Aug 22 2024

The Ministry of Finance has finalised the guidelines and  funds under the Scheme for Special Assistance to States for Capital Investment 2024-25 and circulated them to the states.

Special Assistance to States Finalized

  • Rs 10,000 crore has been finalised for implementing land-related reforms in rural and urban areas.
  • Additional Funds: 
    • Farmers’ Registry: Rs 5,000 crore has been finalised for creating a Farmers Registry  with details of six crore farmers and their lands during the financial year 2024-25 (FY25)
    • Working Women’s Hostel: Rs. 5,000 crore has been finalised  for the construction of working women’s hostels. 
      • The State Government will provide land for the hostels either  free of cost, or the cost of acquiring the land will be borne by them
      • Aim: To facilitate higher participation of women in the workforce through the establishment of working women’s hostels in collaboration with industry, and setting up crèches.
      • Public-Private Partnership (PPP) model: The operation and maintenance of the hostels will be managed by a private party while the ownership of the hostel would rest with the state government
      • State Wise Allotment: Uttar Pradesh will receive the highest amount of Rs 382 crore, followed by Madhya Pradesh (Rs 284 crore) and Assam (Rs 226 crore).
    • Rs 1,000 crore for the development of the National Capital Region (NCR): It will be divided equally among the three states of Haryana, Uttar Pradesh, and Rajasthan.
    • Rs 15,000 crore for states’ shares of Centrally Sponsored Schemes, including Urban and Rural Infrastructure Projects
    • Rs 15,000 crore for stimulating industrial growth
    • Rs 4,000 crore in incentives for Implementing the SNA Sparsh model for just-in-time release of funds under Centrally Sponsored Schemes
    • Rs 25,000 crore as incentives for achieving targets fixed for capital expenditure for 2024-25.

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About The Scheme for Special Assistance to States for Capital Investment 2024-25

  • The scheme envisages special assistance being provided to the States in the form of a 50-year interest-free loan.
    • For the Fiscal Year 2023-24: The Budget Estimate for the scheme was ₹1.30 lakh crore which was later revised to ₹1.05 crore. The scheme was launched for the first time in fiscal year 2020-21 in the wake of COVID-19 Pandemic
  • Principle: The scheme is based on the principle of Multiplier Effect, where it is believed that every  ₹1 spent as capital expenditure will result in an impact worth ₹3. 
  • Capital investment Sectors: Projects in Health, education, irrigation, water supply, power, roads, bridges and railways  are approved.
  • Fiscal Year 2024-25: 
    • Budget:  ₹1.30 lakh crore has been allotted for the year 2024-25
    • Mandatory Conditions: 
      • Correct translation to local language about names and features of centrally sponsored schemes
      • Implementing the SNA Sparsh model: Deposit of central share of interest earned in SNA accounts till March 31 in the Consolidated Fund of India.
    • Proposed Land Reforms in Rural Areas: States have to include the,

Scheme Part

Objective

Part I States have been allocated in proportion to their share of central taxes & duties as per the award of the 15th Finance Commission.

  • ₹55,000 has been earmarked under this componet
Part-II Incentivizing scrapping of government vehicles by providing incentives to States.

  • ₹5,000 crore is allotted. 
Part-III Encouraging reforms in urban planning.

  • ₹5,000 crore has been provided for the ‘Development of iconic Tourist Centres’.
Part-IV Promoting reforms in urban finance.
Part-V Increasing housing stock for police personnel in urban areas.
Part-VI Promoting national integration and the “Make in India” concept through the construction of Unity Malls in each State.
Part-VII Providing financial assistance for the establishment of libraries with digital infrastructure at the Panchayat and Ward levels.
      • Assignment of a Unique Land Parcel Identification Number (ULPIN) or Bhu-Aadhaar for all lands
      • Digitisation of Cadastral Maps
      • Survey of map sub-divisions according to current ownership
      • Establishment of a land registry
    • Proposed Land Reforms In Urban Areas: 
      • Fiscal incentives will be provided for the digitization of land records using GIS mapping 
      • Establishment of an information technology-based system for property record administration, updating, and tax administration.

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Capital Expenditure In India

  • Capital Expenditure is defined as the governmental (central, state, local) spending on the development of physical assets like buildings, machinery, equipment, healthcare facilities, educational institutions, etc. 
    • It also covers the costs incurred by the government to purchase fixed assets like land and investments that will yield earnings or dividends in the future. 
    • Capex involves funds spent on the following:
      • Purchasing fixed and intangible assets
      • Upgrade an existing asset
      • Repairing an existing asset
      • Repayment of loans
  • Capex Loans to States: They are distributed to the states in two major categories,
    • Untied: The untied loans would be released to states in two installments under the Scheme for Special Assistance to States for Capital Investment 2024-25 
      • The first instalment of 66% of the approved amount on meeting the mandatory conditions and the second instalment of 34% will be released on utilization of at least 75% of the amount released in the first installment.
    • Tied: It is subject to social reforms and specific development expenditures.
      •  Example: The Funds provided under specific Centrally Sponsored Schemes and other Schemes. 
  • Fiscal Year 2023-24: The Centre had spent 85 per cent of the revised capital expenditure estimate of Rs 9.5 lakh crore.
    • States: As per the provisional accounts of 25 states, They achieved 84 per cent of the budgeted capital expenditure
      • Special Assistance to States These states had budgeted a capital expenditure (capex) programme of Rs 8.37 trillion for FY24. The provisional amount spent was Rs 7.02 trillion.
      • Lowest capex absorption States: These  included Nagaland, Chhattisgarh, Punjab, and Mizoram.
      • Exception: Four states including Uttar Pradesh, Telangana, Bihar, and Sikkim spent more than the targeted amount
  • Fiscal Year 2024-25: Centre’s Capital Expenditure Target were raised by 16.9 per cent for financial year 2024-25 (FY25) to Rs 11.1 trillion over the revised estimates for FY24 In the interim budget.

Factors Influencing India’s States’ Capex Spending

  • Public Sector Led: The public sector leads in Capex Expenditure with national and state government spending in double digits and in a wide range of areas
  • Underperforming Private sector:  Private Investments has increased slowly, in single digits, and that too in  concentrated areas like in infrastructure, hospitality and retail, and is yet to surge into other segments.
  • Elections: Indian states spend the most on capex when their is an election approaching
    • Example:  Telangana has met 90 percent of its FY24 capex target. The state held elections to its legislative assembly in November last year

Need For Capital Expenditure

  • Planning and Development: it shows the expenditure is planning and development-linked expenditure which may have a positive effect on labor engagement, build up or upgrade infrastructure, and improve the ability to generate more revenue through asset creation.
  • Investment Environment:  States with healthy capex report cards often host a positive investment environment for the private sector.
  • Long Term growth: Capex creates Multiplier Effect thus has a greater impact on long-term growth and productivity than revenue expenditure
  • Increase Productivity: Allocating capital for new projects, expanding ventures, or improving technology and infrastructure promotes economic growth by increasing productivity, demand for related industries, and creating job opportunities.

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The Karnataka High Court has paused “precipitative action” based on the Governor’s sanction to investigate the MUDA SCAM against the Chief Minister  until August 29, the next date of hearing.

Governor Sanctions Corruption Probe Against Karnataka CM Siddaramaiah Under PCA and BNSS

  • The Karnataka Governor has allowed private investigations against Chief Minister Siddaramaiah on complaints of corruption  under Section 17A of the Prevention of Corruption Act, 1988 (PCA) and Section 218 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS)
    • Section 17A of the Prevention of Corruption Act, 1988 (PCA): As per a 2018 amendment, an inquiry against a public servant for crimes committed while in office can only be proceeded after sanction has been given for investigation.
      • The High Court of  Karnataka in an order stated that sanction was needed as per Section 17A of the PCA by the police after registering an FIR and not at the stage  for filing a private complaint.
    • Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS):  Similar to Section 197 of the previous Code of Criminal Procedure Act, Section 218 of the BNSS is relevant after a chargesheet is filed by the investigating agency. 
  • Grounds:  The Governor granted sanction to the probe on the grounds of “Conflict of Interest” as the cabinet is the alter ego of the Chief Minister who is the accused, thus would never give sanction to the probe.
  • Question Before the Court: The court has to decide in the MUDA scam case if the Governor is bound by the aid and advice of the Council of Ministers without discretion to withdraw the show-cause notice or if the facts of the case hold significant weightage  to justify the Governor’s decision and go ahead with the trial.

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About The MUDA Scam Case

  • The Chief Minister of Karnataka is accused of corruption alleging that the CM’s wife was an illegal beneficiary of the MUDA’s “50:50” Scheme (granting 50% of land in a developed locality in exchange for 50% of the land illegally acquired by MUDA) 
    • The Scheme is being devised by the Mysore Urban Development Authority (MUDA) in 2020 to resolve cases in which the authority had illegally acquired land without informing owners about the acquisition. 
    • The CM’s wife was allotted 14 housing sites in Mysuru in exchange for 3.16 acres of land allegedly acquired illegally by a local authority in the city.

Can the Governor Sanction an Investigation against Council Of Minister Suo Moto

  • Constitutional Prescription: As per Article 163 of the Constitution of India, A Governor in the exercise of his functions, except when he is required to exercise his functions in his discretion is bound by the aid and advice of the Council of Ministers with the Chief Minister at the head.
  • Chief Minister’s Arguement: 
    • The Governor is bound by the resolution sent by the Council of Ministers on August 1 urging him to withdraw the show-cause notice issued.
    • The Governor instead sanctioned the private investigation without justifying why the allegations require an investigation or a trial.
  • Prosecution Arguement: The prosecution has relied on a 2004 Supreme Court precedent in Madhya Pradesh Special Police Establishment v. State of Madhya Pradesh.
    •  In this case, the Governor granted sanction to investigate two ministers in the MP government after the Council of Ministers had rejected the same.
    • Supreme Court Judgement: The Supreme Court has decided in the favour of the Governor’s Sanction based on the inquiry report from the Lokayukta for MP and termed the councils rejection of sanction as irrational.

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The government has launched a pilot project to rename 60 Fair Price Shops (FPS), or ration shops, as ‘Jan Poshan Kendra’ across Gujarat, Rajasthan, Telangana, and Uttar Pradesh.

About Jan Poshan Kendras

Jan Poshan Kendras

  • The initiative is designed to address the demands of ration dealers by offering them new income opportunities through these renamed shops.
  • Objective: To modernize the shops and ensure affordable, quality nutrition for all, supporting the broader goal of community empowerment.
  • These FPS will now provide  food products to consumers while also helping FPS dealers earn more income.
  • These Kendras will stock 50% nutrition-rich food items and keep some space reserved for other household essentials.
    • It will help in  offering customers more diverse product options.

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New Digital Tools

  • The government also launched new tools, including:
    • FPS Sahay App: Provides dealers with paperless financing options.
    • Mera Ration App 2.0: Offers consumers easy access to information about the public distribution system.
    • Quality Systems: New guidelines and accreditation of laboratories to ensure food quality and transparency.

Benefits of the Jan Poshan Kendra Initiative

  • Enhanced Income for Ration Dealers:
    • More Products: Jan Poshan Kendras will offer a wider variety of products, including nutritious foods and household items, boosting dealer sales and income.
    • New Income Opportunities: The Kendras will help dealers explore new business options and earn extra income.
    • Financial and Training Support: Dealers will get financial help and training to run their businesses better.
  • Improved Nutrition for Consumers:
    • Better Food Access: The Kendras will provide more nutritious food options for consumers.
    • Affordable Prices: Ration shops will continue offering healthy food at low prices.
    • Stronger Food Security System:
    • Efficient Operations: Digitization will make the system more efficient, transparent, and reduce wastage.
    • Quality Control: Strict quality measures will ensure high-quality products for consumers.
    • Addressing Malnutrition: Increased access to nutritious food will help fight malnutrition.
  • Empowerment of Local Businesses:
    • Economic Growth: The initiative will create new business opportunities and support local economic development.
    • Community Development: Jan Poshan Kendras will act as centers for community growth.
    • Support for Dealers: SIDBI will offer easy credit, and the Ministry of Skill Development will provide entrepreneurship training to improve dealer skills.

Challenges of the Jan Poshan Kendra Initiative

  • Implementation Challenges:
    • Infrastructure: Building storage, transportation, and supply chain systems for more products, especially in rural areas, can be tough.
    • Training: Dealers need extensive training on product knowledge, inventory, and customer service, which requires significant resources.
    • Quality Control: Keeping product quality consistent across a wide range of items and suppliers is challenging.
  • Regulatory Challenges:
    • Compliance: Adhering to regulatory requirements for stocking and selling a wider range of products can be complex and time-consuming for dealers.
    • Corruption: Ensuring transparency and preventing corruption in distribution and pricing is crucial for public trust.
  • Financial Sustainability:
    • Profitability: Ensuring that dealers can generate sufficient profits from selling additional products to cover the costs of storage, transportation, and other expenses is crucial for the sustainability of the initiative.
    • Government Support: Financial help or subsidies from the government might be needed to help dealers manage expenses and stay profitable.

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Public Distribution System

  • It is a government sponsored shop. 
    • Through this system, essential goods such as wheat & rice are distributed at an affordable price to card holders. 
  • Nodal Ministry:  Ministry of Consumer Affairs, Food and Public Distribution 
  • Major commodities: wheat, rice, sugar and kerosene 
  • It is operated jointly by the central, state and UTs governments. 
    • Central government manages procurement, storage, transportation and bulk allocation of food grain through Food Corporation of India (FCI). 

 

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Recently, the news of a two-year-old child from Meghalaya testing positive for polio has raised concern. 

Vaccine Derived Polio Virus

The Union Ministry said the case was vaccine-derived and there was no need to be alarmist about it. This is not a case of wild poliovirus, but an infection that presents in some people with low immunity.

About Vaccine derived Polio Virus (VDPV)

It is a rare condition that occurs when the weakened (also called attenuated) strain of poliovirus used in the oral polio vaccine (OPV) mutates and regains the ability to cause paralysis.

Polio

  • Spread Through: In rare cases, the virus can mutate enough to cause the disease again, and circulate in areas where either immunization is low, or where immunocompromised reside, or with poor sanitation and hygiene. 
  • Classification: According to the World Health Organization (WHO), the virus is classified as “circulating” (cVDPV2) if it is detected in at least two different sources and at least two months apart, that are genetically linked, showing evidence of transmission in the community.
  • Vaccines Differentiation: More than 90% of VDPV outbreaks are due to the type 2 virus present in oral polio vaccines. 
    • Vaccine-associated Paralytic Poliomyelitis (VAPP) constitutes 40% of cases caused by the type 2 oral polio vaccine. 
    • Many cases of VAPP from type 3 virus too occur in countries using OPV.

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About Polio

Polioviruses are enteroviruses that are transmitted primarily by the faecal-oral route. 

  • Enterovirus is a highly contagious single-stranded RNA virus that primarily infects the intestines and is associated with several human diseases.
  • Types of Wild Poliovirus (WPV): Type 1, Type 2 and Type 3. Symptomatically, all these strains are identical.
    • Type 2 Wild Poliovirus: It was declared eradicated in September 2015. 
    • The last detection was in India, 1999. 
    • Type 3 Wild Poliovirus: On World Polio Day, October 24, 2019, the WHO declared that WPV3 has been eradicated worldwide. The last case of WPV3 was detected in northern Nigeria in 2012.
    • Only Type 1 wild poliovirus remains.
  • Impact On: It can invade the central nervous system and as it multiplies, destroy the nerve cells that activate muscles, causing irreversible paralysis in hours
    • Polio typically affects children aged 5 years or younger
    • It can result in muscle weakness, permanent disability, and even death.
    • According to the India Polio Learning Exchange (along with UNICEF):  Of those paralyzed:  5-10% die when their breathing muscles become immobilized.
  • No Cure But Vaccines: There is no cure for polio, but there are safe, effective vaccines which, given multiple times, protect a child for life.

About Polio Vaccines

The first successful polio vaccine for poliovirus was made by Jonas Salk in the early 1950s. 

  • Method Used: He grew it using a method devised by microbiologist John F. Enders and his team in 1948 to cultivate the virus in non-nerve cells. 
    • Salk inactivated the virus using formaldehyde and injected it into the muscles of test subjects. This inactivated polio vaccine (IPV) induced systemic immunity (relating to blood, brain, and all other organ systems) in the subjects.
    • About Inactivated Poliovirus Vaccine (IPV):
      • IPV protects people against all three types of poliovirus
      • IPV does not contain live virus and cannot cause disease.
      • It protects people from polio disease but does not stop transmission of the virus.
  • Achievement by Albert Sabin: He developed another vaccine that contained live polio strains weakened by growing them serially in macaque cells, making them unfit for human infection. 
    • Since it contained the live virus, it had to be administered through its natural mode of infection and was therefore administered orally. This was the Oral Polio Vaccine (OPV).
  • Comparison between IPV and OPV:
    • Preference: OPV is usually preferred over IPV because of its ease of administration and is inexpensive. 
    • Potential: The weakened virus in OPV can occasionally revert, causing the disease it is meant to prevent. 
      • IPV is a less potent vaccine, but contains inactivated virus particles and hence no risk of causing vaccine-associated paralytic poliomyelitis (VAPP).
        • VAPP is a rare, adverse reaction to OPV. IPV is comparatively tougher to manufacture too as it contains chemically inactivated viruses.

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Rise in Cases

  • In India: The Indian government does not count VAPP as polio since these cases are sporadic and pose little or no threat to others.
    • However, as per a 2014 report in the International Journal of Infectious Diseases, the number of VAPP-compatible cases showed an increasing trend from 1998 to 2013.
  • Around the World: After the global switch from trivalent (containing all three variants) to bivalent (type 1 and type 3) oral polio vaccine in 2016 to prevent any more type 2 vaccine-derived poliovirus, the number of vaccine-derived type 2 poliovirus outbreaks have only increased sharply.
  • WHO Recommendation: The WHO authorised a genetically modified type 2 novel oral polio vaccine under Emergency Use Listing in November 2020.
    • It was first used in the field in March 2021, and received WHO prequalification in December 2023. 
    • The vaccine is less likely to revert to neurovirulence unlike the Sabin vaccine and therefore cause less type 2 VDPV.

 

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The much delayed India’s Census (an annual decadal exercise) is likely to kick off in September 2024 as per media reports.

Census

  • The census was due in 2021 and was delayed by at least three years due to the COVID-19 pandemic.
  • The census will take at least 18 months to be carried out and the Union government hopes to release the findings by March 2026.

New Expected Features in the Census

  • The new census is expected to have some features that will distinguish it from the older ones.
    • Digital Census: it will be the First digital Census exercise using mobile phones and applications with self-enumeration options.
    • Inclusive:  The information on families headed by a member of the Transgender Community and family members will be gathered.
      • Previously, there was a separate column for men and women only
    • Inclusion of caste categories: There are talks about including the ‘Other Backward Class’ category as well besides ‘Scheduled Caste’ and ‘Scheduled Tribe’

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About Census

  • The Indian Census is the largest administrative and statistical exercise in the world which forms the most credible source of information on the country’s demographic, economic, social, and cultural profile at a specific point in time 
  • Source of Information: Demography (Population characteristics), Economic Activity, Literacy and Education, Housing & Household Amenities, Urbanization, Fertility and Mortality, Scheduled Castes and Scheduled Tribes, Language, Religion, Migration, Disability etc.
  • Conducted by: The decennial Census is conducted by the Office of the Registrar General and Census Commissioner, Ministry of Home Affairs.
    • Until 1951, the Census Organisation was set up on an ad-hoc basis for each Census.
  • Legal Status:
    • Constitutional Status: The population census is a Union subject under Article 246 of the  Constitution, listed at serial number 69 of the seventh schedule of the constitution.
    • The Census of India Act of 1948: The Act provides the legal framework for carrying out the Census
      • The Constitution nor the Act provides the frequency and periodicity to conduct the census exercise. There is, therefore, no Constitutional or legal requirement that a Census has to be done every 10 years. 
  • Origin: The Census exercise was carried out for the first time in a synchronised manner in 1881 after a trail exercise in 1872 under Viceroy Lord Mayo
    • Since the the Census exercise has been conducted every 10 years till the 2021 census was postponed ( first time in the 150-year history of India’s census operations)
  • Phases:  The Census is essentially a two-step process involving a house-listing and numbering exercise phase followed by the actual population enumeration phase. 
    • Houselisting and Housing Census: It systematically list out all the structures, houses and households throughout the country for preparation of a sound frame for conduct of the Population Enumeration.
      • In addition to collecting data on characteristics of the house, information on availability of certain amenities and assets to the households were also collected in the first phase. 
    • Population Enumeration: It is conducted in the 2nd whereby every person residing within India’s territory are enumerated and her/his individual particulars are collected on various socio-economic and demographic parameters like age, sex, literacy, religion, SC/ST status, disability, languages known, economic activity status and migration etc.
  • Process Followed: 
    • Questions and Forms: Census data is taken by visiting each and every household and gathering particulars by asking questions and filling up census forms.
    • Confidential Information: The information collected during the process is confidential. In fact, this information is not even accessible to the courts of law.
    • Transportation to Data Processing Centers: The forms are transported to data processing centres located at 15 cities across the country.
    • Intelligent Character Recognition Software (ICR): This technology came in India in Census 2001 and has become the benchmark for censuses all around the globe.
    • Scanning and Extraction of Data: This involves the scanning of the census forms at high speed and extracting the data automatically using computer software.

Need for Timely Census

  • Credibility: A comprehensive and detailed government data is critical since alternative sources of data are either unavailable or unreliable.
  • Wide Usage: A census data is being used for a wide range of activities like, it is used by governments for urban planning and deciding federal redistribution, while businesses use the data for information on consumer characteristics and for demand forecasting
  • Assess changing trends in population: The Census Data is used by researchers and demographers to assess population growth and trends to develop estimates
  • For Public Governance: Governments use it for administration, planning, and legislation, as well as management and assessment of numerous programmes.
  • Delimitation/reservation of Constituencies Exercise: Parliamentary/Assembly/Panchayats and other Local Bodies Delimitation is based on population data gathered during the Census. 

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Researchers from ICAR-National Rice Research Institute and Pennsylvania State University developed a smaller alternative called ISDra2TnpB.

About CRISPR

  • CRISPR is a gene-editing tool that allows scientists to make precise changes in an organism’s genome to introduce beneficial traits or remove unwanted ones. 
  • This technology is especially good for agriculture, where it can increase crop yields and resistance to disease and climate change.
  • Challenges in Plant Gene Editing
    • Size Issue: CRISPR uses proteins like Cas9 or Cas12 to target DNA, but these proteins are too large to effectively work in plant cells, limiting their use in plant genome editing.

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Plant Genome Editing Tools

What is ISDra2TnpB?

  • ISDra2TnpB is a specialized protein made up of around 400 amino acid units.
    • It comes from the bacterium Deinococcus radiodurans. 
  • It can precisely cut DNA, which makes it useful for editing genes.
  • It is a smaller alternative to Cas9 and Cas12, commonly used in CRISPR-based genome editing.
    • ISDra2TnpB is less than half the size of Cas9 or Cas12, making it better suited for plant cells.
  • DNA Structure and Role of Nucleotides
    • The genome consists of two DNA strands held together by nucleotides. 
      • Each nucleotide has three parts, two of which are common, and the third is one of four options: adenine (A), thymine (T), cytosine (C), or guanine (G). 
        • The sequence of these nucleotides determines the genetic code.
    • The new system was tested in both rice (a monocot) and Arabidopsis (a dicot), showing a 33.58% editing efficiency in plants where Cas9 and Cas12 were ineffective.
      • It offers a way to address the size constraints of current plant genome editing tools.

Key Features of ISDra2TnpB

  • RNA-Guided: It uses RNA to guide the cutting of DNA at exact spots.

“Jumping genes”

  • These are DNA sequences that move within genomes.
  • Function: Carry only the information needed to move, not to benefit the organism.
  • Negative Impact: Can disrupt or alter important genes.
  • Human Genome: About 30% of our DNA consists of transposons or related sequences.
  • Positive Potential: May contribute to genetic diversity or evolution.
  • Part of TnpB Family: ISDra2TnpB is a member of the TnpB protein family, which is linked to transposons, also known as “jumping genes” that can move within the genome.
  • Potential in Medicine: It corrects faulty genes in organisms which makes it a powerful tool for future medical treatments.

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How does TnpB work?

  • ISDra2TnpB uses a piece of RNA as a guide to find specific DNA sequences. 
  • The RNA helps the protein identify the right spot on the DNA where it needs to make a cut. 
    • This guide RNA comes from a specific part of the transposon called the right element (RE).

Benefits of TnpB-Based Gene-Editing Tools

  • Enhanced Crop Resilience and Yield
    • Disease resistance: TnpB can be used to edit genes that make plants susceptible to diseases, improving their overall health and productivity.
    • Pest resistance: By targeting genes related to pest attraction or vulnerability, TnpB can help create crops that are less susceptible to insect damage.
  • Nutritional Improvement
    • Reduced anti-nutrients: TnpB can be used to remove or reduce anti-nutrients in food crops, making them more nutritious and digestible.
    • Increased nutrient content: TnpB can be used to enhance the levels of essential nutrients, such as vitamins and minerals, in crops.
  • Crop Quality and Safety
    • Improved taste: TnpB can be used to modify genes that affect the flavor and texture of crops, making them more appealing to consumers.
    • Reduced allergens: TnpB can help eliminate or reduce allergens in food crops, making them safer for people with allergies.

Overall, TnpB-based gene-editing tools offer significant potential to improve agricultural productivity, crop quality, and food safety.

Challenges of TnpB-Based Gene-Editing Tools

  • Lower Efficiency in Dicot Plants
    • TnpB has shown good results in monocot plants like rice, but it hasn’t worked as well in dicot plants such as Arabidopsis. 
    • This challenge needs to be overcome for TnpB to be used more widely across different plant species.
  • Limited Data from Whole Plants
    • Most success with TnpB has been seen in protoplasts (plant cells without cell walls). 
    • However, more testing is needed in whole plants to confirm its effectiveness in real-world conditions.
  • Challenges with DNA Integration
    • The way plants absorb and incorporate external DNA into their genomes may affect how well TnpB works. 
    • More research is required to fully understand and improve this process for better results.

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Recently, The Leader of the opposition pointed out the absence of SC/ST officers in framing the 2024 Budget

UPSC Withdraws Controversial Lateral Entry Advertisement Amid Reservation Concerns

  • UPSC issued an advertisement: Recently, the UPSC issued an advertisement seeking applications for 45 senior positions across 24 ministries, sparking a political debate.
  • Significant Roles: These roles are significant as they involve major decision-making responsibilities within the government
  • Criticism: The opposition had strongly criticized the government’s push for lateral entry, primarily because these appointments do not come with mandatory reservations for Scheduled Castes (SC), Scheduled Tribes (ST), and Other Backward Classes (OBC). 
    • Concern raised: This practice might sideline marginalized communities from occupying important government positions, which traditionally come with reservations under the 13-point roster policy.
      • They see the lateral entry could be used to bypass the reservation system 
  • Withdrawal of Advertisement: The Central government directed the Union Public Service Commission (UPSC) to withdraw its advertisement issued a few days ago, seeking applications for lateral recruitment to senior bureaucratic posts at the Centre. 

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What Is Lateral Entry Into The Bureaucracy?

  • Lateral entry: It refers to the practice of recruiting individuals from outside the traditional government service cadres to fill mid and senior-level positions within the bureaucracy. 
  • Instead of selecting officers from within the civil service, lateral entry allows professionals from the private sector, academia, public sector undertakings (PSUs), state governments, and other nongovernmental organizations to be appointed to key roles in the Union government.
  • Process: The UPSC facilitates this process by issuing advertisements for various senior positions such as joint secretary, director, and deputy secretary across multiple ministries
    • Candidates with the appropriate qualifications and experience are invited to apply, making these positions critical decision
  • Term: They would be given contracts of three years, extendable to a total term of five years.

Origin and Implementation of UPSC Lateral Entry

  • Second ARC: The principle of lateral entry was endorsed by the Second Administrative Reforms Commission which was constituted in 2005, chaired by Shri Veerappa Moily. 
  • NITI Aayog Recommendation: NITI Aayog in its three-year Action Agenda, and the Sectoral Group of Secretaries (SGoS) on Governance in its report submitted in February 2017, recommended the induction of personnel at middle and senior management levels in the central government. 
    • These ‘lateral entrants’ would be part of the central secretariat which in the normal course has only career bureaucrats from the All India Services/ Central Civil Services.

Recommendations Of Various Expert Groups/Committees Regarding Lateral Entry

  • 1st Administrative Reforms Commission:
    • It recognised the need for specialization as the functions of the government had become diversified.
    • ARC highlights that performance appraisals may be adopted from the armed forces, which could aid in weeding out non-performers.
    • Surinder Nath Committee in 2003 and Hota Committee in 2004 also recommended domain expertise in civil services.
  • In 2005: Second Administrative Reforms Commission (ARC) recommended lateral entry at both the Central and state levels.
    • ARC highlights that performance appraisals may be adopted from the armed forces, which could aid in weeding out non-performers.
  • Earlier instances of lateral entrants: Nandan Nilekani, Montek Singh Ahluwalia, Vijay Kelkar, Arvind Subramanian,and Raghuram Rajan have all been brought in from outside the services to lead various committees and organizations.

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Need Of Specialist Or Domain Expert

  • Technical knowledge: These domain experts can provide ground level insight and real challenges associated with policy formulation and its implementation.
  • Complex situations: The functions related to administration are now becoming more and more complex, technical and subject specific, hence only a specialist can deal with them effectively.
  • Lack of field knowledge: The generalist or traditional bureaucrats are not aware of reality in the field. 
  • Improvements in governance and performance: NITI Aayog’s Three-Year Action Agenda for 2017-2020, as this will “add competitiveness to the existing career bureaucracy.”
  • Fill the officer vacancy gap: The country is short of nearly 1,500 IAS officers (Ministry of Personnel Data)
    • E.g: Baswan Committee (2016) also advocated lateral entry to fill these vacancies.
  • Entry and retention of talent in government: According to the Sixth Central Pay Commission report (2006), lateral entry will “ensure entry and retention of talent in the government even for those positions that have a high demand and premium in the open sector.

Arguments Against Lateral Entry

  • Lacking Field Experience: External talent lacks the breadth and scope of field experience that the civil service provides. 
  • Long-term commitment: Lateral entrants, often appointed for shorter tenures, may lack the long-term commitment and loyalty that permanent civil servants develop. 
  • Potential conflicts of interest between public service and private sector backgrounds could influence decision-making. 
  • Issue with execution: Career civil servants are better at bridging the gap between policy making and ground level execution than external talent.
  • Internal tussle: A vote of no confidence in the government personnel management system will result from a largescale lateral induction.
  • Undermines the role of civil servants: Civil Servants are already institutionalized operating in the well-established scenarios with efficiency. Lateral entry will kill their morale. 

How Have Lateral Entries Been Kept Out Of The Ambit Of Reservation?

  • “13-point roster”: Reservation in public jobs and universities is implemented via what is known as the “13-point roster”
    • According to this policy, a candidate’s position on a roster of openings is determined by dividing the quota percentage of their group (SC, ST, OBC, and now EWS) by a hundred.
    • For example: OBC quota is 27%. Therefore, OBC candidates are recruited to every 4th post for which a vacancy arises in a department/cadre (100/27=3.7)
      • Likewise, SC candidates, with 15% reservation, are supposed to fill every 7th vacancy (100/15=6.66), Etc…
  • Single Post Filling – Bypassing the policy of reservations: In a single post cadre, reservation does not apply. Since each post to be filled under this scheme [lateral entry] is a Single Post, reservation is not applicable.
    • For ExampleIn the current round of recruitment: UPSC has advertised 45 openings. If these were to be considered as a single group
      • According to the 13-point roster: Six vacancies would be reserved for SC candidates, three for ST candidates, 12 for OBC candidates, and four for the EWS category. 
      • But since these vacancies have been advertised separately for each department, all of them are effectively single-post vacancies, and hence bypass the policy of reservations.

Issues In Ensuring Social Justice In The Bureaucracy

  • Lack of representation for marginalized communities : Recently, During his parliamentary address, the Leader of the opposition highlighted the absence of Scheduled Caste (SC) and Scheduled Tribe (ST) officers among the 20 officials involved in framing the 2024 Budget proposals
    • Only one officer from the minorities and one from the Other Backward Classes (OBC) were included in the process. 
  • No Role in the Framing Policy: This highlights that those who originally belong to poor and deprived sections of society do not have a role in the framing of a crucial aspect of government’s economic policy. 
  • Upper Caste Dominance: Out of 322 officers holding Joint Secretary and Secretary posts, 254 belonged to the general category, while only 16 were from SC, 13 from ST, and 39 from OBC categories
    • Number of Secretary and Joint Secretary-level officers stood at 4% and 4.9%, respectively. 

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Eligibility

  • Age & Attempt Limits: General category candidates can appear for the civil services examination between 21 and 32 years, with a maximum of six attempts.
    • SC/ST candidates: They can take the exam until 37 years of age with unlimited attempts.
    • OBC candidates: They have an upper age limit of 35 years with nine attempts.
    • The upper age limit for Persons with Benchmark Disabilities (PwBD) is 42 years
  • Late Entry Disadvantage: SC/ST and PwBD candidates often join the civil services later in life and are unable to reach the highest positions due to retirement before attaining senior roles.
  • Unreserved candidates are getting, on average, three more years of service: Cabinet Secretariat data (2nd ARC) from 2004 shows that on average, unreserved candidates enter the service at the age of 24.7 years, whereas SC, ST, and OBC members do so at 27.6 years, 26.9 years, and 27.1 years respectively.
    • these late entrants will have a shorter service span, which means that they may not have adequate opportunities to contribute to policy-making at higher levels
  • Subjective process of empanelment for higher positions: In this process, the government first considers applications from eligible candidates
    • Ideally, the willing candidates should be judged on merit, accountability, efficiency, bent toward action, and so on. 
    • But these are all subjective criteria, and in a divided society like India, it is very difficult to create ideal situations
  • Criticism of lateral entry recruitment: Lateral entries have been criticised on the grounds that there are no quotas for SC, ST and OBC candidates in such recruitment.
    • AIM: Lateral recruitment is aimed at achieving the twin objectives of bringing in fresh talent as well as augment the availability of manpower

Way Forward & Proposed Changes

  • Representation matters: Democracies cease to be representative when the population is inadequately represented in the country’s institutions. 
    • Jyotiba Phule Arguments: This was argued by Jyotiba Phule when he said that the Pune Sarvajanik Sabha can’t be called a sarvajanik sabha if only a few castes are in control. 
    • Article 16(4) of the Constitution: That argument is reflected in Article 16(4) as well: “Nothing in this article shall prevent the State from making any provision for the reservation of appointments or posts in favour of any backward class of citizens which, in the opinion of the State, is not adequately represented in the services under the State.”
  • Kothari Commission: The Kothari Commission even favoured only two attempts, not only for the general candidates but also for SC/ST members.
  • The Second ARC recommended: “The permissible age for appearing in the Civil Services Examination should be 21 to 25 years for general candidates, 21 to 28 years for candidates from OBC and 21 to 29 years for candidates from SC/ST and PH. 
    • This will make every entrant to the service, at least theoretically, eligible to be empanelled for the secretary post.
  • To fix the year of service as a condition for retirement: There can be a fixed tenure for all officers, irrespective of entry age. 
    • At the same time, the government must ensure that the scope of arbitrariness, discrimination, and subjectivity in the matter of career progression of the officers is reduced.
  • Retirement Age Adjustment: The retirement age limits could be adjusted to ensure all civil servants retire by around 67 years of age, with annual medical fitness checks after the age of 62.
  • To decrease arbitrariness and subjectivity in Top Bureaucracy:
    • First ARC recommended: Only 5 to 10 per cent of the civil servants engaged in work of a similar nature and at the same level in any organisation be given the grade “fit for promotion out of turn”. 
    • In 2004, the Hota Committee suggested: To replace the Annual Confidential Report (ACR) with a new system, which would focus more on evaluating performance based on clear work plans and objective measures. 
  • Formation of Committee: An independent and multi-disciplinary committee with adequate representation from SC/ST, OBC, and PwBD communities should be established to examine the proposal of fixed tenure and its implications for social justice.

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Conclusion

  • Ensuring social justice within the bureaucracy is crucial for a truly representative democracy. Addressing the underrepresentation of marginalized communities, especially in decision-making positions, is essential to creating an inclusive and equitable governance structure. 
  • On the other hand, Lateral entry for specialist positions should prioritize efficiency over equity. An efficient bureaucracy is ultimately more effective in delivering social justice than reserving specialized jobs for particular categories. The focus should remain on bringing in the best talent to serve the public interest effectively.
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The Multiple Indicator Survey of the National Sample Round, conducted in 2020-21, offers a detailed look at the reasons for intra and inter-State migration across India, and the problems faced by migrants

What’s Migration?

  • Migration is the movement of people away from their usual place of residence, either internal (within the country) or international (across countries) borders. 
  • The terms “immigration” and “emigration” are used to refer to moves between countries (international migration). 

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Intra-State Migration

  • Intra-State migration refers to the movement of people within the same state or region.
  • This can include migration from rural to urban areas, from one city to another, or even from one rural area to another within the same state.

Inter-State Migration

  • Inter-State migration refers to the movement of people from one state to another within the same country. 
  • This type of migration can be more complex due to differences in language, culture, and economic conditions between states.
  • Constitutional Provisions: 
    • Article 19: Migration within the country for work is a fundamental right of a citizen as upheld by Article 19 of the Constitution of India. 
    • Protection: The fundamental rights further prohibit human trafficking and guarantee freedom from discrimination based on place of birth, equal opportunities for employment, and protection from forced as well as child labour.  
    • Seventh schedule of the Constitution: Interstate migration comes under the seventh schedule of the Constitution, List I (Union List), entrusting the authority to the central government.
  • Data on Migration:  Maharashtra hosted the highest share of external migrants
    • It’s followed by Uttar Pradesh, and West Bengal. 
    • Highest number of migrants: U.P. also contributed the highest number of migrants, followed by Maharashtra, West Bengal, and Bihar.
    • If we look at pairs of regions: Migrants going from U.P. to Maharashtra formed the largest chunk of all external migrants 
      • It’s followed by migrants from the Gulf countries (some returning to Kerala), and migrants going from U.P. to Delhi
    • Hosts City: Suburban Mumbai remains the district that hosts the highest number of migrants
      • It’s followed by Pune and Thane in Maharashtra.

Causes of Internal Migration in Indian

  • Urbanization: Rural-urban migration is a major characteristic of urban transition in countries.
    • The rates of urbanization influence rural-urban wage differences.
    • An increase in the demand for labour in urban areas and better wages increase migration.

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‘Pull’ and ‘Push’ Factors

  • Two principal factors– push and pull are responsible for migration. 
    • The push factors are poverty, lack of work opportunities, unemployment and underdevelopment, poor economic condition, lack of opportunities, exhaustion of natural resources etc.
    • Pull factors attract migrants to an area (area of destination), like, employment and higher education opportunities, higher wages facilities, better working conditions.
  • Marriage: Marriage is a very important social factor of migration. Every girl has to migrate to her in-law’s place of residence. 
    • MigrationThus, the entire female population of India has to migrate over short or long distance.
    • Data: Marriage was one of the main reasons (68.2% of all reasons) for migration as well, 
      • Migrants from U.P. to Maharashtra, Bihar to Jharkhand, and Madhya Pradesh to U.P. accounting for the top three highest numbers
  • Economic Reason: It includes better employment prospects, business, service transfers, etc.,
    • Data: Among migrants moving States for economic reasons (who constituted roughly 22% of all reasons)
      • MigrationMigrants going from U.P. to Maharashtra formed the largest chunk of all migrants
      • It’s followed by those moving from U.P. to Delhi and from Bihar to West Bengal.
    • Employment:
      • The prime reason for migration from rural to urban areas and urban to urban areas is search for better employment in industries, trade, transport and services.
      • People seasonally migrate for employment in different areas and different industries
      • Agricultural work: Circular migrants are also attracted by agricultural work, such as the rice harvest season in West Bengal and the sugar cane harvest in Gujarat.
  • Education: Due to lack of educational facilities in rural areas, people migrate to the urban areas for better academic opportunities. In the 2011 census, about 1.77% people migrated for education.
  • Lack of security: Political disturbances and interethnic conflicts is another reason for internal migration.
  • Environmental and disaster induced factors: There are migrants who are forced to move from rural to urban areas as a result of an environmental disaster that might have destroyed their homes and farms.
    • People are also forced to migrate from their traditional habitats due to gradual deterioration of changing environmental conditions.
    • There can also be forced displacement due to reasons such as developmental projects. 
    • According to a Lok Sabha Report, 2013 around 50 million people have been displaced in the name of development projects over 50 years in India.

Challenges Faced by Migrant Workers in India

  • Employment in informal economy: Migrants dominate the urban informal economy which is marked by high poverty and vulnerabilities
    • In an unorganized and chaotic labour market, migrant workers regularly face conflicts and disputes at worksites. 
    • The common issues they face are non-payment of wages, physical abuse, accidents and even death at work.
  • Issue of Identification documents: Proving their identity is one of the core issues faced by poor migrant labourers at destination areas. 
    • The basic problem of establishing identity results in a loss of access to entitlements and social services, such as subsidized food, fuel, health services, or education that are meant for the economically vulnerable sections of the population.
  • Housing: Lack of affordable housing in Indian cities force migrants to live in slums
    • Many seasonal migrants are not even able to afford rents in slums force them to live at their workplaces (such as construction sites and hotel dining rooms), shop pavements, or in open areas in the city
  • Financial Access: Migrant workers have limited access to formal financial services and remain unbanked
  • Access to healthcare: Migrant workers have poor access to health services, which results in very poor occupational health.
  • Education of children: UNESCO’s 2019 Global Education Monitoring Report (GEM Report) shows that children left behind by migrating parents and seasonal migrants face fewer educational opportunities overall.
    • According to the report, 80% of migrant children across seven Indian cities did not have access to education near worksites.
    • Among youth aged 15 to 19 who have grown up in a rural household with a seasonal migrant, 28% were identified as illiterate or had an incomplete primary education.
  • Social exclusion: There is growing hostility of urban governments, as well as middle-class citizens, towards the urban poor, especially migrants to the cities.
  • Political exclusion: Migrant workers are deprived of many opportunities to exercise their political rights. 
    • A 2011 study pointed out that 22% of seasonal migrant workers in India did not possess voter IDs or have their names in the voter list.

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Measures Taken to Address Migration Challenges

  • Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act of 1979: It seeks to address the unjust working conditions of migrant workers, including the necessity of gaining employment through middlemen contractors or agents who promise a monthly settlement of wages but do not pay when the time comes.
  • Enhancing livelihood opportunities for rural population: The government from time-to-time has taken various initiatives to combat farmers’ distress and enhance livelihood opportunities in rural areas. 
    • Examples: Deendayal Antyodaya Yojana-National Rural Livelihoods Mission (DAY-NRLM), Mahatma Gandhi National Rural Employment Guarantee Act, Attracting and Retaining of Youth in Agriculture (ARYA).
  • Infrastructure development in rural areas:
    • RURBAN Mission: It seeks to stimulate local economic development, enhance basic services, and create well planned Rurban clusters (cluster villages)
      • One of the main objectives is to reduce the rural-urban divide-viz: economic, technological and those related to facilities and service
    • PURA (Providing Urban Amenities to Rural Areas): It seeks to tackle the problem of migration of people from rural to urban areas for employment. 
      • It seeks to develop technology in villages, provide better connectivity, enhance livelihood opportunities etc.
    • SMART VILLAGES: It is a concept adopted by national, state and local governments in India, as an initiative focused on holistic rural development. 
      • The Eco Needs Foundation has initiated the concept of “Smart Village”. 
      • Under this project the Foundation is adopting villages and putting efforts for sustainable development by providing basic amenities like sanitation, safe drinking water, internal road, tree plantation, water conservation
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The Indian fintech sector has reacted positively to the Reserve Bank of India’s (RBI’s) recent self-regulatory initiative, but several challenges must be addressed for effective implementation.

About Fintech Sector

Fintech,  a combination of the terms “financial” and “technology,” refers to businesses that use technology to enhance or automate financial services and processes.

Fintech Sector

  • Key factors driving Growth: 
    • Favourable demographic of tech-savvy youth
    • Access to capital
    • Various Government initiatives such as the JAM trinity, Unified Payments Interface, etc
    • Advancements in internet and mobile technology
  • Common types of Fintech Companies in India:
    • Payment: These offer digital payment solutions, such as mobile wallets, online payment gateways, and peer-to-peer (P2P) payments. Example- Bharatpe
    • Lending: These offer digital lending solutions, such as personal loans, business loans, and credit cards. Example- CRED
    • Insurance: These offer digital insurance solutions, such as health insurance, life insurance, and car insurance. Example- Digit Insurance
    • Investment: They offer digital investment solutions, such as stock trading, mutual funds, and cryptocurrency trading. Example- Zerodha
    • RegTech: They offer regulatory technology solutions, such as compliance software and risk management tools. Example- Razorpay
  • Status in India: India is home to the third-highest number of fintechs globally, with more than 9,000 fintechs, holding a 14% share of Indian start-up funding. 
      • In 2022 alone, Indian fintech startups secured an impressive US$ 5.65 billion, positioning it as the second-most-funded startup sector in the country. 
    • Adoption Rate:  India has the highest FinTech adoption rate globally of 87% which is significantly higher than the Global average rate of 64%.
    • Digital Transactions: Fintech companies account for 70% of digital payment transactions, marking a two-fold rise in their share during FY22 compared to FY19. 
    • Financial Inclusion: More than 10 million people and small businesses gained access to savings accounts, insurance, investment options, and credit facilities through mobile-based services and digital platforms. 
      • The adult population with bank accounts increased from 53% to 78%.
    • Keeping pace with Innovation: The Indian fintech ecosystem has witnessed remarkable growth in recent years, with over 2,100 startups currently operating in the space. 

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About Self-Regulatory Organisations in the Financial Technology Sector (SRO-FT)

Self-regulatory models are not new in India. The success of self-regulation in India’s over-the-top media sector, demonstrated by the Internet and Mobile Association of India’s code of ethics, underscores the potential advantages of self-regulation. 

Fintech Sector

  • Refers: A non- governmental organisation that has regulatory power over an industry or profession.
  • Need: To ensure that the growth of the fintech sector is accompanied by responsible practices
    • India’s fintech sector is experiencing rapid growth and evolution, driven by a high demand for digital payments and loans. 
    • Implementing appropriate regulatory frameworks can help to ensure:
      • Sustainable development
      • Mitigate risks
      • Foster long-term stability within the sector
  • Aim: To encourage entities to ensure representative membership from across the fintech sector. 
    • To protect customers, promote ethics, equality and participants in the ecosystem. 
  • Structure:
    • Non-profit Structure: SRO-FTs must be established as not-for-profit companies.
    • Fintech SectorMinimum Net Worth Requirement: SRO-FTs need to maintain a minimum net worth of Rs 2 crore within one year of being recognized by the RBI.
    • Shareholding: Have diversified shareholding, with no single entity holding more than 10% of the shares.
  • Criteria for SROs in Fintech:
    • Apply to RBI: All interested entities have to apply to RBI for getting recognition as SROs. 
    • Letter of Recognition: Regulator issues a letter of recognition upon finding suitability of the entities. 
  • Membership and Governance:
    • Representative Membership: Reflects the entire sector, including regulated entities like account aggregators and P2P lenders, NBFCs, and non-regulated entities.
    • Fintech SectorIndependent and Impartial Functioning: To remain free from any single member’s influence.
    • Knowledge Repository: Act as a knowledge repository and avoid conflicts of interest.
    • Membership Flexibility: Fintech companies may join more than one SRO and are encouraged to participate in at least one.
    • Surveillance Mechanisms: For detecting exceptions, while maintaining confidentiality and collecting important data. 
      • There is a provision of cautioning, reprimanding, counselling,  or even expulsion from the SRO in case of violation of rules and regulation.
        • A reasonable penalty can also be imposed. 
    • Dispute Resolution Framework: SROs are required to  establish a dispute resolution framework for its members within the Fintech industry.
      • In addition to it, this body is responsible for proactively addressing industry-wide concerns beyond individual member interests.
    • Representation of the Interest: SROs are responsible for representing the interests of its members when interacting with the RBI.
      • Along with it, it has to keep the RBI updated on fintech developments.
      • It is responsible for collecting and sharing data with the RBI to aid in policy making.
      • SROs are to report regulatory violations and systemic issues within the sector to the RBI.
  • Mandates: These SROs, envisioned as industry-led bodies, will be tasked with the establishment and enforcement of regulatory standards, the promotion of ethical conduct, the maintenance of market integrity, the resolution of disputes, and the fostering of transparency and accountability among their members.
    • Set Rules and Standards: For entities in the industry by collaborating with all stakeholders.  
    • Regulatory Authority: Regulate in place of or alongside government regulation.
      • Self regulatory process uses impartial mechanisms for its administration
      • All members operate in a disciplined way due to impartial mechanisms and accept the penal actions. 
      • Its regulatory power is independent of the government grants.
    • Focus on Users Protection: SRO-FTs are obligated to address instances of user harm, such as fraud, mis-selling of financial products, and unauthorised transactions.
    • Others: The promotion of ethical conduct, the maintenance of market integrity and the fostering of transparency and accountability among their members.

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Feature Benefit Challenge
Objective Operation and Healthy Growth
  • Promotes responsible innovation within a stable regulatory environment.  
  • Encourages long-term, sustainable development in the fintech sector.
  • Balancing innovation with regulatory compliance can be complex.
Phased Regulatory Compliance
  • Provides a clear path for fintech companies to navigate regulations. 
  • Reduces uncertainty and helps companies prepare for future oversight.
  • The specific timeline and requirements for phased compliance may not be immediately clear.
Industry Standards and Best Practices
  • Establishes a common ground for ethical conduct across the fintech sector. 
  • Improves transparency, disclosure, and data privacy practices for consumers.
  • Developing and enforcing consistent standards across a diverse sector can be challenging.
Representative Membership
  • Ensures all voices within the fintech sector are heard. 
  • Promotes inclusivity and addresses the needs of various segments.
  • Reaching a consensus among different types of members on standards and regulations might be difficult.
Independent Governance
  • Fosters trust and confidence in the SRO’s decision-making. 
  • Reduces the risk of undue influence from any single entity.
  • Ensuring true independence from powerful members can be a challenge.
Member Development and Conduct
  • Upskills the fintech workforce and promotes responsible business practices. 
  • Encourages a culture of compliance and consumer protection.
  • Enforcing disciplinary actions against members may face resistance.
Collaboration with Regulators
  • Creates a channel for open communication between the industry and regulators. 
  • Provides valuable insights for shaping regulations that are both innovative and consumer-centric.
  • Building trust and a productive working relationship with regulators may take time.
  • The fintech ecosystem in India is notably fragmented, making it difficult to unify diverse stakeholders under a single SRO.

 

Global Trends on Fintech Regulatory Landscapes

Globally, the regulatory landscapes for fintechs vary significantly, reflecting the diverse approaches nations take for balancing innovation and oversight. 

  • China: Recent regulatory measures have imposed stricter controls on non-bank payment institutions, aiming to enhance supervision and mitigate systemic risks. 
  • United States: Entities such as the Financial Industry Regulatory Authority (FINRA) play a pivotal role in overseeing broker-dealers, despite criticisms regarding its proximity to the industry it regulates. 
    • The National Futures Association (NFA) oversees the derivatives market, promoting ethical conduct and market integrity.
    • The Municipal Securities Rulemaking Board (MSRB) establishes and enforces standards in the municipal securities market.
  • Atlantic and the United Kingdom: They have transitioned from a model of pure self-regulation to a more government-centric approach, with the Financial Conduct Authority (FCA) now overseeing most financial services. 
    • Nonetheless, the Takeover Panel remains a notable example of effective self-regulation, particularly in mergers and acquisitions. 
  • Japan: Extensive use of SROs is evident in organisations like the Japan Securities Dealers Association (JSDA) and the Investment Trusts Association of Japan.

Way Forward

As the fintech sector in India evolves, the introduction of SROs is anticipated to play a crucial role in its development. 

  • Innovation with Responsible Practices: To fundamentally transform fintech operations, SROs, supported by effective leadership and robust governance, need to align innovation with responsible practices.
  • Strategic Measures: To optimise the effectiveness of self-regulation, the RBI should establish sector-specific categorisations and tailored regulatory approaches to address the diverse nature of fintech entities and their activities. 
  • Robust Safeguards: To mitigate conflicts of interest and prevent anti-competitive behaviour.
  • Transparency and Accountability: Robust Safeguards must be accompanied by transparent guidelines for membership criteria and decision-making processes. 
    • Independent oversight mechanisms should also be established to ensure rigorous enforcement of regulations.
    • Incentivising SRO participation and defining clear selection criteria for SRO candidates will further enhance the regulatory framework.
  • Collaborative and Dynamic Approach: The shift towards self-regulation represents a significant departure from traditional regulatory models, fostering a more collaborative and dynamic approach within India’s fintech sector. 
    • The collaborative approach will enhance consumer trust and support the sustainable growth of India’s fintech ecosystem.

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Conclusion

India has embarked on a different path, embracing a self-regulatory model where fintechs themselves are empowered to set and enforce compliance norms, thereby fostering a culture of responsible innovation.

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