brazil stands out.
•  It had legislated that the ethanol content in petrol should be in the 18-27.5% range, and it finally touched the 27% target in 2021.

-Source: Live Mint

Motor Neuron Diseases

Context:

The annual conference on MND ‘Awareness, Care, and Management’ held at Nimhans, Bengaluru, stated that symptomatic and supportive treatments help manage the condition better.

Relevance:

GS II: Health

Motor Neuron Diseases (MNDs):

• Definition:
  • MNDs are a group of progressive neurological disorders that destroy motor neurons, the cells that control skeletal muscle activity such as walking, breathing, speaking, and swallowing.
  • Motor neurons are found in the brain and spinal cord and they help control muscle movements.
• Age of Onset:
  • MND can appear at any age, but symptoms usually appear after the age of 50 years.
• Symptoms:
  • Early signs include weakness and slurred speech, eventually leading to paralysis.
  • It affects more males than females.
• Causes:
  • The exact cause is unknown. It is believed to be caused by a combination of environmental, lifestyle, and genetic factors.
  • Most cases develop without an obvious cause.
  • Around 1 in 10 cases is ‘familial’, meaning the condition is inherited due to a genetic mutation or an error in the gene.
• Types of Diseases Included:
  • Amyotrophic lateral sclerosis (ALS)
  • Progressive bulbar palsy
  • Primary lateral sclerosis
  • Progressive muscular atrophy
  • Spinal muscular atrophy
  • Kennedy’s disease
  • Post-polio syndrome
• Most Common Type:
  • Amyotrophic Lateral Sclerosis (ALS):
    • Affects both upper and lower motor neurons.
    • Impacts muscles of the arms, legs, mouth, and respiratory system.
    • On average, people with ALS live for 3–5 years after diagnosis, but with supportive care, some live for 10 years or longer.
• Treatment:
  • There is no cure or standard treatment for MNDs.
  • Symptomatic and supportive treatment can help people be more comfortable while maintaining their quality of life.

-Source: The Hindu

Rhisotope Project

Context:

Recently, South African scientists injected radioactive material into live rhinoceros horns under the Rhisotope Project to curb poaching.

Relevance:

Facts for Prelims

About Rhisotope Project:

• Initiation and Location:
  • Launched in 2021 in South Africa.
• Objective:
  • To enhance the detectability of rhinoceros horns at border posts and make them unusable for human consumption.
• Methodology:
  • Insertion of two small radioactive chips into the horns of 20 rhinos.
  • Use of low-dose radioactive material designed to be detectable by radiation sensors at international borders, ensuring no harm to the animals or the environment.
  • Spraying of 11,000 microdots on each treated horn for further identification.
• Effectiveness:
  • The radioactive material is expected to last for five years, providing a more cost-effective solution compared to dehorning every 18 months.
  • Scientists will conduct follow-up blood samples to ensure the rhinoceroses are adequately protected.
• Context:
  • South Africa hosts the majority of the world’s rhinos and is facing a severe poaching crisis fueled by demand from Asia, where rhino horns are used in traditional medicine.

-Source: The Hindu