Daily Prelims Newsletter for upsc 25 Feb 2022

Daily Prelims Newsletter For UPSC
| RaghukulCS

25 Feb 2022-Friday

Table Of Contents

Table of Contents

Russia's Conflict with Ukraine

What exactly is the problem?

The Russian attack on Ukraine is now Europe’s largest attack by one state on another since WWII, and the first since the Balkan conflict in the 1990s.

What is the history of the Ukraine-Russia conflict?

Annexation of Crimea – During the cold war, Ukraine was one of the republics within the USSR, and it remained a strong ally of Russia until 2013.

While Russia was planning to sign an association agreement with the European Union in 2013, it vehemently opposed it, escalating tensions.

Russia then annexed “Crimea” (a Russian-speaking province of Ukraine) by force and declared its sovereignty over it, with the support of the people.

Naval skirmish in the Sea of Azov – Following the annexation of Crimea in 2014, Russia gained control of both sides of the Kerch Strait.

In May 2018, Russia opened a 12-mile-long bridge across the Kerch Strait, which also serves as the physical entry point to the Sea of Azov.

Russia denied Ukrainian ships’ attempt to travel from the Black Sea to the Sea of Azov.

However, Ukraine maintains that the Kerch Strait patrol was authorised by a bilateral agreement with Moscow, resulting in a naval skirmish.

Russian-backed insurgents – Russia has been chastised for its involvement in the eastern Ukrainian regions of Donetsk and Luhansk.

Furthermore, Russia recognised the two Donbass regions as independent republics, exacerbating the situation.

Belarus, a Russian ally, has been blamed for the migration crisis on the EU’s Polish border.

Earlier this month, Russia flew bombers near Poland’s borders.

Russian President Vladimir Putin dispatched ships to shadow US warships in the Black Sea.

Ukraine’s pro-Western stance- Following the fall of the Soviet Union, Ukraine voted for independence from Moscow.

Putin sees Ukraine as a fabricated creation carved out of Russia by enemies.

Ukraine has been described by Russia as a Western puppet.

NATO’s expansion- Russia was enraged by Ukraine’s request to join NATO, and it began stationing troops near the Ukrainian border.

In 2021, Moscow has deployed thousands of troops as well as tanks near Ukraine’s eastern border, and troops in Crimea have been mobilised.

Why can’t the world afford a war over Ukraine?

The global economy is now deeply intertwined, and the costs of a protracted conflict are astronomical.

The death and suffering that is already taking place in Ukraine.

The world is still reeling from the Covid-19 pandemic, which disproportionately impacted poor countries and people, and it cannot afford a conflict-induced slowdown.

What will be the economic situation in times of war?

Russia is the world’s second largest oil producer, posing inflationary risks.

Concerns about supply drove Brent crude above $100 per barrel for the first time in eight years.

Rising oil prices could speed up already rising inflation with India importing more than 80 percent of its oil requirement.

Rising oil prices will also impact the current account deficit, which is the difference between the values of goods and services imported and exported.

Sanctions on Russia by the West could impact its trade with the world and result in a rise in the prices of other commodities and products.

India imports the majority of its sunflower oil from Ukraine, and the two countries are also two of the world’s largest wheat producers.

Economic recovery- The rise in crude prices creates inflationary, fiscal, and external-sector risks.

Oil-related products account for more than 9% of the WPI basket, and experts estimate that a 10% increase in crude would result in a 0.9 percent increase in WPI inflation.

A higher oil import bill will have an impact on India’s external position, and it is also likely to increase LPG and kerosene subsidies, raising the overall subsidy bill.

Investors began withdrawing funds from emerging markets in order to park them in US treasuries and profit from the expected rise in bond yields.

FPIs withdrew a net Rs 6,448 crore from Indian equities on Thursday, causing the markets to fall.

Domestic Institutional Investors (DIIs) emerged as net investors as FPIs withdrew on Thursday.

According to experts, current geopolitical concerns will have no impact on long-term fundamentals, and investors should view the market decline as an opportunity to invest in mutual funds and high-quality blue-chip companies.

Equity investors- If DIIs are investing despite the market’s sharp decline, retail investors should not panic and should increase their investments if they are underweight in equities.

During times of market volatility, investors should avoid investing in small cap stocks and instead invest in flexi cap and multi cap funds, which invest across market capitalisations and produce superior returns when the market recovers.

Gold outlook- In times of uncertainty and inflation, gold emerges as the preferred asset class for investors.

It is worth noting that, at a time when equities are falling, gold has risen sharply, with the price of gold in Delhi rising 8.7 percent.

SEBI's Attempt to Regulate the Pricing of New Age Company Initial Public Offerings

Why in news?

The stock exchange regulator, SEBI, is attempting to improve the disclosures made by new age technology companies seeking to list on the primary market.

What are the problems with new age technology companies?

When it comes to primary markets, digital companies tend to prioritise growth over profitability, and as a result, they are mostly losing money.

Traditional accounting ratios mandated by the SEBI’s ICDR Regulations under “basis for issue price,” such as earnings per share, price to earnings ratio, and return on net worth of the company, are not applicable to these loss-making companies and do not assist investors in their decision-making process.

During the stock market correction, the shares of many newly listed new-age tech firms plummeted dramatically.

Investors who purchased shares in the IPOs of Zomato, Nykaa, and Paytm (One97 Communications) suffered significant losses as the companies’ shares plummeted.

Investors attribute these losses to irrational valuations, and SEBI is working to tighten IPO pricing rules for new-age technology companies.

What are the new SEBI rules for IPO pricing of shares in new-age technology firms?

The SEBI will establish a mechanism for transparent IPO pricing of new-age companies.

Following SEBI’s approval of these proposals, new-age companies will be asked to justify how they arrived at the pricing of their issue.

SEBI discovered that many companies filing offer documents for IPOs under the ICDR Regulations do not have a three-year track record of profits.

Many of these are new-age tech firms, and SEBI is looking for non-traditional information, such as trends in Key Performance Indicators in the past, to justify future profitability.

Furthermore, SEBI seeks information on the company’s previous fundraising rounds, disclosure of all investor presentations prior to the IPO, and a comparison of share sales prior to the IPO.

What recommendations can be made to improve the SEBI’s approach to mandating the disclosure of alternative metrics?

Metrics used by companies- To project growth while valuing their shares, new age digital companies use various metrics such as app downloads, website registrations and traffic, subscribers, and so on.

SEBI would have a difficult time listing all of these metrics for disclosure.

Key performance indicators are listed below. An easier option would be to request that these companies share the key performance indicators shared with investors during the pre-IPO funding rounds in the offer document.

By requiring these metrics to be certified by an independent chartered accountant, the numbers will gain credibility.

Look back period- A three-year look-back period appears sufficient for these disclosures because many of the companies are likely to be start-ups, and going back further than three years may also not present an accurate picture.

Global comparison- Because domestic listed companies in the digital technologies segment are scarce, it is critical that the issuer’s key performance indicators be compared with global peers listed overseas.

Being aware of the risk premium that such companies face in other markets will greatly benefit domestic investors.

Disclosures- The weighted average cost of acquisition of shares issued or allotted during the pre-IPO period can be disclosed in the prospectus, alerting investors to prior allotment to related parties or companies.

Creating a New Pathway for India's Food Systems

What is the issue?

The UN Food Systems Summit called for governments to take action in five areas in order to spur national and regional action to achieve the UN’s 17 Sustainable Development Goals (SDGs) through food system transformation.

What is the current state of India’s food system?

In terms of food grain production, India is now self-sufficient.

However, it has roughly a quarter of the world’s food insecure people who are unable to meet the caloric target of 2,400 kcal in rural settings and 2,100 kcal in urban settings.

Nutrition indicators have marginally improved over time, but macro- and micronutrient malnutrition persists, with over 32% of children under the age of five still underweight, according to the recently released fifth National Family Health Survey (2019-2021) phase 2 survey.

According to the Global Hunger Index 2021, India ranks 101st out of 116 countries.

The country faces the dual challenge of achieving nutrition security while also addressing declining land productivity, land degradation, and the loss of ecological services due to land use change.

What is the UN Food Systems Summit call for action?

The Summit urged the government to take action in five areas.

nourishes all people, promotes nature-based solutions, and promotes equitable livelihoods, decent work, and empowered communities

increase your resistance to vulnerabilities, shocks, and stresses

accelerate implementation methods

In the Indian context, such a transformation would entail improving interfaces between science, society, and policy, with a focus on sustainability, resource efficiency, and circularity.

What is the history of the combination of science and policy?

An active science-society-policy interface avoided the negative atmosphere of the 1960s, which occurred during a period of inability to feed a growing population.

The Green Revolution in India- In the 1960s, food security was achieved not only through science and technology and the development of improved high-yielding rice and wheat varieties, but also through policy measures and the development of institutional structure.

It included a comprehensive agricultural research and technology transfer system at the national, regional, state, and local levels.

Training and Visit System- The system, which was implemented with World Bank assistance in the 1970s, was critical to the science-society interface because it established a cadre of agriculture extension specialists at the local level.

What is the need for a shift away from a siloed agricultural policy?

Food systems are required for sustainability and better nutrition, and they must include a wide range of activities in food production, aggregation, processing, distribution, and consumption.

An important lesson from the Green Revolution era is that for science to be relevant to societal outcomes, it must be planned and carried out within the framework of the theory of change.

To address the escalating economic, environmental, and climate challenges, a good transition theory encompassing the spatial, social, and scientific dimensions, supported by policy incentives and mechanisms for achieving a sustainable, resilient, and food secure agriculture, is urgently required.

A change theory must refocus on sustainability, resource efficiency, and circularity as central pillars for transforming food systems.

The transition is required to correct the Green Revolution’s limitations and unintended consequences, such as the loss of indigenous landraces, soil nutrient depletion, groundwater stress, excessive use of agrochemicals and their residual presence in foods, and the income gap between large, marginal, and small farmers.

the distinction between irrigated and rain-fed areas

What is the way forward?

An agro-climatic approach to agricultural development is critical for long-term sustainability and improved nutrition.

Data compiled in the Indian Council of Agricultural Research and the erstwhile Planning Commission of India’s agro-climatic zones reports reveal enormous potential for crop diversification and precision farming.

The emphasis should be on increasing farmer competitiveness, supporting rural business growth, and incentivizing farmers to improve the environment.

Prioritizing research and investment is required to strengthen food supply chains, reinforce regional food systems, food processing, agricultural resilience, and sustainability.

The transition relies heavily on infrastructure and institutions that assist producers, agri-preneurs, and agri micro, small, and medium enterprises (MSMEs) in their production value chain.

This should be in line with policy priorities such as the Ministry of Agriculture’s National Policy Guidelines for the Promotion of Farmer Producer Organizations from 2012 and the Ministry of Environment, Forests, and Climate Change’s National Resource Efficiency Policy from 2019.

It would promote a resource-efficient and circular economy for food production, processing, and storage techniques by utilising renewable energy solutions and reducing supply chains and inputs.

It would also ensure the efficient use of byproducts, generating value while using fewer inputs and producing less waste for long-term and large-scale impact.

Other’s News

Nettur Petti

Nettur Petti, also known as aada petti, is a handcrafted, ornamental box made by traditional Kerala craftsmen.The Nettur petti is frequently embellished with brass, and its lid is shaped like the roof of a traditional Kerala house.Previously, the petti lid was made from a single piece of wood with no joints. The lid, however, is now made up of four pieces of wood that have been joined together.

Previously, the Nettur Petti was only available in teak or rosewood, but it is now also available in jack, wild jack, and mahogany. It was once used as a safe box to store valuables and ornaments by the royals, wealthy families, and aristocrats, as well as in temples.

Nettur petti gets its name from Nettur, a place that now exists in both the districts of Ernakulam and Kannur in Kerala, as well as the district of Tirunelveli in Tamil Nadu (Tamil Nadu).

Workplace Sexual Harassment Prevention

The first Workshop on the Prevention of Sexual Harassment at Workplace was held under the auspices of the Ministry of Law and Justice’s Department of Legal Affairs.

Vishaka policies – The issue of sexual harassment in the workplace gained traction after the Supreme Court issued guidelines in the case of Vishaka and Others vs. State of Rajasthan in 1997.

These guidelines provided a legal definition of sexual harassment, describing what types of behaviour constitute sexual harassment.

These legally binding guidelines place three major obligations on hiring institutions: prohibition, prevention, and redress.

The institutions must form a Complaints Committee to investigate allegations of sexual harassment of women in the workplace.

The Vishaka guidelines are expanded by the Sexual Harassment of Women at Workplace (Prevention, Prohibition, and Redressal) Act, 2013.

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