Current Affairs Analysis

13th October 2020 Current Affairs Analysis – IASToppers

Homoeopathy to treat Skin related viral diseases; Right to Information (Amendment) Act, 2019; Central Information Commission (CIC); Problems with RTI Act; Kamdhenu Deepawali Abhiyan; Ram Manohar Lohia; Climate change driving butterflies higher up Himalayas; Economics Nobel Prize; Auction Theory; Auction Winners curse; Noble Prize; Mt. Kilimanjaro; Location of Tanzania; Human Cost of Disasters 2000-2019; Hi-Tech School Programme; Chinese Loans to Sri Lanka; Visiting Forces AgreementBhai Taru Singh; National Philately Day; Anti-microbe drug; etc.
By IASToppers
October 13, 2020

Contents

Polity & Governance

  • RTI Act crippled by rising backlog

Government Schemes & Policies

  • Hi-Tech School Programme
  • Kamdhenu Deepawali Abhiyan

Issues related to Health & Education

  • Homoeopathy to treat Skin related viral diseases

Economy

  • Government to spend Rs 37,000 crore

Environment, Ecology & Disaster Management

  • Climate change driving butterflies higher up Himalayas
  • Fire broke out at Mt. Kilimanjaro
  • Human Cost of Disasters 2000-2019

Bilateral & International Relations

  • Chinese Loans to Sri Lanka

Art & Culture

  • Tributes to Dr. Ram Manohar Lohia
  • Nobel Prize in Economics 2020

Key Facts for Prelims

  • Anti-microbe drug can fight Coronavirus
  • National Philately Day
  • Bhai Taru Singh

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Polity & Governance

RTI Act crippled by rising backlog

Fifteen years after the Right to Information (RTI) Act came into force, more than 2.2 lakh cases are pending at the Central and State Information Commissions, which are the final courts of appeal under the transparency law.

  • The increasing backlog is exacerbated by the fact that most Commissions are functioning at reduced capacity, including the Central Information Commission (CIC).

Key Details:

  • Maharashtra had the highest number of pending appeals, with over 59,000 cases, followed by Uttar Pradesh (47,923) and the CIC (35,653).
  • Under the law, every commission should have a chief and up to 10 commissioners.
  • Odisha is functioning with just four commissioners, while Rajasthan has only three.
  • Jharkhand and Tripura have no commissioners at all, and have been defunct for months.
  • The CIC has no chief, and only five commissioners.
  • At the current rate of disposal, the Odisha Commission would take more than seven years to dispose of all pending complaints, while the CIC would take more than two years.
  • The government officials face hardly any punishment for violating the law.
  • Penalties were imposed in only 2.2% of cases that were disposed of, despite previous analysis showing a rate of about 59% violations.

Concern:

  • Non-imposition of penalties in deserving cases by commissions sends a signal to public authorities that violating the law will not invite any serious consequences.
  • This destroys the basic framework of incentives built into the RTI law and promotes a culture of impunity.

Right to Information (Amendment) Act, 2019:

  • The Act changes the terms and conditions of service of the Central Information Commission (CIC) and Information Commissioners at the centre and in states.

i) Term – As per RTI Act 2005:

  • The Chief Information Commissioner (CIC) and Information Commissioners (ICs) (at the central and state level) will hold office for a term of five years or till they attain the age of sixty-five years, whichever is earlier and is not eligible for reappointment.

Amendment:

  • The Act removes this provision and states that the Central government will notify the term of office for the CIC and the ICs.

ii) Quantum of Salary – As per RTI Act 2005:

  • The salary of the CIC and ICs (at the central level) will be equivalent to the salary paid to the Chief Election Commissioner and Election Commissioners, respectively.
  • Similarly, the salary of the CIC and ICs (at the state level) will be equivalent to the salary paid to the Election Commissioners and the Chief Secretary to the state government, respectively.

Amendment:

  • The Act removes these provisions and states that the salaries, allowances, and other terms and conditions of service of the central and state CIC and ICs will be determined by the central government.

iii) Deductions in Salary – As per RTI Act 2005:

  • The Act states that at the time of the appointment of the CIC and ICs (at the central and state level), if they are receiving pension or any other retirement benefits for previous government service, their salaries will be reduced by an amount equal to the pension.
  • Previous government service includes service under: (i) the Central/state government (ii) corporation established under a central or state law, and (iii) company owned by the central or state government.

Amendment:

  • The Act removes these provisions.

What Does the RTI Act Do? 

  • Under the RTI Act, 2005, Public Authorities are required to make disclosures on various aspects of their structure and functioning.
  • This includes: (i) disclosure on their organisation, functions, and structure, (ii) powers and duties of its officers and employees, and (iii) financial information.
  • If such information is not made available, citizens have the right to request for it from the Authorities under RTI act.
  • The intent of such disclosures is that the public should need minimum recourse through the Act to obtain such information and to promote transparency and accountability in the working of Public Authorities.

Who Is Included in the Ambit Of ‘Public Authorities’?

  • ‘Public Authorities’ include bodies of self-government established under the Constitution, or under any law or government notification.
  • These include Ministries, public sector undertakings, and regulators.
  • It also includes any entities owned, controlled or substantially financed and non-government organizations substantially financed directly or indirectly by funds provided by the government.

The Problems with RTI Act:

1. No pro-active dissemination of information:

  • Section 4 of the RTI Act calls for pro-active and voluntary dissemination of information, but only a few Central and State institutions have published relevant information.
  • Rajasthan has taken a lead through its Jan Soochna portal.

2. Vacancies in Information Commissions:

  • The other problem has been persisting vacancies in the State and Central Information Commissions, which was, recently, raised in a plea in the Supreme Court.

3. Information not in public spirit:

  • Supreme court noted that RTI officials were sensing fear due to the kind of queries they are getting that were not always in public spirit and were posed by people who had no ‘locus standi’ (relation) in the matter regarding the queries.

4. Poor state of transparency:

  • A Transparency Audit report submitted to the Central Information Commission (CIC) sought feedback from 2,092 public authorities (PAs) to evaluate the implementation of Section 4 of the Act.
  • Only 838 (40%) responded and, 35% of the PAs fared poorly with little transparency in parameters such as organisation and functions, budget and programme, e-governance, and other information disclosures.

Central Information Commission:

  • Under the provision of Section-12 of RTI Act 2005 the Central Government constituted a body to be known as the Central Information Commission in 2005.
  • There are two women who became CIC till now: Ms Deepak Sandhu (4th CIC) and Ms Sushma Singh (5th CIC).

Power of CIC as per RTI Act, 2005:

  • Adjudication in second appeal for giving information.
  • Direction for record keeping.
  • Suo motu disclosures receiving and enquiring into a complaint on inability to file RTI.
  • Imposition of penalties and Monitoring and Reporting including preparation of an Annual Report.

Composition of CIC:

  • This Commission consists of the Chief Information Commissioner and Information Commissioners not exceeding 10.
  • CIC and members are appointed by the President of India on the recommendation of a committee consisting of:
    • The Prime Minister, who shall be the Chairperson of the committee.
    • The Leader of Opposition in the Lok Sabha.
    • A Union Cabinet Minister to be nominated by the Prime Minister.
[Ref: The Hindu]

Government Schemes & Policies

Hi-Tech School Programme

Hi-Tech School Programme is an initiative of the Kerala Government.

  • With this scheme, Kerala has become the first state in the country to make high-tech classrooms or high-tech labs in all government-run and aided schools.
  • The programme seeks to make 45,000 classrooms in 4,752 schools to Hi-Tech.
  • Kerala Infrastructure Investment Fund Board (KIIFB) is funding the 493.50 crore project.
  • Kerala Infrastructure and Technology for Education (KITE) will be implementing the programme.
[Ref: Indian Express]

Kamdhenu Deepawali Abhiyan

Rashtriya Kamdhenu Aayog (RKA) has started a nation- wide campaign to celebrate Kamdhenu Deepawali Abhiyan this year on the occasion of Deepawali festival.

  • It is encouraged by the response to Gaumaya Ganesha Campaign which encouraged usage of eco-friendly material in manufacture of idols for the Ganesha Festival.

About the campaign

  • Through this campaign, the RKA is promoting extensive use of cow-dung/ Panchgavya products during this Diwali Festival.
  • Manufacture of Cow dung based Diyas, Candles, Dhoop, Agarbatti, Shubh-Labh, Swastik, Samrani, Hardboard, Wall-piece, Paper-weight, Havan samagri, Idols of Lord Ganesha and Goddess Lakshmi for this year’s Diwali festival has already started.
  • RKA aims reaching 11 crore families to ignite 33 crore Diyas made of cow-dung during this year’s Deepawali festival.
  • Apart from generating business opportunities to thousands of cow-based entrepreneurs / farmers/ women entrepreneurs, the use of cow-dung products will lead to cleaner and healthier environment.
  • It will help in making Gaushalas ‘Atma Nirbhar’ too.
  • By providing an environment friendly alternative to Chinese made Diyas, the campaign will boost up Make in India vision and also promote ‘Swadeshi’ movement while reducing environmental damage.
  • Various segments of stakeholders like farmers, manufacturers, entrepreneurs, Gaushalas and other concerned are being involved at large to make the campaign of Kamdhenu Deepawali a grand success.

Rashtriya Kamdhenu Aayog (RKA):

  • Rashtriya Kamdhenu Aayog (RKA) has been constituted in 2019 for the conservation, protection and development of cows and their progeny and for giving direction to the cattle development programmes.
  • RKA is high powered permanent body to formulate policy and to provide direction to the implementation of schemes related to cattle so as to give more emphasis on livelihood generation.
  • Rashtriya Kamdhenu Aayog functions as an integral part of Rashtriya Gokul Mission.
  • The Aayog reviews existing laws, policies as well as suggest measures for optimum economic utilization of cow wealth for enhanced production and productivity, leading to higher farm income and better quality of life for the dairy farmers.
  • Livestock economy sustains nearly 73 million households in rural areas. Even though, the country is largest producer of milk, the average milk yield in India is only 50% of the world average.
  • The low productivity is largely due to deterioration in genetic stock, poor nutrition and unscientific management.
  • RKA is trying to implement the vision of Prime Minister for ‘Atma Nirbhar Bharat’. The Cow-centric economy can also help in achieving this goal by making its own humble contribution.
  • For this purpose, RKA has been consistently endeavouring to increase the use of various cow- panchgavya products to raise the income of farmers, gaupalaks, youth, women, self-help groups and other stakeholders.
[Ref: PIB]

Issues related to Health & Education

Homoeopathy to treat Skin related viral diseases.

A case study published recently in AYUHOM, the Research Journal of North Eastern Institute of Ayurveda and Homoeopathy, Shillong illustrates the point that homoeopathy can help in cases of skin related viral diseases.

  • Skin diseases are numerous and frequently occurring health problem affecting all ages not only India but globally also. The Global Burden of Disease project has shown the skin diseases continue to be the 4th leading cause of non-fatal disease burden worldwide.
  • The case study was done on five patients with Wart, Herpes Zoster and Molluscan Contagiosum. 

Key Facts:

  • Skin warts are benign tumours caused by infection of keratinocytes.
  • Herpes Zoster results from reactivation of varicella-zoster virus (that also causes chickenpox).
  • Molluscan contagiosum is a viral skin infection caused by closely related types of Pox Virus, and is common with children worldwide, especially in warm climates.

Economy

Government to spend Rs 37,000 crore

Finance minister announced additional allocation of Rs 37,000 crore towards capital expenditure, and put money into the pockets of government employees ahead of the festival season, hoping to trigger demand of Rs 1 lakh crore in her latest bid to revive economic activity.

Highlights of the Announcements:

  • Sitharaman proposed ₹73,000 crore in public expenditure, including ₹28,000 crore on leave travel concession (LTC) vouchers and encashment by government employees, ₹8,000 crore on pre-paid special festival advances, ₹12,000 crore capital investment by states via 50-year interest-free loans from the Centre, and ₹25,000 crore additional capital spending on infrastructure projects by the Centre in 2020-21.
  • The much-awaited “stimulus”, however, did not contain measures to address the lack of demand in sectors such as hospitality and tourism that have been hit hard by Coronavirus with demand remaining tepid even after opening.
  • The finance minister said that if the private sector offered similar LTC benefits to their employees, that would have an additional impact of ₹28,000 crore, which would take the total demand stimulus package to over ₹1 lakh crore. All benefits are available till March 31, 2021.
  • Sitharaman said the demand stimulus package has two focus areasconsumer spending and capital expenditure.
  • In consumer spending, the package has two components — LTC encashment vouchers plus leave encashment, and special festival advances through pre-paid RuPay cards.

LTC encashment:

  • Central government employees get tax free LTC to any destination of their choice once every four years besides leave encashment of 10 days.
  •  As travel is difficult during the Covid-19 pandemic, the government has decided to make cash payments for the fares in line with the entitlement of government employees, which is tax-free, she said. The offer is one-time only.
  • To be sure, the offer unveiled by the government is conditional. Employees taking up the offer will be required to buy goods and services worth three times the fare component of LTC and the equivalent of leave encashment component of LTC before March 31, 2021.
  • The money must be spent on products that attract a Goods and Services Tax (GST) rate of 12% or more from a GST-registered vendor through the digital mode.

Special festival advances:

  • Explaining the special festival advance, the second component of the consumer spending measure, the government proposes to restore the festival advance as a one-time measure for its employees.
  • It plans to give an interest-free advance of ₹10,000 per employee through a pre-paid RuPay card that can be repaid in 10 instalments.
  • The beneficiary has to spend the amount through the digital mode by March 31, 2021.
  • All such advances were abolished by the 7th Pay Commission.
  • For Central government employees, this would entail an expenditure of ₹4,000 crore. If states also join this scheme, conservatively, over ₹4,000 crore of additional consumer demand will be generated.

Demand generation through capital expenditure:

  • The government has proposed a ₹12,000 crore special interest-free, 50-year loan scheme to states to be spent by March 31, 2021.
  • According to the scheme, ₹200 crore each will be given to eight Northeastern states and ₹450 crore each to Uttarakhand and Himachal Pradesh.
  • While ₹7,500 crore will be available to other states in proportion to their shares determined by the devolution of the Finance Commission, ₹2,000 crore will be given to those states that meet at least three out of four reforms given in the Atmanirbhar fiscal deficit package.
  • The government has decided to provide ₹25,000 crore in additional budget for capital expenditure on projects related to roads, defence infrastructure, water supply, urban development, defence infrastructure and domestically produced capital equipment. 

Other announcements:

  • The Centre had also accepted the demand of states to raise their borrowing limit from 3% of their gross state domestic product (GSDP) to 5%; that would give them additional resources of ₹4.28 lakh crore during the Covid-19 crisis.
  • The increased limit was, however, conditional and depended on implementation of reforms by them in four areasone-nation, one-ration-card, ease of doing business, power distribution and urban local body revenues.
[Ref: PIB; Hindustan Times]

Environment, Ecology & Disaster Management

Climate change driving butterflies higher up Himalayas

A new study commissioned by the government has found that the rising average temperatures in the Himalayan region have driven several dozen species of butterfly and moth to habitats higher up the mountains.

Major Highlights:

  • The survey was funded by the Ministry of Environment, Forest and Climate Change and carried out by the Zoological Survey of India (ZSI).
  • The Himalayas are home to more than 35 per cent of Lepidoptera — the order of insects that includes butterflies and moths – species found in India.
  • The survey identified at least 49 species of moth and 17 species of butterfly that have shown considerable new upward altitude records with a difference of more than 1,000 metres between their current and previously recorded mean habitat altitudes.
  • Seven species in particular have started to inhabit altitudes more than 2,000 metres higher than the previous.
  • These include the moth species Trachea auriplena (Noctuidae), Actias windbrechlini (Saturniidae), and Diphtherocome fasciata (Noctuidae), with mean altitudinal differences of 2,800 m, 2,684 m and 2,280 m respectively.

Reasons for the change:

  • Receding ice caps and glaciers leading to a scarcity of water in the Himalayas has been a major reason for the altitudinal shift of the Lepidoptera.
  • The increase in average temperature has also resulted in an altitudinal shift in vegetation – trees, shrubs, and plants that once grew at lower altitudes in the Himalayas are now found only higher up in the mountains.
  • Increasing human habitation too, has contributed to the shift.

Significance:

  • Butterflies are sensitive species that are extremely susceptible to changes in climate.
  • They are good indicators of long-term change in climatic conditions.
  • The findings will be used as a baseline indicator to track the impact of climate change on animal species over the coming decade.

Other findings:

  • The study identified two species richness hotspots – one in West Bengal’s Darjeeling hills, where more than 400 species records were documented, and another in Kumaon, Uttarakhand, where more than 600 species records were found.
  • In Himachal Pradesh, two high diversity areas were identified – Dharamshala and Shimla.
  • The study revealed an increase in the richness of Lepidoptera biodiversity from the Western to the Eastern Himalayas – it found 211 species of butterfly in the West, and 354 in the East.
  • But the Lepidoptera habitat is shrinking. The ZSI predicts a decline of as much as 91 per cent in the suitable area for the Notodontidae family of moths in J&K, Himachal, and Uttarakhand by 2050.
[Ref: Indian Express]

Fire broke out at Mt. Kilimanjaro

A fire broke out on Mount Kilimanjaro on 11th Oct and authorities have been trying to contain it.

  • The fire started at the Whona area, a rest centre for climbers using Mandara and Horombo, two of several routes up the mountain.
  • Winds helped spread the fires.

Mount Kilimanjaro:

  • Mount Kilimanjaro is a dormant volcano in Tanzania.
  • It has 3 volcanic cones: Kibo, Mawenzi and Shira.
  • It is the highest mountain in Africa and the highest single free-standing mountain in the world: 5,895 metres (19,341 ft) above sea level and about 4,900 metres (16,100 ft) above its plateau base.
  • Kilimanjaro is the 4th most topographically prominent peak on Earth.
  • The first people known to have reached the summit were Hans Meyer and Ludwig Purtscheller, in 1889.
  • It is part of Kilimanjaro National Park and is a major climbing destination.
  • Because of its shrinking glaciers and disappearing ice fields, it has been the subject of many scientific studies.

Location of Tanzania:

  • Tanzania, East African country situated just south of the Equator.
  • Tanzania was formed as a sovereign state in 1964 through the union of the theretofore separate states of Tanganyika and Zanzibar.
  • Dodoma, since 1974 the designated official capital of Tanzania, is centrally located on the mainland. 
  • The Tanzania mainland is bounded by Uganda, Lake Victoria, and Kenya to the north, by the Indian Ocean to the east, by Mozambique, Lake Nyasa, Malawi, and Zambia to the south and southwest, and by Lake Tanganyika, Burundi, and Rwanda to the west.
[Ref: Reuters; Britannica]

Human Cost of Disasters 2000-2019

United Nations Disaster Risk Reduction (UNDRR) report published to mark the International Day for Disaster Risk Reduction on October 13, 2020.

  • Climate change is largely to blame for a near doubling of natural disasters in the past 20 years.
  • The sharp increase was largely attributable to a rise in climate-related disasters, including extreme weather events like floods, drought and storms.
  • The new report by United Nations Disaster Risk Reduction entitled as “The Human Cost of Disasters 2000-2019”.

Highlights of the report

  • 7348 major disaster events had occurred between 2000 and 2019, claiming 1.23 lives, affecting 4.2 billion people and costing the global economy some $2.97 trillion.
  • The figure far outstrips the 4212 major natural disasters recorded between 1980 and 1999 resulting in approximately US$1.63 trillion in economic losses.
  • The last twenty years has seen the number of major floods more than double, from 1,389 to 3,254, while the incidence of storms grew from 1,457 to 2,034. Floods and storms were the most prevalent events.
  • Floods and storms were the most prevalent events. The last twenty years has seen the number of major floods more than double, from 1389 to 3254, while the incidence of storms grew from 1457 to 2034.
  • The report records major increases in other categories including drought, wildfires and extreme temperature events.
  • There has also been a rise in geo-physical events including earthquakes and tsunamis which have killed more people than any of the other natural hazards under review in this report.
  • The deadliest single disaster in the past 20 years was the 2004 Indian Ocean tsunami, with 226,400 deaths, followed by the Haiti earthquake in 2010, which claimed some 222,000 lives.
  • Asia has suffered the highest number of disasters in the past 20 years with 3068 such events, followed by the Americas with 1756 and Africa with 1192.
  • In terms of affected countries, China topped the list with 577 events followed by the United States with 467.
  • The report did not touch on biological hazards and disease-related disasters like the coronavirus pandemic.
[Ref: The Hindu]

Bilateral & International Relations

Chinese Loans to Sri Lanka

Sri Lanka is planning to secure $500 mn in Chinese loans.

  • In related to news, the US Secretary of State is also visiting Sri Lanka.
  • Earlier, the US has proposed a Visiting Forces Agreement’ (VFA) with Sri Lanka and the current administration opposed the same.

China`s influence in the region:

  • Neighbouring countries drifting towards China is a worrying sign for India.

Reasons:

  • China uses debt-trap diplomacy to extend its influence in Indian Subcontinent. Most of India’s neighbours have entered under Chinese influence through this method.
  • China provides billions of dollars in the form of concessional loans to developing countries, with attractive and below market rate interests, mostly for its large-scale infrastructure projects. These developing nations, which are primarily low- or middle-income countries, are unable to keep up with the repayments, and China then gets a chance to demand concessions or advantages in exchange for debt relief. E.g. China gaining control of Hambantota port of Sri Lanka for 99 years.
  • Another reason is the quick decision-making process of Chinese bureaucracy compared to India or Japan or a western nation.
  • China is also investing in the financial systems of India`s neighbours. It has invested in Dhaka and Karachi Stock Exchanges. And thus, it can be said that China through hard initiatives such as Belt and Road Initiatives and soft initiatives like investing in financial systems etc. is gaining a foothold in the Indian Subcontinent.

Way Forward:

  • India should find alternative strategies to regain its influence in the neighbourhood.

Visiting Forces Agreement:

  • A visiting forces agreement (VFA) is an agreement between a country and a foreign nation having military forces visiting in that country.
  • The US military has the largest foreign presence and therefore accounts for most VFAs.

For more information, please visit

[Ref: The Hindu]

Art & Culture

Tributes to Dr. Ram Manohar Lohia

The Prime Minister, Shri Narendra Modi paid tributes to Dr. Ram Manohar Lohia on his punyatithi.

Ram Manohar Lohia

  • Ram Manohar Lohia was an Indian politician and activist who was a prominent figure in socialist politics and in the movement toward Indian independence.
  • Lohia was born on 23 March 1910 at Akbarpur in Uttar Pradesh in a family of traders.
  • Following in his father’s footsteps, Lohia, then 11 years old, got drawn to the Non-Cooperation Movement, led by Mahatma Gandhi.
  • Lohia completed his intermediate studies from Banaras Hindu University. He earned a bachelor’s degree from the University of Calcutta and later a doctorate from the Humboldt University of Berlin.

Independence struggle

  • Socialist leader Ram Manohar Lohia played a major role in the Independence struggle, especially, during the Quit India Movement.
  • It was Lohia who kept the movement alive through his ‘underground’ work, at a time when several top leaders were jailed by the British rulers.
  • In 1934, Lohia joined the Congress Socialist Party, which served as the Left-wing of the Indian National Congress. He was one of the founding members of the party and also edited its periodical called, Congress Socialist.
  • In 1936, he became the secretary of the foreign department of All India Congress Committee.
  • Lohia bitterly opposed India’s involvement in the World War-II. He was arrested for making comments against the British government in 1939-40.
  • During the Quit India Movement in 1942, when most of the top leaders, including Mahatma Gandhi and Jawaharlal Nehru were arrested, Lohia and Jay Prakash Narayan played a major role in mobilising support.
  • Lohia set up underground radio stations called, Congress Radio, at Bombay and Calcutta.
  • According to a report, JP mobilised a guerrilla force to combat British colonial rule. As a result of this, Lohia was jailed again in 1944-46.

After Independence

  • Lohia, along with several leaders left the Congress in 1948 because of their differences with Nehru.
  • He joined the Praja Socialist Party in 1952. Later, he launched a new Socialist Party and edited its journal Mankind. Lohia started a series of “Satyagrahas” against social injustice and went to jail several times during this period.
  • Lohia was elected to the third Lok Sabha in a bypoll from Farrukhabad in May 1963. In the 1964 budget debate, Lohia showcased that 270 million Indians lived on three annas (19 paise) a day.

Social reforms

  • He gave a number of suggestions for the eradication of caste system, including compulsory intercaste marriages for government servants and community festivals.
  • To eliminate caste barriers, he put forward the idea of “roti and beti”, which means that people would have to break caste barriers in order to eat together and allow marriage of their daughters with grooms from other castes.
  • Lohia died on 12 October 1967, at New Delhi’s Willingdon Hospital, which was later rechristened Ram Manohar Lohia Hospital.
[Ref: PIB]

Nobel Prize in Economics 2020

U.S. economists Paul Milgrom and Robert Wilson won the Nobel Economics Prize 2020.

  • They were awarded for work on commercial auctions, including for goods and services difficult to sell in traditional ways such as radio frequencies.

About the Work:

  • The duo was honoured for improvements to auction theory and inventions of new auction formats.
  • The Royal Swedish Academy of Sciences noted that the discoveries by Mr. Milgrom, 72, and Mr. Wilson, 83, “have benefitted sellers, buyers and taxpayers around the world.
  • Mr. Wilson, a professor at Stanford in the U.S., was spotlighted for developing a theory for auctions with a common value, “a value which is uncertain beforehand but, in the end, is the same for everyone,” according to the academy.
  • Mr. Wilson’s work showed why rational bidders tend to bid under their own estimate of the worth due to worries over the “winner’s curse,” or winning the auction but paying too much.
  • Mr. Milgrom, also at Stanford, then came up with a more general theory of auctions, by analysing bidding strategies in different auction forms.
  • The academy noted that while “people have always sold things to the highest bidder,” societies have also had to allocate “ever more complex objects… such as landing slots and radio frequencies.

What is auction theory?

  • Essentially, it is about how auctions lead to the discovery of the price of a commodity.
  • Auction theory studies how auctions are designed, what rules govern them, how bidders behave and what outcomes are achieved.
  • The outcome of an auction (or procurement) depends on three factors — the first is the auction’s rules, or format. Are the bids open or closed? How many times can participants bid in the auction? What price does the winner pay – their own bid or the second-highest bid?
  • The second factor relates to the auctioned object. Does it have a different value for each bidder, or do they value the object in the same way?
  • The third factor concerns uncertainty. What information do different bidders have about the object’s value?
  • Using auction theory, it is possible to explain how these three factors govern the bidders’ strategic behaviour and thus the auction’s outcome.
  • The theory can also show how to design an auction to create as much value as possible.
  • Both tasks are particularly difficult when multiple related objects are auctioned off at the same time.
  • No one auction design fits all types of commodities or seller.
  • This is also true because the purpose of an auction also differs with the commodity and the entity conducting the auction. More often than not, private sellers want to maximise their gains while public authorities may have other goals in mind.

What is Auction Winners curse?

  • The most optimistic bidder often overestimates the common value of an auctioned object so that ‘winning’ the auction turns out to cause a loss-the winner’s curse.

About Noble Prize:

  • Technically known as the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel.
  • The award was established in 1969 and is now widely considered one of the Nobel prizes.
  • The prestigious award comes with a 10-million-krona (USD 1.1 million) cash prize and a gold medal.
[Ref: The Hindu; Live Mint]

Key Fact for Prelims

Anti-microbe drug can fight Coronavirus

  • Scientists in Hong Kong have announced an affordable anti-microbial drug used to treat stomach ulcers and bacterial infections that has shown promise in combating the coronavirus in animals.
  • Using Syrian hamsters as tests subjects, they found that one of the drugs, ranitidine bismuth citrate (RBC) was a potent anti-SARS-CoV-2 agent.
  • RBC is able to lower the viral load in the lung of the infected hamster by tenfold.

National Philately Day

  • 13th October is celebrated as National Philately Day.
  • India Post, Mumbai has commenced celebration of the National Postal Week from 9th October has come out with a unique philately merchandise –a Stamped Mask.
  • Each day of the week is dedicated to a particular postal service offered by the Department, like the Banking Day, Postal Life Insurance Day etc.
  • In a bid to create awareness about the role and importance of postal sector in socio-economic development and the impact ‘post’ leaves on the lives of people, India Post has decided to launch the ‘Know Your Beat Postman’ initiative.

What is Philately?

  • Philately is the study of postage stamps and postal history.
  • It also refers to the collection, appreciation and research activities on stamps and other philatelic products.

Bhai Taru Singh

The Prime Minister remembered Bhai Taru Singh Ji, on the occasion of his 300th birth anniversary.

  • Bhai Taru Singh was a prominent Sikh martyr born around 1720 into a Sandhu Jat family in Amritsar during the reign of the Mughal Empire.
  • He is known for sacrificing his life by having had his head scalped rather than cutting his hair and converting to Islam, in the name of protecting Sikh values.
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