Daily Current Affairs 14.08.2022 (‘Subsidies on power will continue’, Punjab bans use of 10 insecticides, Walking a tightrope in messaging transmission routes, How lactose tolerance in humans became widespread, HIV drugs shortage is a challenge to ending AIDS in India, Have coastal ecosystem norms been violated?, Digital lending, What is the threat from zoonotic diseases?)

Daily Current Affairs 14.08.2022 (‘Subsidies on power will continue’, Punjab bans use of 10 insecticides, Walking a tightrope in messaging transmission routes, How lactose tolerance in humans became widespread, HIV drugs shortage is a challenge to ending AIDS in India, Have coastal ecosystem norms been violated?, Digital lending, What is the threat from zoonotic diseases?)


1. ‘Subsidies on power will continue’

Power Secretary says State governments will have the discretion to continue concessions

The Centre’s move to introduce the Electricity (Amendment) Bill, 2022 has stoked protests by Opposition parties and trade unions on the grounds that it violated the Constitutional principles of federalisation and was a step towards privatising the electricity sector and would make power costly.Secretary of the Ministry of Power, Alok Kumar speaks on the concerns over the provisions of the Bill, its intent and the reforms it envisages. Excerpts:

The Bill was introduced in the Lok Sabha and referred to a Standing Committee following stringent protests. Did the Centre anticipate this degree of opposition?

When reforms are introduced, there are always different shades of views. This Bill was drafted following the Budget of 2021 and we have undertaken consultations with all States, industry bodies, regulators. Most States had supported the provisions. In the course of discussions, there were also objections on some aspects by States.

What were the concerns raised by States?

A major concern raised was that of ‘cherry picking’ (or when a new player with an electricity distribution licence can choose areas with maximum paying customers, and avoid regions where such electricity charges collection is historically negligible). This is incorrect.

All players with a licence continue to be bound by the Universal Service Obligation (that mandates power to be provided to rural and remote residents at affordable rates).

Second, we have proposed that the Central government prescribe the area to be served by a licensee … and we have moved to further increase this unless the State government decides on a smaller area. A sufficiently large area, like a municipal corporation, for instance, would ensure a wide mix of consumers. We have built-in provisions such as cross-subsidy and wheeling charges in the maximum chargeable price, to safeguard against such cherry-picking. (Wheeling charges are money paid to an existing licensee by a new one for use of an electricity distribution network).

So, to clarify, farmers who currently get free electricity or those who get subsidised electricity will continue to receive them?

Absolutely. The Electricity Act doesn’t mention ‘free’ electricity. Section 65 says State governments may give subsidies to any class of consumers and there is no change at all in this section. The State government will have the discretion to continue free or subsidised power. Reducing cross-subsidies have always been mentioned in the tariff policy (Electricity Act) and for it to be reduced as per the recommendation of the State commission. Those provisions continue. It is a complete myth that the new Bill proposes to do away with subsidies or free power.

A major problem in the electricity distribution sector is the poor financial health of electricity distribution companies (States collectively owe them over ₹1 trillion). Can the entry of private players, as the Electricity Bill envisages, solve this?

A discom’s financial health depends on three factors: properly determining tariffs, the government paying discoms the subsidies it owes and their operational efficiency. This Bill helps with strengthening discoms ability to determine tariffs, we have several provisions outside this Bill to see that these subsidies are paid and finally, the operational efficiencies of several discoms are improving over time. Of these, the first two factors are relatively more important.

Under the amended Bill, an existing licensee can earn wheeling charges from new licensees; second, there is a lot of unmet demand that this Bill will facilitate as well as improve the ability to collect charges and help fund cross-subsidies.

There are a lot of industries that have captive power plants because electricity access is unreliable and if they can be serviced by more players, that money will flow into the collective pool. This Bill will induce competitive pressure on incumbent licensees.

Is the telecom sector the reference point for which reforms in the electricity sector are envisioned?

The economic principle is that the same wire or network shouldn’t be duplicated, it must be shared. We are also not changing the ownership structure of any asset.

The changes in the telecom sector saw job losses and churn. Do you expect similar things to happen here?

There will hardly be job loss, in fact, there will be new jobs because there will be new people to cater to…

States can subsidise but how will private players agree to this?

The Electricity Act doesn’t distinguish between State and private sector licensees. A State government’s decision to provide a subsidy applies to both public and private sector entities.

Electricity (Amendment) Bill 2022

  • About:
    • The Electricity Amendment Bill, 2022 aims at giving multiple players open access to distribution networks of power suppliers and also allowing consumers to choose any service provider.
  • Implication:
    • The Bill seeks to amend Electricity Act 2003:
      • To facilitate the use of distribution networks by all licensees, under provisions of non-discriminatory “open access” with the objective of enabling competition, enhancing efficiency of distribution licensees for improving services to consumers and ensuring sustainability of the power sector.
      • To facilitate non-discriminatory open access to the distribution network of a distribution licensee.
      • To make provisions vis-à-vis graded revision in tariff over a year besides mandatory fixing of maximum ceiling and minimum tariff by the appropriate commission.
      • To convert the rate of punishment from imprisonment or fine to fine.
      • To strengthen functions that will be discharged by the regulators.

Protestor’s Arguments Against the Bill

  • Federal Structure:
    • The Constitution lists ‘Electricity’ as Item 38 of List III (Concurrent) of the Seventh Schedule, so both the Central and state governments have the power to make laws on this subject.
  • Electricity Subsidy:
    • Free power for farmers and Below Poverty Line population will go away eventually.
  • Differential Distribution:
    • Only government discoms or distribution companies will have universal power supply obligations.
      • Therefore, it is likely that private licensees will prefer to supply the electricity in profit-making areas – to industrial and commercial consumers.
        • Once this happens, profit-making areas will be snatched from government discoms and they will become loss-making companies.

How will this Bill impact the Power Employees & Consumers?

  • Monopoly of Private Players:
    • It will lead to a major loss for government distribution companies, eventually helping to establish the monopoly of a few private parties in the country’s power sector.
  • Operational Issue:
    • About 80% of the cost of supply is on account of power purchase, which will be the same for all distribution licensees operating in an area.
    • Having different retailers will open a plethora of operational issues.
    • By bringing in more retailers or distribution licensees, the quality of service or price is not going to be any different.
  • Hit on Consumers:
    • As per a report of UK auditors, due to adoption of such faulty models the consumers had to pay in excess of 2.6 billion pounds.
      • The cost of such transfers was charged to the ordinary consumer.
        • While the private companies failed, consumers were hit the most.

What is the Government’s Rationale for the Bill?

  • Government has maintained that no provision in the bill reduces powers of the states to regulate the power distribution sector, payment of power subsidy.
  • The government has indicated that multiple discoms can already exist in the same area and the bill only simplifies the process to ensure that competition leads to better operations and service.
  • The government has maintained that it had consulted every state and many associations in writing, including a separate written assurance to the Agriculture Ministry, that there is nothing anti-farmer in the bill.
    • The bill allows the use of additional cross-subsidy that is collected from industrial and commercial users in one area, for subsidising for the poor in other areas.
    • With India aiming to achieve 50% of its installed power capacity from renewables by 2030, the government is of the view that the push for Renewable Purchase Obligations (RPOs) mentioned in the bill will augment India’s power demand, which is expected to double in the next eight years while moving to achieve green targets fixed as per the Paris and Glasgow Agreements.

2. Punjab bans use of 10 insecticides

High residue levels in basmati rice

Amid reports that several samples of basmati rice contained the residue of certain pesticides above the maximum residue level (MRL), a potential constraint in its export, the Punjab government has decided to ban the use of 10 of these formulations for 60 days from Friday.

The State Agriculture and Farmers Welfare Department, in its notification, said the State government believed that the sale, stock distribution, and use of Acephate, Buprofezin, Chloropyriphos, Methamidophos, Propiconazole, Thiamethoxam, Profenofos, Isoprothiolane, Carbendazim, and Tricyclazole was not in the interest of basmati rice growers.

It is said that there is a risk of breaching the MRL fixed by the competent authority for basmati rice. Besides, the Punjab Agricultural University has recommended alternative agrochemicals to control pests on the basmati crop in Punjab.

Pointing out that the Punjab Rice Millers and Exporters Association had also reported that several samples got tested by them contained the residue value of these pesticides above the MRL in basmati rice, the notification said the association had requested the ban of these agrochemicals to save the State’s basmati produce and to ensure its hassle-free export.

Alternatives to the said insecticides are available in the market, it added.

3. Walking a tightrope in messaging transmission routes

Public health communication about different routes of transmission of monkeypox virus is critical, especially as demographics can change

Researchers at the National Institute of Virology, Pune, had recently posted the case report of the first two imported monkeypox cases that were detected in Kerala. But the people who tested positive for monkeypox virus had returned from the United Arab Emirates just days before they were detected with monkeypox infection. In a preprint (which is yet to be peer-reviewed), the researchers have detailed the clinical presentation of the infection in these people, and based on genome sequencing data have designated them as belonging to the A.2 clade.

The likely mode for transmission of monkeypox virus (MPXV) in both cases has not been mentioned in the preprint. In the first case — a 35-year-old male — the researchers say multiple vesicular rashes were seen in the “oral cavity and lips followed by a single lesion on the genital organ”. The person had revealed similar lesions in people whom he had come in contact with a week before the onset of symptoms but denied any sexual contact.

In the second case, genital swelling was seen on July 8, 2022, and two days later, multiple vesicular rashes developed on the genital organ and on both hands; lesions were seen in a few other parts of the body couple of days later. This person, too, had denied any sexual or physical contact with anyone with suspected or confirmed monkeypox infection. 

As per the global update by WHO, as of August 10, 98.7% of 18,940 people with confirmed infection were men. Among cases with known data on sexual orientation, 97.2% (8,224 of 8,462) identified as men who have sex with men (MSM). Of the 5,473 cases where the route of transmission was reported, 91.5% was through a sexual encounter. This would mean that in about 8.5% of cases the route of transmission was not sexual.

Route of infection

While the first two people in India who tested positive for the monkeypox virus had developed initial symptoms (rashes/lesions), including in the genital area, even before travelling from the United Arab Emirates to Kerala, both had denied sexual contact with anyone with confirmed or suspected infection. While other routes of transmission cannot be ruled out in both cases, it is pertinent to note that lesions were first seen in the genital and/or oral areas.

The reasons for denying the sexual route of transmission could be due to fear of stigma and discrimination. 

“There is both a legal and social issue for denying sexual route of transmission,” says Dr. Vinod Scaria, a senior scientist at the Institute of Genomics and Integrative Biology (CSIR-IGIB). “Homosexuality is a crime in UAE and people can get prosecuted. So, expatriates who develop lesions fly back to their respective countries.” 

Since genome sequence data are posted along with the date and place, it is possible to identify the infected people and trace them, especially since only two sequences have been posted from India. “So even if they had declared the route of transmission as sexual, it is important not to reveal it in the study,” says Dr. Scaria. 

Multiple routes of spread

As per WHO, majority of cases are among men who have sex with men, and sexual encounter is the route of transmission in 91.5% of cases with the known routes of spread. Both legal and social acceptance of men who have sex with men is very high in the U.S. and many countries in South America and Europe. Despite homosexuality being decriminalised in India, the acceptance is not the same in India, the reason why some people may not disclose the sexual route of transmission of monkeypox virus.

“That is why public health communication about the different routes of transmission is critical. Also, the demographics could change as we go ahead. The communication from India’s health ministry has been quite straight on this. It clearly states that anyone can get infected,” says Dr. Scaria.

Globally, the virus has already spread beyond the MSM networks. Among the people for whom the route of transmission is known, 8.5% of cases are outside the MSM networks. So even though the majority of cases are being reported in men who have sex with men, anyone who comes in direct contact with an infected person or even with towels and bedsheets used by an infected person can get infected.

“While the majority of cases are in the MSM community globally, anyone can get infected through other routes. All efforts and attempts should be directed at ensuring that people who have been infected do not face any stigma and discrimination. Else, we will end up driving monkeypox spread under the radar,” says Dr. Anant Bhan, a researcher in global health, bioethics and health policy.

Nine cases

As of August 11, 184 suspected cases have been tested and nine monkeypox cases have been detected in India. All the five cases detected in Kerala are imported, while all four people detected in Delhi have no international travel history and the index case has not been identified for all three. A Mumbai-based doctor, Dr. Ishwar Gilada, told Bloomberg that two people with suspected monkeypox infection refused to get tested about two months before the first case was reported in Kerala.

The importance of timely testing and isolation of cases to limit virus spread cannot be overemphasised. Equally, sequencing the genomes and posting the data on global databases is imperative. NIV Pune has so far shared only two genome sequences on GISAID. Besides NIV Pune, 15 Viral Research and Diagnostic Laboratories (VRDL) of ICMR have been testing for the virus. All 15 VRDL labs are required to send the positive samples to NIV for confirmation.

Currently, NIV holds all the positive samples only it can sequence the genomes and share them. A large number of SARS-CoV-2 genomes were sequenced and shared nationally and in global databases only when many government labs outside the ICMR were allowed to both test and sequence the genomes.

As of August 11, over 33,000 monkeypox cases have been reported globally. The U.S., with nearly 10,400 cases, accounts for one-third of the total cases, and 41 countries in Europe reported over 17,500 cases.

4. How lactose tolerance in humans became widespread

People who did not carry a copy of the lactase persistence gene variant might have died before reaching their reproductive years

Milk has often been branded as a superfood as it is rich in most of the nutrients necessary for health. However, how milk came to be an integral part of the human diet has been a conundrum to scientists because most of the world can’t digest the product. 

Studies on the global prevalence of this mutation suggest that 65% of humanity is lactose-intolerant, meaning they lack the gene to break down lactose into adulthood. Beyond the age of five, lactose, a sugar present in milk, cannot be naturally broken down in the stomach and this remains in the gut causing flatulence, acidity and diarrhoea. 

India is among the largest producers of milk and, by country, the largest consumer and it stands to reason most Indians possess it. However, multiple studies have shown that only around 18-25% have it.  

Milk drinking, the story goes, hasn’t been very popular in the roughly 3,00,000-year history of humanity. But in the last 5,000 years, a genetic mutation enabled European pastoralists to produce lactase — an enzyme that breaks down lactose into a digestible form — well into adulthood, a trait called lactose persistence. 

Genetic variant

Moreover, the genetic variant present in Indians is almost identical to that found in Europeans, meaning that it likely spread into India from migrant European populations. Thus, the standard story goes that something amplified the popularity of the genetic variant in Europeans and consequently in pockets of other continents.

Because evolution favours traits that confer benefits and eliminates those that don’t, scientists have long sought to explain why the mutated lactose gene became popular. Was it because European pastoralists, who herded cows, continued to drink milk despite the obvious discomfort because it was otherwise a viable source of nutrition? 

A recent study in the journal Nature reports a multi-pronged analysis that suggests drinking milk was actually harmful in those who lacked the gene-variant but only in periods of famine and adverse environmental conditions. Thus, the gene flourished because it likely killed the Europeans who lacked it. 

Professor Richard Evershed, the study’s lead author from the University of Bristol’s School of Chemistry, assembled a unique database of nearly 7,000 organic animal-fat residues from 13,181 fragments of pottery from 554 archaeological sites to find out where and when people were consuming milk. His findings showed milk was used extensively in European prehistory, dating from the earliest farming nearly 9,000 years ago, but increased and decreased in different regions at different times. 

‘No connection’

Another team, led by Professor Mark Thomas, of the University College London, developed a statistical model and applied it to a database that showed the presence or absence of the lactase persistence genetic variant, using published ancient DNA sequences from more than 1,700 prehistoric European and Asian individuals. They found no relationship challenging the long-held view that the extent of milk use drove lactase persistence evolution. 

An analysis of the UK Biobank data, comprising genetic and medical data for more than 3,00,000 living English, found only minimal differences in milk drinking behaviour between genetically lactase persistent and non-persistent people. Also, the large majority of people who were genetically lactase non-persistent experienced no short or long-term negative health effects when they consume milk. 

“If you are healthy and lactase non-persistent, and you drink lots of milk, you may experience some discomfort, but you are not going to die of it. However, if you are severely malnourished and have diarrhoea, then you’ve got life-threatening problems. When their crops failed, prehistoric people would have been more likely to consume unfermented high-lactose milk — exactly when they shouldn’t,” he said in a statement. 

Therefore, the authors argue that as populations and settlement sizes grew, human health would have been increasingly impacted by poor sanitation and increasing diarrheal diseases, especially those of animal origin. Consuming milk under these conditions would have been harmful to those who lacked the digestive gene.

“This situation would have been further exacerbated under famine conditions when disease and malnutrition rates are increased. This would lead to individuals who did not carry a copy of the lactase persistence gene variant being more likely to die before or during their reproductive years, which would push the population prevalence of lactase persistence up,” the authors note.

5. HIV drugs shortage is a challenge to ending AIDS in India

Some people living with HIV have had their regimen changed due to the unavailability of certain ARVs

In June, PLHIV (People Living with HIV) networks across the country started witnessing an acute shortage of certain Antiretroviral (ARV) drugs in Anti-Retroviral Therapy (ART) centres. Among them were pediatric formulations and dolutegravir, the backbone of HIV treatment.

In the summer heat, PLHIV have been protesting peacefully for the past 23 days continuously on the premises of the National AIDS Control Organisation (NACO). The dharna is calling attention to the need for emergency procurement of ARVs and the unintended consequences of a weak and ineffective supply chain.

Suppressing virus

People living with HIV need access to treatment with a combination of drugs known as antiretroviral therapy to suppress the virus, preserve their health, and prevent transmission of the virus to an HIV-negative partner. Staying on anti-retroviral therapy continuously is crucial to keep the virus suppressed.

But the virus can mutate into a resistant form if treatment delivery is poor or patchy. As treatment activists, we have seen firsthand when antiretroviral therapy treatment is interrupted, people living with HIV develop resistance to their regimen and become vulnerable to life-threatening bacterial and fungal infections — the primary causes of hospitalisation and AIDS-related deaths in the community. 

Governments such as the Indian government have made considerable advances in providing access to testing and antiretroviral therapy (ART) for people living with HIV. While there has been a reduction in AIDS-related deaths since 2004, progress has stalled in recent years, highlighting the need to address health system challenges such as disruptions in the medicine supply chain to end AIDS.

The disruptions in the life-saving HIV medicine supply chain are not new. What drives these widespread reoccurring shortages in the last decade affecting many States is the failure of the pooled procurement mechanism. The National AIDS Control Organisation (NACO) under the Ministry of Health and Family Welfare is the nodal agency responsible for overlooking and coordinating activities of the National AIDS Control Programme (NACP) along with the Central Medical Services Society, which is responsible for centralised tendering and pooled procurement of different HIV products, including Antiretroviral drugs.

The tender for pooled procurement of life-saving antiretroviral medicines has faced bureaucratic delays in 2014, 2017, and now again in 2022. 

Lack of treatment

A few days ago, NACO, in its public communication, claimed that 95% of PLHIVs have not faced any shortages. But by its own admission, the current shortages affect 5% of 14.5 lakh people. People living with HIV report that ART centres are struggling to keep them on treatment.

PLHIVs receive a minimum “one month’s dose” from ART centres. Recently, they have had to make many trips in a month to get their pills, creating a chilling effect on adherence as poorer patients do not have the resources to travel frequently. Some have had their regimen changed due to the unavailability of certain ARVs and are worried if these changes are based on the World Health Organization’s guidelines and compromise their future treatment options.

Some PLHIVs have been asked to take multiple doses of pediatric formulations instead of adult formulations. As a result, the pill burden increases, and they worry that they may deprive a child living with HIV of their doses in the near future. And when pediatric doses are not available, adult pills are broken or crushed, resulting in uneven dosing and an unpleasant taste that children do not like to take, making adherence challenging for caregivers.

The peaceful dharna in the NACO office seeks to get government attention on the timely tendering and procurement of HIV medicines and to hold accountable the health ministry’s procurement agency, the Central Medical Services Society, responsible for ARVs tenders to ensure an uninterrupted supply of life-saving treatment.

Shortages of health products in the supply chain of health programmes are not India’s problem alone and are commonly experienced in low- and middle-income settings. However, India has IT-enabled and community monitoring tools at its disposal.

Necessary actions

What is urgently needed is the political will from the Ministry of Health to take necessary measures to ensure that drug shortages, as happened over the last decade, are not experienced by its programmes, such as HIV and TB, in the future.

If ignored, the consequences impact the right to health and drive drug resistance, a significant public health challenge for the country. 

(Loon Gangte is an HIV activist with the International Treatment Preparedness Coalition. Leena Menghaney is a lawyer who works on medicines, law and policy.)

6. Have coastal ecosystem norms been violated?

What has the CAG reported in an audit of the conservation process being followed by Centre and States?

The story so far: This week, the Comptroller and Auditor General (CAG) of India tabled a report in Parliament on whether steps taken by the Union Environment Ministry to conserve India’s coastal ecosystems have been successful. The CAG frequently undertakes ‘performance audits’ of government programmes and ministries. This latest report contains the observations from an audit of ‘Conservation of Coastal Ecosystems from 2015-20.’

What are the Centre’s obligations on conserving the coastline?

The government has issued notifications under the Environment Protection Act, 1986, to regulate activities along India’s coasts particularly regarding construction. The Coastal Regulation Zone Notification (CRZ) 2019, implemented by the Ministry, classifies the coastal area into different zones to manage infrastructure activities and regulate them. The three institutions responsible for the implementation of the CRZ are the National Coastal Zone Management Authority (NCZMA) at the Centre, the State/Union Territory Coastal Zone Management Authorities (SCZMAs/UTCZMAs) in every coastal State and Union Territory and the District Level Committees (DLCs) in every district that has a coastal stretch and where the CRZ notification is applicable. These bodies examine if CRZ clearances granted by the government are as per procedure, if project developers once given the go-ahead are complying with conditions, and if the project development objectives under the Integrated Coastal Zone Management Programme (ICZMP) are successful. They also evaluate the measures taken up by the government towards achieving the targets under Sustainable Development Goals, a set of United Nations-prescribed targets for countries towards eradicating poverty and becoming sustainable societies.

Why did the CAG undertake this audit?

The CAG has a constitutional mandate to investigate and report on publicly funded programmes. The CAG conducted “pre-audit studies” and found that there were large-scale CRZ violations in the coastal stretches. Incidences of illegal construction activities (reducing coastal space) and effluent discharges from local bodies, industries and aquaculture farms had been reported by the media and this prompted it to undertake a detailed investigation.

What did the audit find?

The audit pointed out various categories of violations. For one, the Environment Ministry hadn’t notified NCZMA as a permanent body and it was being reconstituted every few years. In the absence of defined membership, it was functioning as an ad-hoc body. There were instances of the Expert Appraisal Committees — a committee of scientific experts and senior bureaucrats who evaluate the feasibility of an infrastructure project and its environmental consequences — not being present during project deliberations. There were also instances of the members of the EAC being fewer than half of the total strength during the deliberations.

The SCZMA had not been reconstituted in Karnataka and there was delayed reconstitution in the States of Goa, Odisha and West Bengal. The DLCs of Tamil Nadu lacked participation from local traditional communities. In Andhra Pradesh, DLCs were not even established.

There were instances of projects being approved despite inadequacies in the Environment Impact Assessment (EIA) reports. These included non-accredited consultants preparing the EIA, using outdated data, not evaluating environmental impacts of the project, not appraising the disasters which the project area was prone to and so forth.

What problems did the CAG find in the States?

Tamil Nadu didn’t have a strategy in place to conserve the Gulf of Mannar Islands. In Goa, there was no system for monitoring coral reefs and no management plans to conserve turtle nesting sites. In Gujarat, instruments procured to study the physiochemical parameters of soil and water of the inertial area of the Gulf of Kutch weren’t used. Sea patrolling in Gahirmatha Sanctuary, in Kendrapara, Odisha did not happen.

A research laboratory at Dangmal, Kendrapara District, Odisha constructed in 2016 has not yet been made functional. There was no website to disseminate the information related to the NCZMA , the CAG found, which is a clear violation of the mandated requirements of the Authority.

What lies ahead?

These reports are placed before the Standing Committees of Parliament, which select those findings and recommendations that they judge to be the most critical to public interest and arrange hearings on them. In this case, the Environment Ministry is expected to explain omissions pointed out by the CAG and make amends.

7. Digital lending

Why has the RBI come out with a framework to regulate the e-space?

The story so far: On August 10, the Reserve Bank of India (RBI) instituted a framework for regulating the digital lending landscape in the country. It pointed to concerns such as unbridled engagement of third parties, mis-selling, breach of data privacy, unfair business conduct, charging of exorbitant interest rates, and unethical recovery practices bothering consumer confidence and said that they had to be mitigated. The latest set of regulations are based on recommendations received from its Working Group on ‘Digital Lending including lending through online platforms and mobile apps’ (WGDL) which was constituted last January.

What is the digital lending landscape like?

Digital lending utilises automated technologies and algorithms for decision making, customer acquisition, disbursements and recovery. Not only does it lower costs but also ensures speedy disbursal.

Lending Service Providers (LSPs) act in partnership with Non-Banking Financial Companies (NBFCs) who disburse credit (or a line of credit) to the customer using the former’s platform, making it a multi-sided platform. In order to cement their presence in a space with multiple peers, LSPs often resort to reckless lending practices by endowing credit beyond a borrower’s repayment capacity. The risk is mitigated by spreading it to all users by charging higher interest rates.

The absence of standardised disclosure and regulatory norms made it cumbersome to assess a participant’s operational legitimacy. Between January and the end of February last year, there were about 1,100 lending apps available for Indian android users of which about 600 were illegal. They were either unregulated by the RBI or had NBFC partners with an asset size of less than ₹1,000 crore.

The space is largely dominated by NBFCs. Its customers particularly include small borrowers without a documented credit history and thus, not served by traditional financial institutions. Their product mix primarily imbibe on short-term loans, especially those which have shorter tenures of less than 30 days.

What are the new regulations?

The central premise is transparency. Lending must be carried out by entities that are either regulated by the RBI or possess permission to operate under a relevant law. Considering the large-scale outsourcing in the industry, this would also help address regulatory arbitrage.

The RBI has mandated that all loan disbursals and repayments are to be executed directly between the bank accounts of the borrower and the entity, eliminating the involvement of LSP’s nodal pass-through account.

Henceforth, before executing the contract, lenders would have to inform the borrower in a standardised format about all fees, charges as well as the annual percentage rate (APR). The latter refers to the annual rate that is charged for borrowing a loan and is inclusive of processing fees, penalties and all other charges associated with it. This would also help borrowers make better comparisons with industry peers. Further, LSPs cannot raise the credit limit of their customers without prior consent.

Also, to address the need for a dedicated resolution framework, entities would have to appoint a grievance redressal officer. The ecosystem would also fall under the purview of the RBI’s Integrated Ombudsman Scheme (RB-IOS) should the complaint not be resolved within 30 days of receipt.

Will data also have to be regulated?

Yes, all data collected by the apps should be “need-based” and must be with prior and explicit consent of the borrower. Users can also revoke previously granted consent. The information to be collected must be stated in the privacy policy during enrolment. Considering the multi-sided nature of the business, the RBI has put forth that user consent would be mandatory for sharing any personal information with a third-party. This regulation would also address concerns emanating from TechFin (companies that are primarily tech-based service providers, say e-commerce, and also offer financial services). They are known to leverage their existing user data from non-financial business to offer more suitable financial services, which may involve third parties and vice-versa.

What is the outlook for the industry?

The share of digital lending may be small at present, but given their scalability they may soon become significant players. Senior Director and Deputy Chief Ratings Officer at CRISIL, Krishnan Sitaraman, told The Hindu, “We will have to see what kind of changes the digital lenders make to their operating models in light of the new regulations, how it impacts the fees they charge, the speed of their disbursements or how they continue to provide seamless experience to their customers.” On the potential challenges from rising inflation, interest rates and their impact on credit growth in general, he said, “With the economic activity reviving at a decent pace post pandemic and our expectations of a GDP growth of 7.3% this fiscal, we expect demand for loans across the credit ecosystem to be higher this fiscal despite higher inflation and interest rates.”

8. What is the threat from zoonotic diseases?

Is there a standard procedure on checks and genome sequencing for pathogens that pass from animals to humans?

The story so far: A new zoonotic virus that has evolved to infect humans was identified in China in August. On August 4, the New England Journal of Medicine (NEJM) described the virus called Langya (LayV), reported in patients in Eastern China.

What is the nature of Langya?

In a letter published in NEJM, a team of researchers from China and Singapore led by Xiao-Ai Zhang, Hao Li, et al say: “In our study, a newly identified henipavirus of probable animal origin was associated with febrile illness, a finding that warrants further investigation to better understand associated human illness.”

The pathogen belongs to the henipavirus family, closely associated with Nipah and Hendra viruses, and was noticed to cause fever, and respiratory symptoms among 35 people in China since 2018. It was discovered during routine sentinel surveillance of patients who had fever and reported a recent history of exposure to animals in eastern China. It was identified as a phylogenetically distinct henipavirus, indicating its evolution, after being identified in a throat swab sample from a patient. The virus was named after the town this patient lived in — Langya in the Shandong province in China.

Subsequent investigations identified 35 patients with acute LayV infection in the Shandong and Henan provinces of China, the communique explains. In all except nine patients, LayV was the only pathogen isolated, indicating no other infection was present that could have caused the symptoms.

What are the symptoms?

The symptoms were fever, fatigue, cough, anorexia, myalgia, nausea, headache, and vomiting, accompanied by thrombocytopenia or low platelet count, and leukopenia or a low white blood cell count. In some cases, doctors also noticed impaired liver and kidney functions.

What are the animal origins of LayV?

To determine the source or animal origin of the infection, since the patients, mostly farmers, revealed close exposure to animals before they fell sick, scientists drew blood from farm animals and small animals. These serosurveys in animals revealed that shrews, a rat like rodent, might be a reservoir of the LayV.

The NEJM letter says that contact tracing of nine patients with 15 close-contact family members revealed no close-contact LayV transmission, but acknowledges that the sample size was too small to effectively determine the status of human-to-human transmission for LayV. So while concluding, with the available evidence, that the virus must have been directed transmitted by shrews or any other intermediary animal (goats, dogs, for instance, that tested positive for LayV in the sero-study), researchers called for further studies to examine all angles thoroughly.

Is there cause for worry in the future?

An article in Nature quotes evolutionary virologist Edward Holmes, at the University of Sydney, Australia on the way ahead. He says that there is no particular need to worry about this, but constant surveillance would be critical. In general, regularly testing humans and animals for emerging viruses is critical to understand the risk of zoonotic diseases, he adds. The need for surveillance cannot be over stated, certainly not since the COVID-19 pandemic upended the world without warning.

The Central News Agency, a government-controlled news outfit in Taiwan, quoted Chuang Jen-hsiang, deputy director of Taiwan’s Centers for Disease Control saying they would soon establish a standardised procedure for domestic laboratories to conduct genome sequencing and strengthen surveillance of LayV.

While LayV as we know it now does not pose a huge threat, it is apparent that the nature of a connected world facilitates the easy transmission of viruses globally. While scientific research and pharmacology development have gotten a boost in the arm in the two years since the pandemic, prevention continues to be infinitely better than cure. Constant, unflagging surveillance, and adequate sharing of information between nations is essential, experts underscore.

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