5 June 2024

GS2 – Governance

• SEBI has formed a committee under Usha Thorat to review the ownership and economic structure of clearing corporations.
• This move aims to ensure these entities operate independently and effectively manage risk, following concerns from the 2018 Gandhi Committee about concentrated ownership and potential conflicts of interest.

Analysis of the news:

• SEBI forms an ad-hoc committee led by Usha Thorat to review the ownership and economic structure of clearing corporations and recommend measures for resilience, independence, and neutrality.
• The 2018 Gandhi Committee report recommended widely dispersed ownership for Market Infrastructure Institutions (MIIs), noting the high-risk nature of clearing corporations.
• Gandhi Committee emphasised clearing corporations should not be listed due to their sensitive and risk-managing roles.
• Currently, most Indian clearing corporations are 100% owned by a single parent exchange, exposing them to shareholder expectations and financial dependencies.
• Dominance of parent exchanges may conflict with the economic interests of clearing corporations, affecting their capital infusion and reserve augmentation.
• SEBI highlights the need to eliminate any perverse incentives that could compromise the independent risk management role of clearing corporations.
• Gandhi Committee suggested no specific profit stipulation for MIIs but recommended monitoring the reasonableness of charges and fees.
• Clearing corporations must prioritise market stability and development over profit, given their critical roles in technology, settlement guarantee funds, and regulatory resources.
• Rising trading volumes, especially in derivatives, necessitate enhanced settlement guarantee funds for clearing corporations.
• SEBI underscores the importance of clearing corporations as public utilities making reasonable profits to sustain operations while ensuring overall market stability.

What are clearing corporations?

• Clearing corporations are entities that facilitate the settlement of trades in financial markets.
• They act as intermediaries between buyers and sellers, ensuring the transfer of securities and funds. Their role includes managing counterparty risk by guaranteeing the completion of transactions. Clearing corporations maintain margin requirements and settlement guarantee funds to cover potential defaults. They enhance market stability and confidence by ensuring smooth and secure trade settlements.

GS 3 : Science and Technology

Context: Amid the COVID-19 pandemic, the enzyme reverse transcriptase gained prominence for its role in molecular diagnostics, enabling rapid SARS-2 virus detection and tracking.Its discovery revolutionised molecular biology, impacting viral research and treatment, particularly for HIV, and revealing significant evolutionary insights in human and bacterial genomes.

About

• As laboratories worldwide rushed to develop reliable diagnostic tests, techniques using the enzyme became the gold standard to detect the SARS-2 virus, and a cornerstone of molecular diagnostics.
• This remarkable enzyme not only facilitated rapid and accurate testing; along with another powerful approach genome-sequencing it also helped track the virus’s spread, paving the way for surveillance, better public healthcare, and vaccine development.
• In the vesicular stomatitis virus, a protein called RNA polymerase was involved in reverse-translating RNA to DNA.

A Molecular Biology Revolution

• The discovery was transformative, challenging the prevailing Central Dogma which stated that hereditary information flowed only from DNA to RNA and then to protein.
• The new finding showed that information could also flow from RNA to DNA. This revolutionised research methods in molecular biology, allowing researchers to reverse-transcribe messenger RNAs to DNA, clone that DNA into bacterial vectors, and study gene functions.
• In diagnostics, reverse transcriptase was used to convert RNA to DNA, helping estimate viral material in samples, especially in the study of RNA viruses such as hepatitis B and the human immunodeficiency virus.

Innovative Applications and Future Potential

• Recent discoveries highlight the potential of reverse transcriptase in innovative biotechnological and medical applications.
• These include combating antimicrobial resistance, where disease-causing microbes resist the effects of substances designed to kill them.
• Exploring reverse transcriptases could reveal novel mechanisms of genetic evolution and viral resistance.
• This research could lead to new therapeutic strategies and biotechnological tools, demonstrating the enzyme’s fundamental role across different domains of life and its remarkable evolutionary continuity and functional versatility.

The Department of Agriculture and Farmers Welfare released the Second Advance Estimates of 2023-24 for horticultural crops, indicating a slight decrease in total production but varied trends in fruit and vegetable production.

Significance of horticulture for Indian agriculture:

• Significance: Diverse Crop Range: Horticulture encompasses a wide range of crops, including fruits, vegetables, flowers, spices, and medicinal plants, contributing to dietary diversity and nutrition.
• Economic Contribution: Horticulture plays a significant role in India’s agricultural economy, generating income and employment opportunities for millions of farmers and workers.
• Export Potential: High-value horticulture crops have significant export potential, contributing to foreign exchange earnings and boosting rural livelihoods.
• Climate Resilience: Many horticulture crops are more resilient to climate change and water scarcity compared to traditional crops, enhancing agricultural sustainability.
• Nutritional Security: Fruits and vegetables produced through horticulture contribute to improving nutritional security and addressing malnutrition in India.

Challenges: 

• Lack of Infrastructure: Inadequate infrastructure for storage, transportation, and marketing hampers the growth of the horticulture sector.
• Pest and Disease Management: Controlling pests and diseases in horticulture crops requires effective management strategies to minimise crop losses.
• Market Access: Limited market access and price volatility pose challenges for horticulture farmers, affecting their income and livelihoods.
• Technology Adoption: Low adoption of modern technologies and practices in horticulture production limits productivity and quality improvements.
• Post-Harvest Losses: High post-harvest losses due to inadequate storage and processing facilities impact farmer incomes and food security.

Way Forward: 

• Investment in Infrastructure: Improve infrastructure for cold storage, transportation, and market linkages to reduce post-harvest losses and enhance market access.
• Research and Development: Invest in research and development to develop high-yielding and climate-resilient horticulture varieties.
• Capacity Building: Provide training and extension services to farmers on modern horticulture practices, pest management, and market linkages.
• Promote Farmer Producer Organizations (FPOs): Facilitate the formation of FPOs to empower horticulture farmers and strengthen their bargaining power in the market.
• Value Addition: Encourage value addition through food processing, packaging, and branding to increase the marketability of horticulture products and enhance farmer incomes.