Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Affordability of electricity
This article analyses the issue of affordability of electricity in the country and the factors making it expensive.
How recent changes increased subsidy burden
- Recent policy measures like the the “Saubhagya” scheme have remarkably improved the first 3 ‘A’s, i.e., awareness, accessibility and availability.
- It has also increased the cost of supply due to an increase in LT distribution network length necessitating more conductors, meters, transformers, etc.
- Most of the newly-added consumers are from rural areas of low-income states like UP and Bihar.
- They belong to subsidised consumer categories, viz. agriculture, rural-domestic, etc.
- Thus, the subsidy burden of respective state governments has increased.
Affordability of subsidy by States
- The state’s capacity to service power subsidy of its BPL consumers is dependent on its per capita income which varies from state to state.
- The central government provides no subsidy for this purpose.
- Therefore, making electricity affordable for consumers becomes a priority for the power sector.
- Limiting focus only to reduction of the cross-subsidy burden of industries may not be fruitful.
Policy steps to make electricity affordable
1) Expedite overdue distribution reforms
- While generation and transmission sectors have been unbundled, unbundling (segregation of carrier and content business) of distribution has been started yet.
- Privatisation of, and governance reforms in, state-owned distribution companies are likely to unlock huge value and provide efficiency gains through loss reduction for making power affordable.
2) Capping of stranded capacity charges
- As of now, we have surplus installed capacity of around 370 GW against a peak demand of 183 GW.
- So, any fresh capacity addition should be limited to projected load demand growth and replacement of retiring power plants.
- This will reduce the stranded capacity charges the discoms are currently paying to gencos under their long-term power purchase agreements without taking any power from them under availability-based tariff regime.
3) Scrap cost-plus regime
- Now, when the country has sufficient installed capacity, it makes no sense to provide a risk-free 15.5% tax-free (or 22% after-tax) return on equity to the power companies.
- No new project (except hydro and nuclear) should be allowed on cost-plus route or MoU route under section 62 of the Electricity Act.
4) Restructure normative debt-equity financing to 80:20
- At present, the regulatory norm used for tariff computation of projects is 70:30 debt: equity.
- Debt servicing is limited only to the term of the loan, i.e., up to 12 years, but Return of Equity is allowed in perpetuity even after the plant has fully depreciated.
- This needs to be limited to the useful life of the unit.
5) No double-whammy for consumers:
- National Clean Energy Fund was created as a non-lapsable fund in 2010 for promoting clean technology, and since then around Rs 1 lakh crore has been collected from coal cess.
- However, most of it has been diverted and used for other purposes like funding to states for their GST losses, etc.
- Asking gencos to install Fuel Gas Desulfurization and pass on the cost to the consumer amounts to a double whammy for the consumers who first paid the coal-cess and now will have to bear the FGD cost also.
- We should stop using cess as a tax and NCEF should be used to fund the clean energy initiative and FGD installation etc.
Consider the question “What are the factors responsible for making the electricity costly in India. Suggest the pathways to make it affordable to all.”
Conclusion
Making electricity affordable following these steps would be instrumental in the progress of the nation.
Source: https://www.financialexpress.com/opinion/powering-reforms-bringing-power-psus-under-competitive-bidding-will-help-in-tariff-reduction/2057940/
B2BASICS
Electricty generation,transmission and Distribution
Saubhagya scheme
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- Threat to sovereignty of the Arab countries and India's role
The article analyses the threat the Arab countries faces from the new geopolitical realignment and India’s role in it.
Geopolitical realignment in the middle east
- Agreement on the normalisation of relations between the United Arab Emirates and Israel was signed recently.
- At the same time, there is an equally significant reorientation of the Subcontinent’s relationship with the region.
- This is marked by Pakistan’s alignment with non-Arab powers.
Deteriorating relation of Pakistan with Arab world
- Pakistan has been angry with UAE’s invitation to India to address the Organisation of Islamic Cooperation in early 2019.
- Saudi Arabia’s reluctance to convene a meeting to condemn Indian actions in Kashmir last August has angered Pakistan.
- While Pakistan appears to be dreaming of a new regional alliance with Turkey and Iran.
- Pakistan is also betting that a rising China and an assertive Russia will both support this new geopolitical formation as part of their own efforts to oust America from the Middle East.
Threat to the Arab world
- Saudis and Emiratis see sharpening existential threats to their kingdoms from both Turkey and Iran.
- Both Turkey and Iran now intervene with impunity in the internal affairs of the Arab world.
- Two other states have joined this Great Game.
- Malaysia’s Mahathir fancied himself as a leader of the Islamic world.
- Arab Qatar, which is locked in a fraternal fight with the Saudis and the Emiratis, wants to carve out an outsized role for itself in the Middle East.
India’s should follow five principles for Arab Sovereignty
- 1) India must resist the temptation of telling the Arabs what is good for them.
- India should support their efforts to reconcile with non-Arab neighbours, including Israel, Turkey and Iran.
- 2) Oppose foreign interventions in the Arab world. In the past, those came from the West and Israel.
- Today, most Arabs see the greatest threat to their security from Turkish and Iranian interventions.
- 3) Extend support to Arab economic integration, intra-Arab political reconciliation and the strengthening of regional institutions.
- 4) Recognise that India’s geopolitical interests are in close alignment with those in the moderate Arab Centre — including Egypt, Jordan, Saudi Arabia, the UAE and Oman.
- 5) India can’t be passive amidst the unfolding geopolitical realignment in West Asia.
- Some members of the incipient alliance — Turkey, Malaysia and China — have been the most vocal in challenging India’s territorial sovereignty in Kashmir.
Consider the question “Examine the importance of India’s relations with Arab countries. What are the threats the region faces to their sovereignty and how India can play an important role to ensure their sovereignty.”
Conclusion
Standing up for Arab sovereignty and opposing the forces of regional destabilisation must be at the very heart of India’s new engagement with the Middle East.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Article 239AA and Article 239AB
Mains level: Paper 2- Conflict between Lt. Governor and the Delhi Government
The article analyses the tussle between the Delhi Government and the Lt. Governor.
What the 2018 SC judgement was about
- The Supreme Court in Government of NCT of Delhi vs. Union of India (2018) decided on the conflicts between the government of NCT and the Union Government and its representative, the Lieutenant Governor.
- It reminds the Lt. Governor what his real functions are.
- It tells the State government that it should remember that Delhi is a special category Union Territory.
- It lays down the parameters to enabling the harmonious functioning of the government and the Lt. Governor.
- It did not very clearly delineate the issues in respect of which the Lt. Governor can refer a decision taken by the Council of Ministers to the President in the event of a difference of opinion between the Lt. Governor and the State government.
Settled issues and clarifications
- The Supreme Court affirming that the Lt. Governor is bound to act on the aid and advice of council of ministers except in respect of ‘Land’, ‘Public Order’ and the ‘Police’.
- The Court has also made it clear that there is no requirement of the concurrence of the Lt. Governor and that he has no power to overrule the decisions of the State government.
- However, Article 239AA (4) (proviso) which says that in the case of a difference of opinion between the Lt. Governor and his Ministers on any matter, the Lt. Governor shall refer it to the President for decision and act according to that decision.
- If the Lt. Governor thinks that the matter is urgent he can take immediate action on his own.
How Article 239 AA(4) matters
- Lt. Governor can frustrate the efforts of the government, by declaring that there is a difference of opinion on any issue and refer it to the President.
- Refering matter to the President in reality means the Union Home Ministry.
- The Lt. Governor being its representative, it is easier for him to secure a decision in his favour.
- The State government will be totally helpless in such a situation.
- The recent appointment of prosecutors for conducting the Delhi riot cases in the High Court is a case in point.
- When the government decided to appoint them, the Lt. Governor referred it under proviso to Article 239AA (4) to the President stating that there is a difference of opinion.
- This episode clearly points to the fault lines which still exist in the power equations in the capital’s administrative structure.
But, can Lt. Governor refer routine administrative matter to the President?
- A close reading of the Supreme Court judgment in the NCT Delhi case (supra) would reveal that he cannot.
- The Supreme Court says “The words ‘any matter’ employed in the proviso to Article 239AA (4) cannot be inferred to mean ‘every matter’.
- Court also says that “The power of the Lieutenant Governor under the said proviso represents the exception and not the general rule”.
- The President is the highest Constitutional authority and his decision should be sought only on constitutionally important issues.
Executive powers and legislative powers
- Parliament can legislate for Delhi on any matter in the State List and the Concurrent List.
- But the executive power in relation to Delhi except the ‘Police’, ‘Land’ and ‘Public Orders’ vests only in the State government headed by the Chief Minister.
- The executive power of the Union does not extend to any of the matters which come within the jurisdiction of the Delhi Assembly.
- The only occasion when the Union Government can overrule the decision of the State government is when the Lt. Governor refers a matter to the President under the proviso to clause (4).
Consider the question “What are the parameters laid down by the Supreme Court in the Government of NCT of Delhi vs. Union of India (2018) to avoid the conflict between Lt. Governor and the Delhi Government? Also examine the scope of referring any matter to the consideration of the President by the Lt. Governor.”
Conclusion
In the Constitutional scheme adopted for the NCT of Delhi Lt. Governor should not emerge as an adversary having a hostile attitude towards the Council of Ministers of Delhi; rather, he should act as a facilitator.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Ceres and other dwarf planets
Mains level: Not Much
The dwarf planet Ceres, which lies in the asteroid belt between Mars and Jupiter now, has the status of an “ocean world”.
Note various dwarf planets and the criteria making a planet dwarf, as mentioned in the B2b section.
Ceres exploration
- The dwarf planet was first spotted by Giuseppe Piazzi in 1801, who assumed that Ceres was the missing planet between Mars and Jupiter.
- It was classified as a dwarf planet in 2006 and is the first dwarf planet to be orbited by a spacecraft.
- In 2015, NASA’s Dawn reached it to study its surface, composition and history.
What does it mean to be an “ocean world”?
- With a crust that mixes ice, salts, rock-forming minerals and other materials, Ceres looks to be a remnant “ocean world,” wearing the chemistry of its Old Ocean and records of the interaction on its surface.
- The observations from Dawn suggest the presence of briny liquid (saltwater) water under Ceres’s surface.
- Scientists have determined that Ceres has a brine reservoir located about 40 km deep and which is hundreds of miles wide, making the dwarf planet, “water-rich”.
Why do researchers study Ceres?
- Scientists are interested in this dwarf planet because it hosts the possibility of having water, something that many other planets do not have.
- Therefore, scientists look for signs of life on Ceres, a possibility that has also maintained scientists’ interest in the planet Mars, whose atmosphere was once warm enough to allow water to flow through it.
- Another reason why scientists are interested in that studying it can give insights about the formation of the Solar System since it is considered to be a fossil from that time.
Back2Basics: Dwarf Planets
- As of today, there are officially five dwarf planets in our Solar System.
- The most famous is Pluto, downgraded from the status of a planet in 2006.
- The other four, in order of size, are Eris, Makemake, Haumea and Ceres. The sixth claimant for a dwarf planet is Hygiea, which so far has been taken to be an asteroid.
- These four criteria are – that the body orbits around the Sun, it is not a moon, has not cleared the neighbourhood around its orbit and has enough mass for its gravity to pull it into a roughly spherical shape.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Bhadbhut Project, Hilsa Fish
Mains level: Not Much
The Gujarat government recently awarded the contract for a the Bhadbhut project in Bharuch, Gujarat. It has faced protests from local fishermen for its likely impact on fishing patterns, notably those of hilsa.
Make a note of major dams in India along with the rivers, terrain, major wildlife sanctuaries and national parks incident to these rivers.
What is the Bhadbhut Project?
- It is planned to be a 1.7-km causeway-cum-weir barrage with 90 gates, across the river Narmada, 5 km from Bhadbhut village, and 25 km from the mouth of the river, where it flows into the Gulf of Khambhat.
- The barrage will stop most of the excess water flowing out of the Sardar Sarovar Dam from reaching the sea and thus create a “sweet water lake” of 600 mcm (million cubic metres) on the river.
- The barrage will also have a six-lane road that will connect the left and right banks of the river and provide shorten the land distance between two large industrial estates in Surat and Bharuch.
- The project also aims to prevent flooding in years when rainfall is higher than normal.
- Embankments 22 km long will be made and will extend upstream towards Bharuch, from either side of the river.
- The project is part of the larger Kalpasar Project, which entails the construction of a 30-km dam across the Gulf of Khambhat between Bharuch and Bhavnagar districts.
- The reservoir is meant to tap the waters of the Narmada, Mahisagar and Sabarmati.
Why are fishermen upset?
- The barrage is expected to interfere with the migration and breeding cycle of hilsa.
- A marine fish, hilsa migrate upstream and arrives in the brackish water of the Narmada estuary near Bharuch for spawning usually during the monsoon months of July and August, and continue doing so till November.
- Once the barrage is built, it is expected to block its natural entry.
About Hilsa Fish
IUCN status: Least Concerned
- The Hilsa is a species of fish related to the herring, in the family Clupeidae.
- It is a very popular and sought-after food fish in the Indian Subcontinent.
- Though it’s a saltwater fish, it migrates to sweet waters.
- It is the national fish of Bangladesh and state symbol in the Indian states of West Bengal and Tripura.
- The fish contributes about 12% of the total fish production and about 1.15% of GDP in Bangladesh.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Death Valley, Mojave Desert
Mains level: Not Much
California’s Death Valley registered a temperature of 54.4 degrees Celsius or 129.9 degrees Fahrenheit on August 16, 2020, which, once verified, could be the hottest temperature ever recorded on Earth.
Some years back, there was a question in the mains:
Major hot deserts in the northern hemisphere are located between 20-30 degree north and on the western side of the continents. Why?
Death Valley and its location
- Death Valley is a desert valley in Eastern California, in the northern Mojave Desert, bordering the Great Basin Desert.
- It is one of the hottest places on Earth, along with deserts in the Middle East and the Sahara.
- The valley is extremely dry because it lies in the rain shadow of four major mountain ranges (including the Sierra Nevada and the Panamint Range).
- Moisture moving inland from the Pacific Ocean must pass eastward over the mountains to reach Death Valley; as air masses are forced upward by each range, they cool and moisture condenses, to fall as rain or snow on the western slopes.
- When the air masses reach Death Valley, most of the moisture has already been lost and there is little left to fall as precipitation.
Key factors leading to its high temperature
- Solar heating: The valley’s surface (consisting of soil, rocks, sand, etc.) undergoes intense solar heating because the air is clear and dry, and the land is dark and sparsely vegetated. This is especially noticeable in summer when the sun is nearly directly overhead.
- Trapping of warm air: Warm air naturally rises and cools; in Death Valley, this air is subject to continual reheating as it is trapped by high, steep valley walls and recycled back to the valley floor.
- Migration of warm air from other areas (advection): Warm desert regions adjacent to Death Valley, especially to the south and east, often heat air before it arrives in Death Valley.
- Warm mountain winds: As winds are forced up and over mountains (e.g., the numerous ranges west of Death Valley), the winds can be warmed in several ways. The resulting dry, warm winds are known as foehn winds.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: CRAR, PCGS
Mains level: Asset reconstructions post NPA buzz
As part of Aatmanirbhar Bharat Abhiyan, announced by the Government, the Partial Credit Guarantee Scheme (PCGS) 2.0 was launched to provide Portfolio Guarantee for purchase of Bonds or Commercial Papers (CPs) with a rating of AA and below issued by NBFCs/HFCs/ MFIs by Public Sector Banks (PSBs).
Try this PYQ:
When the Reserve Bank of India reduces the Statutory Liquidity Ratio by 50 basis points, which of the following is likely to happen? (CSP 2015)
(a) India’s GDP growth rate increases drastically
(b) Foreign Institutional Investors may bring more capital into our country
(c) Scheduled Commercial Banks may cut their lending rates
(d) It may drastically reduce the liquidity to the banking system
About Partial Credit Guarantee Scheme (PCGS)
- Under the scheme, any PSB can purchase securities (minimum rating of ‘AA’) of financially-sound non-banking finance companies.
- The objective is to address temporary asset-liability mismatches of otherwise solvent NBFCs/Housing finance companies (HFCs) without having to resort to distress sale of their assets to meet their commitments.
- The government will provide a one-time, six months’ partial credit guarantee to public sector banks for first loss of up to 10%.
- Also, these NBFCs/HFCs are mandated that the CRAR (capital to risk-weighted assets ratio) shall not go below the regulatory minimum while exercising of the option to buy back the assets.
What is CRAR?
- CRAR also known as Capital Adequacy Ratio (CAR) is the ratio of a bank’s capital to its risk.
- CRAR is decided by central banks and bank regulators to prevent commercial banks from taking excess leverage and becoming insolvent in the process.
- The Basel III norms stipulated a capital to risk-weighted assets of 8%.
- In India, scheduled commercial banks are required to maintain a CAR of 9% while Indian public sector banks are emphasized to maintain a CAR of 12% as per RBI norms.
- It is arrived at by dividing the capital of the bank with aggregated risk-weighted assets for credit risk, market risk, and operational risk.
- RBI tracks CRAR of a bank to ensure that the bank can absorb a reasonable amount of loss and complies with statutory Capital requirements.
- The higher the CRAR of a bank the better capitalized it is.
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