GS PAPER: II

Global crude oil, fuel flows via Suez Canal

Why in the news?

• As per ship tracking data with a number of global shipping majors and oil companies now avoiding transiting through the Suez Canal and the Red Sea in the wake of recent attacks on commercial vessels by Yemen’s Houthi rebels, global oil and petroleum product flows through the maritime channel have declined by over 50 per cent in December from their regular levels.

Why is the southern Red Sea so significant?

• The Red Sea, one of the worlds’s most densely packed shipping channels, lies south of the Suez canal, the most significant waterway connecting Europe to Asia and east Africa.
• At its southern end is a narrow strait of water – about 20 miles wide – between Djibouti and Yemen: the Bab el-Mandeb strait, the area that the Houthi rebels in Yemen have been targeting.
• About 12% of global trade passes through the Red Sea, including 30% of global container traffic. Billions of dollars of traded goods and supplies pass through the Red Sea every year, meaning that delays there can affect petrol prices, the availability of electronics and other aspects of global trade.

Who are the Houthis and why are they attacking now?

• The Houthis are a Yemeni rebel group who control the west of the country, including its Red Sea coast. They are aligned with and supplied by Iran, but are politically independent. While other Muslim countries and groups have chosen not to try to help Hamas in Gaza, the Houthis declared war on Israel at the end of October.
• Initially the Houthis launched long-range ballistic missiles at Israel, but these were ineffective and some were intercepted by the US and the Saudis. From mid-November, however, the group switched tactics to focus on attacking commercial shipping, starting with the seizure of the Galaxy Leader, which was captured in a dramatic video filmed from body-worn cameras.
• Despite the Houthis initially saying that only ships travelling to Israel would be targeted, the threat to trade has grown as vessels flagged to other countries with no connection to Israel have been attacked.

How have the US and other western nations responded?

• As the situation escalated over the past month, the US has repelled attempts to board other cargo ships, while US, French and British warships have shot down Houthi drones and missiles.
• On Monday, the US announced it had assembled a coalition of countries who had agreed to carry out patrols in the southern Red Sea to try to safeguard vessels against attacks. The coalition, called Operation Prosperity Guardian (OPG), includes the UK, Bahrain, Canada, France, Italy, the Netherlands, Norway, Seychelles and Spain, but the leading regional Arab powers – Egypt and Saudi Arabia – are absent.
• Mohammed al-Bukhaiti, a member of the Houthi leadership, has told Al Jazeera that his group will confront any coalition formed by the US. The direct military threat is limited, but there are concerns the situation could escalate if a successful Houthi strike results in fatalities.
• Some analysts believe the Houthis hope to embroil the US in a direct confrontation. Escalation could also imperil peace talks between the rebel group and the Saudis. The two have fought a bloody war since 2015, in which Riyadh has repeatedly been accused of killing civilians with indiscriminate airstrikes.

How will the disruption affect shipping?

• Prominent shipping companies including Maersk, Hapag-Lloyd, and MSC have decided not to use the Red Sea over the past week. According tothe Atlantic Council, a thinktank, seven out of the 10 biggest shipping companies by market share have suspended operations in the Red Sea.
• Some ships are being diverted around the Cape of Good Hope, on the southern tip of Africa, increasing their journey time by up to two weeks. On Monday, BP halted all shipments of oil and gas through the Red Sea.
• Insurance risk premiums for sailing through high-risk areas are also rising. This risk premium paid by shipping companies was just 0.07% of the value of a ship at the start of December, but has risen to about 0.5% to 0.7% in recent days.
• Despite the formation of the US-led OPG, it is not clear when commercial shipping groups will feel confident enough to allow their vessels to pass through the Bab el-Mandeb strait again.

How will consumers be affected?

• Oil and fossil gas prices rose on the news that BP was pausing shipments through the Red Sea. Analysts say that if the attacks on vessels continue and more oil companies halt shipments through the Red Sea, energy costs are likely to rise further.
• Meanwhile, shipping companies have a binary choice: face the risk of travelling through the Red Sea and the increased insurance costs that brings – or divert their vessels. Both carry the risk of higher costs, though diverting ships around Africa also brings the risk of delays.

Oil shipments to India have not been impacted so far. Why?

• As for oil shipments to India from its major suppliers, industry watchers do not expect much of an impact as most of India’s oil from Key West Asian suppliers like Iraq, Saudi Arabia, and the United Arab Emirates (UAE) comes through the Strait of Hormuz that connects the Persian Gulf with the Gulf of Oman and the Arabian Sea.
• India, however, does depend on the Suez Canal and Red Sea route for its Russian oil imports. But so far, tankers carrying Russian oil have appeared impervious to the Houthi threat.
• “India’s crude supply is relatively safe. First of all, of all the tankers that were hit, there were no crude tankers at all.
• Second of all, Saudi and Iraqi exports avoid the Bab-al-Mandeb area completely, so there is no risk of getting hit.
• Third, Russian tankers seem to be immune to Houthi retaliation, so it is highly unlikely there would be any impact on Russian crude flows.

GS PAPER – III

Telecom Bill 2023, to replace 138-year-old Indian Telegraph Act

Why in the news?

• The Lok Sabha passed the omnibus Telecom Bill 2023 which will replace existing laws, including the 138-year-old Indian Telegraph Act.

Objectives of Bill

• The Bill seeks to reform and simplify the regulatory and licensing regime for telecommunications and remove bottlenecks in creating telecom infrastructure.
• It also allows the government to temporarily take control of telecom services in the interest of national security and provide a non-auction route for the allocation of satellite spectrum.
• The Telecom Bill 2023 provides a mechanism to exercise the right of way for laying telecom infrastructure in public as well as private property.
• The Central government may provide for measures to protect users such as requiring prior consent to receive specified messages, and creation of a do not disturb register.
• Authorisation will be also be required from the Central government to establish and operate telecommunications networks, provide telecommunications services or possess radio equipment.
• Spectrum will be allocated through auction, except for specified entities and purposes for which it will be assigned administratively.

About the Indian Telegraph Act, 1885

• It governs the use of wired and wireless telegraphy, telephones, teletype, radio communications and digital data communications.
• It gives the Government of India exclusive jurisdiction and privileges for establishing, maintaining, operating, licensing and oversight of all forms of wired and wireless communications within Indian territory.
• It also authorizes government law enforcement agencies to monitor/intercept communications and tap phone lines under conditions defined within the Indian Constitution.

Status of the Telecom Sector in India

• The Telecom industry in India is the second largest in the world with a subscriber base of 1.179 Billion as of August 2023 (wireless + wireline subscribers).
• It is also the 4^th largest sector in terms of FDI inflows, contributing 6% of total FDI inflow.
• India has an overall tele-density of 84.69%. Tele-density denotes the number of telephones per 100 populations, and is an important indicator of telecom penetration.
• The average monthly data consumption per wireless data subscriber has also increased to 17.36 GB in March 2023 from 61.66 MB in March 2014.

GS PAPER – III

JN.1 cases

Why in news?

• Admitting that India has registered a rise in the daily COVID-19 positivity rate in some States, including Kerala, Maharashtra, Jharkhand and Karnataka, the Union Health Ministry while issuing an alert, said that no clustering of cases had been reported in the new JN.1 variant of the SARS-CoV-2 coronavirus.
• According to NITI Aayog India has detected 21 cases of the JN.1 sub-variant JN.1 till now, and about 91%-92% of those infected are opting for home-based treatment.
• Nineteen cases of COVID-19 sub-variant JN.1 have been traced in Goa, and one each in Kerala and Maharashtra. Over the past two weeks, 16 deaths related to COVID-19 were recorded, with many of the deceased having serious comorbidities.

What is JN.1, the new COVID-19 variant?

• JN.1 was first reported in August 2023 and it has spread to at least 41 countries so far, according to the WHO.
• Just like the other newer variants, JN.1 is part of the omicron family.
• JN.1 descended from BA.2.86, which is a sublineage of the omicron BA.2 variant.
• JN.1, however, picked up an additional mutation in its spike protein. Spike proteins help the virus latch onto human cells and play a crucial role in helping SARS-CoV-2 infect people. This mutation may affect JN.1’s immune escape properties.
• “Now it’s circulating and growing at a really fast rate compared to other variants.

What are the symptoms of JN.1?

It’s not known whether JN.1 causes different symptoms from other variants.

The symptoms of JN.1 appear to be similar to those caused by other strains, which include:

• Sore throat
• Congestion
• Runny nose
• Cough
• Fatigue
• Headache
• Muscle aches
• Fever or chills
• Loss of sense of taste or smell

How to protect yourself from JN.1

Every day, but especially during respiratory virus season, people can take steps to protect themselves and others from COVID-19.

The experts encourage everyone to:

• Stay up to date with COVID-19 vaccines.
• Test if you have symptoms.
• Isolate if you have COVID-19.
• Avoid contact with sick people.
• Improve ventilation.
• Wear a mask in crowded, indoor spaces.
• Wash your hands with soap and water.

GS PAPER – III

Disinflation may pave way for interest rate cut

Why in news?

• The pace of global growth may slow further in 2024 while disinflation at varying pace in different geographies may pave the way for interest rate reductions.

About report

• Stating that CPI inflation rose to 5.6% in November as the recurrence of food price spikes punctured a brief respite in September and October, CPI inflation would ease to 4.6%in the first three quarters of 2024-25 and domestic financial markets had been lifted by the abiding strength of the real economy.
• Despite significant global headwinds, the Indian economy remained the fastest growing major economy in 2023.
• Emphasising that supply chain pressures in India remained below historical average levels, although they had edged up in recent months, they said RBI’s economic activity index (EAI) now casts GDP growth for Q3:2023-24 at 6.7%.
• Looking ahead, projections from our Dynamic Stochastic General Equilibrium (DSGE) model for the Indian economy, which captures the dynamic interactions between various agents in the economy as well as their response to shocks, show that the growth is likely to be sustained in H2:2023-24 and 2024-25 despite some moderation.
• Highlighting that the softer inflation prints for September and October 2023 and the prolonged pause in the stance of monetary policy had engendered a certain hypermetropia among some stakeholders–an irrational long-sightedness whereby inflation forecasts gravitating towards the 4% target sometime in the distant future were sighted clearly whereas high near-term risks of spikes in inflation outcomes on the back of food volatility were blurred–they said, under these conditions, “a clamour rises for rate cuts or at least that the central bank commits to a path of moderation in the level of the policy rate.”
• Such views imperil the conduct of monetary policy in the pursuit of its goal of durably aligning inflation with the target. These views also undermine the foundations of growth. Projections indicate that inflation will go up further from the September- October 2023 average of 4.9% before it can come down – the projection for Q3: 2023-24 is 5.6% ; for the year 2023-24 it is 5.4% ; and for the first three quarters of 2024-25 it is 4.6%.
• The objective of aligning inflation with the target on a durable basis is far from assured. In earlier editions of this article, we have pointed out that households’ inflation expectations are still not settled; business and consumer confidence in the inflation outlook is yet to turn optimistic.
• On a real-time basis, inflation is hurting discretionary consumer spending and this, in turn, is holding back top line growth of manufacturing companies as well as their capex. If inflation is not brought back to the target and tethered there, there is a strong likelihood that growth may falter.

GS PAPER – III

Big push to AI

Why in news?

• As part of an Artificial Intelligence Mission to develop its own ‘sovereign AI’, the Centre is looking to build computational capacity in the country and offer compute-as-a-service to India’s startups.
• The capacity building will be done both within the government and through a public-private partnership model to reap dividends of the impending AI boom which it envisions will be a crucial economic driver.

Computing capacity of country

• In total, the country is looking to build a compute capacity of anywhere between 10,000 GPUs (graphic processing units) and 30,000 GPUs under the PPP model, and an additional 1,000-2,000 GPUs through the PSU Centre for Development of Advanced Computing (C-DAC).
• For context, according to a 2020 blog by Microsoft, the company had developed a supercomputer for OpenAI – the firm behind ChatGPT – which consisted of 10,000 GPUs among other things.

Public Model of AI Computing

• Under the public model, we will look to build compute capacity within the C-DAC under the National Supercomputing Mission. They already have the Rudra and Param systems and we are planning to add 1,000-2,000 GPUs to them.
• Rudra is an indigenous server platform built by the C-DAC which has two expansion slots for graphic cards. Param Utkarsh is a high performance computing system setup at C-DAC which offers AI over machine learning and deep learning frameworks, compute and storage as a cloud service.

National Data Governance Framework Policy

• Apart from building computing capacities, the government is also working on building datasets and making them available to Indian startups.
• Ministry released a draft of the National Data Governance Framework Policy under which it proposed the creation of an India Datasets platform, which will consist of non-personal and anonymised datasets from Central government entities that have collected data from Indian citizens or those in India.
• The idea is that the non-personal data housed within this programme would be accessible to startups and Indian researchers, the draft proposal said.
• Among the stated objectives of the policy is to modernise the government’s data collection, with an aim to improve governance and to enable artificial intelligence (AI) and data-led research and startup ecosystem in the country.

GS PAPER – II

New laws are designed to replace British era criminal laws

Why in news?

• Loksabha has passed three amended bill that seek to repeal and replace the criminal laws that were in use since colonial period.

Major changes:

• The Indian penal code 1860 is replaced by Bhartiya Nyaya (second) sanhita bill.
• Code of criminal procedure, 1898 is replaced by Bhartiya saksshya (second) bill.
• Indian evidence act is replaced by Bhartiya Nagrik suraksha (second) sanhita bill.
• The criminal law reforms bring terrorism offences into a general crime.
• Sedition has been repealed.
• Punishment for mob lynching is punishable by death.
• It amended the law which excluded doctors from criminal prosecution for death due to medical negligence.
• Hit and run cases are punishable by ten years.

What followed in Lok sabha?

• Majority Opposition members were absent as 97 0f them were suspended during the session.
• All three bills were discussed and passed with voice vote.
• Home minister told that bill stressed justice rather than punishment.
• It is a pure Indian law and it will protect country from becoming a police state

GS PAPER – II

Donald trump disqualified

Why in news?

• The Colorado supreme court barred Former US president Donald trump from appearing on the state’s ballot because of his actions leading up to January 6, 2021 riots.

About the riot

• On January 6, 2021 protestors scaled the walls of the capitol west front, smashing windows, resulting in an armed standoff with security.
• At least four people died and 52 were arrested.
• The court said that president did not merely incite the insurrection but his demand insisted vice president pence to refuse to perform his constitutional duties.

What does this ruling means?

• This means that trump might not appear on the ballot in Colorado for that vote.
• But he can still able to run in other Republican primaries.
• The Colorado court ruling does not directly address the general election.
• Trump campaign on the other hand told that it will appeal to US Supreme Court against the Colorado ruling.