op-ed snap | Economics | Mains Paper 3: Infrastructure: Energy, Ports, Roads, Airports, Railways Etc.

Note4Students

From UPSC perspective, the following things are important :

Prelims level: RLRBSD

Mains level: Paper 3- Issues with the RLRBSD scheme for discoms

The debt burden of discoms is estimated to touch 4.5 lakh crore by the end of 2020-21. This high level of debt underscores the need for reforms in the discoms. With this in view, RLRBSD has been launched by the Centre. The article highlights the issues with this scheme.

Reforms-Linked, Result-Based Scheme for Distribution’ (RLRBSD)

In her FY22 Budget speech, Finance Minister proposed Electricity (Amendment) Bill, 2021, which intends to delicence the distribution business, bring in competition, and give the consumer power to choose her supplier.
She also unveiled the Rs 3 lakh crore electricity distribution reform programme to reduce losses and improve the efficiency of discoms.
Against this background, the RLRBSD aims at helping discoms trim their electricity losses to 12-15% from the present level.
The aggregate technical and commercial (AT&C) losses and shortfall in the average revenue realisation from the sale of electricity vis-a-vis the average cost of supply or the ACS-ARR gap, are major causes for losses of discoms.
Accordingly, the scheme sets the target for both to be achieved by 2025.
It also aims to gradually narrow the deficit between the cost of electricity and the price at which it is supplied to ‘zero’ by March 2025.
It will also have a compulsory pre-paid and smart metering component to be implemented across the power supply chain, including in about 250 million households.

Funding for RLRBSD

The Centre is expected to contribute around Rs 60,000 crore to the scheme’s corpus.
The rest may be raised from multilateral funding agencies such as ADB and World Bank (WB).
The Centre’s contribution will be met through the previous commitment of the ongoing schemes, viz. the Integrated Power Development Scheme (IPDS) and the Deen Dayal Upadhyaya Gram Jyoti Yojna (DDUGJY).
The funds will be released subject to discoms meeting reform-related milestones.

Analysing RLRBSD against the context of UDAY

Under UDAY, discoms were required to reduce AT&C losses from 20.7% during 2015-16 to 15% by 2018-19.
During 2019-20, their AT&C losses were 18.9% against the 15% target for 2018-19.
Further, they were to reduce the ACS-ARR gap from Rs 0.59 per unit during 2015-16 to ‘zero’ by 2018-19.
The ACS-ARR gap during 2019-20, stood at Rs 0.42 per unit against target of ‘zero’ for 2018-19.
Simultaneously, the government gave them a financial restructuring package (FRP).
The FRP was nothing but a condoning of discoms’ staggering debt of about Rs 4 lakh crore.
Against this backdrop, aims of achieving those targets by 2025 under RLRBSD, which should have been achieved by 2018-19 under UDAY seems difficult.

3 factors that contribute to debt of discoms

1) At the root of persistent and increasing losses of discoms is the orders issued by state governments to sell electricity to some preferred consumers, viz. poor households and farmers.
Electricity is supplied to these customers either at a fraction of the cost of purchase, transmission and distribution, or even free.
On the units sold to these groups, discoms incur colossal under-recovery.
2) This is aggravated by AT&C losses—most of it plain theft.
3) Inflated tariff allowed to independent power plants (IPPs) under purchase agreements adds to the revenue shortfall.

Consider the question “Why the discoms in India require frequent bail-outs? How far will the Reforms-Linked, Reforms-Based Scheme for Distribution be successful in addressing the woes of discoms?”

Conclusion

The problem is entirely political. In a bid to win elections almost every political party promises sops which include, among others, power supply to farmers and poor households at a throwaway price or even free. As long as this effect of populist politics persists, the discoms will continue to be in the red, needing a bailout at frequent intervals.

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The perils of domicile-based preferential policies

op-ed snap | Polity | Mains Paper 2: Federalism,Government Scheme/Policies,Indian Constitution - historical underpinnings, evolution, features, amendments, significant provisions and basic structure

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Article 16(3)

Mains level: Paper 2- Domicile-based preferential policies and issues with it

The Haryana government is considering a Bill that provides for 75 per cent reservation to the residents of the state. This article discusses the challenge such policies poses.

Domicile-based preferential policies on rise

The Haryana government’s State Employment of Local Candidates Bill 2020 reserves 75 per cent of new jobs in private establishments for Haryana residents.
Andhra Pradesh has mandated 75 per cent reservation for locals.
Karnataka is considering reserving all blue-collar jobs for locals.
Madhya Pradesh has announced that public employment in the state be reserved for state residents.

Constitutionality of such policies

The Constitution prohibits discrimination based on place of birth.
The right to move freely in the country and reside and settle in any part of it, the right to carry out any trade or profession, are all established rights.
Article 16(3) does, in principle, enable Parliament [ not state legislature] to provide for domicile-based preferential treatment in public employment.

Judicial scrutiny

The constitutionality of domicile-based employment preferences (unlike preferences in education) has never been frontally tested.
But almost all the existing case law that impinges on the matter clearly indicates such laws are unconstitutional.
In Pradeep Jain vs Union of India, the court had indicated this direction; in Kailash Chandra Sharma vs State of Rajasthan, the court had warned against parochialism.
The Andhra Pradesh Bill is sub judice in the high court.

Issues with the policies

The Supreme Court will hopefully rule on the constitutionality of the Haryana government’s Bill.
But the Bill has ramifications beyond constitutionality.
First, because this kind of constitutional cynicism is now not an exception but has become a contagion.
Second, even if the Bill is struck down, such a high wire act is meant to fuel the flames of localism.
Third, the Bill now exposes the bad faith of political parties on private sector reservation more generally.
Fourth, these bills will open up a new form of competitive ethnic politics.
It is odd that a state like Haryana which has benefitted from being part of a cosmopolitan zone like NCR should unilaterally impose reservations.
Fifth, there is patent class discrimination: If you are rich, privileged or highly skilled, there are no entry barriers in accessing any labour market.
But we shall put entry barriers on lower skilled migrants; our own internal version of an H-1B visa.
The greatest damage the Bill does is to increase the discretionary power of the state, almost taking us back to a license permit raj, where companies will have to bargain, or worse, bribe the state for exemptions.
This is the antithesis of regulatory reform.

Consider the question “There have been growing tendencies among the states to pursue domicile-based preferential policies. What are the issues related to such policies?”

Conclusion

But the fact that states feel the need to enact these bills is an indictment of the economy as a whole: They suggest a pessimism about both education and job creation. So we have returned to a world of zero sum thinking.

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Minority Issues – SC, ST, Dalits, OBC, Reservations, etc.

Haryana’s new Job Quota Rule

| Polity | Mains Paper 2: Indian Constitution - historical underpinnings, evolution, features, amendments, significant provisions and basic structure

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Article16

Mains level: Quota debate

The Haryana government has notified a new law that requires 75% of private-sector jobs in the state, up to a specified salary slab, reserved for a local candidate.

Haryana’s move has renewed the debate on whether the government force should private companies to adopt its reservation policy in jobs. While constitutional guarantees for reservation have been limited to public employment, attempts to extend it to private sector are not new either.

Haryana Quota Rule

The Haryana State Employment of Local Candidates Bill, 2020 requires private companies to set aside for domiciles 75% of jobs up to a monthly salary of Rs 50,000 or as may be notified by the government.
The law is applicable to all companies, societies, trusts, limited liability partnership firms, partnership firms and any person employing 10 or more persons.

Other states with such laws

In July 2019, the Andhra Pradesh government had passed a similar law, which was challenged in court.
The Andhra Pradesh High Court had made a prima facie observation that the move might be unconstitutional, but the challenge is yet to be heard on merits.

What are the legal issues in such laws?

Two big legal questions come up.

(1) Question of domicile reservation

While domicile quotas in education are fairly common, courts have been reluctant in expanding this to public employment.
Last year, the MP government decided to reserve all government jobs for “children of the state”, raising questions relating to the fundamental right to equality of citizens.

(2) Right to Equality

The second question, which is more contentious, is the issue of forcing the private sector to comply with reservations in employment.
For mandating reservation in public employment, the state draws its power from Article 16(4) of the Constitution.
It says that the right to equality in public employment does not prevent the state from “making any provision for the reservation of appointments or posts in favour of any backward class of citizens which is not adequately represented in the services under the State.
The Constitution has no manifest provision for private employment from which the state draws the power to make laws mandating reservation.

Rationale in bringing such laws

Providing reservation in public employment is one of the many ways through which the state endeavours to ensure equal opportunity for all citizens.

With public sector jobs constituting only a minuscule proportion of all jobs, legislators have talked about extending the legal protections to the private sector.
They aim to really achieve the constitutional mandate of equality for all citizens.
One argument often made in favour of reservation for private jobs is that private industries use public infrastructure in many ways.
A similar argument was made in requiring private schools to comply with the Right to Education Act, which the Supreme Court also upheld.

Global precedences

Affirmative action is adopted in many countries in the context of race and gender.
In the US, there is no statutory requirement for employers to have quotas.
Courts can order monetary damages and injunctive relief, including “such affirmative action as may be appropriate”, for victims of discrimination.
The Employment Equity Act in Canada also protects minority groups, especially aboriginals from discrimination in federally regulated industries, even in the private sector.

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Hunger and Nutrition Issues – GHI, GNI, etc.

Food Waste Index Report 2021

IOCR | International Relations | Mains Paper 1: Poverty & Development Issues

The Food Waste Index Report 2021 was recently released by the UNEP.

Even though the world produces enough food to feed twice the world’s present population, food wastage is ironically behind the billions of people who are starving.

Food Waste Index

The Food Waste Index is released by the United Nations Environment Programme (UNEP) and partner organisation WRAP.
It measures tons of wasted food per capita, considering a mixed stream of products from processing through to consumption.
It was prepared by using data from 54 countries and then extrapolated to the remaining countries.
Contrary to belief, the study by the UNEP revealed that food waste was a global problem and not that of just the developed world.

Highlights of the 2021 report

The report has revealed that 17 per cent of all food available at consumer levels was wasted in 2019.
That year, some 690 million people had to go hungry.
The food waste amounted to a whopping 931 million tonnes of food sold to households, retailers and restaurants.
Waste at household, foodservice and retail amounted to 79, 26 and 13 kilogram /capita / year respectively.
The data, though scarce, revealed that food waste was substantial, regardless of income level.

Data on India

The report notes that food waste at the consumer level happens in almost every country, regardless of income level.
In South Asia, while 50 kilograms of food is wasted per person each year at the household level in India.
Others include- 65 kilograms of this happening in Bangladesh, 74 kilograms in Pakistan, 76 kilograms in Sri Lanka, 79 kilograms in Nepal and 82 kilograms in Afghanistan.

Why it is important to prevent food wastage?

Food waste also has a substantial environmental, social and economic impact.
Food loss and waste cause about $940 billion per year in economic losses. Reductions can save money for farmers, companies, and households.
For example, 8-10 per cent of global greenhouse gas emissions are associated with food that is not consumed.
Reducing food waste would cut greenhouse gas emissions, slow the destruction of nature through land conversion and pollution, enhance the availability of food and thus reduce hunger and save money.

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Urban Transformation – Smart Cities, AMRUT, etc.

[pib] Ease of Living Index (EOLI) 2020

DOMR | Governance | Mains Paper 1: Urbanization, Their Problems & Remedies

Note4Students

From UPSC perspective, the following things are important :

Prelims level: EOLI, MPI

Mains level: Not Much

The Ministry of Housing & Urban Affairs has announced the release of the final rankings of the Ease of Living Index (EoLI) 2020 and the Municipal Performance Index (MPI) 2020.

For any such index, always note the verticals i.e. the various parameters.

Ease of Living Index (EoLI)

It is an assessment tool that evaluates the quality of life and the impact of various initiatives for urban development.
It provides a comprehensive understanding of participating cities across India based on the quality of life, the economic ability of a city, and its sustainability and resilience.
It examines the outcomes that lead to existing living conditions through pillars of Quality of Life, Economic Ability, Sustainability.

Municipal Performance Index (MPI)

It was launched as an accompaniment to the Ease of Living Index.
The five verticals under MPI are Services, Finance, Policy, Technology and Governance.
The Ease of Living Index encapsulates the outcome indicators while the Municipal Performance Index captures the enabling input parameters.

Performance of cities

Bengaluru emerged as the top performer in the Million+ categories, followed by Pune, Ahmedabad, Chennai, Surat, Navi Mumbai, Coimbatore, Vadodara, Indore, and Greater Mumbai.
In the Less than Million category, Shimla was ranked the highest in ease of living, followed by Bhubaneshwar, Silvassa, Kakinada, Salem, Vellore, Gandhinagar, Gurugram, Davangere, and Tiruchirappalli.

Why need such indices?

The EoLI primarily seeks to accelerate India’s urban development outcomes, including the achievement of the Sustainable Development Goals.
The findings from the index can help guide evidence-based policymaking.
It also promotes healthy competition among cities, encouraging them to learn from their peers and advance their development trajectory.

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Day: March 5, 2021

UDAY Scheme for Discoms