About: South China Sea (SCS)

  • It is one of the busiest waterways of the world connecting Asia with Europe and Africa.
  • One third of global shipping, or a total of US$3.37 trillion of international trade, passes through the South China Sea.
  • Its seabed is rich with natural resources like oil and natural gas. The US Energy Information Administration estimates the area contains at least 11 billion barrels of oil and 190 trillion cubic feet of natural gas.
  • The South China Sea also accounts for 10 per cent of the world’s fisheries, making it a key source of food for hundreds of millions of people.
  • About 80 per cent of China’s oil imports arrive via the Strait of Malacca, in Indonesia, and then sail across the South China Sea to reach China.

In Focus: South China Sea Dispute

  • The South China Sea dispute is about overlapping territorial disputes involving China, Vietnam, the Philippines, Taiwan, Malaysia and Brunei. (remember the mnemonic- CV PM TB)
  • These accounts are based upon several historic and geographic claims.
  • China claims more than 80 per cent of the South China Sea using nine-dash line (NDL) as a geographical marker to assert its claim.
  • As per the NDL, China claims Spartly and Paracel Islands and also Scarborough Shoal.
  • Vietnam claims sovereignty over the Paracel Islands and the Spratly Islands.
  • Philippines asserts ownership of the Spratly archipelago and the Scarborough Shoal.
  • Brunei and Malaysia have claimed sovereignty over southern parts of the sea and some of Spratly Islands.

Nine- Dash Line (NDL):

  • It is a demarcation line which was used by the Republic of China for the first time on an official map in 1947. (Refer to the U-shaped Nine Dash Line in the picture)
  • It illustrates the territorial claims of the Republic of China in the South China Sea.
  • It stretches as far as 2,000km from the Chinese mainland, reaching waters close to Indonesia and Malaysia.
  • Major problems with the nine-dash-line
  • Nobody has ever defined where the actual dashes are located using exact geographic data based on longitudes and latitudes.
  • China has never clarified whether it only claims sovereignty over the islets, reefs and rocks inside the NDL or the entire area falling within the NDL.
  • Many legal experts say the NDL does not comply with international law.

Spratly Island Dispute:

  • It is a territorial dispute between China, Taiwan, Vietnam, the Philippines, and Malaysia concerning the ownership of the Spratly Islands archipelago and nearby geographical features like corals reefs, cays etc.
  • Since 1968, these nations have engaged in varying kinds of military occupation of the islands and the surrounding waters.
  • The exception is Brunei,that has contained its objections to the use of its maritime waters for commercial fishing.
  • Although the Spratly Islands are largely uninhabited, there is a possibility that they may have large reserves of untapped natural resources like oil and natural gas.

Paracel Islands Dispute:

  • The Paracel Islands is an archipelago which is a collection of 130 islands and coral reefs and is located in the South China Sea.
  • It is almost equidistant from China and Vietnam.
  • Historic Claims
  • Beijing claims Paracel islands citing historical references dating back to 14th century writings from the Song Dynasty.
  • Vietnam claims that historical texts from at least the 15th century show that the islands were a part of its territory.
  • Colonial powers of the French-Indochina further accelerated the tensions with regard to the Paracel Islands due to their colonial policies in the 20th century.
  • Dispute in Modern Times:
    • By 1954, tensions had dramatically increased between China and Vietnam over the archipelago.
    • In January 1974, China and Vietnam fought over their territorial disputes after which China took over control of the islands.
    • In retaliation, in 1982, Vietnam said it had extended its administrative powers over these islands.
    • In 1999, Taiwan jumped into the fray laying its claim over the entire archipelago.
    • Since 2012, China, Taiwan and Vietnam have attempted to reinforce their claims on the territory by engaging in construction of government administrative buildings, tourism, land reclamation initiatives and by establishing and expanding military presence on the archipelago.

About: United Nations Convention on the Law of the Sea (UNCLOS), 1982

  • It is an international agreement that defines the rights of countries to the world’s oceans.
  • It was signed in 1982 and came into effect in 1994.
  • UNCLOS sets out the legal framework within which all activities in the oceans and seas must be carried out.
  • It also demarcates exclusive economic zones where coastal states are given the right to exclusively tap fishery and fuel resources.
  • 165 nations, including the Philippines and the People’s Republic of China (PRC) signed the convention. But the United States hasn’t.
  • Dispute Resolution under UNCLOS
    • All signatories of the UNCLOS have committed themselves to settle any issue peacefully.
    • One mechanism is to take a dispute to court, even if one of the contestants declines arbitration.

UNCLOS and SCS Dispute:

  • As per the United Nations Convention on the Law of the Sea (UNCLOS) the states can control the territorial waters within 200 nautical miles (370 km) off their shores. These are called the Exclusive Economic Zones (EEZ).
  • Where the zones overlap, as in some cases, neighbouring states need to decide on maritime borders.
  • It also states that areas that do not fall under EEZ should be international waters, shared by everyone and free for navigation.
  • Countries cannot claim sovereignty over land masses that are submerged or were submerged but that have now surfaced above high tide level because of illegal construction.

Permanent Court of Arbitration’s 2016 Judgement:

  • In 2013, Philippines challenged China’s reconstruction of seven islands on the Scarborough Shoal at a UN backed Permanent Court of Arbitration (PCA) at the Hague in the Netherlands..
  • In 2016, the tribunal ruled in favour of the Philippines, saying China had illegally seized its maritime territory.
  • This invalidated China’s vast historical claims to the waters based on UNCLOS
  • China refused to participate in the case and dismissed the ruling as a sham.
  • China’s Stand
  • As per China, this dispute is not about the interpretation of UNCLOS, but about territorial rights and maritime borders of SCS.
  • And these issues exceed the jurisdiction of the Permanent Court of Arbitration.
  • Therefore, China rejected the verdict saying that the court had no authority to rule on the matter.

Follow up of the judgement:

  • According to the UNCLOS, the court’s ruling is binding on all contesting parties. Annex VII of the UNCLOS says the judgment is final and cannot be appealed.
  • Thus, in theory, both countries have to accept the court’s decision and adhere to it.
  • Nevertheless, the Permanent Court of Arbitration in the Hague has no power to enforce the verdict.
  • At most, the signatories of UNCLOS could punish China with consequences regarding its rights as a member of three UNCLOS bodies: the International Tribunal for the Law of the Sea, the International Seabed Authority and the Commission on the Limits of the Continental Shelf.
  • China could be prompted to withdraw its judge from the International Tribunal for the Law of the Sea in Hamburg. Also, cases at the International Seabed Authority affecting Chinese interests could be shelved.
  • Beyond this, UNCLOS could not deliver much in the SCS dispute.

About REITs

About REITs

  • REITs are investment vehicles that own, operate and manage a portfolio of income-generating properties for regular returns.
  • These are usually commercial properties (offices, shopping centres, hotels etc.) that generate rental income.
  • An REIT works very much like a mutual fund.
  • It pools funds from a number of investors and invests them in rent-generating properties.
  • SEBI requires Indian REITs to be listed on exchanges and to make an initial public offer to raise money.
  • Just like MFs, REITs are subject to a three-tier structure — the sponsor who is responsible for setting up the REIT, the fund management company which is responsible for selecting and operating the properties, and the trustee who ensures that the money is managed in the interest of unit-holders.

 

Problems with REITs in India

  • Market regulator Sebi came out with REIT guidelines two years ago, helping real estate developers list their rent-yielding assets, and also providing large and small stock market investors with an inflation indexed product.
  • REITs have been quite a hit in Asian markets such as Singapore and Hong Kong, but have stayed on the drawing board in India for the last many years.
  • Market regulator SEBI has been tweaking its norms of REITs to enable them take off successfully, but progress has been slow.
  • Countries such as the US and Singapore have seen REITs providing good returns but in India, issues such as lower rental yields and an illiquid and opaque property market have discouraged REITs.
  • In real estate sector, both rent and capital appreciation from property depend on the location, infrastructure and industrial development around that area and REITs juggle these risks through a diversified portfolio of properties.

 

Significance of the first REIT listing

  • With the initiation of REITs, if they take off, there may be light at the end of the tunnel for the struggling real estate sector.
  • The Indian real estate sector has been facing a liquidity crunch on account of unsold inventory and low demand.
  • REITs can help cash-strapped developers to monetise their existing property.
  • Indian investors don’t have too many regular income options.
  • SEBI requires REITs to distribute a minimum 90 per cent of their income earned to investors on a half-yearly basis.
  • Similarly, 90 per cent of sale proceeds too are to be paid out to unit holders unless the amount is reinvested in another property.
  • Thus, the investor gets to receive regular income and also gets to benefit from price appreciation, thereby boosting the returns.
  • If REITs take off, one can invest in the property market with a minimum amount of ₹2 lakh, which is far cheaper than buying property.
  • REITs can be a new asset class to explore.
  • Most of the developers are bullish on this because they have already invested large amount in commercial properties which are generating good returns.
Section : Economics

In focus: Space Debris from Mission Shakti

In focus: Space Debris from Mission Shakti

Findings

  • NASA has identified that India’s A-SAT missile test has generated around 400 pieces of pace debris.
  • 60 are larger than 10cm in size and 24 are identified by NASA as potential threat to International Space Station (ISS) orbiting at the height of 410 km.

NASA’s concern: Threat to ISS

  • The A-SAT missile test produced 24 pieces of space debris that are larger than 24cm and going above the apogee (farthest point) of the International Space Station.
  • This according to NASA has increased the risk of collision with ISS to by 44% in the 10-day interval post the test.

 

How is ISS protected?

  • ISS is constantly at risk from space debris with over 23,000 of them moving in trajectories considered prone to collisions.
  • If an object is assessed to have the potential to enter the area of size 25 km × 25 km × 4 km around the ISS, it is considered a potential threat.
  • Every time space debris is around the aforesaid space, the ISS is maneuvered away from its normal trajectory in a process called Debris Avoidance Manoeuvres.
  • Since 1999, the ISS has undergone 25 DAMs, the last time in 2015.

 

India’s defense

  • India has justified its missile test saying that it chose the orbit above 300 km in order to reduce the impact of space debris.
  • Further, the number of satellites at such heights is few reducing the probability of a collision.
  • ISRO has estimated that the debris generated due to A-SAT test will decompose in a span of few weeks.
  • This is because of 2 reasons
  • Due to gravitational influence of the earth the space debris will fall on earth. Earth’s atmosphere albeit very feeble at such heights will decompose the space debris.
  • Further, if the velocity of the space debris decreases for some reason, the object will fall back on earth and burn out in its re-entry to atmosphere because of air-friction.

 

In brief: Space Debris

Definition

  • Inactive satellites that have passed their functional life, leftovers from a rocket or other small fragments form space debris often called as space junk.

 

Threat from space debris in general

Collisions

  • At low earth orbits the objects including satellites are moving at high velocity of 7.8 km/sec.
  • High velocities are required for objects in order to be in orbit at such low heights due to gravitational influence of earth. (which is around 95-98% at heights of 300km as that on surface)
  • At such high velocities, the kinetic energy released in case of collision is extremely high. (1/2 mv^2)
  • As a result even objects with small sizes about 10cm can potentially damage functional satellites in low earth orbit.

 

Ripple effect

  • According to estimates by NASA, there are about 900000 pieces of debris of sizes above 1cm in space.
  • About 34000 are larger than 10cm in size.
  • A small collision can produce cloud of debris that can eventually trigger more collisions setting up a chain reaction of collisions.
Section : Science & Tech

About Hyper-Spectral Imaging

About Hyper-Spectral Imaging

Working

• Hyper-Spectral Imaging is a combination of spectroscopy and digital imaging.
• The sensors or cameras, mounted on UAVs, will take images in two wavelengths of the electro-magnetic spectrum, namely ‘visible light’ and ‘infrared’.
• The images so takes will be run through ‘deep learning’ algorithms to process them into usable data.
• The data so processed is then communicated to the IAF Air Warfare Strategy Cell.

Principle of Spectroscopy and Digital Imaging

• When an electromagnetic wave shines on the surfaceof an object, some wavelengths are absorbed whileothers are reflected.
• ExampleThe colour of plant leaf is green because it absorbs red and violet light but reflects green lightwhich what we see as colour green.
• Similarly all objects absorb and reflect certain wavelengths of electromagnetic spectrum unique to that object. Thus every object has its own ‘spectral signature’.
• The sensors or cameras which are sensitive to a particular wavelength (say visible light, UV light, Infrared etc) capture the image in that wavelength.
• This ‘image’ captured in ‘visible light’ or ‘infrared’ is super-imposed and converted to usable data.

Applications

  • Military Applications: Hyper-spectral imaging is a new-gen aerial surveillance strategy with the following capabilities:
    • It can perform surveillance in areas under dense treecover along the international borders. (Due to infrared sensors)
    • Multi-sensor imaging helps to track adversary movement in day and night conditions.
    • It works effectively in all-weather conditions, be it cloud cover, dense fog or snow cover.
  • Civilian Applications
  • Crop monitoring
  • Drought monitoring
  • Mapping soil moisture
  • Mineral Prospecting etc

Note: Similar project HySIS

• In November 2018, ISRO launched HySIS advanced earth observation satellite. Click here for details.
Section : Science & Tech

In focus: Titan

In focus: Titan

Introduction

  • Titan is the only moon of Saturn that has a size comparable to that of our own moon.
  • It is the second largest moon in our solar system after Ganymede of Jupiter.

 

Features

  • Thick atmosphere
    • Titan is the only moon that has a thick atmosphere. (about 200 km)
    • The atmosphere is composed of 95% nitrogen, traces of methane, ethane, acetylene, ethylene and propane.
  • Composition
    • As a result of high atmospheric pressure and low temperature (-178 degree Celsius), hydrocarbons such as methane, ethane exist as liquid on Titan.
    • As a result it is the only place other than earth that has standing liquid on its surface.

 

Cassini Mission and its findings

  • Launched in 1997, reached Saturn in 2004
  • Joint effort of NASA, European Space Agency and the Italian Space Agency.
  • Final flyby in 2017.

Objectives

  • Study of composition, structure, weather, origin and evolution of Saturn
  • Structure and composition of Saturn’s rings
  • Study of Titan and other small icy satellites of Saturn

Key discoveries

  • Cassini spacecraft was the first to observe Titan to have rain, rivers, lakes and seas made of hydrocarbons.
  • First to observe nitrogen-rich atmosphere.
  • Current discovery
    • Titan’s northern hemisphere has lakes 300 ft deep made of methane.
    • The lakes are on top of landforms similar to mesas or butte on earth (flatlands) in Karst topography.
    • Further there are small shallow lakes (called phantom lakes) seasonal in nature that appear in winter and evaporate in summer.
Section : Science & Tech

About Sir Chhotu Ram (1881-1945)

About Sir Chhotu Ram (1881-1945)

 

Background

  • In the early 19th century India witnessed immense agricultural indebtedness.
  • With 2.3 million acres under agriculture in 1901-1902, Punjab was primarily an agricultural economy.
  • Chhotu Ram is regarded as the champion of peasantry.
  • He sought to empower peasantry politically, socially and economically.
  • He also served as a distinguished lawyer, a publicist, a legislator and a minister.
  • As a member of the Arya Samaj, he also worked as a social reformer.

Political Ideology and Contribution

  • Although a Gandhian, he did not see a bright future for the peasantry in Gandhi’s philosophy of non-cooperation and thus resigned as the President of the Rohtak District Congress Committee in 1920.
  • Politically, his goal was complete independence of India without being bifurcated.
  • He was the principal architect of the Unionist Party formed in 1923 and Zamindara League under it which worked for the cause of peasants in Punjab.
  • The Unionist Party dominated the politics of the province from 1923 to 1926.
  • He served as a minister of Agriculture in the Punjab from September 1924 to December 1926.
  • After the 1937 election, when the Unionist Party came to power in the province, he served in the Departments of Development and Revenue.

Work towards Peasantry

  • As a champion of peasantry, he sought to empower peasantry politically, socially and economically.
  • His main aim was to root out the anomalies on the basis of equal distribution of taxes between agriculturists and non-agriculturists.
  • He also advocated spending of provincial revenue for reconstruction and social welfare activities in the rural areas.
  • He is mainly remembered by the peasantry for the Golden Agrarian Acts like Punjab Revenue Act, Restitution of Land Mortgaged Act, Regulation of Accounts Act, Relief of Indebtedness Act, Debtor Protection Act, Registration of Moneylenders Act, Agricultural Produce Market Act etc.

Titles

  • He was bestowed the title of Rao Sahib in 1916, Rao Bahadur in 1930 and knighted as Sir in 1937.

 

 

Section : History & Culture

How stock markets really work?

Headline : How stock markets really work?

Details :

What is Market Capitalisation?

  • Market capitalisation or value is the price of individual shares multiplied by total number of shares in the issue.
  • Companies have a dominant shareholder, which can be the government or some promoting group or a business family.
  • Remaining shares are held by institutions (LIC, mutual funds and so on) and individuals.

 

What is a stock market index?

  • A stock index or stock market index is a measurement of a section of the stock market.
  • It is computed from the prices of selected stocks (typically a weighted average).
  • It is a tool used by investors and financial managers to describe the market, and to compare the return on specific investments.

 

What is scrip?

  • A scrip (or chit in India) is any substitute for legal tender and is often a form of credit.
  • Scrips have been created for payment of employees under truck systems and for use in local commerce at times when regular currency was unavailable.

 

When did share trading start in India?

  • The concept of incorporated companies and share trading started in the 1840s in India.
  • Initially facilitated by unregistered brokers, it led to India’s first market boom and bust.
  • The US Civil War saw supply of cotton to British mills slashed while companies trading in Indian cotton profited.
  • This led to a bull run that started in 1861 and went bust after the 1865 surrender of Confederate General Robert Lee to Union General Ulysses S Grant.
  • India’s first stock market, the Bombay Stock Exchange, was set up in 1875 and the Sensex launched in 1986.

 

Does the index include the market cap of all companies listed in the BSE?

  • No, only 30 scrips are selected whose market caps are used to calculate the value of the Sensex.
  • The scrip selection generally takes into account a balanced representation of the listed companies in the exchange.
  • There are other broad-based indices like BSE 100 and BSE 200 that include higher number of scrips. In terms of number of listed companies,
  • BSE is the world’s largest stock exchange.

 

 

How is the value of Sensex calculated?

  • The index helps compare present-day share prices with the past to show how the market is moving.
  • Sensex’s base year is 1978-79.
  • This means the value of the index was equated to 100 for that year.
  • After fixing base year market capitalisation (price of individual shares multiplied by total shares in the issue) was calculated.
  • The present value is arrived at by calculating present market value, dividing it by base year market value, and multiplied by base index value: 100 in this case.
  • Shares held by government or promoter are generally not traded.
  • So Sensex has to be adjusted for free float market-cap value.
  • This means the index is calculated on publicly-traded shares. So a company with large market cap but few publicly traded shares cannot influence it.

 

 

 

Section : Economics

About Generations of Internet

About Generations of Internet

  • The mobile wireless Generation (G) generally refers to a change in the nature of the system, speed, technology, frequency, data capacity, latency etc.
  • Each generation has some standards, different capacities, new techniques and new features which differentiate it from the previous one.
  • The journey of mobile wireless communication began with 1G followed by 2G, 3G, 4G,and the upcoming generation 5G.

 

  • The first generation (1G)Used for voice calls only
    • Speed – 2.4 kbps
    • Allowed voice calls in 1 country
    • Used analog signal
    • Had poor voice quality
    • Offered very low level of spectrum efficiency

 

  • The second generation (2G)It is a digital technology and supports text messaging.
    • Data speed was up to 64kbps.
    • Used digital signals
    • Enables services such as text messages, picture messages and MMS(Multimedia message)
    • Unable to handle complex data such as videos
    • Required strong digital signals to help mobile phones work
    • 5 GSpeed: 64-144 kbps
      • Send/receive e-mail messages
      • Web browsing

 

  • The thirdgeneration (3G)This internet technology provided higher data transmission rate, increased capacity and provides multimedia support.
    • Speed 2 Mbps
    • It offers data services, access to television/video, new services like Global Roaming.
    • It operates at a range of 2100MHz and has a bandwidth of 15-20MHz used for high-speed internet service, video chatting.
    • Increased bandwidth and data transfer rates to accommodate web-based applications and audio and video files
    • Provides faster communication
    • Send/receive large email messages
    • High speed web/more security/video conferencing/3D gaming

 

  • The fourth generation (4G)It integrates 3G with fixed internet to support wireless mobile internet, which is an evolution to mobile technology and it overcome the limitations of 3G.
    • It also increases the bandwidth and reduces the cost of resources.
    • LTE (Long Term Evolution) is considered as 4G technology
    • Capable of providing 10Mbps-1Gbps speed
    • High quality streaming video
    • Combination of Wi-Fi and Wi-Max
    • High security
    • Provide any kind of service at any time as per user requirements anywhere
    • Expanded multimedia services
    • Low cost per-bit

 

  • The fifth generation5thGeneration Mobile technology and is going to be a new revolution in mobile market which haschanged the means to use cell phones within very high bandwidth.

 

What is share buyback?

Headline : What is share buyback?

Details :

Why in news?

  • With prominent companies such as Infosys, TCS and L&T having gone for a share buyback, here is a low-down on the mechanism and the reasons for firms taking such a step.

What is a buyback?

  • A buyback is a mechanism through which a listed company buys back shares from the market.
  • A buyback can be done either through open market purchases or through the tender offer route.
  • Under the open market mechanism, the company buys back the shares from the secondary market while under tender offer, shareholders can tender their shares during the buyback offer.
  • Historically, most companies had preferred the open market route.

Why does a firm go in for a buyback?

  • Buybacks are typically done when a company has a significant cash reserve and feels that the shares are not fairly valued at the current market price.
  • Since the shares that are bought back are extinguishedthe stake of the remaining shareholders rise.
  • Promoters also use this mechanism to tighten their grip on the firm.

What are the benefits?

  • Since the bought back shares are extinguished, the earnings per share (EPS) rise by default.
  • Also, since a buyback is usually done at a price higher than the then prevailing market price, shareholders get an attractive exit option, especially when the shares are thinly traded.
  • It is also more tax-efficient than dividends as a way to reward shareholders.

How can a company execute a buyback?

  • A company can use a maximum of 25% of the aggregate of its free reserves and paid-up capital for a buyback. A special resolution needs to be passed at a general meeting.
  • However, if the company plans to use less than 10% of its reserves then only a board resolution is required.

Can a firm opt for regular buybacks to boost EPS?

  • A company cannot do a second buyback offer within one year from the date of the closure of the last buyback.
  • Also, there are time-bound limitations on further share issuances like preferential allotment or bonus issue post a buyback.
  • These checks have been put in place so that companies do not misuse the buyback mechanism.

Do retail investors get a reservation in buy back?

  • The Securities and Exchange Board of India (SEBI) has recently revised the buy back regulations that stipulate 15% reservation for retail shareholders in a buy back offer.
  • This gives retail investors a fair share in the offer, which otherwise could see large institutional investors tendering their shares leaving little or no room for small investors.
Section : Economics

Angkor Wat Temple

Angkor:
  • Angkor, in Cambodia’s northern province of Siem Reap, is one of the most important archaeological sites of Southeast Asia.
  • It was the capital of the Khmer Empire, which flourished from approximately the 9th to the 15th centuries.
  • It contains the magnificent remains of the different capitals of the Khmer Empire.
  • They include the famous Temple of Angkor Wat and the Bayon Temple at Angkor Thom.
  • It is a UNESCO world heritage site. Wide-ranging programme to safeguard this symbolic site and its surroundings are going on.
Facts about Angkor Wat Temple:
  • It was built in the 12th century during Khmer Empire.
  • It was commissioned by Khmerian King Suryavarman II.
  • It is dedicated to Hindu God Vishnu.
  • Temple represents Mt. Meru, Hindu home of the Gods.
  • It is made of sandstone, with more than 1800 carved apsaras and hundreds of meters of bas relief.
  • Temple was dedicated to Theravada Buddhism around the 14th Century.
Section : History & Culture