15 NOVEMBER 2023

Topic 1 : Active and Passive equity funds

Why in news: According to a recent study, active equity funds witnessed net inflows of about Rs 74,000 crore and passive equity funds saw Rs 9,000 crore of inflows.

What are active funds?

• In an active fund, the fund manager is ‘Active’ in deciding whether to buy, hold, or sell the underlying securities and in stock selection.
• This fund relies on professional fund managers who manage investments.
• Active funds adopt different strategies and styles to create and manage the portfolio.
• They are expected to generate better returns (alpha) than the benchmark index.
• The risk and return in the fund will depend upon the strategy adopted.

What are passive funds?

• Passive funds (index funds and exchange traded funds (ETFs)) hold a portfolio that replicates a stated index or benchmark.
• In a passive fund, the fund manager has a passive role in the stock selection.
• Buy, hold or sell decisions are driven by the benchmark index and the fund manager/dealer merely needs to replicate the same with minimal tracking error.

Active vs passive fund:

• Active fund is suited for investors who wish to take advantage of fund managers’ alpha generation potential.
• Passive fund is appropriate for investors who want to allocate exactly as per market index.Topic 2 : Place in news: Tiau river

Why in news: Traffickers of narcotic substances from Assam and Mizoram have used excavators to carve a 10-km path from the International Border to the nearest habitation in the neighbouring country that starts from the Tiau river, which marks India’s border with Myanmar

About the river:

• Tiau River forms part of the international border between India and Myanmar.
• It rises near Khuangphah village of Champhai district in Mizoram.
• It ultimately merges with the Kaladan River.
• In the local language, the river is also known as Ciau River or Ciau Guun (“Guun” means river).

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Topic 3 : Asia-Pacific Economic Cooperation

Why in news: The Asia-Pacific Economic Cooperation (APEC) grouping is meeting in San Francisco in the United States.
 

About APEC:

• APEC is a regional economic forum that was established in 1989.
• Aim:
• To leverage the growing interdependence of the Asia-Pacific and create greater prosperity for the people of the region through regional economic integration.

• The 21 members of APEC are termed “economies” (rather than countries or member states) because trade and economic issues are the focus of the grouping.
• Taiwan and Hong Kong attend APEC meetings as distinct entities, even though China says they are parts of China and not independent entities.
• The APEC economies as located geographically around the Pacific Ocean, are:
  • Australia, Brunei, New Zealand, Papua New Guinea, Hong Kong (as part of China), the Philippines, Indonesia, Malaysia, Vietnam, Singapore, Thailand, Chinese Taipei (Taiwan), China, Japan, South Korea, Russia, Canada, the United States, Mexico, Peru, and Chile.

Role of APEC:

• The grouping has always championed free trade, the lowering of trade tariffs, and economic liberalisation.
• In the 1991 Seoul Declaration, APEC member economies proclaimed the creation of a liberalized free trade area around the Pacific Rim as the principle objective of the organization.
• APEC economies’ 2.9 billion citizens make up roughly 60 percent of global GDP.
• As of 2018, they represented 48 percent of global trade.

India and APEC:

• India is not yet a member of APEC.
• India has expressed interest in joining APEC, and made a formal request in 1991.
• The request to join was based on India’s geographical location, the potential size of the economy, and degree of trade interaction with the Asia-Pacific.
• The response noted that APEC has had an informal moratorium on expanding membership for many years now.Topic 4 : Place in news: Mount Etna

Why in news: Italy’s Mount Etna, which is one of the world’s most active volcanoes erupted recently.
 

About Mount Etna:

• Mount Etna is Europe’s most active volcano and one of the largest in the world.
• Its recorded volcanic activity dates back to 1500 B.C.
• Since then, it has erupted more than 200 times.

Other volcanoes with long term eruptions:

• Kilauea volcano:
  • One of the most famous long-term eruptions was Kilauea volcano on Hawaii.
  • Its spewing spree in 1983 continued, almost nonstop for 35 years until 2018, only to start again in 2021.
  • The eruption is still ongoing.
• Dukono volcano:
  • Dukono in Indonesia started erupting in 1933 and is still continuing.
• Santa Maria volcano:
  • Santa Maria in Guatemala began erupting in 1922 and continues to this day.
• Yasur volcano:
  • Yasur in Vanuatu first rumbled to life in about 1270 (± 110 years) and was still erupting.

What is a volcano?

• Volcanoes are openings, or vents where lava, tephra (small rocks), and steam erupt onto the Earth’s surface.
• Volcanoes can be on land and in the ocean.
• They are, in part, a result of their own eruptions but also the general formation of our planet, as tectonic plates move.
• There are four main types of volcanoes:
  • cinder cones,
  • composite or stratovolcanoes,
  • shield volcanoes and
  • lava domes.
• Their type is determined by how the lava from an eruption flows and how that flow affects the volcano, and, as a result, how it affects its surrounding environment.

How do volcanoes erupt?

• Essentially, it’s a case of magma, or molten rock, below the surface of the Earth, bubbling up, rising and overflowing.
• The magma finds its way to vents in the volcano and gets spewed across the land and into the atmosphere.
• When magma erupts from a volcano, it is called lava.

Volcanoes active in Pacific Ring of Fire

• Some of the most active volcanoes are located in the Pacific Ring of Fire, which includes New Zealand, Southeast Asia, Japan and the western coast of the Americas.
• About 90% of all earthquakes worldwide strike within this region.

Can scientists predict volcanic eruptions?

• Scientists are capable of predicting volcanic eruptions hours, or sometimes several days, in advance.
• This isn’t the case with earthquakes, which are much harder to predict.
• Scientists use seismographic data from earthquakes and other tremors, because those can be a precursor to volcanic eruptions.
• They monitor the ground for signs of deformation, which may be caused by the movement of magma.
• They also take readings of volcanic gas emissions, and changes in gravity and magnetic fields.Topic 5 : Functional foods

A recent paper confirm that functional foods such as almonds are associated with several health benefits.
 

What are functional foods?

• Functional foods are defined broadly as foods that provide more than simple nutrition.
• They supply additional physiological benefit to the consumer.
• The term ‘functional food’ was coined in Japan in the early 1980s.
  • Japan is also the first country to have devised a specific regulatory approval process for functional foods.
  • The term food for specified health use (FOSHU) was coined and established in 1991.
  • Japan is the only country in the world that recognizes functional foods as a distinct category and the Japanese functional food market is considered to be one of the most advanced, globally.
• A precise and simple definition of functional food could be: these are processed foods having disease-preventing and/or health-promoting benefits in addition to their nutritive value.
• They are not considered preventative or curative by themselves and are typically not essential to the diet.
• Functional foods cover a wide variety of food types and are considered to be those that are fortified, enriched, or enhanced foods.
• Bioactive compounds are a typical hallmark present in significant quantities in functional foods.
• Broadly speaking, these include foods enriched with:
  • dietary fiber,
  • omega-3 polyunsaturated fatty acids,
  • carotenoids,
  • supplemented with probiotics and prebiotics,

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Topic 6 : Krushi Sanjivani Prakalp scheme

Why in news: Maharashtra’s project funds for climate-resilient agriculture has gone to just a few districts and types of interventions
 

About the scheme:

• Since 2018, Maharashtra is running a first-of-its-kind project to help farmers switch to climate change-resilient structures and practices.
• Implemented in 16 of the state’s 36 districts, this Project on Climate Resilient Agriculture (pocra), also named Nanaji Deshmukh Krushi Sanjivani Prakalp, is labelled the country’s biggest such initiative.
• However, data shows that a vast majority of funds have gone to just a few districts and types of interventions.
• Pocra started with a budget of Rs 4,000 crore:
  • Of this amount, 70 per cent is a World Bank loan, while 30 per cent is the state government’s share.
• No other state has such a climate-resilient agriculture project.
• The project is based on direct benefit transfer.
• Farmers, communities, farmer producer organisations/companies (FPOS/FPCS) and self-help groups (SHG) can register and file an application to receive funds for 25 types of interventions.

Problem areas:

• Unequal distribution of funds
  • The scheme has resulted in a few districts garnering a large chunk of the funds.
  • More than 60 per cent of the funds have gone to just three of the 16 districts:
    • Aurangabad (26.1 per cent),
    • Jalna (18.8 per cent) and
    • Jalgaon (15.6 per cent).
• Omission of districts:
  • The omission of some districts is also a cause of concern. 
• Direct benefit transfer only 3 interventions:
  • 77 per cent of DBT to individual farmers has been spent on just three of the 25 interventions:
    • drip irrigation (52 per cent),
    • shade net house (14 per cent) and
    • sprinkler irrigation (11 per cent).

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Topic 7 : State of Food and Agriculture report

Why in news: India’s total hidden costs of agrifood systems were approximately $1.1 trillion, the third largest in the world after China and United States (US), according to the State of Food and Agriculture report by Food and Agriculture Organization (FAO) of the United Nations.

Key details:

• The report presented a first attempt at a national-level assessment for 154 countries, revealing the urgent need to factor these costs into decision-making to transform agrifood systems. 
• Hidden costs of agrifood systems include:
  • environmental costs from greenhouse gas and nitrogen emissions, water use, land-use change,
  • health hidden costs from losses in productivity due to unhealthy dietary patterns and
  • social hidden costs from poverty and productivity losses associated with undernourishment. 
• Global scenario:
  • Globally, the dominant quantified hidden costs were those arising from dietary patterns that lead to diseases and lower labour productivity.
  • The majority of hidden costs were generated in upper-middle-income countries (39 per cent of total quantified hidden costs) and high-income countries (36 per cent of total costs).
  • Lower-middle-income countries account for 22 per cent, while low-income countries make up 3 per cent.
• Indian scenario:
  • India’s share was 8.8 per cent, out of the global quantified $12.7 trillion hidden costs associated with agrifood systems, while China contributed 20 per cent and US 12.3 per cent. 
  • In India, the burden of disease (productivity losses from dietary patterns) had the largest share (60 per cent) among hidden costs, followed by the social cost of poverty among agrifood workers (14 per cent) and then the environmental cost of nitrogen emissions (13 per cent). 
• Environmental, social and health hidden costs: Top 10 countries:
  • China
  • USA
  • India
  • Russia
  • Brazil
  • Germany
  • Indonesia
  • Japan
  • UK and Northern Ireland
  • Mexico

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Topic 8 : Strategies to reduce crop residue burning for air pollution mitigation

Why in news: A Delhi-based think tank Centre for Science and Environment presented strategies to reduce crop residue burning in 2017 to reduce crop residue burning for air pollution mitigation.
 

Why are farmers burning crop residues?

• Shorter cropping cycles:
  • Multiple cropping and shortened intervals between crops give a very short window of about 10–15 days during which the field needs to be prepared for the next crop.
  • This does not give farmers enough time to allow straw to be incorporated in the soil or use other methods of disposal.
  • In Punjab, this interval is further shortened by the rules, which delays the sowing of paddy till after the onset of rains to minimize dependence on groundwater for irrigation. 
• Increased mechanisation of harvesting:
  • The use of mechanized harvesters leaves stubble of 10– 30 cm in the field, depending on the type of crop, which was not the case earlier with manual harvesting.
  • It is too expensive to hire labour to clear this stubble.
• Labour shortage:
  • Use of expensive labour for stubble extraction is not feasible.
  • Costs are especially high in Punjab and Haryana, where farm sizes are large and use of mechanized harvesters is common.
  • Burning of residues is a cheaper and easier option.
• No market for crop residue:
  • The local economy cannot absorb straw any more for roofing of houses etc., as it did earlier.
  • The low commercial and economic value of crop residue, coupled with the high costs of processing, reduces its value for farmers.
  • Although the quantities of residue produced are equivalent to the total crop output, this entire volume of residue has little or no economic value.

Solutions:

• Promote agri-implements with subsidy 
  • The cost of agri-implements needed to reduce burning is high.
  • The state government has rolled out schemes for providing subsidy for mechanical implements that can mix the crop residue with soil to improve fertility.
  • In spite of subsidies, only a small number of farmers can access them.
  • The subsidy amount can be augmented.
• Promote co-ownership models for the agri-implements:
  • Cooperative and privately run Agricultural Machinery Service Centres (AMSC) can be supported with subsidies on purchase of agri-implements.
  • These agencies can make such implements accessible to farmers.
  • It is important that farmers understands the value of crop residues and use these implements for extraction and packaging. 
• Utilise crop-residues fuel in biomass-based power plants: 
  • Crop residue can be used as fuel to generate electricity through biomass-based power plants.
  • Such plants aggregate the combustion of crop residues.
  • The emissions from these are much easier to control and mitigate.
  • State governments need to incentivise establishment of biomass-based power plants through fiscal interventions and prioritization.
  • Along with long-term purchase contracts for the power generated thus, this will effectively promote the development of a market for crop residue and build a commercial supply chain around it.
• Use of crop residues for production of biofuels and fertilizers 
  • Crop residue contains high concentrations of organic nutrients, which ought to be returned to the soil in order to retain its fertility and yield potential.
  • These can be used either in a decentralised small-scale ex-situ unit or through organized commercialization for the production of fertilizers.
  • Similarly, they can be used to produce biofuels. 
  • The state governments, along with appropriate policy interventions from the central government need toincentivise utilisation of biofuels.
    • For example, higher levels of biodiesel can be permitted for blending with regular diesel and made available commercially. 
• Utilisation as raw material for biomass pellets:
  • Biomass pellets can be sold commercially as the main fuel for industrial boilers and replace coal.
  • Micro-pelletization should be incentivised and its local usage promoted.
  • There are other small-scale industries such as cardboard manufacturing and mattress production that can utilise straw.
  • Straw can also be used for substrata for mushroom cultivation.
  • Sugar cane residue or bagasse is used as the raw material for the production of paper. 
  • State governments, along with appropriate policy interventions from the Central government, need to popularize biomass-based paper and other such products made from crop residue. 
• R&D and crop diversification 
  • R&D efforts require intensive investments in terms of time and resources.
  • The results will only be visible in the medium to long term and will require intensive efforts to execute. 
• Crop residue collection mechanism 
  • There is no centralized or uniform decentralised mechanism for the collection, storage and commercial sale of crop residues to support all the initiatives and enterprises that are possible around the reuse and recycling of crop residues.
  • This makes procurement of raw material very difficult.
    • For instance, power producing companies are dependent on specific farmers for supply of biomass fuel.
  • There is also uncertainty of year-round availability of crop residue due to its seasonal nature, coupled with the lack of infrastructure. 
  • There is a need to create a uniform decentralised mechanism for the collection, storage and commercial sale of crop residue.
  • This will facilitate easy procurement of biomass fuel for power generation and other uses.
  • The strategy, broadly, is to assign a real economic and commercial value to the agricultural residue and making burning it an economic loss to the farmer.