Syllabus subtopic: Awareness in the fields of IT, Space, Computers, Robotics, Nano-technology, Bio-technology and issues relating to Intellectual Property Rights.

Prelims and Mains focus: about cryptocurrencies: merits and demerits

News: In April 2018, the Reserve Bank of India (RBI) had barred regulated entities such as banks from dealing in bitcoins and other virtual currencies. The Supreme Court has now lifted the restriction.

What exactly are cryptocurrencies?

• Cryptocurrencies are internet-based mediums of exchange. They are digital currencies that can be exchanged between parties without the need of a third entity, like a bank.

• Many of them use a decentralized blockchain—an encrypted ledger for storing information.

• Over 3,000 crypto assets have entered the digital currency market since 2008. They are decentralized rather than being under the control of any nation or company. This can often lower transaction costs for global payments compared to financial messaging systems such as SWIFT (Society for Worldwide Interbank Financial Telecommunication), used for making transactions in different currencies.

Do cryptocurrencies carry a lot of risk?

• Cryptocurrencies are vulnerable to cyber hacking and data privacy breaches and increase the risk of money laundering. They do not have any fundamental value as they are not legal tender, and are not backed by governments, central banks or a pool of assets. This reduces trust in them, which is necessary for a credible medium of exchange.

• They are a poor medium of exchange also because their valuation tends to be excessively volatile and susceptible to manipulation. They are seen as instruments of speculation and transactions that are below the radar of regulators and law enforcement agencies.

Are state-backed digital coins a better option?

Yes, as state-backed digital coins can combine the positives of digital and sovereign currencies. RBI has no plans to introduce digital coins, but China is likely to launch the Digital Currency Electronic Payment and Central Bank Digital Currency. Russia has been working on a state-backed cryptoruble. Sweden has its e-krona project.

Why is RBI worried about cryptos?

• Since 2013, RBI has been warning about the risks associated with virtual currencies. In the case of cryptocurrencies, it is not clear who is the lender of last resort, or who people should turn to if there is fraud or abuse of monopoly power.

• If cash issued by central banks or fiat currencies and retail deposits held with banks get shifted on a large scale to digital currencies, the effectiveness of monetary policy can erode. It may also trigger rupee depreciation. If they lead to capital flight, financial stability could be at risk.

What is the future of such currencies?

• Central banks may begin to strictly regulate virtual currencies. Dominance of the US dollar in the international trade and monetary system will weaken. Instead of accepting dollars as the settlement currency for trade, users may choose from a variety of currencies.

• Sovereign currencies may coexist with cryptocurrencies, digital currencies issued by central banks and private dollar-centric digital ones launched by private parties such as Facebook’s Libra.

Internet Shutdowns in India

Syllabus subtopic: Challenges to Internal Security through Communication Networks, Role of Media and Social Networking Sites in Internal Security Challenges,

Prelims and Mains focus: about the study and its key findings; trends in internet shutdowns in India

News: Data on internet shutdowns in India is available in the public domain and compiled by Software Freedom Law Centre (SFLC).

Key findings

• The number of preventive internet shutdowns enforced by the central and the state governments in India saw a major spike between 2017 and 2019, and as many as 95 of these lasted for more than 24 hours.

• There were at least 147 instances over these three years for which there is no data on the duration of the shutdowns as there is a lack of any form of communication on these blockades.

• In most of these instances, there was no formal order being issued to the telecom operators.

• The Union Territory of Jammu and Kashmir, where the internet had remained suspended until March 4 for 213 days, has seen since 2012 at least 60 instances of connectivity being snapped for more than 24 hours without any official order.

Difference between Preventive and Reactive internet shutdown

• Preventive shutdowns are defined as internet blockade by the state in anticipation of violence, unrest or disturbance, whereas reactive shutdowns are enforced to prevent further escalation of violence.

• Despite a rising number of preventive internet shutdowns, the number of reactive shutdowns, however, remained low over the three years, according to the data.

What are the rules regarding internet shutdown?

• Under the Indian Telegraph Act of 1885, only the Home Secretary of the central or the state government can pass orders to enforce an internet shutdown in any area.

• The order must include the detailed reasons for the shutdown and must be sent to a review committee the next day.

• The committee shall, within five days, submit its report and only if the shutdown is justified even after that will the communications blockade continue.

Are the Telegraph rules being followed?

• The Telegraph rules lay down many checks and balances, but that does not happen. It is the first reaction. One good example is Rajasthan, where there has been a regime change, but number of shutdowns is on the rise. Rajasthan, however, is also the only state that provides a formal order for nearly all internet shutdowns it enforces.

• In 2017, for instance, of the 79 instances of internet shutdown across the country, there were 51 where the authorities cut connectivity to mobile phone, while there were seven instances where connections to both mobiles and landlines were severed. Similarly, in 2018, authorities suspended mobile phone connectivity 126 times, and 100 times in 2019.

• 93 of the 381 internet shutdowns between 2012 and January 2020 lasted less than 24 hours, 74 lasted between 24 and 72 hours, 41 lasted for over 72 hours, while no information was available on the respective duration of the remaining 208 internet shutdowns.

Misuse of Section 144 of CrPC

• Another rising trend was to use Section 144 of the Code Of Criminal Procedure to justify the communications blockade and its continuance of it. That cannot be done. The use of 144 does not pass any muster under the law. However, it is seldom challenged.

• A colonial-era law, Section 144 gives a magistrate the powers to enforce a general shutdown of the area, if he or she believes that there could be violence in the area, arising from a certain tension between two or more groups of people.

How is the internet shutdown executed?

• Most of the internet shutdowns are done using the ‘kill switch’ individual tower-wise in respective areas. Following instructions from the authorities, the local unit of the telcos switches off power to the tower in that area, following which mobile phones in the area latch on to the next nearest tower.

• What happens then is that one tower has too many calls and data volume being placed on it, due to which very few calls get through. So that also serves the purpose. Then that tower is also switched off and so on.

• While reports estimate that India loses around Rs 6,000 crore per year due to internet shutdowns, the government had told the Rajya Sabha in February that it did not keep a track of how much losses were incurred by the states or the individuals owing to the internet shutdowns.

NRIs permitted to own 100% stake in Air India

Syllabus subtopic: Effects of Liberalization on the Economy, Changes in Industrial Policy and their Effects on Industrial Growth.

Prelims and Mains focus: about the move to privatize Air India and its significance; about Air India

News: The Union cabinet approved a proposal to let non-resident Indians (NRIs) own up to a 100% stake in Air India Ltd as the government attempts to make a success of its second attempt to completely privatize the debt-laden airline.

Background

In the government, which aims to divest its entire stake in Air India, in February began the stake sale process by inviting offers from potential investors after a costly turnaround plan and an earlier effort to sell a controlling stake in the flag carrier failed. To sweeten the deal, the Centre has also reduced Air India’s debt from about Rs.56,334 crore to about Rs.23,287 crore.

About the move

The cabinet, headed by Prime Minister, has approved an amendment to the foreign direct investment (FDI) policy to permit FDI in Air India by NRIs up to 100% under the automatic route.

Significance of the move

The cabinet decision will give the government more flexibility to receive bids for Air India.

Investment rules for NRIs

• Under the existing policy, NRIs/ OCIs (Overseas Citizens of India) are permitted to invest under automatic route up to 100% in scheduled air transport services.

• The investment limit including NRIs, in Air India was restricted to 49%, which has now been aligned with the existing policy for investment by NRI in the civil aviation sector.

About Air India

• Air India is the flag carrier airline of India, headquartered at New Delhi.

• The airline was founded by J. R. D. Tata as Tata Airlines in 1932; Tata himself flew its first single-engine de Havilland Puss Moth, carrying air mail from Karachi to Bombay's Juhu aerodrome and later continuing to Madras (currently Chennai).

• After World War II, it became a public limited company and was renamed as Air India. On 21 February 1960, it took delivery of its first Boeing 707 named Gauri Shankar and became the first Asian airline to induct a jet aircraft in its fleet.

• In 2000–01, attempts were made to privatise Air India and from 2006 onwards, it suffered losses after its merger with Indian Airlines.

• Air India has 128 aircraft in its fleet, according to its website, while its subsidiaries Air India Express and Alliance Air have 25 and 19 planes, respectively.

• The airline has 9,426 permanent workers, 4,201 contract employees, and 2,867 employees on deputation.