Silicon Valley Bank (SVB) Crisis

Concerns have been expressed about how the closure and seizure of Silicon Valley Bank (SVB) by US regulators may affect India’s startup sector. It served as a crucial ally for the world’s startup economy.

SVB crisis: what is it?

Silicon Valley Bank, one of the biggest commercial banks in the United States, is managed by SVB Financial Group.

A $1.75 billion share sale programme was announced last week in an effort to further strengthen its balance sheet.

The group’s shares experienced a significant sell-off as a result of this programme.

Following that, the market turned extremely negative, and a bear rampage destroyed more than $80 billion of its market worth.

Alongside, the bond prices of the group collapsed and created a panic in the market.

Reasons for SVB’s downfall

Downturn of tech stocks: The bank was hit hard by the downturn in technology stocks over the past year as well as the Federal Reserve’s aggressive plan to increase interest rates to combat inflation.

Lower bond yield due to lower interest rates: SVB bought billions of dollars’ worth of bonds over the past couple of years, using customers’ deposits as a typical bank would normally operate.

Mostly startups account holders: SVB’s customers were largely startups and other tech-centric companies that started becoming needier for cash over the past year.

Drying VC funding: Venture capital funding was drying up, companies were not able to get additional rounds of funding for unprofitable businesses.

Fear over deposit insurance: Since its customers were largely businesses and the wealthy, they likely were more fearful of a bank failure since their deposits were over $250,000, which is the government-imposed limit on deposit insurance.

Immediate effects of SVB’s failure

Startups scramble: Many startups and other companies that relied on the bank’s services were suddenly left without access to their funds, which caused financial strain and uncertainty for these businesses.

Ripple effect: They now fear that they might have to pause projects or lay off or furlough employees until they could access their funds.

Major implications for SVB

There are two large problems remaining with Silicon Valley Bank-

Huge uninsured deposits: The vast majority of these were uninsured due to it’s largely startup and wealthy customer base.

No scope for asset reconstruction: There is no potential buyer of Silicon Valley Bank.

Could this lead to a repeat of what happened in 2008?

No probability: At the moment, experts do not expect any issues to spread to the broader banking sector.

Diversified customer bases: Other banks are far more diversified across multiple industries, customer bases and geographies.

Impact on Indian startups

Uncertainty over deposits: The failure of SVB is likely to have a ripple effect on Indian startups, many of which have significant amounts of funds deposited with the bank.

Hamper the funding: SVB has been a major player in the Indian startup ecosystem, providing banking services and funding to many of the country’s most successful startups, including Flipkart, Ola, and Zomato.

Ripple effect: This could lead to a cash crunch for many companies, which may be forced to cut costs, delay projects, or lay off employees.

Reduce global footprints: SVB has also been instrumental in helping Indian startups expand into the US market, by providing them with the necessary infrastructure and support to set up operations in Silicon Valley.

How can Indian startups mitigate the impact of SVB’s failure?

Diversify banking relations: Indian startups that have funds deposited with SVB may want to consider diversifying their banking relationships to reduce their exposure to any one bank.

Alternative financing: This may involve opening accounts with multiple banks, or exploring alternative banking services such as digital banks or fintech startups.

Same-Sex Marriages can rock societal values: Centre

In the Supreme Court, the Center stated its opposition to same-sex marriage, citing conventional views and values.

The following are the affidavit’s main points:

Since the beginning of time, heterosexual marriage has been the norm and is “fundamental to both the existence and continuation of the state.”

India views marriage as a “holy union,” a “sacrament,” and a “sanskar,” and it is influenced by society norms, conventions, rituals, and practises.

Any “deviation” in “human relationships” from the “statutorily, religiously, and socially” accepted norm can only occur through the legislature, not the Supreme Court.

Basis of Centre’s opposition

The 2018 Navtej Singh Johar judgment decriminalised homosexuality, but it did not mention/legitimise same-sex marriage.

Same-sex marriage cannot be compared to a man and woman living as a family with children born out of the union.

Registration of same-sex marriage would result in a violation of existing personal as well as codified law provisions.

There is a “compelling interest” for the society and the state to limit recognition to heterosexual marriages only.

Reasons behind centre’s opposition

Legal revamp required: The registration of marriage of same-sex persons also results in a violation of existing personal as well as codified law provisions — such as ‘degrees of prohibited relationship’; ‘conditions of marriage’; ‘ceremonial and ritual requirements’ under the personal laws governing the individuals”.

Definition of spouse: In a same-sex marriage, it is neither possible nor feasible to term one as ‘husband’ and the other as ‘wife’ in the context of the legislative scheme of various personal laws.

Against cultural norms:  The social order in our Country is religion based which views procreation as an obligation for the execution of various religious ceremonies.

Property and other civil rights: Property rights post marriage is a much-contested issues in India. Same sex marriage will not create any immunity for the law but increase complex interpretations.

Issues with such marriages

The issue of homosexual conduct to this fore in recent legal and political debate for main reasons, which are as follows:

Morality: This has brought with it a change in social attitudes, so that the stigma attached to homosexuality has to a greater extent disappeared.

Rising activism: Campaigns for lesbian and gay rights taken on an increasingly radical character, arguing for an end to all forms of discrimination against homosexuality.

Religious sanctions: Same sex acts are punishable by death in Arab countries. No religion openly embraces same sex marriage. More or less, they are considered un-natural everywhere.

Social stigma:  Apart from the harsh legal scenario, homosexuals face social stigma as well. Same sex marriages are still unimaginable as any instance of sexual relations between a couple of the same sex draws hatred and disgust.

Patriarchy: It must not be forgotten that the Indian society is patriarchal in nature and the fact that certain women and men have different choices, which is not sanctioned by the ‘order’, frightens them in a way.

Burden of collectivity: Our society is very community oriented and individualism is not encouraged in the least, any expression of homosexuality is seen as an attempt to renounce tradition and promote individualism.

Arguments in favor

Pursuit of happiness: Homosexuality is not an offence, it is just a way of pursuit of happiness, a way to achieve sexual happiness or desire.

Right to privacy: The fundamental right to liberty (under Article-21) prohibits the state from interfering with the private personal activities of the individual.

Arbitrariness: Infringement of, the right to equal protection before law requires the determination of whether there is a rational and objective basis to the classification introduced.

Issues with definition: Section-377 assumes that natural sexual act is that which is performed for procreation. Hence, it thereby labels all forms of non-procreative sexual act as unnatural.

Discrimination: Section-377 discriminates on the basis of sexual orientation which is forbidden under Article-15 of the Constitution. Article-15 prohibits discrimination on several grounds, which includes Sex.

Human rights: The universal law of Human Rights states that social norms, tradition, custom or culture cannot be used to curb a person from asserting his fundamental and constitutional rights.

Many countries recognizing: According to global think tank Council of Foreign Relations, same sex marriages are legal in at least 30 countries, including the United States, Australia, Canada and France.

Way forward

Dissociating from religion: Such marriages are forbidden in almost every religion. Hence no single religion should be considered a hindrance in creating a legal sanction.

Doing away with discrimination: The same-sex community needs an anti-discrimination law that empowers them to build productive lives and relationships irrespective of gender identity.

Letting the society evolve: The society has to imbibe the doctrine of progressive realization of rights and it cannot be forcibly convinced by law.

Creating awareness: Certainly this is not an overnight phenomenon. We are society where practice of Sati and Nikah halala was considered a religious order.

Rural-Urban Dichotomy And The Continuum

In order to understand and address poverty, undernourishment, education, health, environmental management, or even development, the old dichotomy of rural and urban, and the correspondingly prescribed governing structure, appears inadequate. In order to comprehend urban-rural interconnections and handle challenges linked to environment and natural resource management, it is necessary to accept the concept of urban catchment regions outlined along an urban-rural continuum.

Rural-Urban Dichotomy: What Is It?

Unique Division: It is the idea that rural and urban areas are clearly and distinctly divided into two independent and distinct entities.

Significant Differences: This dichotomy is based on the assumption that there are significant differences between rural and urban areas in terms of social, economic, and cultural characteristics.

Traditional vs modern values: It suggests that rural areas are primarily agricultural, less developed, and have traditional social and cultural values, while urban areas are more developed, industrialized, and have modern values.

The Rural-Urban Continuum

The Rural-Urban Continuum is an alternative perspective that acknowledges the existence of intermediate areas that blur the distinction between rural and urban.

An intermediate settlement formation exists between the two extremes where rural and urban functions coexist without distinguishable boundaries.

Such formations evolve due to interactions of a complex set of geographical, cultural, economic, and historical processes.

The transition from rural to urban follows a graded curve of development, and opportunities for social and economic development depend on one’s location along this curve.

Importance of the Rural-Urban Continuum

Identification of urban catchment areas delineated along an urban-rural continuum would help understand urban-rural interconnections, which is important for making policy decisions across development sectors and for addressing issues related to environment and natural resources management.

Studies and examples of Rural-Urban Continuum

The Desakota Study report:

A 2008 report of the Desakota Study Team, Re-imagining the Rural Urban Continuum, was based on studies in eight countries around the world including India.

Team’s report in 2008 emphasized understanding the changing relationship between ecosystems and livelihoods under diversified economic systems across the rural-urban continuum as it has important policy implications at all levels.

In India, Kerala for instance:

Kerala is well known for the rural-urban continuum in the coastal plain. This was noted even by Moroccan traveller Ibn Batuta in the 14th century. The trend further spread over the lowlands and adjoining midlands and highlands.

Geographical factors supported by affirmative public policy promoting distributive justice and decentralisation have increased rural-urban linkages and reduced rural-urban differences in major parts of Kerala.

The urban industrial interaction in India is spreading rapidly: The urban industrial interaction fields in India are spreading by linking rural areas and also small towns around the mega cities and urban corridors penetrating rural hinterlands.

Dissolving the boundaries and barriers

Technology and globalization led connectivity: Technology and economic globalization have increased mobility of resources and people and enhanced inter- and intra-country connectivity, promoting the rural-urban continuum.

Physical distance barriers are melting: The barriers due to physical distance are melting as increasing rural-urban linkages have given rise to diffused network regions.

Movement of goods, people and information is rising: Rural hinterlands are connected to multiple urban centers, and the movement of goods, people, information, and finance between sites of production and consumption has strengthened linkages between production and labour markets.

Changing Ecosystems of the Rural-Urban Continuum

Land Use Changes: Agriculturally productive lands are being given for other uses, food security zones are being reconfigured, and areas for pollutant filtering are declining.

Impacts on Ecosystem Services and Local Livelihoods: There is an increase in waste dump, enhanced disaster risk, and elevated vulnerability, reducing the access of local people to water, food, fuel, fodder, and fiber from ecosystems.

Emergence of Intermediary Market Institutions: At the same time, intermediary market institutions are emerging to provide these goods, which has significant implications for the local people.

Escalating Market Value of Land and Marginalization: There is also escalation of market value of land, which further marginalizes them.

Way ahead

Acknowledge the rural-urban continuum in discussions on social and economic development and environmental issues.

Identify challenges and opportunities for improving both urban and rural governance and enhancing access to employment, services, institutional resources, and environmental management.

Build rural-urban partnership by taking a systems approach, where the city and surroundings form a city region for which a perspective plan is prepared integrating rural and urban plans within a common frame.

Move towards a post-urban world where the rural-urban dichotomy will no longer exist.

Better map rural-urban linkages by using satellite-based settlement data and integrating it with Census data.

States demand that ‘Lightning’ be declared a Natural Disaster

Because to the significant number of fatalities it causes across the nation, a few states have asked that lightning be classified as a natural disaster.

Why talk about this?

2,500 people every year lose their lives to lightning.

According to current standards, disasters covered by the State Disaster Response Fund include cyclones, droughts, earthquakes, fires, floods, tsunamis, hailstorms, landslides, avalanches, cloudbursts, pest attacks, frost, and cold waves.

Deliberations are required because it is a matter of policy.

Describe lightning.

According to science, lightning is a sudden, intense, and partially earthward directed discharge of electricity.

The discharges are generated in giant moisture-bearing clouds that are 10-12 km tall.

The base of these clouds typically lie within 1-2 km of the Earth’s surface, while the top is 12-13 km away.

Temperatures in the top of these clouds are in the range of –35° to –45°C.

Its formation

As water vapour moves upward in the cloud, the falling temperature causes it to condense.

As they move to temperatures below 0°C, the water droplets change into small ice crystals.

They continue to move up, gathering mass until they are so heavy that they start to fall to Earth.

This leads to a system in which, simultaneously, smaller ice crystals are moving up and bigger crystals are coming down.

Collisions follow and trigger the release of electrons, a process that is very similar to the generation of sparks of electricity.

As the moving free electrons cause more collisions and more electrons, a chain reaction ensues.

This process results in a situation in which the top layer of the cloud gets positively charged, while the middle layer is negatively charged.

The electrical potential difference between the two layers is huge, of the order of a billion to 10 billion volts.

In very little time, a massive current, of the order of 100,000 to a million amperes, starts to flow between the layers.

Types of lightning

Broadly, there are three forms of lightning:

Inter-cloud

Intra-cloud

Cloud-to-ground

It is the cloud-to-ground form of lightning that kills humans, as well as animals and livestock, and can substantially damage property.

While the Earth is a good conductor of electricity, it is electrically neutral.

However, in comparison to the middle layer of the cloud, it becomes positively charged.

As a result, about 15%-20% of the current gets directed towards the Earth as well.

It is this flow of current that results in damage to life and property on Earth.

How intensely does it strike?

A typical lightning flash is about 300 million volts and30,000 amps.

To put it in perspective, household current is 120 volts and 15 amps.

A flash of lightning is enough to light a 100-watt incandescent bulb for about three months.

Why does lightning kill so many people in India?

The reason for the high number of deaths is due to people being caught unawares and more than 70% of fatalities happened due to people standing under isolated tall trees.

About 25 per cent of the people were struck in the open.

Also, lightning is the direct promulgation of climate change extremities.

Mitigating lightning incidents

Lightning is not classified as a natural disaster in India.

But recent efforts have resulted in the setting up of an early warning system that is already saving many lives.

More than 96% of lightning deaths happen in rural areas.

As such, most of the mitigation and public awareness programmes need to focus on these communities.

Lightning protection devices are fairly unsophisticated and low-cost. Yet, their deployment in the rural areas, as of now, is extremely low.

States are being encouraged to prepare and implement lightning action plans, on the lines of heat action plans.

An international centre for excellence on lightning research to boost detection and early warning systems is also in the process of being set up.