Daily Current Affairs for 22nd December 2020

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IBC suspension extended till March 2021


Mains: General Studies-III: Technology, Economic Development, Bio diversity, Environment, Security and Disaster Management

 Why in News?

The government has decided to extend the suspension of the Insolvency and Bankruptcy Code (IBC) till March 31, 2021, to help businesses cope with the lingering difficulties posed by the COVID-19 pandemic.

 Key Details:

  • IBC provides for a time-bound process to resolve insolvency.
  • When a default in repayment occurs, creditors gain control over debtor’s assets and must make decisions to resolve insolvency.
  • Under IBC debtor and creditor both can start ‘recovery’ proceedings against each other.
  • COVID-19 has thrown the economy into a tailspin; thus the Government has extended the suspension of IBC till March 31st 


  • Sections 7, 9 and 10 of IBC enable financial creditors to initiate insolvency proceedings against a corporate debtor. Whereas Section 9 grants these powers to operations creditors, Section 10 allows corporate debtors to initiate insolvency proceedings.
  • Sections 7, 9 and 10 of the bankruptcy law were suspended for six months from March 25 by way of an ordinance in June.
  • The Parliament has approved Section 10A under the second amendment to the IBC that permits the government to extend the suspension of insolvency proceedings for up to a year from the date of beginning.

State of economy

  • The suspension of IBC being extended till the end of the year is not a surprise since the economy is still recovering from the pandemic.
  • Though the second-quarter GDP data has shown a decline in contraction when compared to the first quarter, it is still a long way to go.
  • The economy has entered into a recessionary phase, thus resumption of economic activities will take longer than expected.
  • Recession is defined as a fall in the overall economic activity for two consecutive quarters (six months) accompanied by a decline in income, sales and employment.

  IBC Suspension justified?

  • IBC’s suspension has been justified as a relief measure but actually, the IBC process provides for the revival of the corporate debtor and all stakeholders of the corporate debtor in a time-bound manner.
  • The suspension of IBC will not end the creditors’ attempt to recover their capital, but the alternative means the creditors would resort to might lack the efficiency of the IBC process.
  • Those mechanisms may not lead to an efficient resolution of stress which is the need of the hour during this economic slowdown.

 Way Ahead:

  • The suspension of the IBC appears to be the right move taking into context the current economic landscape in the country, every industry has had to deal with stresses induced on account of COVID-19.
  • The moratorium will give the businesses the much-needed breathing space to get their businesses up and running and not expend their energy worrying about fulfilling creditors requirements.

What is Insolvency and Bankruptcy Code?

Definition of Bankruptcy:

  • The legal status of an entity or a person where the debt owed to the creditors cannot be repaid is known as Bankruptcy.
  • A court order imposes bankruptcy in most of the jurisdictions.
  • It is mostly initiated by the debtor.
  • It is important to note that bankruptcy is not synonymous with insolvency.
  • It is not the only legal status that could be applicable to an insolvent individual or an entity.
  • The Insolvency and Bankruptcy Code, 2016 (IBC) is the bankruptcy law of India which seeks to consolidate the existing framework by creating a single law for insolvency and bankruptcy.

IBC – What does the Code aim to do?

  • The 2016 Code provides for a time-bound process to resolve insolvency.
  • When a default in repayment occurs, creditors gain control over the debtor’s assets and must make decisions to resolve insolvency within 180 days.
  • To ensure an uninterrupted resolution process, the Code also provides immunity to debtors from resolution claims of creditors during this period.
  • The Code also consolidates provisions of the current legislative framework to form a common forum for debtors and creditors of all classes to resolve insolvency.

Law to keep checks, controls over private hospitals mooted


Mains: General Studies- II: Governance, Constitution, Polity, Social Justice and International relations.

Why in News?

There should be a comprehensive public health Act with suitable legal provisions to keep checks and controls over private hospitals in times of a pandemic and to curb black marketing of medicines, the standing committee on Home Affairs, has said in a report that was submitted to Rajya Sabha Chairman.

What are the issues and what committee suggested in report?


There had been several reported instances of beds reserved for COVID-19 patients in private hospitals being sold at exorbitant rates, the report noted.

Committee recommendation:

  • The committee strongly recommends a comprehensive public health Act, preferably at the national level with suitable legal provisions to support the government in keeping checks and controls over private hospitals as there have been reports about the selling of hospital beds by them.
  • The Act, it stated, should keep a check on black marketing of medicines and product standardisation.
  • It flagged the initial confusion over medicines that ‘helped’ in containing the COVID-19 infectionand how they were sold at higher rates.
  • It suggested that the government should be proactive by holding awareness campaigns on cheaper and effective repurposed medicines to prevent people from panicking and spending a huge amount of money on expensive drugs.

Issue-2: COVID-19 insurance

The committee observed that in the initial phase of the pandemic, medical insurance was not extended to patients with COVID-19 infection.

Committee’s recommendation:

  • While appreciating the work done by the National Disaster Management Authority (NDMA) by coming out with standard operating procedures (SOPs), guidelines and awareness generation, the committee said the ongoing pandemic was unlike any natural disaster that the NDMA had handled.
  • The committee recommended that a separate wing may be formed in the NDMA that will specialise in handling /managing pandemics like COVID-19 in future.

Issues-3: Schemes implementation

On the economic front, the committee said that while the government had taken a host of measures to ameliorate the impact of the pandemic on the economy, many schemes have not been implemented properly.

Committee’s recommendation:

The report said that more interventions and schemes were required to support the recovery and to sustain this economic revival especially for the MSME (Micro, Small and Medium Enterprises) sector.

Issue-4: Mid-day meal

  • The committee expressed concern that with schools shut down now for more than nine months, many children were deprived of mid-day meal.
  • Many States continued the scheme by delivering dry ration to students at their homes or giving them allowances.
  • But this was not uniform.

Committee’s recommendation:

“The committee, therefore, strongly recommends that the Ministry of Home Affairs, along with the Department of Food and Public Distribution, take up the matter with the State governments to ensure that the local administrations are delivering the rations/ allowances in time and this should be continued until the schools reopen.

Markets plunge on news of mutant virus


Mains: General Studies-III: Technology, Economic Development, Bio diversity, Environment, Security and Disaster Management

Why in News?

  • Fears of a rapidly spreading new strain of the COVID-19 virus in the U.K. caused a bloodbath in Indian equity markets, with key benchmark indices slumping 3%.
  • The rupee declined to a two-week low at 73.79 against the U.S. dollar.

  • The key benchmark indices in the Indian equity market slumped upon the news of a new strain in the COVID-19 virus.
  • The rupee too saw a slide against the dollar, standing currently at 73.79 against the dollar.

Mutation: why gained mileage?

  • The new variant, which UK scientists have named “VUI – 202012/01” includes a genetic mutation in the “spike” protein that the SARS-CoV-2 coronavirus uses to infect human cells.
  • Certain sections of the scientific community believe that these changes, in theory, could lead to a faster spread of COVID-19 between people.

Market reaction

  • The re-imposition of lockdown in the UK has sparked fears of another lockdown in India.
  • The National Stock Exchange (NSE) fell by 3.14%, declines were witnessed across several sectors like oil and gas, auto, banks, real estate, public sector stocks.
  • The market saw the worst single-day loss in more than seven months.

Future course:

  • The news of a new strain in the UK has been the reason for the renewed pessimism in the Indian market and also the global markets.
  • This news has poured cold water on some of the optimism that was generated with the development of the COVID-19 vaccine.

Jupiter-Saturn conjunction


Mains: General Studies-III: Technology, Economic Development, Bio diversity, Environment, Security and Disaster Management

Why in news?

  • In a once-in-a-lifetime coming together, Jupiter and Saturn will cross within 0.1 degrees of each other (a fraction of the width of the full moon), overlapping to form a double planet.
  • December 21stwitnessed Jupiter and Saturn appear closer in the Earth’s night sky than they have since 1226.

Key Details:

  • It is aptly described as a once-in-a-lifetime event and it has been termed as the ‘Great conjunction’ and the next occurrence of this event is estimated to be in the year 2080.
  • The two giant planets of the Solar System will lie a mere six arc minutes (0.1 degrees) apart, only one-fifth of the diameter of the Full Moon, when they become visible in the south-south-western sky or soon after sunset.
  • The planets were separated by just one-tenth of a degree, however, despite the appearance, they were still separated by a distance of 730 million kilometers.

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