Current Affairs for IAS Exams - 20 December 2022

::NATIONAL::

Surety Bond Insurance

• Union Minister for Road Transport and Highways Shri Nitin Gadkari launched one of India’s first-ever Surety Bond Insurance product from Bajaj Allianz.

About:

• Surety bond can be defined in its simplest form as a written agreement to guarantee compliance, payment, or performance of an act. Surety is a unique type of insurance because it involves a three-party agreement. 

The three parties in a surety agreement are:

• Principal: The party that purchases the bond and undertakes an obligation to perform an act as promised.
• Surety: The insurance company or surety company that guarantees the obligation will be performed. If the principal fails to perform the act as promised, the surety is contractually liable for losses sustained.
• Obligee: The party who requires, and often receives the benefit of the surety bond. For most surety bonds, the obligee is a local, state or federal government organization.

Significance: 

• Surety Bond Insurance will act as a security arrangement for infrastructure projects and will insulate the contractor as well as the principal. 
• The product will cater to the requirements of a diversified group of contractors, many of whom are operating in today’s increasingly volatile environment. 
• The Surety Bond Insurance is a risk transfer tool for the Principal and shields the Principal from the losses that may arise in case the contractor fails to perform their contractual obligation. 
• The product gives the principal a contract of guarantee that contractual terms and other business deals will be concluded in accordance with the mutually agreed terms. In case the contractor doesn’t fulfil the contractual terms, the Principal can raise a claim on the surety bond and recover the losses they have incurred. 
• Unlike a bank guarantee, the Surety Bond Insurance does not require large collateral from the contractor thus freeing up significant funds for the contractor, which they can utilize for the growth of the business.
• The product will also help in reducing the contractors’ debts to a large extent thus addressing their financial worries. The product will facilitate the growth of upcoming infrastructure projects in the country.

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25th Eastern Zonal Council meeting

• Union Home and Cooperation Minister presided over the 25th Eastern Zonal Council meeting in Kolkata recently. 

About:

• He highlighted the near-end of Left-Wing Extremism in India’s Eastern region, and need to accelerate campaign against drugswith the help of Artificial Intelligence (AI).
• Drug trafficking is a global illicit trade involving the cultivation, manufacture, distribution and sale of substances which aresubject to drug prohibition laws.
• India is highly vulnerable to drug trafficking as it is wedged between two largest sources of illicit drugs in South Asia, i.e., GoldenCrescent (Pakistan, Afghanistan and Iran) and Golden Triangle (Myanmar, Thailand and Laos).
• Challenges in curbing Drug-Trafficking: Rough terrain, strong ethnic unitywith people-to-people ties going beyond borders, poor coordination amongcentre-state agencies, unemployment, lack of education, promotion of drugculture via. movies etc.
• Five Zonal Councils were set up under States Re-organisation Act, 1956.
• Northern: Haryana, Himachal Pradesh, J&K, Punjab, Rajasthan, NCT of Delhiand UT of Chandigarh.
• Central: Chhattisgarh, Uttarakhand, Uttar Pradesh and Madhya Pradesh.
• Eastern: Bihar, Jharkhand, Orissa and West Bengal.
• Western: Goa, Gujarat, Maharashtra, Daman & Diu and Dadra & Nagar Haveli.
• Southern:Telangana, Andhra Pradesh, Karnataka, Kerala, Tamil Nadu and Puducherry

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::INTERNATIONAL::

Kunming-Montreal Global Biodiversity Framework

• The 15th Conference of Parties (COP15) to the UN Convention on Biological Diversity (CBD) adopted the Kunming-Montreal Global Biodiversity Framework (GBF. The framework has 23 targets that the world needs to achieve by 2030.
• The targets are ambitious, considering that biodiversity is in a poor state. In 2020, the world had failed to meet the last set of targets, the Aichi Targets. Countries would need to ensure success this time round. 

About:

• The framework has 23 targets that the world needs to achieve by 2030.
• The countries will monitor and report every five years or less on a large set of indicators related to progress.
• The Global Environment Facility has been requested to establish a Special Trust Fund to support the implementation of the Global Biodiversity Framework (“GBF Fund”).

Key provisions:

• Countries committed to protecting 30% of land and 30% of coastal and marine areas by 2030, fulfilling the deal’s highest-profile goal, known as 30-by-30.
• The deal also aspires to restore 30% of degraded lands and waters throughout the decade, up from an earlier aim of 20%.
• And the world will strive to prevent destroying intact landscapes and areas with a lot of species, bringing those losses “close to zero by 2030”.

Minimum Tax on Big Businesses

• Members of the European Union agreed in principle to implement a minimum tax of 15% on big businesses. 
• Last year, 136 countries had agreed on a plan to redistribute tax rights across jurisdictions andenforce a minimum tax rate of 15% on large multinational corporations.

About:

• Agreement on Global Minimum Tax (GMT) was drawn up under Inclusive Framework on Base Erosion and Profit Sharing (BEPS) from Organisation for Economic Cooperation and Development (OECD) and G20.
• Framework provides two-pillar solution to address tax challenges arising from digitalisation of economy.
• It is joined by 142 countries, including India to reform international taxation rules and stop governments racing to cut taxes in a bid to attract companies.
• Two pillars
• Pillar One: Applied to around 100 biggest and most profitable MNEs (global turnover above 20 billion euros and profitability above 10%), it reallocates part of their profits to places where they sell products or provide services.
• Pillar Two: Applied to larger MNEs, i.e., companies with over EUR 750 million of annual revenue, it subjects them to global minimum corporate tax of 15% from 2023.

Significance of Global Minimum Tax:

• Expected to generate around $150 billion in new global tax revenues annually.
• Tax havens would no longer exist since taxes avoided in haven would be collected at home.
• Boost global economy by levelling the playing field for businesses.

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::Economy::

Rupee Trade Settlement Mechanism

• India's rupee trade settlement (RTS) mechanism, a means of using rupees instead of dollars and other big currencies for international transactions, is attracting interest from more countries.
• Tajikistan, Cuba, Luxembourg and Sudan have begun talking to India about using the mechanism.
• It has already been used by Russia following the imposition of sanctions on Moscow over the Ukraine war.

About:

• RTS mechanism uses rupees instead of dollars andother big currencies for international transactions.
• The Reserve Bank of India (RBI) set up the mechanism in July.
• Internationalisation of Rupee is a process of increasingrupee acceptance (credibility) across the world throughits:

1.     increased use in invoicing and settlement ofcross-border transactions.
2.    freedom for non-residents to hold financialassets/liabilities or tradable balance in rupee.
Benefits of Internationalisation of Rupee

• Reduced Foreign Exchange Reserves required forBalance of Payment Stability.
• Reduced Vulnerability to External Shocks andCurrency Risks, increasing bargaining power of IndianEnterprises.
• Lower Transaction Costs and Facilitate Trade with countries facing sanctions or short of dollars.

::SCIENCE AND TECHNOLOGY::

Water Worlds

• Astronomers found evidence that two exoplanetsKepler-138c and Kepler-138d orbiting a red dwarfstar are ‘water worlds’, where water makes up alarge fraction of entire planet.

About:

• These worlds, located in a planetary system 218light-years away in constellation Lyra, are unlikeany planets found in our solar system.
• Water wasn't detected directly at Kepler-138c andKepler-138d.
• Instead, astronomers concluded that a significant fraction of their volume should be made ofmaterials that are lighter than rock but heavier than hydrogen or helium.

About Exoplanet:

• Exoplanet is a planet outside the Solar System.
• The first confirmation of detection of exoplanets occurred in 1992. More than 4,400 exoplanets have been discovered till now.
• Exoplanets are very hard to see directly with telescopes. 
• They are hidden by the bright glare of the stars they orbit. So, astronomers use other ways to detect and study exoplanets such as looking at the effects these planets have on the stars they orbit.

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