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Daily News Analysis – May 11, 2019

Source: The Hindu, Live Mint and Indian Express

AIRSPACE

Context: A Georgian An-12 transport aircraft that took off from Karachi bound for New Delhi, was intercepted by Indian Air Force (IAF) fighters on Friday afternoon after it deviated from its flight path.

 Essentials

Airspace

  • Airspace is the portion of the atmosphere controlled by a country above its territory, including its territorial waters.
  • It is not the same as aerospace, which is the general term for Earth’s atmosphere and the outer space in its vicinity.
  • Airspace may be further subdivided into a variety of areas and zones, including those where there are either restrictions on flying activities or complete prohibition of flying activities.

 Horizontal boundary

  • By international law, the notion of a country’s sovereign airspace corresponds with the maritime definition of territorial waters as being 12 nautical miles (22.2 km) out from a nation’s coastline.
  • Airspace not within any country’s territorial limit is considered international, analogous to the “high seas” in maritime law.
  • However, a country may, by international agreement, assume responsibility for controlling parts of international airspace, such as those over the oceans.
  • For instance, the United States provides air traffic control services over a large part of the Pacific Ocean, even though the airspace is international.
  • Under the Geneva Convention on the High Seas (1958) as well as under international customary law, the freedom of the high seas applies to aerial navigation as well as to maritime navigation.

 Vertical boundary

  • There is no international agreement on the vertical extent of sovereign airspace (the boundary between outer space—which is not subject to national jurisdiction—and national airspace).
  • Vertically, airspace ends where outer space begins.

 International Civil Aviation Organization (ICAO)

  • The International Civil Aviation Organization (ICAO) is a UN specialized agency, established by States in 1944 to manage the administration and governance of the Convention on International Civil Aviation (Chicago Convention).

CHANDRAYAAN-2

Context: The ISRO is planning to launch Chandrayan-2 Mission during July 9-16.

 Essentials

  • GSLV-F10/Chandrayaan-2 is ISRO’s second mission to the Moon and is a totally indigenous mission comprising of an Orbiter, Lander and Rover.
  • Chandrayaan-2 will be ISRO’s first mission to land a spacecraft on Moon and explore its surface with a rover.

  • The 3,800-kg spacecraft includes:
  • an orbiter which will circle the moon at 100 km and perform the objectives of remote sensing the moon;
  • a five-legged lander called Vikram that will descend on the moon on or around September 6; and
  • a robotic rover, Pragyan, that will be used mostly for insitu experiments. The six-wheeled Rover will move around the landing site in semi-autonomous mode as decided by the ground commands.
  • Chandrayaan-2 will have 14 Indian payloads or study devices.
  • It will perform mineralogical and elemental studies of the lunar surface.
  • GSLV-F10/Chandrayaan-2 Mission  will be taken to the moon by a Geosynchronous Satellite Launch Vehicle called GSLV-Mk III.
  • ISRO has prepared a site named Challakere in Karnataka to resemble lunar craters and to conduct preliminary tests of Chandrayaan-2 lunar lander’s sensors.
  • In October 2008, the space organisation had launched its orbiter mission Chandrayaan-1 on its PSLV booster. The spacecraft had 11 payloads.
  • One of the U.S. payloads shares credit with Chandrayaan-1 for confirming the presence of water ice on the moon.
  • Most of the Moon landing missions so far were done on equatorial region of the Moon as:
  • 1) Lunar south pole is shadowy and dark in places. Without Sunlight, the lander and rover spacecrafts cannot work for long.
  • 2) The landing manoeuvre on this region is very difficult.
  • ISRO has chosen a landing area at the hitherto unexplored lunar south pole, making it the first agency to touch down at the south pole if it succeeds in its first landing attempt.

 Why did the ISRO choose the Moon’s South Pole as the landing site for Chandrayaan-2?

  • The lunar South Pole is one of the most compelling places in the entire Solar System.
  • The towering massifs of the South Pole-Aitken Basin can be accessed, and these massifs contain impact melt that will allow scientists to unambiguously determine the age of this huge basin and could provide insights into planetary formation.
  • Permanently shadowed craters may harbour reservoirs of ices and other volatile compounds that could serve as a tremendously valuable resource for future explorers.
  • Additionally, these volatile deposits could contain a priceless record of water composition dating back to the beginning of our Solar System, an incomparable dataset for astrobiology investigations.
  • A few mountain peaks near the pole are illuminated for extended periods of time, which could provide near-constant solar power for a permanent lunar outpost sometime in the far future.
  • Chandrayaan-1 discovered water on Moon earlier. Now for deeper understanding and knowledge about Lunar water, it requires to explore this icy region.
  • Why not North Pole?
  • The south pole of Moon has a large shadowy region (larger than that in North pole). It contains places that remains in permanent darkness where Sunlight never reaches.
  • Further,
  • The South Pole is at the edge of the Aitken basin, the largest impact basin in the Solar System.
  • NASA’s Lunar Reconnaissance Orbiter is still flying over the South Pole region at an altitude of only 30 km, collecting a wealth of data.
  • Unlike Earth, which turns on its axis every 24 hours, the Moon takes about 30 days to make a complete rotation. This means that days and nights on the Moon last two weeks.

 What is the difference between GSLV and PSLV?

  • Both PSLV (Polar Satellite Launch Vehicle) and GSLV (Geosynchronous Satellite Launch Vehicle) are the satellite-launch vehicles (rockets) developed by ISRO.
  • PSLV is designed mainly to deliver the:
  • “earth-observation” or “remote-sensing” satellites with
  • lift-off mass of up to about 1750 Kg to
  • Sun-Synchronous circular polar orbits of 600-900 Km altitude.
  • Apart from launching the remote sensing satellites to Sun-synchronous polar orbits, the PSLV is also used to launch the satellites of lower lift-off mass of up to about 1400 Kg to the elliptical Geosynchronous Transfer Orbit (GTO).
  • The remote sensing satellites orbit the earth from pole-to-pole.
  • PSLV is a four-staged launch vehicle with first and third stage using solid rocket motors and second and fourth stages using liquid rocket engines.
  • It also uses strap-on motors to augment the thrust provided by the first stage, and depending on the number of these strap-on boosters, the PSLV is classified into its various versions.
  • A neat launch record has made the booster a trusted and affordable space vehicle for small satellites. Big rocket players are focussed on taking heavy, multi-tonne satellites to space.
  • Since its first commercial launch in 1999, the PSLV has put in orbit 237 small satellites of 28 countries, bout half of them are from the US.

 Geosynchronous Satellite Launch Vehicle or GSLV

  • is an expendable launch system;
  • is a three-stage vehicle with solid, liquid and cryogenic stages;
  • has three variants- GSLV MK-I, MK-IIand GSLV MK-III.
  • GSLV MK-I (Russian Cryogenic Stage) and GSLV MK-II (indigenous Cryogenic Upper Stage), are otherwise similar in configuration, have the capability to place INSAT-II class of satellites (2000 – 2,500 kg) of lift-off mass of up to 2,500 kg to the GTO and satellites of up to 5,000 kg lift-off mass to the LEO.
  • GSLV MK-III, the most powerful indigenous rocket, is conceived and designed to make ISRO fully self reliant in launching heavier communication satellites of INSAT-4 class, which weigh 4500 to 5000 kg.
  • GSLV MKIII has almost double power as compared to GSLV MKII.
  • The GSLV is designed mainly to deliver the communication-satellites to the highly elliptical Geosynchronous Transfer Orbit (GTO).
  • The satellite in GTO is further raised to its final destination, viz., Geo-synchronous Earth orbit (GEO) of about 36000 Km altitude (and zero deg inclination on equatorial plane) by firing its in-built on-board engines.
  • Due to their geo-synchronous nature, the satellites in these orbits appear to remain permanently fixed in the same position in the sky, as viewed from a particular location on Earth, thus avoiding the need of a tracking ground antenna and hence are useful for the communication applications.

NON-PERFORMING ASSETS (NPAS)

Context: Non-performing assets (NPAs) at commercial banks amounted to 11.2% of advances, in March 2018. Public sector banks (PSBs) accounted for 86%, of the total NPAs. The ratio of gross NPA to advances in PSBs was 14.6%.

 Essentials

  • A non performing asset (NPA) is a loan or advance for which the principal or interest payment remained overdue for a period of 90 days.
  • If accounts remain ‘out of order’ in case of overdraft/Cash Credit accounts or the bills purchased/discounted remain overdue for a period of more than 90 days, such accounts will also be classified as NPA.
  • Any amount due to the bank under any credit facility is ‘overdue’ if it is not paid on the due date fixed by the bank.
  • In case of agricultural advance, the account is classified as NPA, if the installment of principle or interest thereon remain overdue for two crop seasons for short duration crops.
  • In case of long duration crop loans, the account will be classified as NPA if the outstanding is overdue for more than one crop season.
  • Banks are required to classify NPAs further into Substandard, Doubtful and Loss assets.
    Substandard assets:Assets which has remained NPA for a period less than or equal to 12 months.
    2. Doubtful assets: An asset would be classified as doubtful if it has remained in the substandard category for a period of 12 months.
    3. Loss assets: Loss asset is considered uncollectible and of such little value that its continuance as a bankable asset is not warranted, although there may be some salvage or recovery value.

 Stressed Assets Vs Restructured Loans

  • Stressed Assets are those loans which show signs of becoming non-performing assets.
  • Restructured loans are those assets which got an extended repayment period, reduced interest rate, converting a part of the loan into equity, providing additional financing, or some combination of these measures. Hence, under restructuring a bad loan is modified as a new loan.
  • So Stressed Assets = Non-performing Assets + Restructured loans

 Written off assets

  • Written off assets are those the bank or lender doesn’t count the money borrower owes to it. The financial statement of the bank will indicate that the written off loans are compensated through some other way.

 Tougher Lending Norms by RBI to check the growth of NPAs

  • Effective April 1, 2019, the limit for exposure to any business group has been reduced from 40% of total capital to 25% of tier I capital (which consists of equity and quasi-equity instruments).
  • The limit for a single borrower will be 20% of tier 1 capital (instead of 20% of total capital).

 NPAs and Provisioning Requirements

  • Setting aside of money from profits to compensate a probable loss caused on lending a loan is called Provisioning. Provisioning is done to cover risk.
  • In the case of loss accounts for which the recovery is found to be almost negligible, banks make provision up to 100 percent
  • In the case of doubtful accounts for which some recovery is expected, banks make provision depending upon the period of classification and the provision may be 90; 85; 80 percent etc.,
  • Even banks make provision for standard assets also. It has to be noted that there is no guarantee that the personal loans granted to the borrowers will be recovered in full
  • Provisioning provides some information about the financial loss that the bank is going to incur during the financial year on account of writing off loan accounts for which recoveries are expected to be almost nil.
  • When banks report profits, they give low dividends now a day because of the provisioning requirement. Many banks have substantial NPAs now and they are setting apart a major chunk of their profit to meet the provisioning.

INDEX OF INDUSTRIAL PRODUCTION (IIP) 

Context: The Index of Industrial Production (IIP) contracted in March for the first time since June 2013, due in large part to a continuing slowdown in the manufacturing sector.

 Essentials

Index of Industrial Production (IIP) 

  • It is computed and published by the Central Statistical Organisation (CSO) on monthly basis.
  • It measures the short-term changes in the volume of production of a basket of industrial products.
  • It is a composite indicator that measures the growth rate of industry groups classified under,
    Broad sectors, namely, Mining, Manufacturing and Electricity
    2. Use-based sectors, namely Basic Goods, Capital Goods and Intermediate Goods.
  • The base year for IIP is 2011-12.
  • IIP is first deflated by the Wholesale Price Index (WPI) of the corresponding categories, released by the Office of the Economic Adviser, Ministry of Industry.
  • The scope of the IIP as recommended by the United Nations Statistical Office (UNSO) includes mining, manufacturing, construction, electricity, gas and water supply. But due to constraints of data availability, the IIP compiled in India has excluded construction, gas and water supply sectors.
  • IIP is compiled using data received from 14 source agencies
  • (i) Department of Industrial Policy & Promotion (DIPP);
  • (ii) Indian Bureau of Mines;
  • (iii) Central Electricity Authority;
  • (iv) Joint Plant Committee, Ministry of Steel;
  • (v) Ministry of Petroleum & Natural Gas;
  • (vi) Office of Textile Commissioner;
  • (vii) Department of Chemicals & Petrochemicals;
  • (viii) Directorate of Sugar & Vegetable Oils;
  • (ix) Department of Fertilizers;
  • (x) Tea Board;
  • (xi) Office of Jute Commissioner;
  • (xii) Office of Coal Controller;
  • (xiii) Railway Board; and
  • (xiv) Coffee Board.

 Index of Eight Core Industries (base: 2011-12)

  • The Eight Core Industries comprise 27 % of the weight of items included in the Index of Industrial Production (IIP).
  • The data relating to core industries is released by the Ministry of Commerce and Industry.
  • The eight core industries are:
  • Petroleum Refinery Products (weight: 28.04%)
  • Electricity (weight: 19.85%)
  • Steel (weight: 17.92 %)
  • Coal production (weight: 10.33 %)
  • Crude Oil (weight: 8.98 %)
  • Natural Gas (weight: 6.88 %)
  • Cement (weight: 5.37%)
  • Fertilizer (weight: 2.63 %)

 Office of the Economic Adviser (OEA)

  • It is an attached office of the Ministry of Commerce & Industry. 
  • Its main functions are:
  • Compiling and releasing monthly Index of Core Industries Production.
  • Compiling and releasing monthly Wholesale Price Indices.
  • Monthly Statistical compilation of macro indicators.
  • Developing other Indices on experimental basis, e.g. select business service price indices.
  • Supervising as a source agency.

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