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DAILY CURRENT AFFAIRS, 12 JUNE 2023

MORGAN STANLEY'S GLOBAL ECONOMIC OUTLOOK

 
 
 
1.Context
Morgan Stanley’s latest forecast suggests that some of the wealthiest countries will struggle to grow in the coming months while China is expected to regain its growth momentum.
 
2.Key takeaways
  • Both global growth as well as global inflation is likely to moderate through 2023 and 2024
  • Some of the wealthiest countries in the world are in for a tough time. The G10 countries are likely to witness rather anaemic growth rates
  • The G10 grouping refers to, oddly enough, 11 industrialised countries
  • The member countries are Belgium, Canada, France, Germany, Italy, Japan, the Netherlands, Sweden, Switzerland, the United Kingdom, and the United States
  • As the names suggest, the G10 refers to some of the wealthiest countries (in per capita income terms) in the world.
  • China, on the other hand, is expected to progressively recover its growth momentum
  • Even so, it is unlikely to challenge India in terms of GDP growth rates. Readers should, however, remember that the Chinese economy is almost five-times India’s size (in terms of GDP)
  •  So when China grows at 5% in a year, it adds $1 trillion to its GDP, which is already around $20 trillion
  • To match the same level of additional GDP, India will have to grow at more than 25% because India’s existing GDP base is less than $4 trillion.
  • On the inflation front, it looks like US inflation is likely to come fairly close to the US central bank target of 2% by the end of 2023
  • This would be good news because the US central bank actions tend to have an oversized impact on economies across the world including India
  •  If inflation is under control in the US, India can look forward to a more stable interest rate scenario, which, in turn, will help business plan and invest
 
 
 
Source: indianexpress

RAIL INTERLOCKING SYSTEM

1. Context 

An electronic track management system used by the Railways has become the focus of the investigation after the multigrain crash in the Balasore District of Odisha on June 2, leaving nearly 300 people dead and more than 1, 000 injured.
 

2. Key points

  • According to the Minister for Railways, stated to the Media that the electronic interlocking and point machine change led to the accident. 
  • The Railway Board, the apex body of Indian Railways, also singled out "Signalling interference" in its preliminary probe, with senior officials indicating that possible sabotage and tampering with the interlocking system could have caused the mishap.

3. About Interlocking System.

  • Railway traffic is controlled and managed by railway signalling. Interlocking, an integral part of it, involves a set of apparatus placed on a track to manage the safe movement of trains and track to manage the safe movement of trains and track configuration at stations and junctions.
  • It prevents conflicting movements as a train gets a signal to proceed ahead only when its route is set, locked and detected as safe.
  • The signal apparatus in an interlocking system may be interconnected mechanically or electrically with the tracks or both.
  • Electronic interlocking (EI) is an advanced version of signalling that uses computer-based systems and electronic equipment to control signals, points and level-crossing gates.
  • The Indian Railways defines it as "microprocessor-based interlocking equipment to read the yard and panel inputs; process them in a failsafe manner and generate required output.
  • Unlike the conventional relay interlocking system, the interlocking logic in an EI system is managed via software and electronic components.
  • It ensures all elements work together in proper sequence so that trains can move without coming in the way of one another.
Image source: The Hindu

4. Components of Electronic interlocking signal system

4.1. Signal

Based on the status of the track ahead, light signals direct a train to stop (red light), proceed (green) or exercise caution (yellow).

4.2. Point

  • These are moveable sections of a track which allow a train to change track by guiding the wheels towards a straight or diverging line.
  • For instance, if a train has to change lines, the point is activated ahead of time and locked.
  • Electric point machines lock and unlock point switches in the desired position.

4.3. Track Circuit

  • Electrical circuits are installed on tracks to detect the presence of a train between two points.
  • These verify whether it is safe for a train to proceed over it.
  • Electronic systems, communication devices that control signalling equipment and other components are kept in relay rooms with dual lock access control.
  • All systems activities are recorded in a "data logger", similar to an aircraft's black box.

5. Working of the system

  • The system receives a command, following which information is collected from the yard and processed to set a safe route.
  • The determined route is aligned and signalling devices are interlocked at a particular position.
  • A signal to pass is given based on which direction the track is set and whether the divergent track is set and whether the divergent track is free of obstruction.
  • If a train is required to switch lines, the system will direct it to the empty track where two lines meet.
  • Track circuits, meanwhile, prevent multiple trains from running on that block to avoid a collision.
  • All points remain locked until the train has crossed a particular section of the track in use or the signal to proceed has been withdrawn.
  • In case there is a failure in the system, the red light will be flashed, indicating that the route ahead is not clear or safe.

6. Causes for the Odish train crash

  • A preliminary probe by Railways officials has found that a problem with the signal system could be the cause of the accident at Bahanaga Bazar railway station on the evening of June 2.
  • The change that was done to the electronic interlocking led the Coromandel Express off the main line and onto the loop line where it crashed into a stationary goods train.
  • The Bahanaga Bazar station has four lines two main lines which are primarily used by trains that don't have a scheduled stop and two loop lines for those trains that have to stop or halt at the station.
  • At the time of the accident, two goods trains were stopped on the two loop lines, while the route was set for two mail express trains that were to pass the station via the main lines, as per Railway Board officials. The route, direction and signal were set.
  • The Coromandel Express heading south (to Chennai) was given the green signal to enter Up Main line.
  • The Yesvantpur Howrah Express heading north (to Kolkata) was to move on the Down Main Line.
  • At the time of the accident, the Yesvantpur Howrah was running at a speed of 126 kmph and the Coromandel Express was travelling at 128 kmph both within the permissible limit of 130 kmph for the section.
  • As the Coromandel Express was approaching the station, there was a signalling issue and the train move out of the main track and veered onto the adjacent track, the loop line, where it crashed into a parked freight train to carry iron ore, triggering the multi-train collision.
  • The impact of the collision was such that the engine of the Coromandel Express and a few coaches jumped the tracks, toppled and hit the last two coaches of the Yesvantpur Howrah Express headed in the opposite direction.

7. Malfunction of the system

  • Railway officials suspect that there was outside intervention or tampering because the affected stretch was equipped with the 'errorproof' EI system which ideally should not have taken the Coromandel Express to the loop line.
  • The kind of tinkering done with the logic of the system can only be intentional.
  • A senior officer, the flaws in the signalling system a few months before the Balasore accident.
  • The officer raised the issue of trains getting into adjacent lines despite getting the green signal for another track.
  • The official warned that if the signal maintenance system was not monitored and corrected immediately, it would result in serious accidents.
For Prelims: Indian Railways, electronic track management system, Minister for Railways,  interlocking system, Coromandel Express, Yesvantpur Howrah Express, Kavach
For Mains: 
1. What is an Interlocking system? Discuss the components of the Interlocking system and Explain the causes of the recent Odisha Train Accident. (250 Words)
 
 
Previous Year Questions
 
1. With reference to bio-toilets used by the Indian Railways, consider the following statements: (UPSC 2015) 
1. The decomposition of human waste in the bio-toilets is initiated by a fungal inoculum.
2. Ammonia and water vapour are the only end products in this decomposition which are released into the atmosphere.
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: D
 
Source: The Indian Express

ARCTIC SEA ICE

 

1. Context

A recent study in the Nature Journal says that the loss of Arctic sea ice is inevitable in the decades ahead, even if the world somehow gets its act together and sharply reduces carbon emissions. 
Image source: Nature

2. Why is the Arctic sea ice important?

  • The massive sheets of ice that pad the Arctic region plays a major role in influencing global climate and the rise and fall in Arctic sea temperatures.
  • During winter, the sea ice envelops most of the Arctic Ocean and in summer, a portion of it melts due to being exposed to longer periods of sunlight and elevated temperatures.
  • Sea ice normally melts and is at its thinnest and most sparse in mid-­September, when the area covered by ice is roughly half the size of the winter maximum.
  • With the onset of winter and dipping temperatures, the ice begins to expand and thicken, all the way until March when it reaches its zenith.

3. The United States Environment Protection Agency (EPA) explains the importance of sea ice

  • Sea ice is light-colored, reflecting more sunlight to space than liquid water, thus playing a vital role in keeping polar regions cool and maintaining the earth's energy balance.
  • Sea ice also keeps the air cool by forming a barrier between the cold air above and the relatively warmer water below.
  • As the amount of sea ice decreases, the Arctic region's cooling effect is reduced, and this may initiate a feedback loop whereby ocean warming caused by more absorption of solar energy leads to an even greater loss of sea ice and further warming.
  • Changes in sea ice can affect biodiversity and impact mammals such as polar bears and walruses, which rely on the presence of sea ice for hunting, breeding, and migrating. The reduction in ice cover also affects the traditional subsistence hunting lifestyle of indigenous Arctic populations such as Yup'ik, Inupiat, and Inuit.
  • On the other hand, reduced ice can present commercial and economic opportunities by opening shipping lanes and increasing access to natural resources in the Arctic region.
  • This has already provoked global competition with several countries, including India, vying for greater influence in groups such as the Arctic Council that governs access to Arctic resources.

4. What does the new study say?

  • The world will see its first 'sea-ice-free summer' before 2050.
  • The global emissions will drive temperatures to beyond 4.5°C making the Arctic ice-free by 2081-2100.
  • There is no scenario under which the Arctic sea ice can be saved in summer.
  • Moreover, if drastic reductions in emissions are not undertaken, we could very well be seeing the first such summer in the 2030s.

5. What’s the basis for this study’s conclusions? 

  • The researchers first estimated how much of the ice melting was due to human instigated, or anthropogenic factors and they found that this was as much as 90%, and the rest of it was caused by natural variability.
  • They established that the climate models, which even the IPCC relied on, underestimated the rapidity of melting.
  • When they corrected for this, it turned out that there were also likely to be ice-free Augusts and Octobers by 2080 in the emission scenarios where the temperature rose above 4.5°C. 

6. Consequences

  • The diminished sea ice while warming the Arctic also leads to a weakening of the polar jet streams, which are currents of air that form when warm and cold air meet.
  • This weakening has been linked to rising temperatures and heatwaves in Europe as well as unseasonal showers in northwest India.
  • While the ice-free summer may be inevitable, reducing carbon emissions might mean being better able to adapt to climate 'tipping points'.
For Prelims: Arctic Sea, the United States Environment Protection Agency (EPA), Arctic Council, Intercontinental Panel on climate change (IPCC), Global emissions, and Tipping points.
 
 

Previous year Questions

1. Which one of the following statements best describes the 'Polar Code'? (UPSC 2022)
A. It is the international code of safety for ships operating in polar waters.
B. It is the agreement of the countries around the North Pole regarding the demarcation of their territories in the polar region.
C. It is a set of norms to be followed by the countries whose scientists undertake research studies in the North Pole and the South Pole.
D. It is a trade and security agreement of the member countries of the Arctic Council.
Answer: A
 
2. Which of the following statements is correct about the deposits of 'methane hydrate'? (UPSC 2019)
1. Global warming might trigger the release of methane gas from these deposits.
2. Large deposits of 'methane hydrate' are found in Arctic Tundra and under the seafloor. 3. Methane in the atmosphere oxidizes to carbon dioxide after a decade or two.
Select the correct answer using the code given below:
A. 1 and 2 only
B. 2 and 3 only
C. 1 and 3 only
D. 1, 2 and 3
Answer: D
Source: The Hindu

CRYPTO EXCHANGES

 

1. Context

Recently, the U.S. Securities and Exchange Commission (SEC) filed over a dozen charges against Binance, alleging that the crypto exchange commingled billions of dollars of investors’ funds and routed them to a company in Europe owned by CEO Changpeng Zhao.

2. What happened to Binance?

  • Crypto exchange Binance handles tens of billions of dollars in trading volumes every day.
  • Due to trading controls in the U.S. and strict oversight and registration procedures for crypto businesses, Binance did not allow U.S. customers to trade on Binance.com.
  • But it offered the Binance.US trading platform to U.S.­based users. The regulator alleged that Binance let “high­value U.S. customers” access the international Binance.com platform. Binance.US is operated by Binance and BAM Trading Services Inc.
  • The regulator alleged that BAM Trading and BAM Management US Holdings, Inc. misled investors about trading controls that did not exist on Binance. US.
  • The regulator also stated that Binance and its CEO commingled and diverted customer funds while Mr. Zhao was controlling the operations of Binance.US in secret.
  • The SEC has filed 13 charges against Binance entities and Mr. Zhao, alleging that they were “engaged in an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law.

3. What happened to Coinbase?

  • The regulator alleged that Coinbase evaded disclosure requirements that were put in place to safeguard investors.
  • The lawsuit charged that the exchange traded at least 13 crypto tokens that should have been registered.
  • Coinbase said in a statement that it will continue its regular operations. Coinbase went public in 2021 during the crypto boom and opened at $381 a share on its first trading day. On Tuesday, the company’s shares were down to $51.61 apiece.

4. How will this impact Binance?

  • At the basic level, the regulator’s actions will spook U.S.­based crypto traders who use Binance’s services but wish to invest in crypto assets legally.
  • The SEC’s message has made it clear that U.S. traders using both Binance.com and Binance.US are in danger of violating the law.
  • The SEC also questioned the ability of Binance and its entities to keep its customers’ funds safe.
  • “Defendants’ purposeful efforts to evade U.S. regulatory oversight while simultaneously providing securities­related services to U.S. customers put the safety of billions of dollars of U.S. investor capital at risk and Binance’s and Zhao’s mercy.

5. How Binance has responded?

  • Binance issued a statement saying that it was disappointed with the SEC and that it had previously cooperated with the regulator's investigations.
  • The crypto exchange also accused the SEC of trying to make headlines rather than protecting investors.
  • Binance stressed its intention to defend itself “vigorously.” It pointed out that as the U.S. regulator, the SEC’s control over the trading platform was limited because Binance was not a U.S. company.

6. Effect on Crypto Market

  • The cryptocurrency market is small and extremely susceptible to shocks and spooks when compared to more mainstream finance sectors.
  • After SEC’s lawsuit against Binance, the price of Bitcoin (BTC), the largest cryptocurrency by market capitalization, fell as much as 3.90% to retail at under $26,000.
  • The second largest coin, Ether, fell by 2.96% in the same interval to trade below $1,900. Experienced investors may have already taken into account Binance’s legal tangles.
  • But new investors may panic and sell their tokens. Others may wait to see how the regulatory landscape changes for the volatile crypto industry.
For Prelims: U.S. Securities and Exchange Commission (SEC), Binance, Coinbase, Crypto Currency, Bitcoin, Ether, Blockchain technology.
 
 

Previous year Question

1. With reference to “Blockchain Technology”, consider the following statements: (UPSC 2020)
1. It is a public ledger that everyone can inspect, but which no single user controls.
2. The structure and design of the blockchain are such that all the data in it are about cryptocurrency only.
3. Applications that depend on the basic features of blockchain can be developed without anybody’s permission.
Which of the statements given above is/are correct?
A. 1 only
B. 1 and 2 only
C. 2 only
D. 1 and 3 only
Answer: D
 
2. With reference to 'Bitcoins', sometimes seen in the news, which of the following statements is/are correct? (UPSC 2016)
1. Bitcoins are tracked by the Central Banks of the countries.
2. Anyone with a Bitcoin address can send and receive Bitcoins from anyone else with Bitcoin address.
3. Online payments can be sent without either side knowing the identity of the other. Select the correct answer using the code given below.
A. 1 and 2 only
B. 2 and 3 only
C. 3 only
D. 1, 2 and 3
Answer: B
 
3. With reference to Non-Fungible Tokens (NFTs), consider the following statements:(UPSC 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: The Hindu

THAILAND

1. Context 

  • Thailand's Progressive Move Forward Party (MFP) and the populist Pheu Thai Party claimed victory in an election that gave a thumbs-down to the military-backed parties which ruled on and off for a decade.
  • The alliance signed an ambitious deal aiming to draft a new constitution, end mandatory military conscription and monopolies and allow same-sex marriage, among other things.
  • However, the government has not been formed yet and the possibility of any legislative reform will boil down to who gets to form Thailand's government a power which in Thailand, is not automatically given to the majority election winners owing to a constitutional tweak by the military government in 2017.

2. Thailand election 2023

  • The MFP emerged as the single largest party in the May 14 polls, garnering 151 seats in the 500-seat House of Representatives.
  • Its 42-year-old leader Pita Limjaroenrat capitalised on his popularity among disillusioned young voters awaiting change after eight years of a military-backed government.
  • MFP is the only party promising to reform the strict lesemajeste laws.
  • Limjaroenrat is seen as the Prime Ministerial candidate if the coalition led by his party forms the government.
  • MFP's main ally Pheu Thai, the populist party led by the billionaire family of the self-exiled former Premier Thaksin Shinawatra, emerged as the second biggest winner with 141 seats.
  • Pheu Thai drew its support from the rural and urban working class, mainly in the north and northeast regions of Thailand.
  • Other smaller parties in the pro-democracy alliance also managed to secure a significant share of votes. This election dealt a historic blow to Thailand's military-backed parties.

3. Thailand's political history

  • The Siamese revolution marked the end of absolute monarchy in 1932.  Since then, Thailand's military has staged 13 coups.
  • The confrontation between military generals and civilian politicians and activists has been at the root of continuing instability in the country.
  • In 2001, Thailand got its first elected government which completed a four-year term, under police manturnedtelecom giant Thanksin, who rode a populist wave to victory with his Thais Love Thais party.
  • However, the ensuing two decades were one of the most turbulent times in Thai Politics. Mr Thaksin's controversial war on drugs killed more than 2, 500 people.
  • Additionally, scores of lives were lost through security force crackdowns in the Muslim-dominated south region of the country, igniting a new round of insurgency.
    While Thaksin did sweep the 2005 polls, his premiership was soon engulfed by a financial scandal and with subsequent protests, he was forced to call for fresh elections. 
  • However, the leader got booted out months later in a bloodless coup.
  • The period post-2006 is often described as Thailand's lost decade. Bangkok descended into a cycle of rallies and riots in 2008.
  • In 2010, Thailand saw its most brutal crackdown on protestors, with more than 90 people supporters of Mr Thaksin called the Red Shirts killed by army fire in Bangkok.
  • In 2011, Mr Thaksin's younger sister Yingluck became the country's first female Prime Minister but her administration too faced protests as she sought amnesty for her brother, still in self-exile.
  • This led to the army carrying out a coup and declaring martial law in 2014 under the guise of bringing stability to a country in paralysis. The coup brought Mr Prayuth to power. 
  • In 2017, the military introduced a new constitution allowing it to appoint a 250-member Senate which would play a role in selecting the Prime Minister.
  • The military delayed a Parliamentary election, which was then held in 2019 and was initially seen as an exercise to transfer power from the military junta to an elected government. However, Mr Prayuth retained power after the election, resulting in renewed resentment.

4. Role of the monarchy

  • Even after the end of the absolute monarchy, the Thai King retained godlike status in society and enormous influence in the government.
  • Criticising or even talking about the state of the monarchy has long been a taboo in Southeast Asian Countries.
  • The institution has historically been shielded from public criticism by strict lesemajeste laws.
  • It has wielded strong political influence, putting its seal of approval on every military coup since the 1990s. The current monarch, Maha Vajiralongkorn, assumed the throne in 2016 after the death of his father, the revered King Bhumibol Adulyadej, who was the world's longest-reigning monarch at the time of his death.
  • The junta gave the new king full control of the Crown Property Bureau, which manages the palace's roughly $ 30 billion worth of assets (Thailand is the richest existing monarchy).
  • Last year, the King assumed direct control of two Army units.
  • In 2020, in an unprecedented expression of discontent with the monarchy, widespread protests, led mainly by students spread throughout the country, asked for a separation of the King's assets and the Crown Property Bureau.
  • They also wanted to cut the Palace's share in the national budget and ban the King from expressing his political views.
  • The protestors also rejected the military's outsized influence in Mr Prayuth's government.
  • These protests were a long-simmering reaction against Thailand's economic and political system, seen for decades as serving mainly three privileged groups the one per cent of the population owning two-thirds of all Thai assets, the financially privileged military which is intertwined with state enterprises and the world's richest monarchy.

5. Significance of the Recent Victory

  • The current election is the first election since the major pro-democracy protests of 2020 and the second since the 2014 coup.
  • The fact that Thai People came out in the record of 2020 and the second since the 2014 coup.
  • The fact that Thai people came out in record numbers (a 75 per cent voter turnout) to vote for a young party promising historic reforms, rejecting influential military-backed parties is being considered a tectonic shift in the country's politics.
  • The overwhelming support for the MFP, the only party pledging to change lesemajeste laws, also showed how the antimonarchy sentiment of 2020 translated into an electoral mandate.
  • The support for the populist Pheu Thai Party also indicated conservative working-class fatigue and a population seeking an end to corruption and army influence.

6. Formation of the government

  • The winner of the May 14 vote has not been assured the right to form the new government.
  • A Joint session of the 500-seat House of Representatives and the 250-member Senate will be held in July to select the new prime Minister.
  • This process is widely seen as undemocratic because the senators, appointed by the military rather than elected, vote along with Sunday's winning lawmakers.
  • While Mr Limjaroenrat now claims that his alliance led by the MFP comprises 313 seats, he will need the backing of 376 legislators in the House to be voted in.
  • Besides, the alliance will need to win over some of the 250 members of the conservative-leaning Senate, which is usually inclined to support military-backed parties.
  • However, such an alliance, even if it forms a government, might face the threat of military intervention due to MFP's radical pledge to change the monarchy laws.
  • There is also another alliance scenario, interestingly, without the largest vote-getting party.
  • While the populist Pheu Thai party is making strong calls for a government led by MFP, analysts say it could also tie up with Bhumjaithai as well as the current ruling party, Palang Pracharat.
  • In yet another potentially contentious scenario, the military-backed parties could form a minority government with the Senate's support, going against the will of the electorate.
  • Meanwhile, if no compromise is reached, Thailand could also witness months of deadlock without a working government, since there is no constitutional deadline to form one.
 
For Prelims: Thailand, Monarchy, lesemajeste laws, Military rule
 
 
Previous Year Questions
 
1. What is the correct sequence of occurrence of the following cities in South-East Asia as one proceeds from south to north? (UPSC 2014) 
1. Bangkok
2. Hanoi
3. Jakarta
4. Singapore
Select the correct answer using the code given below.
A. 4-2-1-3     B. 3-2-4-1        C. 3-4-1-2            D. 4-3-2-1
 
Answer: C
 
2. Which of the following are regarded as the main features of the "Rule of Law"? (UPSC 2018)
1. Limitation of powers
2. Equality before law
3. People's responsibility to the Government
4. Liberty and civil rights
Select the correct answer using the code given below:
A. 1 and 3 only    B. 2 and 4 only     C.  1, 2 and 4 only        D. 1, 2, 3 and 4
 
Answer: C
 
 Source: The Hindu
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