UCPMP, Vocal for Local, UCC, Climate Change, and More

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GS Paper 2

Uniform Code for Pharmaceutical Marketing Practices (UCPMP) 2024

    • News: The Department of Pharmaceuticals has issued marketing code for pharmaceutical firms.
      • The department falls under the Ministry of Chemicals and Fertilisers and is responsible for making and executing policies for the regulation of pharmaceuticals in India.
  • Key Features are: 
      • Restrictions on Travel Facilities & Gifts: UCPMP prohibits pharma companies from offering gifts and travel facilities to healthcare professionals or their family members.
  • Limitation on Free Sample Distribution: The code restricts the supply of free samples only to qualified individuals authorized to prescribe the respective pharmaceutical product.
  • Hospitality Limitations: Companies are barred from offering any form of hospitality, such as hotel accommodations, to doctors attending medical conferences.
      • Restriction on Monetary Transactions: The Code prohibits companies or their representatives from making cash payments to healthcare professionals.
  • Establishment of Committees: Associations need to create Ethics Committees for Pharmaceutical Marketing Practices (ECPMP) and dedicate a section on their websites for UCPMP.
    • Record-keeping: Companies must maintain detailed records of free samples distributed, including product name, doctor name, quantity, date, and total monetary value.
    • Guidelines: Setting clear guidelines for drug promotion in both written and audio-visual formats.
      • No exaggerated claims, comparisons, or use of “safe” without qualification.
      • “New” can’t be used for products available for over a year.

‘Vocal for Local’ Initiative

    • News: NITI Aayog has launched ‘Vocal for Local’ Initiative Fostering Grassroots Entrepreneurship and Self- reliance.
    • Aim: To encourage a spirit of self-reliance among the populace of Aspirational Blocks, propelling them towards sustainable growth and prosperity.
  • Launched Under: Aspirational Blocks Programme (ABP). 
    • Implementation: It is being implemented in partnership with Government e-Marketplace (GeM) and Open Network for Digital Commerce (ONDC) platforms.
    • Features:
      • As a part of this initiative, indigenous local products from 500 Aspirational Blocks have been mapped and consolidated under Aakanksha. 
        • Aakanksha is an umbrella brand, which could be supplemented into multiple sub-brands that have the potential to create an international market.
      • In order to encourage these products, a dedicated window for Aspirational Blocks Programme under the brand name ‘Aakanksha’ on GeM portal has been established.  
      • The partners will provide technical and operational support for e-commerce onboarding, establishing linkages, enhancing financial and digital literacy, facilitating documentation and certification, and promoting skill development. 
  • Aspirational Blocks Programme (ABP): 
      • Launch: It was launched in 2023 by NITI Aayog.
      • Aim: ABP focuses on improving governance to enhance the quality of life of citizens in the relatively underdeveloped blocks of India. 
      • Coverage: 500 blocks from 329 districts across 27 States and 4 Union Territories of India are part of the programme. 
      • Themes: 
        • Health and Nutrition
        • Education
        • Agriculture and Allied Services
        • Basic Infrastructure and
        • Social Development.
      • Strategy: The Programme strategy is based on convergence of existing schemes, defining outcomes, and monitoring them on a constant basis.
  • GeM Portal: 
    • Launch: The GeM is an online platform launched by the Ministry of Commerce and Industry, Government of India in 2016.
    • Ownership: The platform is owned by GeM SPV (Special Purpose Vehicle), which is a 100% Government-owned, non-profit company under the Ministry of Commerce and Industry.
    •  Aim: Creating an inclusive, efficient, and transparent platform for the buyers and sellers to carry out procurement activities in a fair and competitive manner.
    • Coverage: Open to all government departments, public sector undertakings, autonomous bodies, and other organizations.
    • Success: 
      • Covid-19 pandemic has highlighted the importance of digital platforms like GeM in ensuring the continuity of essential services. 
      • The portal has played a crucial role in the procurement of medical equipment and supplies during the pandemic.
      • GeM has been effectively contributing to the government’s commitment of “Minimum Government, Maximum Governance”.

Uniform Civil Code

  • News: The Uniform Civil Code (UCC) Bill in Uttarakhand, passed by the state Assembly has received the President’s assent, making it law.
  • UCC: 
    • The Uniform Civil Code (UCC) Bill is a proposal in India to establish uniform rules for personal matters for all citizens. These matters include marriage, divorce, inheritance, and property rights.
    •  The UCC would apply to all citizens equally, regardless of their religion, gender, or sexual orientation.
  • Importance: 
    • It makes Uttarakhand the first state in India to adopt the UCC after Independence.
    • The President gave her assent to the Uniform Civil Code, Uttarakhand, 2024 under Article 201 of the Constitution of India. 
      • Article 201: When a Bill is reserved by a Governor for the consideration of President, the President shall declare either that he assents to the Bill or that he withholds assent therefrom”. But no time stipulation is provided in the Constitution.
  • UCC in the Indian Constitution: After independence, the makers of the Constitution gave the right under Article 44 that the States can also introduce the UCC at appropriate time.
    • The term, ‘Uniform Civil Code’ is explicitly mentioned in Part 4, Article 44 of the Indian Constitution. 
    • Article 44 says, “The State shall endeavor to secure for the citizens a uniform civil code throughout the territory of India.”

GS Paper 3

Global Methane Tracker 2024

  • News: The Global Methane Tracker 2024 has been released by International Energy Agency (IEA). 
  • Global Methane Tracker: 
    • Global Methane Tracker is an annual report released by the International Energy Agency (IEA).
    • Global Methane Tracker is based on the most recently available data on methane emissions from the energy sector and incorporates new scientific studies, measurement campaigns, and information collected from satellites.
  • Key Findings:
    • Methane Emissions: In 2023, methane emissions from fuel use reached nearly 120 million tonnes (Mt), nearing record highs.
    • Top Emitters and Sector Contributions: Approximately 80 Mt of methane emissions stemmed from the top 10 emitter countries, with the United States leading, followed by Russia. 
      • The energy sector, encompassing oil, natural gas, coal, and bioenergy, accounted for over a third of methane emissions. 
      • Additionally, bioenergy, mainly from biomass utilization, contributed 10 Mt of emissions. 
    • Impact on Global Temperature Rise: Methane, responsible for about 30% of the increase in global temperatures since the preindustrial era, poses a significant climate challenge.
    • Recommendations: 
      • Paris Agreement Target: To align with the Paris Agreement’s goal of limiting warming to 1.5°C, a reduction of 75% in methane emissions from fossil fuels is necessary by 2030.
      • Cost Estimates: IEA estimated that achieving this goal would necessitate approximately $170 billion in expenditure, representing less than 5% of the fossil fuel industry’s income in 2023. 
      • Potential for Emission Reduction: Full implementation of methane policies and commitments could lead to a 50% reduction in methane emissions from fossil fuels by 2030.

India’s R&D Landscape: Funding, Challenges, and Initiatives

  • News: The allocation of a ₹1 lakh crore corpus in the interim Budget for 2024-25 to enhance the research and innovation ecosystem in the nation has ignited excitement among scientific and research communities.
  • India’s Position in R&D Landscape: 
    • Low R&D Funding Allocation: India’s R&D funding allocation, at 0.64% of GDP, trails behind China’s 2.4% and the US’s 3.5%.
    • Growth in GERD: While India’s Gross Expenditure on Research and Development (GERD) has grown significantly, surpassing USD 17 billion in 2020-21, it remains lower as a percentage of GDP compared to major economies.
    • Academic Talent Production: Despite lower R&D expenditure, India ranks third globally in producing PhDs and publications, indicating a commitment to nurturing intellectual capital and contributing to global research efforts.
    • Patent Grants: India ranks sixth globally in patent grants, illustrating a developing innovation landscape with potential for further growth in intellectual property creation.
    • Investment in Autonomous R&D: A significant portion of R&D funding is directed to autonomous government-operated laboratories, driving research and technology development with strategic implications.
    • Government Sector Dominance: With 54% of total R&D investment allocated to the government sector, key scientific agencies like DRDO, Department of Space, ICAR, and Department of Atomic Energy benefit enhancing strategic research and development initiatives.
      • Provisions in Interim Budget 2024-25:The interim budget earmarked a corpus of Rs. 1 lakh crore for long-term financing or refinancing in R&D, alongside launching a new scheme to bolster deep-tech technologies for defense purposes, promoting self-reliance.
  • Challenges in India’s R&D Landscape: 
    • Low R&D Investment Relative to GDP: Despite significant growth in Gross Expenditure on Research and Development (GERD), India’s R&D investment as a percentage of GDP remains low at 0.64%.
    • Limited Private Sector Contribution: Compared to economies like China, Japan, South Korea, and the U.S., where private industries typically contribute over 65% of R&D funding, India’s private sector contributed only about 36% in 2020-21.
    • Under-Utilization of Allocated Funds: In 2022-23, the Department of Biotechnology (DBT) utilized only 72% of allocated funds, while the Department of Science and Technology (DST) utilized only 61%.
    • Bureaucratic Hurdles and Procurement Delays: Bureaucratic red tape and delays in procuring laboratory equipment pose challenges and hinder research progress.
    • Inadequate State Government Funding: Most states allocate only 0.09% of Gross State Domestic Product (GSDP) on average for research, indicating a lack of emphasis on research at the state level.
    • Weak Patent System and Intellectual Property Protection: Concerns arise due to a weak patent system, leading to inadequate protection of intellectual property.
    • Capacity Constraints in Patent Office: The Indian Patent Office faces capacity constraints, making it challenging to handle patent examination demands efficiently.
    • Talent Shortage and Higher Education: Underdeveloped higher education institutions contribute to a lack of talent, hampering private sector engagement in R&D.
    • Limited Collaboration Between Academia and Industry: Insufficient collaboration between academia and industry inhibits innovation and commercialization efforts.
  • Government Initiatives:
    • Atal Innovation Mission (AIM): Initiated in 2016, the AIM aims to encourage innovation through the development of new programs and policies supporting startup growth.
    • Innovation of Science Pursuit for Inspire Research (INSPIRE): The INSPIRE scheme is designed to attract talent to science and research at an early stage, fostering interest and exploration.
    • One Week – One Lab Campaign: This campaign, led by CSIR-NPL, aims to raise awareness about their technologies, provide solutions to societal challenges, and cultivate scientific curiosity among students.
    • National Initiative for Developing and Harnessing Innovations (NIDHI): NIDHI is an end-to-end plan for startups, with the goal of doubling the number of incubators and startups within five years, facilitating their growth and development.
  • National Startup Awards: These awards recognize exceptional startups and ecosystem enablers, acknowledging their contributions to economic vitality by stimulating innovation and fostering competition.
  • National Research Foundation (NRF):
    • First proposed under the National Education Policy (NEP) in 2020.
    • NRF is a new research funding agency that the Union Cabinet recently approved.
    • It has a budget of Rs 50,000 crore over five years.
    • Aim: It aims to help boost research and innovation in India by providing more funding, streamlining the research funding process, and strengthening linkages between academia, industry, society, and government.
    • Governance:  NRF’s functioning will be governed by an Executive Council chaired by the Principal Scientific Adviser to the Government of India.
    • The Department of Science and Technology (DST) will be the administrative Department of NRF which will be governed by a Governing Board.
    • Governing Board will consist of eminent researchers and professionals across disciplines.
    • The Prime Minister will be the ex-officio President of the Board.
    • The Union Minister of Science & Technology & Union Minister of Education will be its ex-officio Vice-Presidents.

SEBI-Mandated Stress Tests

  • News: For the past three years, small and mid-cap stock mutual funds have been extremely popular among Indian investors. 
  • These funds have delivered impressive returns of 24% and 22% respectively over the three-year period, attracting a significant portion of equity investments. 
  • This surge in investments has encouraged these funds to acquire more small and mid-cap stocks, sustaining their strong performance.
  • This small and mid-cap boom caught the SEBI’s (Securities and Exchange Board of India) attention when it called it a ‘froth or bubble’ and it told mutual funds to put a framework in place to protect retail investors in case of a market crash.
  • A bubble is an economic cycle that is characterized by the rapid escalation of market value, particularly in the price of assets. 
  • This fast inflation is followed by a quick decrease in value, or a contraction, that is sometimes referred to as a “crash” or a “bubble burst.”
  • It prompted the Association of Mutual Funds in India (AMFI) to tell mutual funds to conduct ‘stress tests’ and publish the result on their websites.
  • Large Cap, Mid Cap and Small Cap Stocks: 
    • Market Capitalisation can be defined as the total value of the company that is traded on the stock market. It is calculated by multiplying the total number of shares by the current market per share price.  
    • As per the SEBI guidelines the companies are classified as: 
    • Large Cap: Companies ranked between 1 and 100, when sorted by market capitalisation. 
    • Mid Cap: Companies ranked between 101 and 250, when sorted by market capitalisation. 
    • Small Cap: Companies ranked beyond 250, when sorted by market capitalisation. 
    • Large cap funds offer stability and lower risk, while mid cap funds provide growth opportunities with moderate risk, and small cap funds offer potentially high returns but with increased risk. 
  •  Stress Test:
      • Stress testing of small and mid-cap funds is an attempt to determine how these mutual funds fare if they face large and sudden redemption (withdrawal of money) demands.
      • The test checks two things: selling speed and price impact. 
      • Selling speed checks how quickly can a fund manager sell small company stocks if many investors redeem their investments. and 
      • The price impact checks whether selling these stocks would bring down their price significantly or not.
  • Need for Stress Tests: 
  • The stress test was done to clear the market regulator’s concern about froth in the small and mid-cap segments on the back of relentless inflow in these schemes, backed largely by retail investors chasing high returns.
  • A few years ago, small- and mid-cap mutual funds managed relatively small assets. 
  • But with the flood of money in recent years, small-cap funds have grown to manage ₹2.49 lakh crore and mid-cap funds ₹2.95 lakh crore by end of February 2024.
  • The leading funds in these sectors currently range from ₹25,000 crore to ₹60,000 crore. With such large holdings, even a minor 1 percent sell-off would require transactions worth ₹250 crore to ₹600 crore. 
  • This magnitude of selling could overwhelm the market’s capacity to absorb it. If these sales occur in stocks with limited trading volume, it could lead to significant increases in transaction costs, causing NAV to drop more than expected.
    • NAV stands for Net Asset Value. The performance of a mutual fund scheme is denoted by its NAV. It is the market value of the securities held by the scheme.
  • Conducting Stress Tests: 
    • At the end of each month, small- and mid-cap funds will calculate how long it will take to liquidate 50 per cent and 25 per cent of their portfolios based on four assumptions. 
    • First, they will arrive at the average trading volumes for all their stock holdings for the past three months. 
    • Two, they will exclude the bottom 20 per cent illiquid stocks. 
    • Three, they will assume a three-fold spike in volumes on a hypothetical trading day when markets are under stress (higher market volatility usually spikes volumes). 
    • Four, they will calculate how many days it may take to sell their holdings, if able to participate to the extent of 10 per cent of a stock’s traded quantity on the given day. This yields the number of days a fund will take to liquidate 25 per cent or 50 per cent of its portfolio.
  • Interpretation of the data by Investors: 
    • The main data points investors need to look out for are the number of days estimated for liquidating 50 per cent and 25 per cent of the portfolio. 
    • They also need to check if the fund has a concentration problem — a few investors holding a large proportion of assets. 
    • Funds that take longer to liquidate their holdings will have a greater challenge in meeting exceptional redemption demands. 
    • They could also face higher impact costs when selling. 
    • Concentrated investors make a fund more susceptible to bulky redemptions.
  • What Does The First Set Of Data Show?
      • The data shows that small-cap funds have a bigger challenge in dealing with stress scenarios, than mid-cap funds.
      • Small-cap funds with assets of ₹10,000 crore or more, generally reported a longer time to liquidate.
      • Mid-cap funds seem to carry much lower risk from bulky redemptions compared to small-cap funds. 
      • Most mid-cap funds estimated taking about half the time to liquidate 50 per cent of their portfolios as small-cap funds from the same AMC (Asset management Company). 
      • Investor concentration was slightly higher for mid-cap funds.
  • Should Investors Sell Their Small-Cap And Mid-Cap Funds Now?
      • That small and mid-cap funds are risky and hold stocks with patchy liquidity has been known for some time. Stress testing only quantifies the impact of these risks. Therefore, stress testing cannot be a trigger to sell your funds. 
      • But if you were not aware of the risks lurking in these funds when you invested and cannot handle sharp draw-downs, you should reduce your exposure to them.
      • You can decide to book profits on any of your small or mid-cap holdings if you have uncomfortably high allocations to them within your equity portfolio or need the money within the next 3-4 years. Selling funds that are a part of your long-term portfolio isn’t a good idea.
  • Regulatory Provisions To Help The Retail Investors?
  • Bond (or debt) market liquidity in India is erratic and debt funds are patronised by corporate treasuries and institutions, which can trigger bulky redemptions. 
  • Equity funds are held mainly by retail investors. History suggests that, when markets fall, retail investors may stop new investments, but they don’t immediately redeem from equity funds.
  • Two, AMCs are aware of liquidity risks in small and mid-caps and can use the 35 per cent leeway to hold large-cap stocks, apart from cash. 
  • SEBI regulations also allow funds to borrow to the extent of 20 per cent of assets to meet short-term liquidity needs. This gives funds a significant cushion.  
  • Three, SEBI’s stress testing requirement is likely to force AMCs that have been flirting with risks to lighten up on illiquid names and own more liquid names. 
  • After all, no open-end fund would like stress test disclosures to alarm investors into redeeming.   

Read more: SEBI-Mandated Stress Tests: UPSC Exam Prep

Fact for Prelims 

Devin AI

  • News: Devin AI, an artificial intelligence software has been launched by US-based startup Cognition.
  • Devin AI: 
    • It is the world’s ‘1st fully autonomous’ AI software engineer.
    •  It can write codes, create websites & software with just a single prompt.
    • Other popular AI-powered tools that help with coding are OpenAI Codex, GitHub Copilot, Polycoder, CodeT5, Tabnine, etc 

Lyme Disease

  • News: Recently, a case of Lyme disease has been reported in the Ernakulam district of Kerala.
  • Definition:  It is a vector-borne infectious disease.
  • Cause: Bacterium Borrelia burgdorferi
  • Symptoms:
    • High-grade fever, 
    • pain and swelling in his knee, 
    • neck stiffness and 
    • superficial ulcers over the scrotum
  • Transmission:
    •  It is primarily transmitted to humans through the bite of infected black-legged ticks, often referred to as deer ticks.
  • Affected Regions: It has been found in forests and grasslands around the world, especially when the weather is warmer.
    • It is most commonly reported in North America, Europe, and some parts of Asia.
  • Treatment:
    •  The standard treatment for Lyme disease is an antibiotic taken as a pill.
    •  The treatment usually lasts 10 to 14 days. Treatment may be longer depending on symptoms.
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