KUDUMBASHREE
1. Context
2. About Kudumbashree in Kerala
- Kudumbashree is a poverty eradication and women empowerment programme implemented by the State Poverty Eradication Mission (SPEM) of the Government of Kerala. The name Kudumbashree means "prosperity of the family" in Malayalam.
- Kudumbashree was launched in 1998 to empower women and reduce poverty in Kerala.
- It is one of the largest women's empowerment programmes in the world, with over 4.5 million members.
- Kudumbashree is based on the principle of collective action. NHGs are formed at the village level, with each NHG consisting of 15-20 women.
- SHGs are formed within NHGs, with each SHG consisting of 10-15 women. SHGs are the primary units of Kudumbashree, and they provide a range of services to their members, including microfinance, skill development, and income generation.
2.1. The benefits of kudumbasree
Kudumbashree offers a wide range of benefits to its members, including:
- Kudumbashree provides microfinance loans to its members at affordable interest rates. This helps women to start their own businesses and generate income for their families.
- Kudumbashree offers a variety of skill training programmes to its members, such as tailoring, embroidery, computer training, and beauty care. This helps women to develop new skills and improve their employability.
- Kudumbashree helps its members to start income-generating activities, such as self-help groups, micro-enterprises, and community farming. This helps families to increase their incomes and improve their living standards.
- Kudumbashree offers a variety of social welfare programmes to its members, such as health insurance, child care, and old age pension. This helps families to meet their basic needs and live with dignity.
- Kudumbashree plays an important role in disaster relief and rehabilitation. It provides emergency relief to families affected by natural disasters and helps them to rebuild their lives.
- Kudumbashree empowers women to participate in public life and make decisions that affect their lives.
- Kudumbashree brings people together from different backgrounds and communities. This helps to promote social cohesion and reduce conflict.
- Kudumbashree has helped to reduce gender inequality in Kerala by empowering women and giving them a voice in society.
3. About Self-Help Groups
Self-Help Groups (SHGs) are small, informal, and economically homogeneous groups of individuals who come together voluntarily to address common social and economic goals. They are a form of microfinance and community development, primarily focused on empowering marginalized and economically disadvantaged sections of society, especially women. The concept of SHGs has gained significant traction as a means of poverty alleviation and women's empowerment.
Importance of Self-help groups (SHGs)
- SHGs provide their members with access to financial services, skill training, and other resources. This can help members to start their own businesses, invest in education and healthcare, and cope with unexpected expenses.
- SHGs are typically composed of women, and they play an important role in empowering women. SHGs help women to build confidence, develop leadership skills, and participate in public life.
- SHGs provide a variety of social services to their members and the community at large. They can help to improve access to education, healthcare, and other essential services. SHGs can also play a role in disaster relief and rehabilitation.
- SHGs bring together people from different backgrounds and communities to work together for the common good. This can help to promote social cohesion and harmony.
3.1. The data and statistics about SHGs in India
As of 2023, there are over 8 crore Self Help Groups (SHGs) in India with over 14 crore members. Of these, over 90% are women-led SHGs. SHGs have played a significant role in reducing poverty, empowering women, and improving social development in India.
Some key data and statistics on SHGs in India
- Number of SHGs: 8.54 crore (as of March 2022)
- Number of SHG members: 14.2 crore (as of March 2022)
- Percentage of women-led SHGs: 90%
- Total savings of SHGs: Rs. 47,240 crore (as of March 2022)
- Total loans disbursed to SHGs by banks: Rs. 10,30,000 crore (as of March 2022)
3.2. The necessity of SHGs in rural development
Self-help groups (SHGs) are a necessity in rural development for several reasons.
- SHGs provide their members with access to financial services, skill training, and other resources. This can help members to start their own businesses, invest in education and healthcare, and cope with unexpected expenses.
- SHGs are typically composed of women, and they play an important role in empowering women. SHGs help women to build confidence, develop leadership skills, and participate in public life.
- SHGs can help to improve access to social services such as education, healthcare, and drinking water. They can also play a role in disaster relief and rehabilitation.
- SHGs can help to promote sustainable development by promoting environmental protection, natural resource management, and other sustainable practices.
- SHGs can help farmers improve their agricultural practices by providing them with access to inputs, credit, and training. This can lead to increased agricultural productivity and incomes.
- SHGs can help farmers to market their produce more effectively by providing them with information on market prices and trends, and by helping them to negotiate better prices for their produce.
- SHGs can help rural households access credit for productive purposes such as starting a business or investing in agriculture. This can help to reduce poverty and promote economic development.
- SHGs can help to reduce social isolation and promote community cohesion by providing members with a platform to interact and socialize.
3.3. The Role of SHGs in Women's Empowerment and Fighting Poverty
Self-help groups (SHGs) play a significant role in women's empowerment and fighting poverty. They provide women with a platform to come together, save money, and access credit. SHGs also provide women with training and support to start their own businesses and improve their skills.
The specific ways in which SHGs empower women and fight poverty:
- SHGs provide women with access to credit at low interest rates. This helps women to start their own businesses and invest in income-generating activities.
- SHGs offer a variety of skill training and development programmes to their members. This helps women to improve their employability, start their own businesses, and generate additional income.
- SHGs provide women with opportunities to develop their leadership skills. This helps women to participate more effectively in public life and to advocate for their rights.
- SHGs provide women with social support and empowerment. They help women to build confidence, develop their self-esteem, and overcome social barriers.
| For Prelims: kudumbashree, SHGs
For Mains
1. SHGs are a crucial tool for empowering women and reducing poverty in India. Comment (250 Words)
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Previous Year Questions
1. Consider the following statements: (UPSC 2023)
1. The Self-Help Group (SHG) programme was originally initiated by the State Bank of India by providing microcredit to the financially deprived.
2. In an SHG, all members of a group take responsibility for a loan that an individual member takes.
3. The Regional Rural Banks and Scheduled Commercial Banks support SHGs.
How many of the above statements are correct?
A. Only one B. Only two C. All three D. None
Answer: B
2. Kudumbashree is a programme implemented by the State Poverty Eradication Mission (SPEM) in ______. (SSC CPO 2020)
A. Gujarat B. Odisha C. Kerala D. Andhra Pradesh
Answer: C
Mains
1. Can the vicious cycle of gender inequality, poverty and malnutrition be broken through microfinancing of women SHGs? Explain with examples. (2021)
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NATIONAL INVESTMENT AND INFRASTRUCRURE FUND (NIIF)
Key features and details of the National Investment and Infrastructure Fund (NIIF) include:
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The NIIF is structured as a fund of funds (FoF), which means it invests in various sector-specific or project-specific funds rather than making direct investments. These sector-specific funds can focus on areas like transportation, energy, urban infrastructure, and more.
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The NIIF comprises contributions from the Indian government, international investors, and other financial institutions. The government's contribution is typically channeled through the India Investment Grid (IIG) and other related entities.
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The NIIF is professionally managed by a team of experienced professionals and experts in the field of finance and infrastructure. It operates with a mandate to make commercially viable investments in infrastructure projects.
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The fund's primary focus is on infrastructure projects that are considered economically viable. These projects can include transportation, energy, urban infrastructure, and other sectors critical to India's development.
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NIIF's objective is to act as a catalyst for both domestic and foreign investment in Indian infrastructure. It aims to provide a platform for long-term investors to participate in India's infrastructure growth story.
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NIIF plays a key role in promoting public-private partnerships in infrastructure development. By leveraging private sector investments and expertise, it helps address India's infrastructure financing gap.
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NIIF may adopt various investment approaches, including equity, debt, or hybrid instruments, depending on the specific project and investment needs.
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NIIF is often categorized as a sovereign wealth fund (SWF) because of its government sponsorship. However, it primarily focuses on domestic infrastructure investments rather than accumulating foreign assets.
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NIIF comprises various funds, including the NIIF Master Fund and sector-specific funds. Contributions from the Indian government, multilateral institutions, sovereign wealth funds, and other investors fund these sub-funds.
- NIIF is primarily established to provide long-term, patient, and flexible capital to infrastructure projects in India.
- It aims to bridge the financing gap for infrastructure development by attracting investments from various sources, including domestic and foreign investors
- One of the primary goals of NIIF is to act as a catalyst for investment in the infrastructure sector.
- By facilitating investments, it helps accelerate the development of infrastructure projects critical to India's economic growth.
- NIIF is involved in various stages of infrastructure project development, including project identification, planning, financing, and implementation. It plays a role in the entire project lifecycle
- NIIF seeks to make commercially viable investments. While it has a development mandate, it aims to generate returns on investments, making it an attractive proposition for investors.
The National Investment and Infrastructure Fund (NIIF) in India comprises several funds, each with a specific focus on different sectors and types of investments. As of my last knowledge update in September 2021, there were primarily three types of funds under NIIF:
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NIIF Master Fund: The NIIF Master Fund is the core fund and serves as the anchor fund for NIIF. It is a diversified fund that can invest in various infrastructure projects and sectors. Its primary objective is to attract investment from both domestic and international sources and facilitate infrastructure development across the country. The Master Fund is typically involved in equity investments in infrastructure projects and may also provide debt financing.
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Fund of Funds (FoFs): NIIF operates several sector-specific and project-specific funds, referred to as Fund of Funds (FoFs). These funds are set up to focus on particular sectors, such as energy, transportation, and urban infrastructure. The FoFs are designed to channel investments into specific sectors where there is a need for infrastructure development. For example, there may be an FoF dedicated to renewable energy projects, which will invest in various renewable energy ventures.
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Strategic Investment Fund (SIF): The Strategic Investment Fund is another type of fund under the NIIF umbrella. This fund is aimed at making direct investments in companies and businesses that are involved in the infrastructure sector. SIF can invest in both greenfield (new projects) and brownfield (existing projects) investment
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Previous Year Questions
1.With reference to 'National Investment and Infrastructure Fund', which of the following statements is/are correct? (UPSC CSE 2017)
1. It is an organ of NITI Aayog.
2. It has a corpus of Rs 4,00,000 crore at present.
Select the correct answer using the code given below:
A. 1 Only
B. 2 Only
C. Both 1 and 2
D. Neither 1 nor 2
Answer (D)
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LEGISLATIVE ASSEMBLY ELECTIONS
1. Context
2. Reforms and changes are proposed by Election Commission of India in the upcoming elections
The Election Commission of India (ECI) has proposed several reforms and changes for the upcoming elections, including:
- The ECI has proposed that VVPAT machines be made mandatory for all elections. VVPAT machines generate a paper slip that displays the voter's chosen candidate, which is then dropped into a sealed box. This allows voters to verify their vote and helps to prevent fraud.
- The ECI is also considering the use of R-EVMs in the upcoming elections. R-EVMs are EVMs that can be operated from a remote location, such as a polling booth in a remote area. This would make it easier for voters in remote areas to cast their votes.
- The ECI has also proposed to make online voter registration easier and more accessible. This would make it easier for eligible voters to register to vote, especially young voters and voters who live abroad.
- The ECI has also proposed measures to increase transparency in political funding. This would include requiring political parties to disclose their sources of income and expenditure.
- The ECI has also proposed to strictly enforce the Model Code of Conduct during elections. The Model Code of Conduct is a set of guidelines that political parties and candidates must follow during elections. It is intended to ensure that elections are conducted in a fair and free manner.
- The ECI is proposing to increase the number of polling booths in areas with a large number of voters. This would make it easier for voters to cast their votes without having to travel long distances.
- The ECI is proposing to introduce new rules for regulating the use of social media during elections. This includes requiring political parties to disclose their social media accounts and to be transparent about the content they are sharing.
3. The election process
The election process in India is as follows:
- The ECI announces the schedule for the elections at least six weeks before the date of polling. The schedule includes the dates for filing nominations, campaigning, and polling.
- Political parties and candidates file their nominations with the ECI on the specified dates. Each candidate must file a nomination form and pay a deposit. The nomination form must include the candidate's name, address, and other personal information.
- The ECI scrutinizes the nominations to ensure that they meet all the requirements. The ECI may reject a nomination if the candidate is not eligible to contest the election or if the nomination form is not properly filled out.
- The candidates campaign for the elections from the date of notification of candidates to the 48 hours before the polling day. During this period, the candidates hold rallies, give speeches, and distribute pamphlets.
- Voting is held on the day of the election, which is a public holiday in India. Voters must cast their votes at the polling booth in the constituency where they are registered to vote. Voters must show their voter ID card to cast their vote.
- The votes are counted after the polls close. The counting of votes is done in the presence of representatives of the candidates and political parties. The candidate who receives the most votes in a constituency is declared the winner.
- The ECI declares the results of the elections after the counting of votes is complete. The winning candidates are awarded certificates of election.
4. The maximum and minimum strengths of a legislative assembly
- The maximum and minimum strength of a legislative assembly is specified in the Constitution of India.
- The Constitution also gives the states the autonomy to decide on the number of seats reserved for women Scheduled Castes and Scheduled Tribes.
- The maximum strength of a legislative assembly in India is 500 members and the minimum strength is 60 members. However, there are some exceptions to this rule.
- For example, the legislative assemblies of Arunachal Pradesh, Goa, and Sikkim have a minimum strength of 30 members, and the legislative assemblies of Mizoram and Nagaland have a minimum strength of 40 and 46 members respectively.
- The strength of a legislative assembly is determined by the population of the state. The larger the population of the state, the larger the size of the legislative assembly.
5. Determination of the legislative assembly’s strength
- The strength of the legislative assembly is determined by the Delimitation Commission.
- The Delimitation Commission is a quasi-judicial body that is appointed by the Government of India.
- The Delimitation Commission is responsible for redrawing the boundaries of constituencies based on the latest census data.
- The Delimitation Commission takes into account several factors when determining the strength of a legislative assembly, including:
- The population of the state
- The geographical features of the state
- The distribution of population within the state
- The number of Scheduled Castes and Scheduled Tribes in the state
- The Delimitation Commission also ensures that each constituency has approximately the same number of voters.
- This is important to ensure that all voters have equal representation in the legislative assembly.
- Once the Delimitation Commission has determined the strength of the legislative assembly, it publishes a delimitation order.
- The delimitation order specifies the number of constituencies in the state and the boundaries of each constituency.
- The strength of a legislative assembly is an important factor in determining the level of representation that voters have.
- A larger legislative assembly means that there are more representatives to represent the interests of the people.
6. Reasons for no uniformity in the organisation of state legislatures
- There is no uniformity in the organization of state legislatures in India because the Constitution of India gives the states a lot of autonomy in this matter.
- The Constitution only specifies the minimum and maximum strength of state legislatures.
- The states are free to decide on the number of seats reserved for women, Scheduled Castes and Scheduled Tribes.
- The Constitution also gives the states the option to have a unicameral or bicameral legislature. A unicameral legislature has only one house, while a bicameral legislature has two houses.
Currently, six states in India have a bicameral legislature:
- Andhra Pradesh
- Bihar
- Telangana
- Karnataka
- Maharashtra
- Uttar Pradesh
The other states and union territories in India have a unicameral legislature.
The following are some of the reasons why there is no uniformity in the organization of state legislatures:
- Some states have a bicameral system because they have a long history of bicameralism. For example, the states of Uttar Pradesh and Bihar had bicameral legislatures before independence.
- India is a linguistically and culturally diverse country. The states have different languages, cultures, and traditions. This diversity is reflected in the organization of state legislatures. For example, the state of Tamil Nadu has a unicameral legislature because it has a strong tradition of unitary government.
- Political parties often play a role in determining the organization of state legislatures. For example, the state of Telangana has a bicameral legislature because the ruling party wanted to create a separate upper house to represent the interests of different groups in the state.
- The states have different administrative requirements. This may necessitate different types of state legislatures.
The following are some of the advantages and disadvantages of having a bicameral legislature:
Advantages:
- A bicameral legislature can provide better representation for different groups in the state.
- A bicameral legislature can act as a check on the power of the lower house.
- A bicameral legislature can provide a forum for more in-depth deliberation on legislation.
Disadvantages:
- A bicameral legislature can be more expensive to run than a unicameral legislature.
- A bicameral legislature can be more difficult to manage than a unicameral legislature.
- A bicameral legislature can lead to a deadlock between the two houses.
7. Model Code of Conduct
After the Election Commission announces the schedule for the polls, various activities related to the election process, including nomination filing, campaigning, polling, and counting, are carried out as per the prescribed timeline. The Model Code of Conduct comes into effect, and the election machinery is put into motion to ensure a free and fair electoral process.
7.1. Duration of Model Code of Conduct
- The Model Code of Conduct (MCC) is a set of guidelines that political parties and candidates must follow during elections in India.
- It is intended to ensure that elections are conducted in a fair and free manner.
- The MCC was first introduced in 1971 and has been updated several times since then.
- The Model Code of Conduct (MCC) is enforced from the date of the announcement of the election schedule by the Election Commission and remains in operation until the completion of the election process, which includes the counting of votes and the announcement of results.
7.2. The Role of the Election Commission in the State Legislative Assembly Elections
- The Election Commission of India (ECI) is a constitutional body responsible for conducting elections to the Parliament of India and the legislative assemblies of the states and union territories of India.
- The ECI is also responsible for conducting elections to the office of the President of India and the Vice President of India.
- The State Election Commissions (SECs) are statutory bodies responsible for conducting elections to the urban local bodies (ULBs) and rural local bodies (RLBs) in the states.
- The SECs are set up under the provisions of the Constitution of India and the state election laws.
The ECI's role in state legislative elections includes
- The ECI announces the schedule for state legislative elections at least six weeks before the date of polling. The schedule includes the dates for filing nominations, campaigning, and polling.
- The ECI scrutinizes the nominations of political parties and candidates to ensure that they meet all the requirements.
- The ECI is responsible for conducting polling on the day of the election. This includes setting up polling booths, providing ballot papers, and deploying security personnel.
- The ECI is responsible for counting votes after the polls close. The counting of votes is done in the presence of representatives of the candidates and political parties.
- The ECI declares the results of the elections after the counting of votes is complete. The winning candidates are awarded certificates of election.
- The Model Code of Conduct is a set of guidelines that political parties and candidates must follow during elections. The Model Code of Conduct is intended to ensure that elections are conducted in a fair and free manner.
- The ECI monitors the campaign period to ensure that all political parties and candidates adhere to the Model Code of Conduct.
- The ECI conducts voter education programs to ensure that all eligible voters are aware of their rights and responsibilities.
- The ECI resolves disputes that arise during the election process, such as disputes over the validity of nominations or the counting of votes.
7.3. The salient features of the Model Code of Conduct
- The Model Code of Conduct is intended to ensure that elections are conducted in a fair and free manner. This means that all political parties and candidates must have an equal opportunity to participate in the election process.
- The Model Code of Conduct requires all political parties and candidates to be transparent about their activities and finances. This helps to promote accountability and deter corruption.
- The Model Code of Conduct prohibits political parties and candidates from discriminating against any person based on caste, creed, religion, language, or sex. This helps to ensure that all citizens have an equal opportunity to participate in the election process.
- The Model Code of Conduct respects the right to free speech. However, it prohibits political parties and candidates from making false or misleading statements. It also prohibits them from inciting violence or hatred.
- The Model Code of Conduct requires political parties and candidates to maintain law and order during the election process. This means that they must avoid any actions that could lead to violence or disorder.
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For Prelims: Election Commission of India, State Election Commissions, State legislative elections, Model Code of Conduct, Bicameralism, Delimitation Commission, VVPAT, R-EVM's,
For Mains:
1. Critically examine the reasons for the lack of uniformity in the organization of state legislatures in India. What are the advantages and disadvantages of a bicameral legislature? (250 words)
2. Discuss the challenges faced by the Election Commission of India in conducting elections in a large and diverse country like India. Suggest measures to improve the electoral process. (250 words)
3. What factors determine the strength of a legislative assembly in India? How does the Delimitation Commission play a crucial role in the determination of legislative assembly strength? (250 words)
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Previous Year Questions
Prelims
1. Consider the following statements: (UPSC 2017) 1. The Election Commission of India is a five-member body.
2. Union Ministry of Home Affairs decides the election schedule for the conduct of both general elections and bye-elections.
3. Election Commission resolves the disputes relating to splits/mergers of recognised political parties.
Which of the statements given above is/are correct? A. 1 and 2 only B. 2 only C. 2 and 3 only D. 3 only Answer: D 2. With reference to the Constitution of India, prohibitions or limitations or provisions contained in ordinary laws cannot act as prohibitions or limitations on the constitutional powers under Article 142. It could mean which one of the following? (UPSC CSE 2019) Answer: B 3. Consider the following statements : (UPSC 2021) 1. In India, there is no law restricting the candidates from contesting in one Lok Sabha election from three constituencies.
2. In the 1991 Lok Sabha Election, Shri Devi Lal contested from three Lok Sabha constituencies.
3. As per the- existing rules, if a candidate contests in one Lok Sabha election from many constituencies, his/her party should bear the cost of bye-elections to the constituencies vacated by him/her in the event of him/her winning in all the constituencies.
Which of the statements given above is/are correct?
A. 1 only B. 2 only C. 1 and 3 D. 2 and 3
Answer: B
4. With reference to the Delimitation Commission, consider the following statements: (UPSC 2012)
1. The orders of the Delimitation Commission cannot be challenged in a Court of Law.
2. When the orders of the Delimitation Commission are laid before the Lok Sabha or State Legislative Assembly, they cannot effect any modifications in the orders.
Which of the statements given above is/are correct?
A. 1 only B. 2 only C. Both 1 and 2 D. Neither 1 nor 2
Answer: C 5. The Voter Verifiable Paper Audit Trail (VVPAT) system was used for the first time by the Election Commission of India in (UPSC CAPF 2019) A. North Paravur Assembly Constituency, Kerala
B. Noksen Assembly Constituency, Nagaland
C. Mapusa Assembly Constituency, Goa
D. Nambol Assembly Constituency, Manipur
Answer: B 6. VVPAT, used in Electronic Voting Machine, stands for (BPSC CDPO 2018) A. Voter Verifiable Paper Audit Trail
B. Voter Varying Paper Account Trail
C. Voter Verified Paper Account Trail
D. Voting Verifiable Paper Audit Trail
E. None of the above/More than one of the above
Answer: A 7. In which of the following options, Electronic Voting Machines were used for the first time during general elections all over India? (Rajasthan Police Constable 2020) A. 2014 B. 1999 C. 2004 D. 2009 Answer: C Mains 1. In the light of recent controversy regarding the use of Electronic Voting Machines (EVM), what are the challenges before the Election Commission of India to ensure the trustworthiness of elections in India? (UPSC 2018) 2. Discuss the role of the Election Commission of India in the light of the evolution of the Model Code of Conduct. ( UPSC 2022) |
NON FUNGIBLE TOKENS (NFT)
- Non-fungible tokens (NFTs) are a type of digital asset that represent ownership or proof of authenticity of a unique item or piece of content using blockchain technology. Unlike cryptocurrencies such as Bitcoin or Ethereum, which are fungible and can be exchanged on a one-to-one basis (1 BTC is always equal to 1 BTC), NFTs are non-fungible, meaning each NFT has distinct, irreplaceable properties that make it one-of-a-kind
- For the uninitiated, Blockchain is a distributed ledger where all transactions are recorded. It is like your bank passbook, except all your transactions are transparent and can be seen by anyone and cannot be changed or modified once recorded.
- NFTs are gaining massive popularity now because they are becoming an increasingly popular way to showcase and sell your digital artwork.
- Billions of dollars have been spent on NFTs since its inception—which date backs to 2015, and Terra Nulius was the first NFT on Ethereum Blockchain, although this project was merely an idea which only allowed to customise a short message which was then recorded on blockchain.
Non-Fungible Tokens (NFTs) work by leveraging blockchain technology to create and manage unique, digital assets. Here's a step-by-step explanation of how NFTs function:
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Blockchain Technology: NFTs are typically built on blockchain platforms, with Ethereum being one of the most popular choices. A blockchain is a distributed ledger that records transactions in a secure and immutable manner.
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Tokenization: To create an NFT, a digital or physical asset is tokenized. This process involves converting the unique asset, such as digital art, music, or a collectible, into a digital token. This token is coded to be non-fungible, meaning it has unique characteristics that distinguish it from other tokens.
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Smart Contracts: NFTs often use smart contracts, which are self-executing contracts with the terms and conditions of the NFT written into code. Smart contracts automate various functions, such as the transfer of ownership, royalties, and other rules associated with the NFT.
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Minting: The creation of an NFT is called "minting." This is typically done through NFT marketplaces or platforms that support NFT creation. When an artist or creator wants to mint an NFT, they upload the digital file, provide details about the NFT, and often set parameters like royalties to be received on future sales.
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Ownership and Provenance: Once minted, the NFT is assigned to a specific blockchain address, and ownership is recorded on the blockchain. The blockchain provides transparency and a history of the NFT, showing who the original creator is and any subsequent transfers or sales. Provenance and authenticity are major benefits of NFTs.
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Transfer and Transactions: NFTs can be bought, sold, and traded on NFT marketplaces. When a transaction occurs, the blockchain updates the ownership records. These transfers can happen instantly, and ownership changes are recorded on the blockchain.
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Interoperability: NFTs are not confined to a single platform or ecosystem. They can be bought and sold on different NFT marketplaces, making them highly interoperable.
- Wallets: To interact with NFTs, individuals need cryptocurrency wallets that are compatible with the blockchain supporting the NFT. These wallets store the private keys necessary to access and manage NFTs.
| Subject | Non Fungible Tokesn (NFT) | Cryptocurrency |
| Fungibility | NFTs are non-fungible, which means each NFT is unique and cannot be exchanged on a one-to-one basis with other NFTs. They represent ownership or proof of authenticity of a specific, one-of-a-kind item or piece of content. | Cryptocurrencies like Bitcoin and Ethereum are fungible, meaning each unit is interchangeable with any other unit of the same denomination. For example, one Bitcoin is always equal in value and utility to another Bitcoin |
| Ownership and Value | NFTs represent ownership of unique digital or physical assets, such as digital art, music, collectibles, or even real estate. They derive their value from the uniqueness and scarcity of the assets they represent | Cryptocurrencies are primarily used as digital money and store of value. They have a quantifiable value and are used for transactions, investments, and as a medium of exchange. |
| Interchangeability | NFTs are not interchangeable. Each NFT represents a distinct and irreplaceable item, and they are typically not used for everyday transactions like buying coffee or groceries | Cryptocurrencies are interchangeable and are often used for everyday transactions. You can send or receive fractions of a cryptocurrency with the same denomination. |
| Blockchain Technology | NFTs can be built on various blockchain platforms, with Ethereum being a popular choice. NFTs rely on blockchain technology to record and verify ownership and provenance | Cryptocurrencies are typically built on blockchain networks optimized for financial transactions. Bitcoin, for example, operates on a blockchain focused on secure, peer-to-peer payments |
| Value Determination | The value of NFTs is often influenced by factors like the rarity of the asset they represent, the reputation of the creator, and the demand from collectors and investors | The value of cryptocurrencies is determined by supply and demand dynamics in the open market, and their prices can be highly volatile |
Some of the largest NFT marketplaces are:
OpenSea.io: Touted as the largest NFT marketplace, you can find digital art, there are collectibles including game items, domain names, even digital representations of physical assets at OpenSea. Essentially, the platform is like an eBay for NFTs with millions of digital assets organised into hundreds of categories.
Rarible: Quite similar to OpenSea, Rarible is also one of the largest NFT marketplace that enables artists and creators to issue and sell NFTs.
Foundation: This is a unique NFT marketplace where artists must receive “upvotes” from fellow creators to post their art. Artists list NFTs for auction at a reserve price, and once the first bid is placed, a 24-hour auction countdown begins. If a bid is placed within the last 15 minutes, the auction extends for another 15 minutes.
6.What are the risks associated with buying NFTs?
Buying Non-Fungible Tokens (NFTs) can be an exciting and potentially lucrative endeavor, but it also carries certain risks. It's important for anyone considering NFT investments to be aware of these risks and take precautions
Here are some of the main risks associated with buying NFTs:
- NFT prices can be highly volatile. Just like cryptocurrencies, the value of NFTs can fluctuate significantly in a short period. Buying an NFT at a high price could result in substantial losses if the market value declines
- While NFTs can be bought and sold, the market for certain NFTs may lack liquidity, making it challenging to sell them quickly or at a fair price, especially for lesser-known or niche assets.
- The NFT space has attracted scammers who create fake or plagiarized NFTs, as well as fraudulent NFT marketplaces.
- Buyers should exercise caution and verify the authenticity of the NFT and the reputation of the seller.
- NFTs are often associated with digital art, music, and other creative works. There can be legal challenges and copyright disputes related to the ownership and sale of these assets. Buyers should ensure they have the rights to use and resell the NFT.
7. Way forward
NFTs work by creating unique digital tokens on a blockchain that represent ownership and authenticity of digital or physical assets. They are bought, sold, and traded in a transparent and secure manner, and their smart contracts often allow for automated processes like royalties. The NFT space is continually evolving, offering new opportunities and challenges for creators, collectors, and investors
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Previous Year Questions 1. With reference to Non-Fungible Tokens (NFTs), consider the following statements: (UPSC CSE 2022) 1. They enable the digital representation of physical assets. 2. They are unique cryptographic tokens that exist on a blockchain. 3. They can be traded or exchanged at equivalency and therefore can be used as a medium of commercial transactions. Which of the statements given above is/are correct? A.1 and 2 only B.2 and 3 only C.1 and 3 only D.1, 2 and 3 Answer (A) |
Source: indianexpress
ELECTORAL BONDS
1. Context
2. Statistics
- As much as Rs 660.25 crores of EBs 97.63 per cent of the bonds sold were encashed by political parties at the New Delhi Main branch of State Bank of India.
- SBI is the only bank authorised to issue EBs to political parties.
- SBI said EBs worth Rs 309.45 crores were sold by the Mumbai Main branch and Rs 222.40 crores by the New Delhi Branch.
- With this, the total amount collected by parties through EBs has gone up to Rs 11, 467 crores from various anonymous donors in 23 phases since 2018 when the Electoral Bond Scheme was introduced.
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Anonymous donors had given Rs 545 crores in the 22nd sale of EBs conducted between October 1 and 10, according to data available from SBI.
Parties got 1,221 crores in the last two months and Rs 389.50 crores in the previous sale in July this year.
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3. Electoral bonds
- Simply, electoral bonds are a debt instrument through which anyone can donate money to political parties.
- Such bonds are a debt instrument through which anyone can donate money to political parties.
- Such bonds are sold in multiples of Rs 1,000, Rs 10, 000, Rs 1 lakh, Rs 10 lakh and Rs 1 crore and can be bought from authorised branches of the State Bank of India.
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A donor is required to pay the amount say Rs 10 lakh via a cheque or a digital mechanism (cash is not allowed) to the authorised SBI branch.
The donor can then give this bond (just one, if the denomination chosen is Rs 10 lakh or 10, if the denomination is Rs 1 lakh) to the party or parties of their choice.
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- The political parties can choose to encash such bonds within 15 days of receiving them and fund their electoral expenses.
- On the face of it, the process ensures that the name of the donor remains anonymous.
4. Reasons for introducing electoral bonds
- The country has not been able to evolve a transparent method of funding political parties which is vital to the system of free and fair elections.
- Political parties continue to receive most of their funds through anonymous donations which are shown in cash.
- An effort, therefore, requires to be made to cleanse the system of political funding in India.
5. Introducing electoral bonds
- The reduction of the amount of money that a political party could accept in cash from anonymous sources from Rs 20, 000 to Rs 2, 000.
- The introduction of electoral bonds is a way to make such funding more transparent.
6. Criticism
- The central criticism of the electoral bonds scheme is that it does the exact opposite of what it was meant to do: Bring transparency to election funding.
- The anonymity of electoral bonds is only for the broader public and opposition parties.
- The fact that such bonds are sold via a government-owned bank (SBI) leaves the door open for the government to know exactly who is funding its opponents.
- This, in turn, allows the possibility for the government of the day to either extort money, especially from the big companies or victimise them for not funding the ruling party either way providing an unfair advantage to the party in power.
- Further, one of the arguments for introducing electoral bonds was to allow common people to easily fund political parties of their choice but more than 90 per cent of the bonds have been of the highest denomination (Rs 1 crore).
7. Learning outcomes
- Moreover, before the electoral bonds scheme was announced, there was a cap on how much a company could donate to a political party: 7.5 per cent of the average net profits of a company in the preceding three years.
- However, the government amended the Companies Act to remove this limit, opening the doors to unlimited funding by corporate India.
8. Election commission's stand
- The Election Commission, in its submission to the Standing Committee on Personnel, Public Grievances, Law and Justice in May 2017, had objected to the amendments in the Representation of the People (RP) Act, which exempt political parties from disclosing donations received through electoral bonds. It described the move as a "retrograde step".
- In a letter written to the Law Minister the same month, the Commission had even asked the government to 'reconsider' and "modify" the above amendment.
| Asking the government to withdraw the new proviso, the EC had written, "In a situation where the contribution received through electoral bonds are not reported, on perusal of the contribution report of political parties, it cannot be ascertained whether the political party has taken any donation in violation of provision under Section 29(b) of the RP Act which prohibits the political parties from taking donations from government companies and foreign sources". |
For Prelims & Mains
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For Prelims: Election Commission of India, Electoral bonds, Representation of the People act, State Bank of India,
For Mains:
1. What are electoral bonds and Discuss why the electoral bonds scheme is opposed by transparency activists (250 Words) |
Source: The India Express
