28 April, 2021 - Daily Current Affairs Analysis & MCQs - The Daily News Simplified from The Hindu

  • A patently wrong intellectual property regime -international affairs - Polity & Governance
  • Leaders calls for House panels meet - Polity and governance
  • True name (Armenian Genocide) International affairs- World History
  • SEBI tighten rules for for provisional debt rating - Indian Economy
  • Scheme for revision
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    UPSC Current Affairs: A patently wrong regime | Page 06

    UPSC Syllabus: Mains – GS Paper III – Economy

    Sub Theme: Patents for the Pharmaceutical drugs | TRIPS Agreement | TRIPS Waiver to deal with CoVID-19 | UPSC

    Context: Intellectual property regime has acted as a lethal barrier to the right to access health. Even request for a temporary waiver is not getting accepted.

    Waivers are already in place under the World Trade Organisation’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). Developed nations including USA and European Nations, have blocked such waivers. This blockage has restricted essential drugs and vaccines to developing nations.

    What is a patent?

    A patent is an exclusive right granted for an invention, which is a product or a process that provides, in general, a new way of doing something, or offers a new technical solution to a problem. To get a patent, technical information about the invention must be disclosed to the public in a patent application.

    Patent is provided for the period of 20 years. Exclusive rights are only applicable in the country or region in which a patent has been filed and granted, in accordance with the law of that country or region. Patent rights are usually enforced in a court on the initiative of the right owner.

    In India, Patents are provided by Indian Patent Office. Any appeal against the order or violation goes to Intellectual Property Appellate Board.

    Patents are justified:

    1. People have something of a natural and moral right to claim control over their inventions.
    2. Exclusive rights promote invention.
    3. Individuals should be allowed to benefit from their labour and merit.
    4. Innovation is an expensive activity to undertake.

    However, these patents have been taken as a medium to own monopoly.

    Background in India: India adopted the colonial patent protection regime (Indian Patents and Design Act, 1911). However, in 1959, a committee chaired under the N. Rajagopala Ayyangar objected this regime on ethical grounds. India adopted a new Patents Act in 1970 and this led to the rise in generic medicines production in India. India is now the largest generic medicine producer in the world. India’s efforts on HIV and Cancer drugs are well appreciated.

    A generic drug is a medication created to be the same as an already marketed brand-name drug in dosage form, safety, strength, route of administration, quality, performance characteristics, and intended use. These similarities help to demonstrate bioequivalence, which means that a generic medicine works in the same way and provides the same clinical benefit as the brand-name medicine. In other words, you can take a generic medicine as an equal substitute for its brand-name counterpart.

    One important waiver: Compulsory licensing

    For patents: when the authorities license companies or individuals other than the patent owner to use the rights of the patent — to make, use, sell or import a product under patent (i.e. a patented product or a product made by a patented process) — without the permission of the patent owner. Allowed under the WTO’s TRIPS (intellectual property) Agreement provided certain procedures and conditions are fulfilled (Chapter 16).

    The following conditions should be fulfilled by the applicant:

    • Reasonable requirements of the public with respect to the patented invention have not been satisfied.
    • Patented invention is not available to the public at a reasonably affordable price.
    • Patented invention is not used in India.

    Benefits of such waiver:

    Countries would be able to facilitate a free exchange of know-how and technology surrounding the production of vaccines.

    Why should waiver be provided?

    Most of the general medicines are produced under the research of Government funding mechanism or donations. For example: 97% of the funding towards the development of the Oxford/AstraZeneca vaccine recently was public money. Then how can they create monopoly on this.

    The cost of innovation or R&D could be easily provided through a one-time payment or prize money rather a long-term patent.

     

    UPSC Current Affairs:Leaders call for House panels’ meet | Page 08

    UPSC Syllabus: Mains – GS Paper II– Polity & Governance

    Sub Theme: Parliamentary Committees in India | UPSC

    Context: Leaders of opposition have asked Rajya Sabha Chairman and Lok Sabha Speaker to allow virtual meetings of the parliamentary panels (standing committees). Last year similar demand was raised however, it was declined citing the confidentiality clause.

    We will venture into the composition and functioning of Parliamentary committees.

    Origin: in the British Parliamentary system.

    Authorisation: Such committees draw their Authority from the Article 105 (on privileges of Parliament members) and Article 118 (on Parliament’s authority to make rules for regulating its procedure and conduct of business).

    Types:

    Article is talking about DRSCs: In 1993, 17 Departmentally related Standing Committees (DRSCs), later increased to 24 (16 under Lok Sabha, 8 under Rajya Sabha), were constituted in the Parliament. These committees drew members from both Houses roughly in proportion to the strength of the political parties in the Houses. One committee may work for two or more ministries. For example: committee on science and technology, environment and Forest work for five ministries.

    These committees work under the direction of the Speaker/Chairman and take reports from them. They also have dedicated secretariats.

    Composition: each committee consist of 31 members (21 from Lok Sabha and 10 from Rajya Sabha). Minister is not eligible to be a member (i.e., there is not executive participation).

    Significance: Inter-ministerial co-ordination, instrument of for detailed scrutiny, act as mini parliament, provides un-biased opinion, uphold parliamentary principle.

    However, the main objective of such committees is financial accountability during the budget session.

    Issues in such committees:

    1. Only 27% of the bills were referred to such committees in 16th Lok Sabha.
    2. Major and controversial issues were totally surpassed by their scrutiny. For example: deliberation on Article 370 revocation.
    3. Low attendance of MPs.

     

    UPSC Current Affairs:True Name | Page 06

    UPSC Syllabus: Mains – GS Paper II– International Relations

    Sub Theme: Mass killings of Armenians by Ottoman Turks| UPSC

    Context: USA President Joe Biden’s officially recognised the mass killings of Armenians by Ottoman Turks as an ‘act of genocide’. This could infuriate Turkey.

    Background: Up to 1.5 million Armenians are estimated to have been killed in the early stage of the First world war within the territories of the Ottoman Empire. In 2019, the US congress (Parliament of US) passed resolutions calling the slaughter a genocide, but the Donald Trump administration stopped short of officially calling it so.

    Why were Armenians killed?

    Sequence of events:

    1. Decline of ottoman empire in late 19th century.
    2. Russia-Turkish war of 1877-78 raise the enmity between Turkish and Armenians, who were supported by Russia.
    3. Treaty of Berlin dictated terms to Ottomans to provide reforms for Armenian people.
    4. Treaty led to the attacks on Armenian people from Turks and Kurds.
    5. Post 1908, attacks on Ethnic minority began at greater pace.
    6. Defeat of Turks in Battle of Sarikamish (during World War 1) was blamed on Armenian. This led to further intensification of genocide over Armenians.
    7. On fear of security from Russian support to Armenian, Ottoman Government passed a legislation to deport Armenian via Syrian desert. This killed many Armenians.

    After the defeat of Ottoman in World War 1, Armenian authorities took revenge measures and executed many officials. But Armenian resistance fighters under the banner of Operation Nemesis continued to hunt down Ottoman officials.

    As of now, Turkey (centre of erstwhile Ottoman Empire) has acknowledged that atrocities were committed against Armenians, but denies it was a genocide (which comes with legal implications and challenges the estimates that 1.5 million were killed.

    Larger question: Was it a Genocide?

    This term was coined by the Raphael Lemkin. According to Article II of the UN Convention on Genocide of December 1948, genocide has been described as carrying out acts intended “to destroy, in whole or in part, a national, ethnic, racial or religious group”.

    Between 1914 to 1922, Armenian population fell from 2 million to 3,87,000 only. There is apprehension that this was due to 1.5 million Armenians who were genocide.

    Therefore, as of now there are only historians claims and no actual proof about such genocide. However, it is true that many Armenians were killed as part of ethnic conflicts.

     

    UPSC Current Affairs:SEBI tightens rules for provisional debt rating | Page 14

    UPSC Syllabus: Mains – GS Paper III- Indian Economy

    Sub Theme: Credit rating Agencies- Functioning and Models | UPSC

    Context

    Market regulator SEBI came out with a new framework to strengthen policies on provisional rating by credit rating agencies for debt instruments.

    Details about Credit Rating Agencies

    • A credit rating agency is an entity which assesses the ability and willingness of the issuer company for timely payment of interest and principal on a debt instrument. The Rating is denoted by a simple alphanumeric symbol, for e.g., AA+, A-, etc.
    • The rating is assigned to a security or an instrument issued by a company.
    • Ratings are based on a comprehensive evaluation of the strengths and weaknesses of the company fundamentals including financials along with an in-depth study of the industry as well as macro-economic, regulatory and political environment.

    Different Business Models of Credit Rating Agencies

    The different models of Credit rating agencies are based upon “Who Pays to get the Credit rating of an instrument issued by the company?”. Broadly, there are 3 Models of Credit rating agencies:

    Issuer Pay Model

    • Under this Model, the Issuer i.e., the company pays the money to the Credit rating agencies (CRAs) in order to get credit rating for the instruments issued by it.
    • To enable the CRAs to give the credit rating, the company provides all the necessary details such as company’s balance sheet and business details. Based upon a thorough and detailed analysis of such details, the CRA issues credit rating to the instrument issued by the company.

    Investor Pay Model

    • Under this Model, the investor is required to pay the money to the CRA in order to know the credit rating.
    • Hence, only those investors who are ready to pay for a rating can access the credit rating of the instrument. The credit rating issued by the CRA is not commonly available to all the investors free of cost.

    Regulators pay Model

    Under this model, the money is paid by the regulator in the country in order to get the credit rating. Either the company or the investor need not pay for the credit rating. The credit ratings would be made available to all the investors.

    Issuer Pay Model

    Investor pays model

    Regulator pays model

    Advantages

    ●                    Ratings are available to the entire market free of charge and will highly aid the small investors.

    ●                    It gives the rating agencies access to high-quality information that enhances the quality of analysis.

     

    Disadvantages

    ●                    It can lead to serious conflict of interest since the CRAs are paid by the company to get the rating. The CRAs may inflate the rating to satisfy the company.

    ●                    It may lead to ‘Rating Shopping’ which refers to the situations where an issuer approaches different rating agencies for the ratings and then choose to publish the most favourable ratings to disclose it to the public via media while concealing the lower ratings.

    Advantages

    ●                    It would avoid the serious conflict of interest of the CRAs.

    ●                    This would enable the investors to get the credit rating based on the true and actual financial condition of the company.

     

    Disadvantages

    ●                    Ratings would be available only to those investors who can pay for them and takes ratings out of the public domain and thus affects the small investors.

    ●                    The company may not always share all the necessary information with the CRAs which then can have an adverse impact on the quality of the ratings.

    ●                    It can pose serious conflict of interest involving the investors themselves. If investors are the payees, they can influence CRAs to give lower-than-warranted ratings to help them negotiate higher interest rates.

     

    Advantages

    It eliminates the conflict of interest as seen in both Issuer Pay Model and Investor Pay Model.

     

    Disadvantages

    ●                    The problem with this model lies in the choosing the CRA and payment to be fixed.

    ●                    The CRA chosen by the regulator may not be able to provide the best credit rating. Further, if the regulator pays less amount of money to the CRA, the CRA may find it difficult to continue with its business and could have an adverse impact on the quality of the ratings issued.

     


    Conclusion

    • Any CRA business model must facilitate two objectives: 1) ensure ratings are of high quality and 2) ensure all market participants have access to such ratings at a reasonable cost.
    • Additionally, the models must involve minimal or no conflict of interest. ‘Minimal’ is a considered usage here since conflicts cannot be eliminated.
    • Each model has its pros and cons. It’s imperative to pick the model that best meets the primary objectives of credit rating – high quality and open access.
    • In that context, the issuer pays model appears to be the best.

     

    UPSC Current Affairs:Production linked scheme

    UPSC Syllabus: Mains – GS Paper III- Indian Economy

    Sub Theme: Details about Production linked Incentive Scheme | UPSC

    Details about PLI Scheme

    Objective: Boost domestic manufacturing and attract large investments in domestic manufacturing

    Incentives: Extend an incentive of 4% to 7% on incremental sales (over base year of 2019-20) of goods manufactured in India for a period of 5 years.

    Eligibility: Incentives are provided under the scheme to only those companies which cross the threshold level in terms of incremental sale of Manufactured Goods and Incremental investment over the base year.

    Tenure of Scheme: 5 years

    For MSMEs, one percent (1%) higher incentive is proposed in year 1, year 2 and year 3.

    Minimum Investment threshold for MSME has been kept at Rs. 10 Crores and for others at Rs. 100

    Crores.

    Once qualified, the investor will be incentivized up to 20 times of minimum investment threshold

    enabling them to utilize their unused capacity.

    The Scheme will be operational from 1st April 2021

    Benefits:

    This scheme will lead to incremental production of around Rs 2.4 Lakh Crores with exports of around Rs 2 Lakh

    Crores over 5 years. It is expected that scheme will bring investment of more than Rs 3,000 crore and generate

    huge direct and indirect employment and taxes both.

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