Note4Students
From UPSC perspective, the following things are important :
Prelims level: Shekatkar Committee
Mains level: Significance of the Border Infrastructure
Government has accepted and implemented three important recommendations of the Committee of Experts (CoE) under the chairmanship of Lt General D B Shekatkar (Retd.) relating to border Infrastructure.
Practice question for mains:
Q. India’s unique geo-strategic location needs an all-weather and efficient border infrastructure. Comment.
About Shekatkar Committee
- The military reforms committee – under Lt General (retd.) DB Shekatkar – was set up by then Raksha Mantri Manohar Parrikar in 2015.
- The committee was established with a mandate for Enhancing Combat Capability and Rebalancing Defence Expenditure.
- Shekatkar Committee had made recommendations on enhancing the combat potential of India’s three armed forces, rationalizing the defence budget etc.
- The committee submitted its report on December 21, 2016. It had apparently exceeded its brief with some 200 recommendations.
- A major recommendation is that the defence budget should be 2.5% to 3% of the GDP.
Recommendations on border infrastructure
- On the matter related to creating border infrastructure, the Government has implemented the recommendation of CoE to outsource road construction work beyond the optimal capacity of Border Roads Organisation (BRO).
- These were related to speeding up road construction, leading to socio-economic development in the border areas.
- The other recommendation relating to the introduction of modern construction plants, equipment and machinery has been implemented.
Back2Basics: Border Roads Organisation (BRO)
- The BRO develops and maintains road networks in India’s border areas and friendly neighboring countries and functions under the Ministry of Defence.
- It is entrusted for construction of Roads, Bridges, Tunnels, Causeways, Helipads and Airfields along the borders.
- Officers from the Border Roads Engineering Service (BRES) and personnel from the General Reserve Engineer Force (GREF) form the parent cadre of the Border Roads Organisation.
- It is also staffed by officers and troops drawn from the Indian Army’s Corps of Engineers on extra regimental employment.
- The BRO operates and maintains over 32,885 kilometers of roads and about 12,200 meters of permanent bridges in the country.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Countries bordering Afghanistan.
Mains level: Paper 2- Peace process in Afghanistan and implications for India.
From economic, strategic to security, India has many interests in “future” Peaceful and Developed Afghanistan. But India was sidelined from the recently organised meeting on Afghanistan. This article analyses what went wrong in India’s foreign and security policy. Two factors are emphasised in the article- India’s reluctance to talk with the Taliban and the US’s desperation to get out of Afghanistan.
India’s Rigid policy toward Afghanistan
- Recent developments in Afghanistan demand a flexible approach.
- But India’s foreign and security planners have lacked flexibility in their approach.
- Right approach should have included seeking to establish open connections with all its political groups, including with those perceived to be in Pakistan’s pocket.
- Instead, they continued to rigidly cling to Afghanistan President Ashraf Ghani even as his influence diminished with each passing month.
India’s support to Mr Ghani
- Prime Minister Narendra Modi congratulated Mr Ghani for winning the elections, in December 2019 when the Afghanistan election commission had only announced the preliminary results.
- And most countries had maintained a discreet silence then.
- When the final result came it was rejected by Mr Ghani’s main rival, Abdullah Abdullah.
- The international community ultimately supported Mr Ghani.
- But qualified it with an insistence that he enters into a real power-sharing agreement with Mr Abdullah.
India sidelined from meeting on Afghanistan
- The United Nations Secretariat organised a meeting on Afghanistan where it invited the 6 current physical neighbours of Afghanistan—China, Pakistan, Iran, Turkmenistan, Uzbekistan and Tajikistan.
- In addition, invitations were extended to the United States, Russia and the Ghani government.
- Obviously, Mr Ghani did not condition his participation on India’s inclusion.
- The constructive role New Delhi has played in Afghanistan’s reconstruction since the Taliban were ousted from the country in 2001-2002 after 9/11 was neglected.
US going along with India’s absence
- The role and action of the US proved that the U.S. acts to promote its interests in Afghanistan.
- It obviously expects that if in doing so Indian interests are exposed, India will protect them as best as it can.
- U.S. Special Representative for Afghanistan Reconciliation said that ‘India should talk directly to Taliban, discuss terror concerns directly’.
- He noted that despite India’s contributions to Afghanistan’s economic development — and these are undeniably significant covering large parts of the country, and are popular — as well as its long history of contacts with that country, it does not have a place in international diplomacy on Afghanistan.
- He also said that when it comes to international efforts, India yet does not have a role that it could.
- He patronisingly added that the U.S. wants India to have a more active role in the peace process.
So, why India’s presence was not considered vital?
- U.S. Special Representative for Afghanistan Reconciliation thinks that by avoiding open contacts with the Taliban, India has reduced its role in international diplomatic efforts.
- That the U.S. is currently crucially dependent on Pakistan for the successful implementation of its Taliban deal.
- It is reminiscent of the time in the 1990s when, at Pakistan’s insistence, India was considered a problem and kept out of crucial global forums on Afghanistan.
Way forward
- In such a situation, it is essential for India to maintain its strong links with the Afghan government, built and support its traditional Afghan allies.
- But India should also established open lines of communication with the Taliban.
- This is important because they are informally conveying that India should not consider them as Pakistan’s puppets and also because they have gained international recognition.
- Contacts and discussions do not mean acceptance of their ways but its still a step forward.
- India should act keeping in mind that there are no countries on the horizon which are really opposed to the Taliban acquiring a major place in the Afghanistan’s formal power structures.
In 2013, the UPSC asked a question related to developments in Afghanistan against the backdrop of the proposed withdrawal of the International Security Assistance Force. Similarly, a question based on the latest development can be asked, for ex-“The return of Taliban after the US-Taliban deal in Afghanistan is fraught with major security implications for the countries in the region. Examine in the light of the fact that India is faced with a plethora of challenges and needs to safeguard its own strategic interests.”
Conclusion
India needs to take corrective diplomatic action even at this late stage, and even in the time of COVID-19. It must begin openly talking to the Taliban and with all political groups in the country. It must realise that its Afghan policy needs changes.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: GDP rankings
Mains level: Paper 3- Atmanirbhar Bharat Abhiyan
The article examines the various aspects of the recently announced Atmanirbhar Bharat Abhiyaan (ANBA). But before digging deeper into the ANBA the author ruminates over India’s growth (GDP) story. Reasons for India’s failure to deliver on the economic empowerment are also examined. In the end, the relation between the free economies and the welfare states is examined.
The good and the bad of India’s GDP story
- India crossed the UK two years ago, France last year, and will cross Germany and Japan in the next five years. (In terms of nominal GDP)
- That will leave only America and China ahead of us.
- But India’s per capita GDP story is on a different track.
- We once equalled Korea (1960) and China (1997) but today there are 138 countries ahead of us.
- The COVID-19 lockdown and the stories of pain inflicted on migrant workers exposes how per capita GDP is more important for our citizens than total GDP.
A take on Economic empowerment
- Ramchandra Guha, in his book- Gandhi: The Years that Changed India, suggests that while other patriots had used Swaraj to signify national independence, Gandhiji made India aware of its true or original meaning, Swa-Raj, or self rule- both political and economic.
- Our collective political Swaraj hasn’t always translated into individual economic Swa-Raj because of inadequate formalisation, industrialisation, urbanisation, financialisation, and skilling.
Atmanirbhar Bharat Abhiyaan(ANBA) – A step towards Swaraj
- The Atmanirbhar Bharat Abhiyaan (ANBA) policy announcements are important moves in meeting Gandhiji’s vision of individual self-reliance and recognising poverty as the worst form of violence.
- ANBA targets avoiding unemployment becoming hunger and illiquidity becoming insolvency.
- The agriculture package of Rs 1.63 lakh crore included farm-gate and aggregation point infrastructure, fisheries, animal husbandries, and others like animal vaccination, micro food enterprises.
- The non-bank liquidity package of Rs 5.94 lakh crore included MSMEs, NBFCs, MFIs, housing finance companies, power discoms, and others (PF, tax relief).
- The migrant and farmer package of Rs 3.16 lakh crore included concessional credit via kisan credit card, farmer working capital, affordable housing, and others (food, street vendors, microloans).
- The welfare and health package of Rs 1.85 lakh crore included women and pensioner benefits, MNREGA, emergency health response, and others like food, financial security.
- RBI’s liquidity measures of Rs 5.24 lakh crore included two phases of targeted long-term repo operations, CRR cut, marginal standing facility limit increase, refinancing facilities, and mutual fund special liquidity facility.
- The reform to the Essential Commodities Act, APMCs and contract farming directly impact prosperity as 45 per cent of our agricultural labour force generates only 14 per cent of GDP.
How ANBA maintained fiscal health?
- ANBA is also important for what it is not. It’s not fiscal profligacy-i.e. the government is spending with due care for fiscal deficit figures.
- Total spending may be higher if the loans for which government has stated to stand as a guarantor turns NPAs (for ex. MSMEs loans).
- But for now, it marginally raises our already difficult fiscal deficit.
- It’s not an institutional assault — RBI’s role in ANBA keeps it away from the political minefield that the US Federal Reserve has entered.
- The US Fed is buying the bonds sold by corporations (i.e. Fed is spending itself) while the RBI has only lent the money to banks.
- There is a recognition that RBI has lending powers, not spending powers.
- It’s not a mindless public sector expansion: The end of monopolies (public sector monopoly) and new public-private partnership opportunities signal pragmatism and efficiency targeting.
- It’s not waiting for potential COVID upsides: it makes us worthy if risky global just-in-time supply chains get replaced by resilient just-in-case diversification.
- It’s not shutting off India from the world i.e. Atmanirbhar is not isolationist policy.
- It creates new openness to ideas, investment, and trade.
What is on agenda for ANBA 2.0?
- The unfinished agenda for ANBA 2.0 includes following-
- Civil service reform-the steel frame has become a steel cage.
- Government reform-Delhi doesn’t need 57 ministries and 250 people with Secretary rank.
- Financial reform-sustainably raising credit to GDP ratio from 50 per cent to 100 per cent.
- Urban reform-having 100 cities with more than a million people rather than 52.
- Education reform-our current regulator confuses university buildings with building universities.
- Skill reform-our apprentice regulations are holding back employers and universities.
- Labour reform-our capital is handicapped without labour and labour is handicapped without capital.
Welfare state and free economies
- A modern state is a welfare state with formal private jobs.
- The idealisation of Scandinavian social democracies forgets that their dense social security nets are underwritten by remarkably free economies.
- The World Bank Ease of Doing Business scale ranks Denmark third, Norway seventh, and Sweden 12th of 190 countries.
- Despite — or thanks to — America’s capitalism, its central government spends 37 per cent of GDP while India’s spends 14 per cent.
- And its ferocious fiscal pandemic response involves $3 trillion government borrowing in the next three months.
- People suggest the US can sustain its welfare state because it has the world’s reserve currency.
- But America can afford its welfare state because of the productivity of its cities, companies and citizens. Consider the following-
- New York’s GDP equals Russia with 6 per cent of the people and 0.00005 per cent of the land.
- The $4.5 trillion revenue of its 25 largest companies is more than Germany’s GDP.
- Its per capita income is $55,000.
- India’s welfare state does not lack intentions but lacks resources.
- No amount of CSR, philanthropy, or government borrowing can provide the resources for the care of our weak, vulnerable, and unlucky that will flow from more productive cities, firms, and citizens.
- This is what ANBA hopes to achieve.
Consider the question “Far from being an isolationist, Atmanirbhar Bharat Abhiyan seeks to make India a welfare state with more productive cities, firms and citizens. Comment.”
Conclusion
India missed the manufacturing export train that China boarded but another may be coming. Policy reform is not the solving of a sum but the painting of a picture — 90 days after the lockdown ends, we need ANBA 2.0 to finish the job.
Back2Basics: Just in time inventory
- The just-in-time (JIT) inventory system is a management strategy that aligns raw-material orders from suppliers directly with production schedules.
- Companies employ this inventory strategy to increase efficiency and decrease waste by receiving goods only as they need them for the production process, which reduces inventory costs.
- This method requires producers to forecast demand accurately.
Just in case inventory
- Just in case (JIC) is an inventory strategy in which companies keep large inventories on hand.
- This type of inventory management strategy aims to minimize the probability that a product will sell out of stock.
- The company that utilizes this strategy likely has a hard time predicting consumer demand or experiences large surges in demand at unpredictable times.
- A company practicing this strategy essentially incurs higher inventory holding costs in return for a reduction in the number of sales lost due to sold-out inventory.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: APMC Act, ECA-1955
Mains level: Paper 3- Reforms in agri-marketing.
The finance minister proposed package for the farmers. The package has 11 points. But this article discusses only 3 points which the author hopes would be the game-changer for agri-marketing. The three points pertain to the ECA, APMC Acts and contract farming. So, how can these three proposed laws transform agri-marketing and be a boon to farmers and consumers at the same time? Read the article.
1. Amending the Essential Commodities Act 1955
- Background of the ECA: The ECA of 1955 has its roots in the Defence of India Rules of 1943.
- At that time, India was ravaged by famine and was facing the effects of World War II.
- It was a scarcity-era legislation.
- By the mid-1960s, hit by back-to-back droughts, India had to fall back on PL480 imports of wheat from the US and the country was labelled as a “ship to mouth” economy.
- Importer to exporter: Today, India is the largest exporter of rice in the world and the second-largest producer of both wheat and rice, after China.
- Our granaries are overflowing.
So, how ECA hurts farmers as well as consumers?
- Our legal framework is of the 1950s, which discourages private sector investment in storage.
- How ECA discourage investment? The ECA can put stock limits on any trader, processor or exporter at the drop of a hat.
- Such limits discourage investments in storage facilities. As a result, the country lacks storage facilities.
- When farmers bring their produce to the market after the harvest, there is often a glut, and prices plummet. All this hurts the farmer.
- In the lean season, prices start flaring up for the consumers.
- So, both lose out because of the lack of storage facilities.
How the amendment will help?
- The amendment announced last week, if implemented in the right spirit, will remove roadblocks in investment and help both farmers and consumers.
- It will bring relative price stability.
- It will also prevent the wastage of agri-produce that happens due to lack of storage facilities.
2. Central law to allow farmers to sell outside APMC
- Issues with APMC Acts: Our farmers suffer more in marketing their produce than during the production process.
- APMC markets have become monopsonistic with high intermediation costs.
How the proposed Central law to allow farmers to sell to anyone outside the APMC yard will help?
- 1. It will bring greater competition amongst buyers.
- 2. It will lower the mandi fee and the commission for arhatiyas (commission agents).
- 3. It will reduce other cesses that many state governments have been imposing on APMC markets.
- 4. The proposed law will open more choices for the farmers and help them in getting better prices. So their incomes should improve.
- 5. By removing barriers in inter-state trade and facilitating the movement of agri-goods, the law could lead to better spatial integration of prices.
- 6. This will help farmers of regions with surplus produce to get better prices and consumers of regions with shortages, lower prices.
- 7. India will have one common market for agri-produce, finally.
3. Legal framework for contract farming
- The legal environment for contract farming, with the assurance of a price to the farmers at the time of sowing, is a step in the right direction.
- It will help them take cropping decisions based on forward prices.
- Normally, our farmers look back at last year’s prices and take sowing decisions accordingly.
- The new system will minimise their market risks.
2 Supplementary notes for success of above 3 measures
- Big buyers like processors, exporters, and organised retailers going to individual farmers is not a very efficient proposition.
- They need to create a scale.
- 1. And for that, building farmer producer organisations (FPOs), based on local commodity interests, is a must.
- How FPOs will help? This will help ensure uniform quality, lower transaction costs, and also improve the bargaining power of farmers vis-à-vis large buyers.
- NABARD has to ensure that all FPOs get their working capital at 7 per cent interest rate — a rate that the farmers pay on their crop loans.
- Currently most of them depend on microfinance institutions and get loans at 18-22 per cent interest rates.
- This makes the entire business high-cost.
- 2. Another thing to watch out for is the fine print of the legislation.
- Certain conditions to reimpose the ECA restrictions if the prices of commodity go up in the proposed legislation could be counterproductive.
- That would be unreasonable and all the reforms would be undone.
- One needs to understand how much is the “extra burden” inflicted by the price increase on the food budget of a household.
The UPSC asked a direct question about the APMC Act in 2014- ” There is also a point of view that Agriculture Produce Market Committees (APMCs) set up under the State Acts have not only impeded the development of agriculture but also have been the cause of food inflation in India. Critically examine.”
Conclusion
The reforms, announced last week could be a harbinger of major change in agri-marketing, a 1991 moment of economic reforms for agriculture. But before one celebrates it, let us wait for the fine print to come.
Back2Basics: Agriculture Produce Marketing Committee Regulation (APMC) Act.
- All wholesale markets for agricultural produce in states that have adopted the Agricultural Produce Market Regulation Act (APMRA) are termed as “regulated markets”.
- With the exception of Kerala, J & K, and Manipur, all other states have enacted the APMC Act.
- It mandates that the sale/purchase of agricultural commodities notified under it are to be carried out in specified market areas, yards or sub-yards. These markets are required to have the proper infrastructure for the sale of farmers’ produce.
- Prices in them are to be determined by open auction, conducted in a transparent manner in the presence of an official of the market committee.
- Market charges for various agencies, such as commissions for commission agents (arhtiyas); statutory charges, such as market fees and taxes; and produce-handling charges, such as for cleaning of produce, and loading and unloading, are clearly defined, and no other deduction can be made from the sale proceeds of farmers.
- Market charges, costs, and taxes vary across states and commodities.
Essential Commodities Act 1955
- The ECA is an act which was established to ensure the delivery of certain commodities or products, the supply of which if obstructed owing to hoarding or black-marketing would affect the normal life of the people.
- The ECA was enacted in 1955. This includes foodstuff, drugs, fuel (petroleum products) etc.
- It has since been used by the Government to regulate the production, supply and distribution of a whole host of commodities it declares ‘essential’ in order to make them available to consumers at fair prices.
- Additionally, the government can also fix the maximum retail price (MRP) of any packaged product that it declares an “essential commodity”.
- The list of items under the Act includes drugs, fertilizers, pulses and edible oils, and petroleum and petroleum products.
- The Centre can include new commodities as and when the need arises, and takes them off the list once the situation improves.
How ECA works?
- If the Centre finds that a certain commodity is in short supply and its price is spiking, it can notify stock-holding limits on it for a specified period.
- The States act on this notification to specify limits and take steps to ensure that these are adhered to.
- Anybody trading or dealing in the commodity, be it wholesalers, retailers or even importers are prevented from stockpiling it beyond a certain quantity.
- A State can, however, choose not to impose any restrictions. But once it does, traders have to immediately sell into the market any stocks held beyond the mandated quantity.
- This improves supplies and brings down prices. As not all shopkeepers and traders comply, State agencies conduct raids to get everyone to toe the line and the errant are punished.
- The excess stocks are auctioned or sold through fair price shops.
PL-480
- The US President Dwight D. Eisenhower signed into law the Agricultural Trade Development and Assistance Act of 1954, commonly known as PL–480 or Food for Peace.
- Prior to that, the United States had extended food aid to countries experiencing natural disasters and provided aid in times of war, but no permanent program existed within the United States Government for the coordination and distribution of commodities.
- Public Law 480, administered at that time by the Departments of State and Agriculture and the International Cooperation Administration, permitted the president to authorize the shipment of surplus commodities to “friendly” nations, either on concessional or grant terms.
- It also allowed the federal government to donate stocks to religious and voluntary organizations for use in their overseas humanitarian programs.
- Public Law 480 established a broad basis for U.S. distribution of foreign food aid, although reduction of agricultural surpluses remained the key objective for the duration of the Eisenhower administration.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: UDAY scheme
Mains level: UDAY scheme, its success and failures
Part of the package announced by Finance Minister was a Rs 90,000-crore liquidity injection into power distribution companies (or discoms).
Practice question:
Ujwal DISCOM Assurance Yojana (UDAY) has failed to turn around the precarious financial position of state power DISCOMs in India. Discuss.
Fiscal push for DISCOMs
- The move is aimed at helping the discoms clear their dues with gencos (or electricity generation companies), who in turn can clear their outstanding dues with suppliers, such as coal miners, easing some of the working capital woes of Coal India Ltd and contract miners.
- This is subject to the condition that the Centre will act as guarantor for loans given by the state-owned power finance companies such as PFC and REC Ltd to the discoms.
Why was this needed?
- The primary trigger is the poor financial condition and revenue collection abilities of most state discoms.
- This is despite several interventions, including a scheme called UDAY that was launched in 2015 to fix the problems of a sector where the upstream side (electricity generation) was drawing investments even as the downstream (distribution) side was leaking.
How do the DISCOMs work?
To understand how the sector works, we have to imagine a three-stage process.
- First stage: Electricity is generated at thermal, hydro or renewable energy power plants, which are operated by either state-owned companies or private companies.
- Second stage: The generated electricity then moves through a complex transmission grid system comprising electricity substations, transformers, and power lines that connect electricity producers and the end-consumers.
- The entire electricity grid consists of hundreds of thousands of miles of high-voltage power lines and millions of miles of low-voltage power lines with distribution transformers that connect thousands of power plants to millions of electricity customers all across the country.
- Third stage: This last-mile link is where discoms come in, operated largely by state governments. However, in cities such as Delhi, Mumbai, Ahmedabad, and Kolkata, private entities own the entire distribution business or parts of it.
Why there is a problem?
- Discoms essentially purchase power from generation companies through power purchase agreements (PPAs), and then supply it to their consumers (in their area of distribution).
- The key issue with the power sector currently is the continuing problem of the poor financial situation of state discoms.
- This has been affecting their ability to buy power for supply, and the ability to invest in improving the distribution infrastructure. Consequently, this impacts the quality of electricity that consumers receive.
There are two fundamental problems here:
1) Lack of competitiveness
- One, in India, electricity price for certain segments such as agriculture and the domestic category (what we use in our homes) is cross-subsidised by the industries (factories) and the commercial sector (shops, malls).
- This affects the competitiveness of the industry.
2) Transmission and distribution losses
- There is the problem of AT&C (aggregate transmission and distribution losses), which is a technical term that stands for the gap in the bills that it raises and the final collection process from end-consumers.
- As a result, the discoms are perennially short of funds, even to pay those supplying power to them, resulting in a cascading impact up the value chain.
Back2Basics: UDAY Scheme
https://www.civilsdaily.com/news/uday-scheme-for-financial-turnaround-of-power-distribution-companies/
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From UPSC perspective, the following things are important :
Prelims level: Sovereign Gold Bonds
Mains level: Not Much
Gold bond prices rise to near record highs after the second tranche of subscription were closed.
Questions based on capital markets are quite frequent these years. Consider this-
Which of the following is issued by registered foreign portfolio investors to overseas investors who want to be part of the Indian stock market without registering themselves directly? (CSP 2019)
(a) Certificate of Deposit
(b) Commercial Paper
(c) Promissory Note
(d) Participatory Note
What is a Sovereign Gold Bond (SGB)?
- SGB is a substitute for holding physical gold.
- The bonds are issued by the RBI on behalf of the government and are a bond denominated in gold.
- The government issues such bonds in tranches at a fixed price that investors can buy through banks, post offices and also in the secondary markets through the stock exchange platform.
What are the benefits of buying SGB?
- These bonds are backed by a sovereign guarantee and can also be held in Demat form.
- Further, they are priced as per the underlying spot gold prices.
- Hence, investors who want to invest in gold can buy the bonds without worrying about the safekeeping of physical gold along with locker charges, making charges or purity issues.
- Plus, these bonds offer interest at the rate of 2.5% per annum on the principal investment amount.
- While the interests on the bonds are taxable, the capital gains at the time of redemption are exempt from tax.
- These bonds can also be used as collateral for availing loans from banks and NBFCs.
How are the bonds structured?
- SGB has a fixed tenure of eight years, though early redemption is allowed after the fifth year from issuance.
- Since the bonds are listed on the exchange, these can be transferred to other investors as well.
- The bonds are priced in rupees based on the simple average of the closing price of gold of 999 purity which published by the India Bullion and Jewellers Association.
- At the time of redemption, cash equivalent to the number of units multiplied by the then prevailing price would be credited to the bank account of the investor.
Are there any risks in investing in SGB?
- A capital loss is a risk since the bond prices would reflect any change in gold prices.
- If gold prices fall, the principal investment would fall proportionately.
Why need such bonds?
- The gold demand rises in times of uncertainty or high inflation.
- Gold demand is mostly met through imports
- Years of high imports are ones of high current account deficits which, in turn, have weakened the rupee.
- It is to reduce this huge import bill that, in November 2015, the government tried to introduce gold bonds.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: National Migrant Information System (NMIS)
Mains level: Inter-state workers migration
The National Disaster Management Authority (NDMA) has developed an online Dashboard – National Migrant Information System (NMIS).
Did you notice, the peculiarity of the NMIS? The portal is developed and maintained by the National Disaster Management Authority (NDMA) not Ministry of Labour & employment or Labour bureau.
About NMIS
- The NMIS aims to capture the information regarding the movement of migrants and facilitate the smooth movement of stranded persons across States.
- The key data pertaining to the persons migrating has been standardized for uploading such as name, age, mobile no., originating and destination district, date of travel etc., which States are already collecting.
- States will be able to visualize how many people are going out from where and how many are reaching destination States.
- The mobile numbers of people can be used for contact tracing and movement monitoring during COVID-19.
Benefits
- The portal helps maintain a central repository on migrant workers and help in speedy inter-State communication/co-ordination to facilitate their smooth movement to native places.
- It has additional advantages like contact tracing, which may be useful in overall COVID-19 response work.
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From UPSC perspective, the following things are important :
Prelims level: Iron-Manganese based Biodegradable Alloy
Mains level: Affordable medical devices and implants in India
Indian scientists have jointly developed new generation Iron-Manganese based alloys for biodegradable metal implants for use in humans.
Do you remember the Johnson and Johnson’s faulty hip implants case?? The alloy mentioned in the newscard can prove to be a gamechanger in the field of medical implants.
Iron-Manganese based Biodegradable Alloy
- Biodegradable materials (Fe, Mg, Zn, and polymer) can participate in the healing process and then degrade gradually by maintaining mechanical integrity without leaving any implant residues in the human body.
- They are better alternatives to currently used metallic implants which remain permanently in the human body and can cause long-term side effects like systemic toxicity, chronic inflammation, and thrombosis.
- The ARCI team employed both conventional melting and powder metallurgy techniques in the manufacturing of the new Fe-Mn based biodegradable alloys.
- The alloy Fe-Mn (having Mn composition of more than 29% by weight) is a promising biodegradable metallic implant which exhibits a single austenitic phase (a non-magnetic form of iron) with MRI compatibility.
Easy degradation
- The alloy also showed a degradation rate in the range of 0.14-0.026 mm per year in the simulated body fluid.
- It means that the Fe-Mn alloy exhibits mechanical integrity for 3-6 months and completely, disappears from the body in 12-24 months.
- During the degradation process, calcium phosphate deposits on the implant due to local alkalization and saturation of calcium and phosphate, allow cells to adhere onto the surface to form tissues.
Benefits
- The Fe-Mn alloy produced at ARCI exhibited 99% density with impressive mechanical properties and behaved as a nonmagnetic material even under a strong magnetic field.
- These properties are comparable to presently used permanent Titanium (Ti) and stainless-steel metallic implants (which is very costly).
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From UPSC perspective, the following things are important :
Prelims level: LASER, LIDAR
Mains level: NA
The UN marks the International Day of Light (IDL) — an annual initiative held globally to raise awareness on the critical role played by light-based technologies in everyday life.
The IDL as mentioned in the news creates no scope for a possible prelim question, but the purpose behind its celebration does. i.e. LASER technology. LIDAR is the latest development in the LASER technology. UPSC may puzzle you here by asking the working principle of LIDAR.
International Day of Light (IDL)
- The IDL is administered from the International Basic Science Programme (IBSP) of UNESCO, and its Secretariat is located at the Abdus Salam International Centre of Theoretical Physics (ICTP) at Trieste, Italy.
- The IDL highlights the contribution of such technologies in various avenues such as science, technology, art, and culture, thus helping achieve the UNESCO goals of education, equality, and peace.
- The day selected, May 16, marks the anniversary of the first successful operation of the LASER in 1960 by physicist and engineer Theodore Maiman.
- The LASER is a perfect example of how a scientific discovery can yield revolutionary benefits to society in communications, healthcare and many other fields.
Why is the IDL celebrated?
- In 2015, to raise global awareness of the achievements of light science and its applications, the UN observed the International Year of Light and Light-based Technologies 2015 (IYL 2015).
- The event helped establish links and collaborations between decision-makers, industry leaders, scientists, artists, social businesses, NGOs, and the public at large.
- Following the success of IYL 2015, Ghana, Mexico, New Zealand and Russia placed a resolution before the UNESCO Executive Board supporting the idea of an International Day of Light.
- It was adopted on September 19, 2016, at the Board’s 200th session at the UNESCO HQ in Paris, France.
- The Board decision was endorsed by the UNESCO General Conference at its 39th session on November 7, 2017, and the first IDL was held on May 16, 2018.
Back2Basics: LASER
- A laser is a device that emits light through a process of optical amplification based on the stimulated emission of electromagnetic radiation.
- It is an acronym for “light amplification by the stimulated emission of radiation.
- The laser stimulates atoms or molecules to emit light at particular wavelengths and amplifies that light, typically producing a very narrow beam of radiation.
- The emission generally covers an extremely limited range of visible, infrared, or ultraviolet wavelengths.
- Many different types of lasers have been developed, with highly varied characteristics.
- A laser is widely used in industrial cutting, surgical removal of tissues etc.
- LIDAR is the most famous application of LASERs.
LiDAR (Light Detection And Ranging)
- It is a remote sensing method that uses light in the form of a pulsed laser to measure ranges (variable distances) to the Earth.
- It bounces pulsed laser light off the ground, revealing contours hidden by dense foliage.
- These light pulses—combined with other data recorded by the airborne system— generate precise, three-dimensional information about the shape of the Earth and its surface characteristics.
- LIDAR systems allow scientists and mapping professionals to examine both natural and manmade environments with accuracy, precision, and flexibility.
- A LIDAR instrument principally consists of a laser, a scanner, and a specialized GPS receiver.
- Airplanes and helicopters are the most commonly used platforms for acquiring LIDAR data over broad areas.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Baltic Travel Bubble
Mains level: Travel restriction in times of COVID outbreak
The Baltic countries of Estonia, Latvia and Lithuania have opened their borders to one another, creating a coronavirus “travel bubble” with an improvised idea to boost travel into their countries.
Mark the following things on Map:
1. Baltic Sea and its bordering nations
2. Irben Strait
3. Gulf of Riga
4. Gulf of Finland
Baltic Travel Bubble
- The ‘Baltic travel bubble’ aims to facilitate the citizens of these three countries to travel within the region without hassles.
- However, those who are coming from any other than these three countries would be required to follow self-isolation guidelines and stay in quarantine for exactly 14 days.
- During the epidemic, Estonia and Lithuania closed their borders to non-citizens and all three nations placed mandatory quarantines for those entering for reasons related to non-work activities.
- The region has been part of the European Union since 2004 and since 2007 has been a member of the European Schengen Free Travel Area.
Significance of the travel ease
- The Baltic nations have shown trust in each other’s healthcare system and have concluded that they have been able to tackle the coronavirus outbreak efficiently.
- For Asian countries including India, these developments can provide interesting pointers when lockdown relaxations pertaining to travel and flights are being considered.
Bonus: Try this question from CSP 2011
Between India and East Asia, the navigation-time and distance can be greatly reduced by which of the following?
1. Deepening the Malacca straits between Malaysia and Indonesia.
2. Opening a new canal across the Kra isthmus between the Gulf of Siam and Andaman Sea.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Troglomyces twitteri
Mains level: NA
A new species has just been identified on an old image on Twitter. It is named as Troglomyces twitteri.
The species Troglomyces twitteri has something unique in its name. UPSC may ask a straight forward question like – The specie Troglomyces twitteri recently seen in news is a- (a) Algae (b) Fungi (c) Fish (d) Sea Grass …….
Troglomyces twitteri
- Troglomyces twitteri is a type of parasitic fungus.
- It belongs to an order called Laboulbeniales — tiny fungal parasites that attack insects and millipedes.
- These fungi live on the outside of host organisms; in this case, on the reproductive organs of millipedes.
- Laboulbeniales were first discovered in the middle of the 19th century.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: BSF
Mains level: Paper 3 -Wartime role of BSF
The BSF came into being in the wake of the 1965 India-Pakistan war. So, its ‘innate’ tasks involves both wartime and peacetime roles. This article is written by a retired IPS officer who has been ADG of BSF. Our aim is to provide you with on-ground experience of issues in this security force. Focus of the article is on the preparedness of the BSF for its wartime role. From the exam perspective, focus on issues and possible solutions.
Role of BSF
- Officially, its role is defined in expansive terms like ‘security of the border of India and matters connected therewith’.
- The tasks of BSF are divided into peacetime and wartime.
- 1) The peacetime tasks include preventing smuggling and any other illegal activity, and unauthorised entry into or exit from the territory of India, etc.
- 2) The wartime tasks of the BSF include holding ground in less threatened sectors, etc.
Unpreparedness in wartime role
- The BSF, in terms of its defences, equipment, weaponry and training, is not at all prepared for its wartime role.
- This means that in the eventuality of any military assault, our ‘first line of defence’ would simply crumble.
- Falling back on army’s mobilizations for a counterattack may take up to several days.
- Retreat and loss of territory in this period is a possible scenario.
- The report titled ‘Border Security: Capacity Building and Institutions’ of the department-related Parliamentary Standing Committee on Home Affairs, submitted to the Rajya Sabha on April 11, 2017:
- Does not talk about the wartime role of the BSF even once.
- It talks only of its peacetime role including fencing, floodlights and roads along the borders, development of integrated check posts, and construction of strategic roads.
The fallacy of infantry attack
- The founders of the BSF, including the committee of secretaries, had a wrong presumption that the assault on the ‘first line of defence’ will be by the enemy’s ‘exposed’ infantry.
- This assault, they imagined, would be repulsed by BSF soldiers wielding similar arms.
- But that presumption is a folly.
- Now, as a rule of thumb, infantry assault, whether supported by armour or not, or even a purely armour assault on any position is preceded by as heavy and as accurate artillery bombardment as possible.
- If the attacking nation could afford it, such as the US during the 1991 Gulf War the bombardment could be aerial also.
Unprepared to withstand shelling
- Our ‘first line of defence’ does not have any defensive structures or fortifications that could withstand artillery bombardment even for a minute.
- According to photographs available in the public domain, most BSF observation posts on the international border are ramshackle structures of tin sheets and sandbags erected on small mounds of earth.
- Adding to that, the mounds are in full view of the enemy and their locations are known to them to the last centimetre.
Uninspiring weaponry
- The photographs of the 105 mm Indian Field Gun and their staple, the 7.62 mm medium machine gun are available in public domain.
- The 105 mm Indian Field Guns have been placed under the operational command of the army, and BSF would not be able to use them when the enemy makes first contact with them.
- That leaves them with their 51 mm and 81 mm mortars.
- The 51mm mortar, with just 109 grams of explosive per shell and a maximum range of 850 m is as good as useless in a war.
- The 81 mm mortar bomb with an explosive charge of 750 grams has a maximum range of 6000 m.
- The enemy artillery would in any case be firing from way beyond that range, thereby making effective retaliation through mortars impossible.
- Even when enemy IFV/APC or armour would come closer and in range, the smooth-bore 81 mm mortar is inherently not accurate enough to hit a moving vehicle. (smoothness of bore reduces accuracy)
- Even the NATO rifled 120 mm mortars have a CEP (circular error probable) of 136 m.
- As for the 7.62 mm medium machinegun, it is an anti-personnel weapon with the armour penetration of the M80 bullet being just 3 mm at 500m.
- That makes it useless against even lightly armoured vehicles.
- This means that the BSF outposts will not be able to deliver any effective fire at all on an enemy assault.
IPS leadership issue
- Since the BSF’s inception, the force’s Indian Police Service (IPS) leadership has not focused on the wartime role of the BSF.
- The IPS officers in top positions in the BSF lack knowledge of military science that could enable them to appreciate and address the wartime role.
Way forward
- The only defence feasible against artillery bombardment is to go sub-surface—in the form of deep concrete dugouts and fire trenches.
- Then we also need elaborate anti-tank ditches.
- To deliver effective fire on enemy armoured and lightly armoured vehicles, and infantry operating under their protection, the BSF needs weapons which carry enough explosive payloads to tackle armour, both light and heavy.
- Portability, manoeuvrability and accuracy are important considerations in the ‘first line of defence’ attacking armour.
- A veritable battery of ATGMs and cheaper yet accurate options like the 80 mm Breda Folgore RCL are available.
- Using them effectively would require defensive fighting positions interconnected by communication trenches.
- Research needs to be done to mount weapons like the Shipunov 2A42 30 mm autocannon on platforms faster than the BMP-2.
- Similarly, MMGs/GPMGs need mobile platforms like Humvees to increase their survivability as well as effectivity.
Consider the question “The BSF, which is often hailed as India’s ‘first line of defence’ has tasked with wartime and peacetime roles. Though it is quite adept in peacetime role, its wartime preparedness needs an overhaul. Comment.”
Conclusion
These issues with the BSF could result in a situation where there is every possibility of rout and retreat in the early days of the war. This issue needs to be urgently addressed by the government.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: CDS, CDO, ABS, MBS
Mains level: Paper 3- Difference between 2008 financial crisis and financial crisis caused due to Covid-19.
Not all financial crises are the same. And this is more so about the two crises that we have been witness to – the 2008 Global Financial Crisis (GFC) and the current Corona Financial Crisis (CFC). The author points out the four key difference in the two crises. These four difference also mean that the solution for 2008 GFC may not be the solution for the present CFC. But why is it so? Read to know more…
1. Origin of the two crises
- The GFC originated in the financial sector.
- In GFC, banks and financial intermediaries got carried away by irrational exuberance and recklessly piled on risk.
- CDS, CDO, MBS, ABS and various other became the villains in the GFC drama as it unfolded in the rich countries.
- As people lost their wealth and savings in the financial meltdown, demand collapsed and growth slumped.
- The contagion, which originated in the financial sector, spread to the real economy.
- In contrast, the CFC came from outside the economic system.
- The first impact came by way of a supply shock as China-centred supply chains broke down.
- And then as countries ordered lockdowns and economies shut down, demand slumped.
- The ensuing distress in the real economy led to distress in the financial system.
So, how origin of the crisis matter for its resolution?
- Restoring the faith in the financial system was key to the resolution of GFC.
- Which meant rescue and rehabilitation of banks and other financial institutions.
- Once that task in the financial sector was accomplished, repair of the real economy fell in place.
- The demand came back, supply resumed and growth picked up.
- In contrast, the central challenge in the resolution of the CFC is to beat the pandemic, and that solution has to come from science.
- Only when there is public confidence that the incidence of the pandemic has been brought down to a low-level equilibrium, will there be a resolution in both the real and financial economies.
- We are seeing that even during this crisis, just like in 2008, governments are coming out with fiscal stimulus packages and central banks with monetary stimulus packages.
- But these are not solutions to the pandemic; they are just holding operations till the central problem is resolved.
2. No one country hold key to solution
- The second difference between the two crises arises from the asymmetry of the solutions.
- The GFC originated in the subprime mortgage sector of the US and then, rapidly engulfed the world.
- The CFC originated in the Hubei province of China and rapidly engulfed the world.
- But the similarity ends there.
- For the resolution of the GFC, restoring financial stability in the US was necessary, and a sufficient condition for restoration of financial stability everywhere.
- But the situation with the CFC is different.
- Every country needs to control the pandemic within its borders.
- But that is not sufficient because the virus can hit back from across the border.
- No country is safe until every country is safe.
3. Policy interventions involve a dilemma
- How the policy interventions interact with one another makes for the third difference between the two crises.
- During the resolution of the GFC, solutions in the financial sector and in the real economy reinforced each other.
- For example, to mitigate the crisis, the RBI cut rates and intervened in the forex market, the government extended special concessions for housing and real estate sectors to provide stimulus in the real economy.
- There was synergy in these actions.
- In contrast, in managing the challenge of the CFC, what we are seeing is tension between the various sets of policy actions.
- The effort to contain the pandemic is exacerbating the challenges in both the real economy and the financial sector.
- The more stringent the lockdown to save lives, the more extensive the loss of livelihoods.
- Managing this tension is by far the biggest dilemma for governments battling the crisis.
4. No single large economy to keep the world afloat
- The global financial crisis, although it was called “global” did not affect all countries equally.
- China was less affected even as all rich countries were in a financial meltdown.
- In fact, one of the less acknowledged facts of the 2008 crisis is that it was the stimulus provided by China that kept the global economy afloat.
- In contrast, now all rich and big economies are weighed down by the virus, and there is not a single large economy to keep the rest of the world afloat.
Consider the question “Analyse the key differences in the Global Financial Crisis of 2008 and the financial crisis caused by the Covid-19.”
Conclusion
If pandemics are going to be more frequent, as is now suspected, it is all the more important that there is a more enforceable global protocol on early warning and information sharing. For all their differences, the GFC and CFC are similar in one respect — they both teach us life-enhancing lessons. The GFC forcefully reminded us that greed and avarice will only bring tears in the end. The CFC is teaching us that the force of nature is bigger than the combined force of our science and technology.
Back2Basics: Credit Default Swap (CDS)
- A credit default swap (CDS) is a type of credit derivative that provides the buyer with protection against default and other risks.
- The buyer of a CDS makes periodic payments to the seller until the credit maturity date.
- In the agreement, the seller commits that, if the debt issuer defaults, the seller will pay the buyer all premiums and interest that would’ve been paid up to the date of maturity.
Collateralised Debt Obligations (CDO), MBS and ABS
- To create a CDO, investment banks gather cash flow-generating assets—such as mortgages, bonds, and other types of debt.
- These assets are then repackaged into discrete classes or tranches based on the level of credit risk assumed by the investor.
- These tranches of securities become the final investment products: bonds, whose names can reflect their specific underlying assets.
- For example, mortgage-backed securities (MBS) are comprised of mortgage loans.
- And asset-backed securities (ABS) contain corporate debt, auto loans, or credit card debt.
- CDOs are called “collateralized” because the promised repayments of the underlying assets are the collateral that gives the CDOs their value.
- Mortgage-backed securities played a central role in the financial crisis that began in 2007 and went on to wipe out trillions of dollars in wealth, bring down Lehman Brothers, and roil the world financial markets.
- In retrospect, it seems inevitable that the rapid increase in home prices and the growing demand for MBS would encourage banks to lower their lending standards and drive consumers to jump into the market at any cost.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: IATA
Mains level: Paper 3- Impact of corona pandemic on aviation industry.
Primarily the major driver of connectivity, the aviation industry is one of the worst affected industries in the corona crisis. It is in the need of relief package from the government. The article discusses the contribution of the industry in the economy. Finer details of the operation of the industry are also explained. In the end, details of the measures expected from the government relief package are discussed.
Significance of aviation industry in Indian economy
- The air transport industry, including airlines and its supply chain, is estimated to contribute directly or indirectly $72 billion of GDP to India.
- India being the fastest-growing domestic market in the world at 18.6 per cent per annum, followed by China at 11.6 per cent. (IATA report)
Impact of Covid-19 crisis
- The same IATA report says that in India, 29.32 lakh jobs in the aviation sector are at risk.
- Airlines in the Asia Pacific region may see the largest revenue drop.
- The air transport business along with its supply chain may see a near wipeout of approximately 40 per cent of business volume in the current financial year.
- The two-month-long shutdown has eroded the capital of most airlines.
- The cost of maintaining Aircraft on Ground (AoG) is extremely high, and with nil revenues, this is a sure-shot recipe for disaster.
Economics of running airlines profitably
- You should be flying your entire fleet, with no Aircraft on Ground. (Airbus A-320 or similar)
- Every plane must fly for 11 hours a day.
- Which will be possible only if you have a turnaround time of 30-45 minutes.
- And you have an average Passenger Load Factor (PLF) of around 65 to 67 per cent.
Now, consider this:
- Forty per cent of your fleet is grounded.
- Due to social distancing and other hygiene protocols, an aircraft can fly only eight hours because of the elongated turnaround time.
- One-third seats are to be kept vacant.
- And finally, you are flying with a reduced 50 per cent PLF.
- The break-even ticket price in such a scenario would be astronomical.
Demand for financial relief package
- The Asia Pacific division of the IATA has corresponded with the Indian government, citing the case of some of the other nations which have announced financial relief packages for the sector.
- As per reports, countries like Australia, New Zealand and Singapore, have announced relief packages for airlines.
- FICCI has urged the government to immediately provide direct cash support to Indian carriers whereby the airlines can meet their fixed costs.
What relief measures could be provided?
- First, a moratorium for the next 12 months on all interest on the principal amount of loans without limitations of size or turnover through a direction to all financial institutions.
- Second, VAT on ATF by state governments, which ranges from 0-30 per cent, should be rationalised with immediate effect to a maximum of 4 per cent across all states for the next six months.
- Third, aviation turbine fuel needs to be brought under the ambit of 12 per cent GST, with full input tax credit on all goods and services.
- Fourth, a waiver for private airport operators space rentals and AAI, royalty, landing, parking, route navigation and route terminal changes for the next one year.
- This should be done not only for the airlines but all aviation-related businesses.
- Fifth, all airlines and aviation-related business must be treated as priority sector lending.
- Sixth, no loans to airlines and other aviation-related business should be classified as NPAs and no collateral enforced or enhanced during this moratorium.
- Finally, support the airlines and other-aviation related companies by paying or taking care of salaries of the employees for a period of six months.
- This will allow employee retention and is being done in a lot of countries.
A question was asked by the UPSC in 2017 related to the development of Airports in India under PPP model. This shows the importance of the aviation sector from UPSC point of view. Consider the question asked by the UPSC “Examine the development of Airports in India through joint ventures under PPP model. What are the challenges faced by the authorities in this regard?”
Conclusion
Recovery from this crisis is going to be a long and uphill task. It will take effort, planning and, most importantly, coordination between the aviation industry and the government.
Back2Basic: IATA-International Air Transport Association
- IATA was founded in Havana, Cuba, on 19 April 1945.
- It is the prime vehicle for inter-airline cooperation in promoting safe, reliable, secure and economical air services – for the benefit of the world’s consumers.
- The international scheduled air transport industry is more than 100 times larger than it was in 1945.
- Few industries can match the dynamism of that growth, which would have been much less spectacular without the standards, practices and procedures developed within IATA.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Atmanirbhar Bharat Abhiyan
Mains level: Economic stimulus for Agri sector
FM has announced plans to enact a central law to permit barrier-free inter-State trade of farm commodities and ensure a legal framework to facilitate contract farming under the third tranche of the Atmanirbhar Bharat Abhiyan economic stimulus package.
Try this question:
‘Doubling Farmer’s Income’ and ‘USD 5 trillion economy’ seems more like slogans today in wake of COVID pandemic. Comment on the statement with keeping in view the Atmanirbhar Bharat Abhiyan of the government.
Details of the package
- The third tranche included plans to invest ₹1.5 lakh crore to build farm-gate infrastructure and support logistics needs for fishworkers, livestock farmers, vegetable growers, beekeepers and related activities.
- The Centre will deregulate the sale of six types of agricultural produce, including cereals, edible oils, oilseeds, pulses, onions and potatoes, by amending the Essential Commodities Act, 1955.
- Stock limits will not be imposed on these commodities except in case of national calamity or famine or an extraordinary surge in prices.
- The Centre is considering introducing a law on contract farming under the Contract Act of 1872 to enable farmers to directly engage with processors, aggregators, large retailers and exporters in a fair and transparent manner.
- It would allow private players to invest in inputs and technology in the agricultural sector.
Must read:
[pib] Atmanirbhar Bharat Abhiyan (Self-reliant India Mission)
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Diamer-Bhasha Dam
Mains level: India-Pakistan border disputes
Pakistan government has signed a contract with a joint venture of a Chinese state-run firm for the construction of the Diamer-Bhasha dam in the PoK.
Make a note of major dams in India along with the rivers, terrain, major Wildlife sanctuaries and national parks incident to these rivers.
Diamer-Bhasha Dam
- Diamer-Bhasha Dam is a concreted-filled gravity dam, in the preliminary stages of construction, on the River Indus between Kohistan district in Khyber Pakhtunkhwa and Diamer district in Gilgit Baltistan region of PoK.
- The dam will have a gross storage capacity of 8.1 Million Acre Feet (MAF) and power generation capacity of 4500 MW.
- The eight Million Acre Feet (MAF) reservoir with 272-metre height will be the tallest roller compact concrete (RCC) dam in the world.
- It will have a spillway, 14 gates and five outlets for flushing out silt.
- The diversion system involves two tunnels and a diversion canal — all three having 1 km length each.
- The bridge — a box girder structure — under the contract will be constructed downstream of the dam structure while the 21MW power plant will be built to meet the energy requirements of the project during construction.
Why is this dam being built?
- The project is designed to serve as the main storage dam of the country, besides Mangla and Tarbela dams, and its storage would be helpful for alleviating flood losses.
- The project is estimated to help alleviate acute irrigation shortage in the Indus basin irrigation system caused by progressive siltation of the existing reservoirs.
- It aims to reduce the intensity, quantum and duration of floods and reduce the magnitude and frequency of floods in the River Indus downstream.
Issues with the Dam
- The dam is located in the Gilgit-Baltistan region which is an Indian territory illegally occupied by Pakistan.
- India has consistently conveyed her protest and shared concerns with both China and Pakistan on all such projects in the Indian territories under Pakistan’s illegal occupation.
- In the past too, India has opposed projects jointly taken up by Pakistan and China in PoK as part of the China-Pakistan Economic Corridor.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Gharial, Mugger , Saltwater Crocodile
Mains level: Species reintroduction and various associated issues in news
Forty gharials (Gavialis gangeticus) were released in the Ghaghara River by the Bahraich forest division of Uttar Pradesh.
This year, we have seen many news focusing on species reintroduction into the wild. Can you recall them?? If not, Click Here.
And one may often get confused between the Mugger, Gharial and the Saltwater Crocodile. Note the differences about their IUCN status, habitat (freshwater/saltwater) etc..
Gharials
- The Gharial is a fish-eating crocodile is native to the Indian subcontinent. They are a crucial indicator of clean river water.
- Small released populations are present and increasing in the rivers of the National Chambal Sanctuary, Katarniaghat Wildlife Sanctuary, Son River Sanctuary.
- It is also found at the rainforest biome of Mahanadi in Satkosia Gorge Sanctuary, Orissa.
- Gharials are ‘Critically Endangered’ in the IUCN Red List of Species.
- The species is also listed under Schedule I of the Wild Life (Protection) Act, 1972.
Into the wild
- A major chunk of gharials in India is found in the Chambal River, which has about 1,000 adults.
- The Ghaghara acts as an important aquatic corridor for gharials in Uttar Pradesh. The river is a major left-bank tributary of the Ganges.
- About 250 gharials have been released in the Ghaghara since 2014.
- However, there are satellite populations of less than 100 adults in the Girwa River (Katarniaghat Wildlife Sanctuary in Uttar Pradesh, the Ramganga River in Jim Corbett National Park and the Son River).
- Like Uttar Pradesh, Bihar too is releasing gharials in the Valmiki Tiger Reserve as part of restocking the wild population. Unlike crocodiles, gharials do not pose any danger to humans.
Back2Basics
Mugger
- The mugger is a marsh crocodile which is found throughout the Indian subcontinent.
- It is a freshwater species and found in lakes, rivers and marshes.
- IUCN Status: Vulnerable
Saltwater Crocodile
- It is the largest of all living reptiles.
- It is found along the eastern coast of India.
- IUCN Status: Least Concerned
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: HCQ, Quinine Nongladew
Mains level: NA
Quinine, the most primitive antimalarial avatar of Hydroxychloroquine (HCQ), has made a village in Meghalaya latch on to its past for a curative future.
Relate Quinine Nongladew with the following question. Such peculiar names are very important.
Q. Recently, there was a growing awareness in our country about the importance of Himalayan nettle (Girardinia diversifolia) because it is found to be a sustainable source of (CSP 2019)
(a) anti-malarial drug
(b) bio-diesel
(c) pulp for paper industry
(d) textile fibre
Quinine Nongladew
- The herb Quinine Nongladew is the alkaloid quinine extracted from the bark of cinchona, a plant belonging to the Rubiaceae family and classified as either a large shrub or a small tree
- The tree is named after a village about 70 km south of Guwahati, on the highway to Meghalaya capital Shillong.
- The cinchona nursery was raised in the 19th century, probably around 1874, when Shillong became the British administrative headquarters for Assam Province.
- Large swathes of Meghalaya used to be, and still are, malaria-prone.
- The British had the foresight to start the plantation to combat malaria and other diseases caused by mosquitoes.
Back2Basics: Hydroxychloroquine (HCQ)
- HCQ is an oral tablet used as an anti-malarial drug. It is used to treat malaria, lupus erythematosus, and rheumatoid arthritis.
- It may be used as part of a combination therapy where it is taken with other drugs.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Defence Testing Infrastructure Scheme (DTIS)
Mains level: Defence manufacturing promotion measures
In order to give a boost to domestic defence and aerospace manufacturing, Raksha Mantri has approved the launch of the Defence Testing Infrastructure Scheme (DTIS).
Practice question for mains:
Q. Self-reliance in defence manufacturing is one of the key objectives of ‘Make in India’. Discuss.
Defence Testing Infrastructure Scheme (DTIS)
- The DTIS would run for the duration of five years and envisages set up six to eight new test facilities in partnership with private industry.
- The scheme has been allocated with an outlay of Rs 400 crore for creating a state of the art testing infrastructure for this sector.
- This will facilitate indigenous defence production, consequently, reduce imports of military equipment and help make the country self-reliant.
- While the majority of test facilities are expected to come up in the two Defence Industrial Corridors (DICs), the Scheme is not limited to setting up Test Facilities in the DICs only.
Funding pattern
- The projects under the Scheme will be provided with up to 75 per cent government funding in the form of ‘Grant-in-Aid’.
- The remaining 25 per cent of the project cost will have to be borne by the Special Purpose Vehicle (SPV) whose constituents will be Indian private entities and State Governments.
- The SPVs under the Scheme will be registered under Companies Act 2013 and shall also operate and maintain all assets under the Scheme, in a self-sustainable manner by collecting user charges.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Measures announced for MSMEs
Mains level: Paper 3- Significance of MSMEs and measures for supporting the MSME during corona crisis.
Recently, a stimulus package worth 20 lakh crore was announced by the government. How effective will these measures prove for the MSMEs? How the liquidity issue plaguing the NBFCs is sought to be solved? Finally, what are the issues with the package? All such question are dwelled upon here!
Why ensuring flow of credit is important?
- While assessing policy measures during the lockdown there are two over-arching principles one must keep in mind
- One, the flow of funds will slow down with economic activity.
- Two, firms do not go bankrupt because of insolvency, but because of lack of access to funds also called liquidity.
- World over policymakers are pulling out all stops to make sure that the flow of credit continues.
- Of the Rs 20-lakh-crore economic support announced by the Prime Minister on May 12, we have details for about Rs 16 lakh crore.
- Monetary and financial interventions taken by the government and the RBI to provide credit to those who need it make up more than 90 per cent of it.
Limited impact of RBI’s measures
- Most of the measures announced by the RBI earlier have not had the desired effect.
- The quantum of cheap funds being made available being more or less the same as the increase in the amount being deposited in the RBI every night by banks.
- Just reducing the cost of funds (i.e. lower Repo rate and LTRO) had no impact on the volume and cost of the credit they provided.
- This happened due to the heightened risk aversion in banks.
So, how government sought to address this problem?
- The series of measures announced to provide credit support to the micro, small and medium enterprises (MSMEs) attempts to address this gap.
- For MSMEs that have been servicing their loans so far new loans up to 20 per cent of the current outstanding credit will be fully backstopped by the government.
- That is, if there is a default, the government will pay the bank.(i.e. act as a backstop).
- So, how backstop by the government could help?
- The move could lead to immediate credit creation, as guarantees are available only for loans extended in the next six months.
- Also, the lenders have zero risk, and the borrowers are most likely stressed and would want these funds.
- It is possible if not likely that firms will use these loans to just pay interest and cover losses.
- But if so, that in a way is the purpose of this scheme — the government absorbing losses upfront rather than the likely larger lost taxes and potential bank bailouts if there is a bankruptcy.
- For the government, the costs of this guarantee would be spread over several years, with at most 10 per cent incurred in this fiscal year.
Move to provide liquidity to NBFCs
- The two schemes together, targeting to provide Rs 75,000 crore of liquidity to non-banking finance companies (NBFCs), may be a bit less successful.
- The special purpose vehicle that is to provide liquidity to NBFCs provides funds for three months at a time, may succeed in addressing problems like an NBFC defaulting due to lack of liquidity.
- But it may not suffice to get them to grow.
- The partial credit guarantee given to banks’ loans to NBFCs may be more effective for a subset of NBFCs.
- But as it is only available to public sector banks, it would depend on their willingness and ability to extend new loans.
Fund to provide equity for MSMEs
- The Rs 50,000 crore fund to provide equity for MSMEs, with a corpus of Rs 10,000 crore being provided by the government, which would then be leveraged, is an interesting initiative.
- Losses incurred in the current lockdown are depleting risk capital.
- Replenishing if not growing that is paramount to restoring India’s growth potential.
- While global as well as local private equity and venture capital funds would continue to explore and invest in smaller firms, such a fund can scale up the funds availability significantly.
Issues with the package
- The natural limitation of the policy interventions thus far is that they only affect enterprises in the formal sector and in agriculture.
- The problems in informal non-agricultural enterprises may stay unaddressed, and remain an impediment on growth.
- While less than 10 per cent of the announcements thus far has been the fiscal cost.
- One senses a fiscal caution in government measures that is overdone, and could hurt more than it helps. (avoiding direct expenditure)
Stability: of bond market and value of rupee
- Two things minimised the volatility in the bond market: 1) pre-announcing the additional bond issuance for the year 2) giving an implicit assurance that additional deficits would be financed separately.
- Even though that potentially means the RBI purchasing government bonds, the rupee has been remarkably stable.
- There was fear that fiscal spending financed by the central bank would be frowned upon and drive currency weakness.
Consider the question-“MSME sector forms the backbone of Indian economy. List challenges it faces in present times. Critically analyse whether the current stimulus package is suitable to boost growth in this sector.”
Conclusion
The road ahead remains unclear, but it is likely that the economic damage is already much larger than the measures undertaken so far. A continued focus on reforms and on sustaining India’s growth potential will be critical in preventing macroeconomic instability.
Back2Basics: The two schemes announced for NBFCs
- The FM announced a Rs 30,000-crore liquidity scheme for NBFCs.
- The government will buy debt papers by NBCs, MFIs and HFCs.
- The buying of papers will be fully guaranteed by the government of India.
- Under this scheme investment will be made in both primary and secondary market transactions in investment-grade debt paper ofNBFCs/HFCs/MFIs.
- The move is seen providing liquidity support for NBFCs and mutual funds and create confidence in the market.
- The FM also announced Rs 45,000 crore partial credit guarantee scheme (PCGS) 2.0 for NBFCs.
- Existing PCGS scheme will be extended to cover borrowings such as primary issuance of bonds/ CPs of such entities.
- The first 20 per cent of loss will be borne by the government of India.
50000 Crore fund for MSMEs
- Finance Minister Nirmala Sitharaman announced Rs 50,000-crore equity infusion through Fund of Funds for MSMEs.
- The Fund of Funds will be set up with a corpus of Rs 10,000 crore.
- The Fund of Funds will be operated through a mother fund and a few daughter funds.
- The fund structure will help leverage Rs 50,000 crore at daughter-fund levels.
- This will help MSMEs expand size as well as capacity.
- It will encourage MSMEs to get listed on the main board of stock exchanges, the government said.
- Based on the recommendations of UK Sinha Committee, the Fund of Funds was first announced in the Union Budget on February 1, 2020.
- An investment of Rs. 10,000 crore was proposed in the Budget for the scheme.
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