Bitcoin Surpasses $100K: The Factors Driving Its Historic Surge

GS 3: Economy: Advocating Cryptocurrency

Why is it in the news?

• Bitcoin crossed the historic $100,000 mark for the first time on December 4, driven by Donald Trump’s return to the White House and expectations of more crypto-friendly policies under his administration. The cryptocurrency is up 130% this year, with much of the rally occurring post-election.
• A notable catalyst was Trump appointing tech billionaire Elon Musk to lead the newly formed Department of Government Efficiency (DOGE), an acronym nodding to Musk’s favourite cryptocurrency, Dogecoin. Investors had predicted this milestone if Trump were elected, as his campaign prominently featured pro-crypto messaging.

Trump’s Pro-Crypto Administration

• Key to Bitcoin’s rise was Trump’s pick of Paul Atkins to head the Securities and Exchange Commission (SEC), a known advocate for cryptocurrencies. Bitcoin soared past $100,000 hours after Atkins’ appointment was announced.
• This marked a significant shift from the previous administration under Joe Biden, where the SEC, led by Gary Gensler, had aggressively cracked down on the crypto industry with lawsuits and fines.
• Trump’s transformation from a crypto skeptic to a supporter was evident during his campaign, with promises like recognizing Bitcoin as a strategic reserve and promoting favourable policies for crypto mining.
• Additionally, Trump has ventured into the crypto space by launching World Liberty Financial, his own cryptocurrency business.
• Further, the broader cryptocurrency market has also benefited from global developments, with governments and institutions embracing blockchain technology. This acceptance signals a maturing ecosystem with potential for sustained growth.

India’s Complex Relationship with Cryptocurrency

• In India, cryptocurrency remains a contentious issue. High taxation on crypto income and an unfriendly banking sector dampen investor enthusiasm.
• Historically, India’s stance on cryptocurrency has been fraught with challenges. In 2018, the Central Board of Direct Taxes proposed a ban, and the Reserve Bank of India (RBI) restricted banks from dealing in cryptocurrencies—a decision later overturned by the Supreme Court in 2020. Despite this, the RBI continues to view crypto assets as a macroeconomic risk.
• In 2022, Finance Minister Nirmala Sitharaman emphasized the need for international collaboration for effective regulation or a potential ban, citing the borderless nature of digital currencies.

Taxation and Regulatory Challenges

• India’s government has imposed a 30% tax on income from crypto transfers and a 1% tax deducted at source (TDS) on every transaction. While these measures aim to regulate the market, they have created hurdles for investors.
• A paper by the International Monetary Fund (IMF) and Financial Stability Board (FSB) suggested licensing crypto service providers instead of outright bans, given the global nature of cryptocurrencies.

Calls for Re-evaluation in India

• The recent surge in Bitcoin has prompted questions about whether India can continue to ignore the cryptocurrency. A note by an expert criticized the country’s framing of Bitcoin as a private currency and highlighted its potential as “digital gold.”
• The note emphasized that Bitcoin could help India build reserves without the geopolitical risks associated with physical gold custody or dollar reserves. It argued that India’s focus on central bank digital currencies (CBDCs) has overshadowed Bitcoin’s proposition as a strategic asset in a fragile global economic environment.

 

Addressing the Mental Health Crisis in Tuberculosis Care

GS 2: Society: Stigma of TB

Why is it in the news?

• In 2022, India reported 42 million tuberculosis (TB) cases, revealing a silent crisis marked by profound stigma. TB is often associated with poverty, unhealthy behaviours, and the fear of contagiousness, leading to both social and self-stigma.
• This stigma adversely affects patients’ mental health, fostering hopelessness, despair, and impaired decision-making, which can disrupt treatment and recovery. TB and mental illness often coexist, creating a cycle of vulnerability and poor outcomes.

The Stigma of TB

• The stigma surrounding TB stems from its association with contagiousness and poverty, which fuels social isolation. Patients frequently face ostracism from their families, communities, and even healthcare providers.
• This leads to mental health challenges, such as depression and anxiety, which can further hinder recovery by causing patients to lose hope, disregard medical advice, or discontinue treatment altogether.
• TB treatment is lengthy and often accompanied by severe side effects, including rashes, psychotic episodes, and noticeable physical changes that lower self-confidence. These factors contribute to significant mental strain on both patients and caregivers.
• Studies show that up to 84% of TB patients experience depression, underscoring the interplay between the disease’s physical and psychological impacts.

The Bidirectional Link Between TB and Mental Health

• The relationship between TB and mental health is bidirectional. TB stigma, prolonged treatment, and side effects negatively affect mental health, while poor mental health, including stress and depression, weakens the immune system, increasing susceptibility to TB.
• Substance abuse, commonly linked to mental health disorders, also heightens the risk of TB. With nearly 197 million Indians affected by mental health disorders in 2017, individuals with such conditions represent a significant high-risk population for TB.
• Current TB care standards mandate screening for conditions like diabetes and HIV but neglect mental health. A global survey of 26 national TB programs found that only a few included routine mental health screenings or protocols for co-managing mental health disorders.
• India lacks comprehensive frameworks to integrate mental health into TB care despite the proven benefits of early screening and intervention.

Recommendations for Comprehensive Care

1) Mental Health Screening in TB Programs

• India must incorporate mental health assessments into TB care. Simple questionnaires administered at diagnosis by healthcare workers or self-administered can effectively identify mental health issues.

2) Psychological Support During Treatment

• Providing mental health support should become a standard part of TB care to address the emotional toll of treatment. Digital solutions like app-based therapies and AI-powered interventions can help address resource gaps.

3) Community-Based Support

• Community engagement is critical to destigmatizing TB and mental health. Support groups and informational campaigns can empower patients and families, fostering an inclusive and supportive environment.

4) Strengthening Psychiatric Care

• India needs to prioritize training more psychiatrists and creating pathways for early referrals to address severe cases. This requires significant investment given the shortage of mental health professionals.

The Need for Policy Integration

• To eliminate TB, India must recognize the intertwined nature of TB and mental health. Policies should integrate mental health support at every stage of TB care, from diagnosis to treatment.
• This collaborative approach requires allocating resources, leveraging technology, and fostering community participation. Addressing the mental health needs of TB patients is vital for their well-being and for breaking the cycle of TB transmission.

 Oilfields Amendment Bill 2024: A Step Towards Reducing Import Dependence

GS 2: Polity and Governance: Reducing dependence on oil imports

Why is it in the news?

• The Rajya Sabha passed the Oilfields (Regulation and Development) Amendment Bill, 2024, on December 3, aiming to promote domestic production of petroleum and other mineral oils. This move is also intended to encourage private investment in these sectors, reducing India’s reliance on oil imports.
• The Bill amends the Oilfields (Regulation and Development) Act of 1948 by creating a clear distinction between laws governing mineral oil production and those governing mining activities, under the Mines and Minerals (Development and Regulation) Act, 1957.

Key Features of the Oilfields Amendment Bill

• The Oilfields Bill addresses several gaps in the existing law. One of the significant changes is the definition of “mineral oils,” which now includes hydrocarbons in various forms, such as crude oil, natural gas, and petroleum.
• However, the Bill explicitly excludes coal, lignite, and helium associated with petroleum or coal, which are still governed by the Mines and Minerals Act. Additionally, the Bill replaces references to “mining leases” with “petroleum leases,” thereby focusing on the development, exploration, and production of mineral oils rather than minerals.
• The Bill also introduces measures to encourage private sector participation in petroleum production. It includes provisions to maintain the validity of existing mining leases and replace imprisonment for violations of the Act with hefty fines, which can reach up to Rs. 25 lakhs, with a further penalty of Rs. 10 lakh per day for continued violations.

Impact on State Rights and Criticisms

• While the Bill aims to foster private investment and improve oil production, concerns have been raised about its impact on state rights. States traditionally have the power to tax mining activities, and the new law could alter this dynamic.
• Opposition parties argued that the redefinition of mining leases to petroleum leases could reduce the control of state governments over oil-related activities.
• The Supreme Court had previously ruled that states have the exclusive power to tax mining activities, but the Oilfields Bill’s shift to petroleum leases might bring it under Union jurisdiction, as petroleum falls under the Union List in the Indian Constitution.
• Union Minister for Petroleum and Natural Gas sought to address these concerns, assuring that states would still have some control over granting petroleum leases. Despite these reassurances, critics remain wary of the potential shift in power.

Environmental Concerns and Private Sector Involvement

• Another point of contention is the increased involvement of private players in the oil sector. Critics expressed concerns that public companies like Oil and Natural Gas Corporation (ONGC) should be prioritized over private firms.
• The Bill removes the criminal penalties for violations, offering private players greater discretion, which could have environmental implications.
• However, the Bill also grants the Centre expanded powers to enforce environmental regulations, including measures to curb carbon emissions and promote renewable energy initiatives at oilfields.

Conclusion

• The Oilfields Amendment Bill seeks to modernize the regulation of petroleum production in India, creating a more investment-friendly environment while clarifying the jurisdiction between the central and state governments.
• However, concerns over state rights, environmental protection, and the increasing role of private players remain key issues that need careful consideration moving forward.
• The success of this Bill will depend on its implementation and the balance it strikes between economic growth, environmental responsibility, and equitable governance.

Ratapani and Madhav Tiger Reserves: Expanding India’s Efforts in Tiger Conservation

GS 3: Environment and Biodiversity: Promoting Tiger Conservation

Why is it in the news?

• On December 2, India’s 57th tiger reserve was officially declared in Madhya Pradesh’s Ratapani Wildlife Sanctuary, following in-principle approval from the Union Ministry of Environment, Forest, and Climate Change.
• This development came just a day after Madhav National Park also received approval to be declared a tiger reserve, making it the 58th. This marks a significant milestone in India’s ongoing efforts to conserve its tiger population.

About Tiger Reserve

• A tiger reserve in India is a designated area established under the Project Tiger initiative launched in 1973 to ensure the protection of tigers and their habitats. These reserves aim to conserve biodiversity and restore ecological balance.
• They typically consist of a core area, designated as a national park or sanctuary, and a buffer zone, which includes a mix of forest and non-forest lands. The buffer zone is a transitional area for wildlife, allowing human activity in certain parts.
• Currently, there are 57 tiger reserves in India, covering approximately 82,000 square kilometres, accounting for more than 2.3% of the country’s geographical area.
• According to the National Tiger Conservation Authority (NTCA), India is home to over 70% of the world’s tiger population, with a recorded minimum of 3,167 tigers as per the 2022 tiger census.

The Origin of Tiger Reserves in India

• India’s tiger population began to decline rapidly in the mid-20th century due to poaching, habitat loss, and other human activities. By the 1960s, the tiger population was in significant danger.
• To address this, the Indian Government banned the export of wild cat skins in 1969. Subsequently, in 1972, the Indian Board for Wild Life formed a task force to develop a strategy for tiger conservation. The task force’s recommendations led to the launch of Project Tiger on April 1, 1973, with the first reserve being Corbett National Park in Uttarakhand.
• The initial phase of Project Tiger included nine reserves, with notable ones like Corbett, Kanha, Ranthambhore, and Melghat.

How is a Tiger Reserve Created?

• The process of creating a tiger reserve begins with the identification of an appropriate area by the state government, based on the presence of a viable tiger population and suitable habitat. Ecological assessments, such as studies on prey base and vegetation, are carried out.
• Once the area is identified, a detailed proposal, including maps and management plans, is prepared and submitted to the NTCA for approval. The Union Ministry of Environment, Forest, and Climate Change then reviews the proposal.
• Following this, a preliminary notification is issued under the Wildlife (Protection) Act, 1972. After addressing any objections, a final notification is issued, officially declaring the area as a tiger reserve.
• This designation allows the reserve to receive central funding and technical support under the Project Tiger initiative.

Benefits of Tiger Reserves

• Tiger reserves have significant ecological and environmental benefits. As apex predators, tigers play a crucial role in regulating the food chain and maintaining the health of forest ecosystems.
• Protecting tigers also safeguards the biodiversity of these habitats and the broader environmental system, including the preservation of water resources and the climate. According to an NTCA official, the protection of tigers has a broader “umbrella effect,” benefiting other species within the ecosystem.
• A 2023 study highlighted the climate benefits of tiger conservation. Between 2007 and 2020, tiger reserves in India helped prevent the loss of over 5,800 hectares of forest, which, in turn, helped avoid the release of approximately 1 million metric tons of carbon dioxide into the atmosphere. This demonstrates the significant role that tiger conservation can play in addressing climate change.

Conclusion

• The establishment of Ratapani and Madhav National Park as tiger reserves marks a significant expansion of India’s tiger conservation efforts.
• With over 57 reserves, India continues to lead global efforts in tiger conservation, protecting not only the iconic species but also the ecosystems they inhabit.
• The positive environmental impacts of these reserves highlight the broader benefits of tiger conservation, extending beyond biodiversity to address pressing challenges like climate change.

Nagaland’s Hornbill Festival

GS 1: Culture and History: Hornbill Festival

About the news

• The 25th Hornbill Festival in Nagaland is underway amid debates about relaxing the 35-year-old liquor prohibition law during the event.
• Nagaland’s Tourism Minister announced that tourists and stall owners are permitted to use Indian-made Foreign Liquor (IMFL) at the Kisama Heritage Village venue.
• However, this decision has drawn criticism from influential church bodies that oppose making alcohol, including traditional rice beer, available at the state’s largest cultural gathering. Adding to the controversy is the government’s proposal to review the Nagaland Liquor Total Prohibition (NLTP) Act, 1989.

About Hornbill Festival

• The Hornbill Festival, Nagaland’s largest public event, was launched in 2000 to promote tourism and showcase the state’s rich heritage and culture. It serves as a unifying force by bringing together the traditions of 14 recognised Naga tribes under one umbrella.
• The festival is a major tourist attraction; in 2023, it drew over 1.54 lakh visitors, including 2,108 foreign tourists and 37,089 from across India.

6) Balancing Growth and Equity: Challenges for the Sixteenth Finance Commission

GS 3: Economy: Union-State Fiscal Relations

Why is it in the news?

• The Government of Tamil Nadu recently hosted the Sixteenth Finance Commission, chaired by Arvind Panagariya, to discuss India’s pressing fiscal challenges.
• With a team of distinguished experts, the Commission is tasked with addressing the imbalance in Union-State fiscal relations and shaping the nation’s economic future for the next five years and beyond.

An Analysis

Opportunities Amid Global Economic Shifts

• The Commission’s work coincides with significant changes in global trade and investment patterns, marked by trends like “friendshoring” and “reshoring.”
• These shifts present unique opportunities for India, particularly for high-performing States like Tamil Nadu. To capitalise on these changes, the Finance Commission must balance equitable resource distribution with incentivising growth in progressive States.
• Since its inception in 1951, each Finance Commission has sought to address fiscal challenges through vertical and horizontal devolution. While vertical devolution aims to increase States’ share of resources, horizontal devolution redistributes funds to less-developed States.
• However, gaps remain between objectives and outcomes. For example, while the Fifteenth Finance Commission allocated 41% of the divisible pool to States, effective devolution during the first four years amounted to only 33.16% of the Union’s gross tax revenue, largely due to the Union’s increased reliance on cess and surcharges.

Increasing States’ Share and Rewarding Performance

• States bear significant developmental expenditures, making it crucial to increase their share of central taxes to 50%, enhancing fiscal autonomy. Progressive resource allocation must strike a balance between supporting less-developed States and rewarding high-performing States.
• This approach would expand the national economic pie, ensuring adequate resources for all while enabling progressive States like Tamil Nadu to act as growth engines.

Challenges for Progressive States

• Progressive States such as Tamil Nadu face unique challenges, including demographic shifts and urbanisation. With an aging population and a median age above the national average, Tamil Nadu’s consumption-based tax revenues are declining, while costs to support the elderly are rising.
• Additionally, rapid urbanisation demands significant infrastructure investment. Tamil Nadu is projected to have 57.3% urbanisation by 2031, far exceeding the national average of 37.9%, necessitating earmarked resources for sustainable growth.

Conclusion

• The Finance Commission’s mandate extends beyond fiscal distribution to envisioning a future where all States contribute to and benefit from national progress.
• Decisions on manufacturing growth, urbanisation, and climate resilience will shape millions of lives and determine India’s trajectory as a global economic leader.
• A balanced approach is crucial to ensuring equitable progress for all States while enabling India to achieve its full potential.