Day: September 30, 2021

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Financial Inclusion in India and Its Challenges

What gives rise to the rural debt trap?

| Economics | Mains Paper 3: Inclusive Growth & Issues,Indian Economy
Note4Students

From UPSC perspective, the following things are important :

Prelims level: Incidence of Indebtedness (IOI)

Mains level: Paper 3- Challenges in access to credit

Context

The AIDIS report published this month reveals that non-institutional sources have a strong presence in the rural credit market, notwithstanding the high costs involved in borrowing from them.

Highlights of AIDIS

  • The All-India Debt and Investment Surveys (AIDIS) is carried out by the National Statistical Office.
  • AIDIS is among the most important nationally representative data sources on the rural credit market in India.
  • According to the latest report, the average debt per household in rural India is Rs 59,748, nearly half the average debt per household in urban India.
  • IOI: As per the latest AIDIS report, the incidence of indebtedness (IOI) is 35 per cent in rural India — 17.8 per cent of rural households are indebted to institutional credit agencies, 10.2 per cent to non-institutional agencies and 7 per cent to both.
  • Dependence on institutional source: The share of debt from institutional credit agencies in total outstanding debt in rural India is 66 per cent as compared to 87 per cent in urban India.
  • Dependence on institutional sources is often seen as a positive development, signifying broadening financial inclusion, while reliance on non-institutional sources denotes vulnerability and backwardness.
  • Purpose: Institutional credit is taken mainly for farm business and housing in rural India.
  • A significant portion of debt from non-institutional sources is used for other household expenditures.
  • Socio-economic inequality: The data indicates that better-off households have greater access to formal-sector credit and use it for more income-generating purposes.
  • Access to institutional credit is largely determined by the ability of households to furnish assets as collateral.
  • The report shows that the top 10 per cent of asset-owning households have borrowed 80 per cent of their total debt from institutional sources, whereas those in the bottom 50 per cent borrowed around 53 per cent of total debt from non-institutional sources.
  • Debt-trap: the Debt-Asset Ratio (DAR) of the bottom 10 per cent asset-owning households in rural India is 39, much higher than the DAR of 2.6 estimated for the top 10 per cent households.
  • This, coupled with higher borrowing from non-institutional sources, acts as a debt trap for households with fewer assets.

Way forward

  • Inadequate access to affordable credit lies at the heart of the rural distress
  • The credit policy needs to be revamped to accommodate the consumption needs of the rural poor and to find alternatives for collateral to bring the rural households within the network of institutional finance.

Conclusion

The solution to the problem of lack of access to credit in rural areas lies in policy changes.

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RTI – CIC, RTI Backlog, etc.

PM-CARES

op-ed snap | Governance | Mains Paper 2: Governance, Transparency & Accountability, Citizens Charters
Note4Students

From UPSC perspective, the following things are important :

Prelims level: Various funds mentioned in the newscard

Mains level: Right to Information Act and its limitations

We all know that the Prime Minister’s Citizen Assistance and Relief in Emergency Situations (PM CARES) Fund doesn’t come under the ambit of Right to Information (RTI). This oped seeks to discuss certain aspects of this issue.

Present context

  • In a recent affidavit, the Delhi High Court was informed that the PM CARES Fund is not a Government of India fund and that the amount collected by it does not go to the Consolidated Fund of India is strange.
  • This petition is seeking the PM-CARES fund to be declared as the “State” under Article 12 of the Constitution.

Intriguing facts about PM-CARES fund

  • PM CARES has been created not by law, not by notification, but by the mere creation of a webpage, and set up last year in March to raise funds for those affected by the COVID-19 pandemic.
  • The page lists its structure, functions and duties in an arbitrary manner. The official appeals for funds are made under the national emblem.
  • The most significant lie of this sworn statement is that the Government has no control over the Fund.

What is the case?

  • The PM-CARES Fund was not subject to CAG audit since the Supreme Court regarded it as a public charitable trust.
  • It is not under public scrutiny. Also contributions to it were 100% tax-free.
  • It is accused that there was statutory fund already in existence under the Disaster Management Act of 2005 to receive contributions to finance the fight against a calamity.

What is RTI?

  • RTI is an act of the parliament which sets out the rules and procedures regarding citizens’ right to information.
  • It replaced the former Freedom of Information Act, 2002.
  • Under the provisions of RTI Act, any citizen of India may request information from a “public authority” (a body of Government or “instrumentality of State”) which is required to reply expeditiously or within 30.
  • In case of the matter involving a petitioner’s life and liberty, the information has to be provided within 48 hours.

About PM CARES Fund

  • The PM CARES Fund was created on 28 March 2020 following the COVID-19 pandemic in India.
  • The fund will be used for combat, containment and relief efforts against the coronavirus outbreak and similar pandemic like situations in the future.
  • The PM is the chairman of the trust. Members will include the defence, home and finance ministers.
  • The fund will also enable micro-donations. The minimum donation accepted is ₹10 (14¢ US).

The other funds

(1) National Disaster Response Fund (NDRF)

  • The statutorily constituted NDRF was established under the Disaster Management (DM) Act of 2005.
  • The NDRF is mandated to be accountable, and answerable under the RTI Act, being a public authority, and auditable by the Comptroller and Auditor General of India.

(2) Disaster Response Fund

  • The DM Act also provided for a Disaster Response Fund — state and district level funds (besides the national level).
  • It also collects and uses the donations at the local level, with mandatory transparency and audit provisions.

(3) Prime Minister’s National Relief Fund

  • There is the PMNRF operative since the days of Jawaharlal Nehru. It was established with public contributions to assist displaced persons from Pakistan.
  • The resources are now utilised primarily to render immediate relief to families of those killed in natural calamities and to the victims of the major accidents and riots.
  • However, it has the President of India and the Leader of Opposition also as trustees.

Issues over PM-CARES Fund

  • No defined purpose: It is deliberately ignored while a new, controversial, unanswerable, and ‘non-accountable vehicle is created; its character is not spelt out till today.
  • Non-accountable: The government seems to consider statutory provisions for enquiry and information seeking to be embarrassing obstacles.
  • Centralization of donations: It centralises the collection of donations and its utility, which is not only against the federal character but also practically inconvenient. The issue is seeming, the trusteeship of the fund.

Questions and gaps

  • Law/statute: The PM CARES Fund was neither created by the Constitution of India nor by any statute.
  • Authority: If that is the case, under what authority does it use the designation of the Prime Minister, designated symbols of the nation, the tricolour and the official (gov.in) website of the PMO, and grant tax concessions through an ordinance.
  • Collection and dispensation: The amount received by the Fund does not go to the Consolidated Fund of India. If it goes to the CFI, it could have been audited by the CAG.
  • Uncontrolled: The This Trust is neither intended to be or is in fact owned, controlled or substantially financed by any instrumentality of the any govt even being chaired by the PM.

Issue over tax benefits

  • Income tax: An ordinance was promulgated to amend Income Tax Act, 1961 and declare that the donations to the PM CARES Fund “would qualify for 80G benefits for 100% exemption”.
  • CSR Funds: It will also qualify to be counted as Corporate Social Responsibility (CSR) expenditure under the Companies Act, 2013.
  • Foreign donations: It has also got exemption under the FCRA [Foreign Contribution Regulation Act] and a separate account for receiving foreign donations has been opened.

What can be inferred from all these?

  • The Centre now considers it as another obstacle and has created a new trust with the Prime Minister and his Ministers only.
  • The manner in which the PM CARES Fund was set up — with its acronym created to publicise the point that the PM cares for people — shows a bypassing of the statutory obligations of a public authority.

Query and response: Again ironical

  • After initial denials, the Government has conceded it to be a public charitable trust, but still maintains that it is not a ‘public authority’.
  • The point is that the PMO operates the Fund, but says it cannot supply any information about the PM CARES Fund because it is not a public authority.

Severe interpretations: Is it an Office of Profit?

  • If the PM CARES Fund is unconnected with the Government, then the Fund could become an office of profit.
  • And that could disqualify him and the three Ministers from holding those constitutional offices.

Conclusion

  • In order to uphold transparency, the PM CARES Fund should be declared as a Public Authority under the RTI Act, and all RTI queries answered truthfully.
  • The fund should be designated as a “public authority” under Section 2(h) of the RTI Act.

 

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Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

PM Poshan Shakti Nirman Scheme

Schemes | Governance | Mains Paper 2: Government Scheme/Policies
Note4Students

From UPSC perspective, the following things are important :

Prelims level: PM POSHAN Scheme

Mains level: Mid-day meal scheme

The existing Mid-Day Meal scheme, which provides hot meals to students, has been renamed as the National Scheme for PM Poshan Shakti Nirman.

Key propositions in the PM POSHAN Scheme

  • Supplementary nutrition: The new scheme has a provision for supplementary nutrition for children in aspirational districts and those with high prevalence of anaemia.
  • States to decide diet: It essentially does away with the restriction on the part of the Centre to provide funds only for wheat, rice, pulses and vegetables. Currently, if a state decides to add any component like milk or eggs to the menu, the Centre does not bear the additional cost. Now that restriction has been lifted.
  • Nutri-gardens: They will be developed in schools to give children “firsthand experience with nature and gardening”.
  • Women and FPOs: To promote vocal for local, women self-help groups and farmer producer organisations will be encouraged to provide a fillip to locally grown traditional food items.
  • Social Audit: The scheme also plans “inspection” by students of colleges and universities for ground-level execution.
  • Tithi-Bhojan: Communities would also be encouraged to provide the children food at festivals etc, while cooking festivals to encourage local cuisines are also envisaged.
  • DBTs to school: In other procedural changes meant to promote transparency and reduce leakages, States will be asked to do direct benefit cash transfers of cooking costs to individual school accounts, and honorarium amounts to the bank accounts of cooks and helpers.
  • Holistic nutrition: The rebranded scheme aims to focus on “holistic nutrition” goals. Use of locally grown traditional foods will be encouraged, along with school nutrition gardens.

About the Mid-Day Meal Scheme

  • The Midday Meal Scheme is a school meal program designed to better the nutritional standing of school-age children nationwide.
  • It was launched in the year 1995.
  • It supplies free lunches on working days for children in primary and upper primary classes in:
  1. Government, government aided, local body schools
  2. Education Guarantee Scheme, and alternate innovative education centres,
  3. Madarsa and Maqtabs supported under Sarva Shiksha Abhiyan, and
  4. National Child Labour Project schools run by the ministry of labour
  • The Scheme has a legal backing under the National Food Security Act, 2013.

Objective:

To enhance the enrolment, retention and attendance and simultaneously improve nutritional levels among school going children studying in Classes I to VIII

History of the scheme

  • In 1925, a Mid Day Meal Programme was introduced for disadvantaged children in Madras Municipal Corporation.
  • By the mid-1980s three States viz. Gujarat, Kerala and Tamil Nadu and the UT of Pondicherry had universalized a same scheme with their own resources for children studying at the primary stage.
  • In 2001, the Supreme Court asked all state governments to begin this programme in their schools within 6 months.

Calorie approach

  • Primary (1-5) and upper primary (6-8) schoolchildren are currently entitled to 100 grams and 150 grams of food grains per working day each.
  • The calorific value of a mid-day meal at various stages has been fixed at a minimum:
Calories Intake Primary Upper Primary
Energy 450 calories 700 calories
Protein 12 grams 20 grams

 

Impact created by the Scheme

  • The MDM Scheme has many potential benefits: attracting children from disadvantaged sections (especially girls, Dalits and Adivasis) to school, improving regularity, nutritional benefits, socialisation benefits and benefits to women are some that have been highlighted.
  • Apart from nutrition, this scheme has been miraculous. Mothers who first used to interrupt their work to feed their children at home, now no longer need to do so.

Issues with the Scheme

  • Discrimination: Caste-based discrimination continues to occur in the serving of food, though the government seems unwilling to acknowledge this.
  • Leakages: The scheme has been subjected to leakages similar to the Public Distribution System.
  • Unhealthy and unhygienic: There have been cases of eating pesticide-contaminated mid-day meals leading to food poisoning.

 

Try this PYQ:

Which of the following can be said to be essentially the parts of Inclusive Governance?

  1. Permitting the Non-Banking Financial Companies to do banking
  2. Establishing effective District Planning Committees in all the districts
  3. Increasing government spending on public health
  4. Strengthening the Mid-day Meal Scheme

Select the correct answer using the codes given below:

(a) 1 and 2 only

(b) 3 and 4 only

(c) 2, 3 and 4 only

(d) 1, 2, 3 and 4

 

Post your answers.

 

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Right To Privacy

Contentious Clauses in Data Protection Bill

| 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: Data privacy

Mains level: Contentious Clauses in Data Protection Bill

The Joint Parliamentary Committee on Data Protection has found a middle ground on certain contentious clauses. Many panellists had objected to the clause, saying that it made the entire Act infructuous.

What is the issue?

  • The Data Protection Law has some clauses in the name of “sovereignty”, “friendly relations with foreign states” and “security of the state”.
  • These clauses allow any agency under the Union government exemption from all or any provisions of the law.
  • The legislation gives powers to the Central government to suspend all or any of the provisions of the Act for government agencies.

Personal Data Protection Bill, 2019

  • The PDP Bill was introduced in Lok Sabha by the Minister of Electronics and Information Technology in 2019.
  • The Bill seeks to provide for protection of personal data of individuals, and establishes a Data Protection Authority for the same.

Here are the key features:

Applicability

  • The Bill governs the processing of personal data by: (i) government, (ii) companies incorporated in India and (iii) foreign companies dealing with personal data of individuals in India.
  • Personal data is data which pertains to characteristics, traits or attributes of identity, which can be used to identify an individual.
  • The Bill categorises certain personal data as sensitive personal data.
  • This includes financial data, biometric data, caste, religious or political beliefs, or any other category of data specified by the government, in consultation with the Authority and the concerned sectoral regulator.

Data fiduciary and his obligations

  • A data fiduciary is an entity or individual who decides the means and purpose of processing personal data. Such processing will be subject to certain purpose, collection and storage limitations.
  • For instance, personal data can be processed only for specific, clear and lawful purpose.
  • Additionally, all data fiduciaries must undertake certain transparency and accountability measures such as: (i) implementing security safeguards (such as data encryption and preventing misuse of data), and (ii) instituting grievance redressal mechanisms to address complaints of individuals.
  • They must also institute mechanisms for age verification and parental consent when processing sensitive personal data of children.

Rights of the individual

The Bill sets out certain rights of the individual (or data principal).  These include the right to:

  1. Obtain confirmation from the fiduciary on whether their personal data has been processed
  2. Seek correction of inaccurate, incomplete, or out-of-date personal data
  3. Have personal data transferred to any other data fiduciary in certain circumstances and
  4. Restrict continuing disclosure of their personal data by a fiduciary, if it is no longer necessary or consent is withdrawn

Grounds for processing personal data

  • The Bill allows the processing of data by fiduciaries only if consent is provided by the individual. However, in certain circumstances, personal data can be processed without consent.
  • These include: (i) if required by the State for providing benefits to the individual, (ii) legal proceedings, (iii) to respond to a medical emergency.

Social media intermediaries

  • The Bill defines these to include intermediaries which enable online interaction between users and allow for sharing of information.
  • All such intermediaries which have users above a notified threshold, and whose actions can impact electoral democracy or public order, have certain obligations, which include providing a voluntary user verification mechanism for users in India.

Data Protection Authority

  • The Bill sets up a Data Protection Authority which may: (i) take steps to protect interests of individuals, (ii) prevent misuse of personal data, and (iii) ensure compliance with the Bill.
  • It will consist of a chairperson and six members, with at least 10 years’ expertise in the field of data protection and information technology.
  • Orders of the Authority can be appealed to an Appellate Tribunal. Appeals from the Tribunal will go to the Supreme Court.

Transfer of data outside India

  • Sensitive personal data may be transferred outside India for processing if explicitly consented to by the individual, and subject to certain additional conditions.
  • However, such sensitive personal data should continue to be stored in India.
  • Certain personal data notified as critical personal data by the government can only be processed in India.

Exemptions:

The central government can exempt any of its agencies from the provisions of the Act:

  1. In interest of security of state, public order, sovereignty and integrity of India and friendly relations with foreign states
  2. For preventing incitement to commission of any cognisable offence (i.e. arrest without warrant) relating to the above matters
  • Processing of personal data is also exempted from provisions of the Bill for certain other purposes such as: (i) prevention, investigation, or prosecution of any offence, or (ii) personal, domestic, or (iii) journalistic purposes.
  • However, such processing must be for a specific, clear and lawful purpose, with certain security safeguards.

Sharing of non-personal data with government:

The central government may direct data fiduciaries to provide it with any:

  1. Non-personal data and
  2. Anonymised personal data for better targeting of services.

Amendments to other laws

  • The Bill amends the Information Technology Act, 2000 to delete the provisions related to compensation payable by companies for failure to protect personal data.

 

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Air Pollution

Probe shows use of toxic material in firecrackers: Supreme Court

Prelims Only | Enviro & Biodiversity | Mains Paper 3: Conservation, Environmental Pollution & Degradation, Eia
Note4Students

From UPSC perspective, the following things are important :

Prelims level: Air pollutants in crackers, Green Crackers

Mains level: Air pollution due to firecrackers

The Supreme Court has said a preliminary enquiry by the CBI into the firecracker industry, including in Tamil Nadu, revealed rampant violation of its ban on use of toxic ingredients like Barium and its salts.

Air Pollution created by firecrackers

  • Firing crackers increase the concentration of dust and pollutants in the air.
  • After firing, the fine dust particles get settled on the surrounding surfaces which are packed with chemicals like copper, zinc, sodium, lead, magnesium, cadmium and pollutants like oxides of sulphur and nitrogen.
  • These invisible yet harmful particles affect the environment and in turn, put our health at stake.

Harmful elements used

  • Copper: Irritates the respiratory tract.
  • Cadmium: Leads to anemia by reducing the capacity of blood to carry oxygen.
  • Zinc: Can cause metal fume fever and induces vomiting.
  • Lead: Harms the nervous system.
  • Magnesium: Metal fume fever is caused by Magnesium fumes.
  • Sodium: It is a highly reactive element and caused burns when it is combined with moisture.

Why is the issue in news now?

Ans. Barium content

  • A chemical analysis of the samples of finished and semi-finished firecrackers and raw materials taken from the manufacturers showed Barium content.
  • The court stated that loose quantities of Barium were purchased from the market.
  • Also, firecracker covers did not show the manufacture or expiry dates.

Issues with Barium

  • Barium nitrate, which emits green flames when a cracker is lit, is a metal oxide that increases both air and noise pollution.
  • There is is no clarity on whether barium nitrate can actually be used or not.

Alternatives: Green Crackers

  • The new CSIR-NEERI formulation for green crackers has NO barium nitrate — one of the key ingredients of traditional firecrackers.
  • These crackers have been named “safe water releaser (SWAS)”, “safe minimal aluminium (SAFAL)” and “safe thermite cracker (STAR)”.
  • The three crackers release water vapour or air as a dust suppressant and diluent for gaseous emissions.
  • These products can only be manufactured by those who have signed a non-disclosure agreement (NDA) with CSIR-NEERI.
  • The green crackers are sold with a unique logo on the box, and will also have a QR code with production and emission details.

 

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US policy wise : Visa, Free Trade and WTO

What is H-1B Visa?

Prelims Only | International Relations | Mains Paper 2: Indian Diaspora
Note4Students

From UPSC perspective, the following things are important :

Prelims level: Various visas mentioned

Mains level: NA

The need for H-1B visas will continue to exist till the ‘talent challenge’ is tackled globally, even though the information technology industry has successfully adopted the work-from-home model amid pandemic-related travel restrictions.

Various US Visa Programs

1) H-1B visa

What is it: The H-1B visa category covers individuals who “work in a speciality occupation, engage in cooperative research and development projects administered by the US Department of Defense or are fashion models that have national or international acclaim and recognition.”

Who’s covered: The H-1B is most well known as a visa for skilled tech workers, but other industries, like health care and the media, also use these visas.

2) H-2B visa

What it is: According to USCIS, the H-2B program allows US employers or agents “to bring foreign nationals to the United States to fill temporary non-agricultural jobs.”

Who’s covered: They generally apply to seasonal workers in industries like landscaping, forestry, hospitality and construction.

3) J-1 visa

What it is: The J-1 visa is an exchange visitor visa for individuals approved to participate in work-and-study-based exchange visitor programs in the United States.

Who’s covered: The impacted people include interns, trainees, teachers, camp counsellors, au pairs and participants in summer work travel programs.

4) L-1 visa

What it is: The L1 Visa is reserved for managerial or executive professionals transferring to the US from within the same company, or a subsidiary of it. The L1 Visa can also be used for a foreign company opening up US operations.

Who’s covered: Within the L1 Visa, there are two subsidiary types of visas

  • L1A visa for managers and executives.
  • L1B visa for those with specialized knowledge.

 

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Health Sector – UHC, National Health Policy, Family Planning, Health Insurance, etc.

Antimalarial drug resistance in India

Prelims Only | Governance | Mains Paper 3: Awareness in various sc and tech fields
Note4Students

From UPSC perspective, the following things are important :

Prelims level: Malaria and it vaccines

Mains level: Non-communicable diseases burden on India

In recent years there is increasing evidence for the failure of artemisinin-based combination therapy for falciparum malaria either alone or with partner drugs.

What is Malaria?

  • Malaria is caused by the bite of the female Anopheles mosquito if the mosquito itself is infected with a malarial parasite.
  • There are five kinds of malarial parasites — Plasmodium falciparum, Plasmodium vivax (the commonest ones), Plasmodium malariae, Plasmodium ovale and Plasmodium knowlesi.
  • Therefore, to say that someone has contracted the Plasmodium ovale type of malaria means that the person has been infected by that particular parasite.

Burden of Malaria in India

  • In 2018, the National Vector-borne Disease Control Programme (NVBDCP) estimated that approximately 5 lakh people suffered from malaria.
  • 63% of the cases were of Plasmodium falciparum.
  • The recent World Malaria Report 2020 said cases in India dropped from about 20 million in 2000 to about 5.6 million in 2019.

Treatment of Malaria

  • Malaria is treated with prescription drugs to kill the parasite. Chloroquine is the preferred treatment for any parasite that is sensitive to the drug.
  • In most malaria-endemic countries including India, Artemisinin-based antimalarial drugs are the first-line choice for malaria treatment.
  • This is especially against Plasmodium falciparum parasite which is responsible for almost all malaria-related deaths in the world.

Why in news now?

  • There are reports of artemisinin resistance in East Africa and is a matter of great concern as this is the only drug that has saved several lives across the globe.
  • In India, after the failure of chloroquine to treat P. falciparum malaria successfully, artemisinin-based combination therapy was initially introduced in 2008.
  • Currently, several combinations of artemisinin derivatives are registered in India.

Artemisinin-based combination therapy failure in India

  • In 2019, a report from Eastern India indicated the presence of two mutations in P. falciparum cases treated with artemisinin that linked to its presence of resistance.
  • Again in 2021, artemisinin-based combination therapy failure was reported from Central India where the partner drug SP showed triple mutations with artemisinin wild type.
  • This means the failure of artemisinin-based combination therapy may not be solely linked to artemisinin. Here it is needed to change the partner drug as has been done in NE states in 2013.

History of drug resistance

  • In the 1950s chloroquine resistance came to light.
  • Both chloroquine and pyrimethamine resistance originated from Southeast Asia following their migration to India and then on to Africa with disastrous consequences.
  • Similarly, artemisinin resistance developed from the six Southeast Asian countries and migrated to other continents, as is reported in India and Africa.
  • It would not be out of context that artemisinin is following the same path as has been seen with chloroquine.
  • Now, the time has come to carry out Molecular Malaria Surveillance to find out the drug-resistant variants so that corrective measures can be undertaken in time to avert any consequences.
  • Some experts even advocate using triple artemisinin-based combination therapies where the partner drug is less effective.

Try this PYQ:

Widespread resistance of malarial parasite to drugs like chloroquine has prompted attempts to develop a malarial vaccine to combat malaria.

Why is it difficult to develop an effective malaria vaccine?

(a) Malaria is caused by several species of Plasmodium

(b) Man does not develop immunity to malaria during natural infection

(c) Vaccines can be developed only against bacteria

(d) Man is only an intermediate host and not the definitive host

 

Post your answers here.

 

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Renewable Energy – Wind, Tidal, Geothermal, etc.

[pib] Renewable Energy Certificate (REC) Mechanism

PIB | Economics | Mains Paper 3: Infrastructure: Energy, Ports, Roads, Airports, Railways Etc.
Note4Students

From UPSC perspective, the following things are important :

Prelims level: REC Mechanism

Mains level: Renewable Energy in India

Union Minister of Power and New & Renewable Energy has given his assent to amendments in the existing Renewable Energy Certificate (REC) mechanism.

What are RECs?

  • Renewable Energy Certificates (REC) is a policy instrument to catalyze the development of renewable energy.
  • It is a market-based mechanism that will help the states meet their regulatory requirements (such as Renewable Purchase Obligations (RPOs)) by overcoming the geographical constraints on existing renewable potential in different states.

REC Mechanism

  • REC mechanism is a market-based instrument to promote renewable energy and facilitate compliance of renewable purchase obligations (RPO).
  • It is aimed at addressing the mismatch between availability of RE resources in state and the requirement of the obligated entities to meet the RPO.
  • 1 REC is treated as equivalent to 1 MWh.

How many types of RECs are there?

There are two categories of RECs, viz., solar RECs and non-solar RECs.

  1. Solar RECs are issued to eligible entities for generation of electricity based on solar as renewable energy source.
  2. Non-solar RECs are issued to eligible entities for generation of electricity based on renewable energy sources other than solar.

Sources of revenue under REC mechanism

  • Revenue for a RE generator under REC scheme includes revenue from the sale of electricity component of RE generation and the revenue from the sale of environmental attributes in the form of RECs.

What are the proposed changes?

The salient features of changes proposed in revamped REC mechanism are:

  • Validity of REC would be perpetual i.e., till it is sold.
  • Floor and forbearance prices are not required to be specified.
  • The RE generator who are eligible for REC, will be eligible for issuance of RECs for the period of PPA as per the prevailing guidelines.
  • The existing RE projects that are eligible for REC would continue to get RECs for 25 years.
  • A technology multiplier can be introduced for promotion of new and high priced RE technologies, which can be allocated in various baskets specific to technologies depending on maturity.
  • RECs can be issued to obligated entities (including DISCOMs and open access consumers) which purchase RE Power beyond their RPO compliance notified by the Central Government.
  • No REC to be issued to the beneficiary of subsidies/concessions or waiver of any other charges.
  • Allowing traders and bilateral transactions in REC mechanism.

 

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Trade Sector Updates – Falling Exports, TIES, MEIS, Foreign Trade Policy, etc.

[pib] National Export Insurance Account (NEIA) Scheme

PIB | Economics | Mains Paper 3: Effects Of Liberalization On The Economy, Changes In Industrial Policy and their effects on Industrial Growth
Note4Students

From UPSC perspective, the following things are important :

Prelims level: National Export Insurance Account Scheme

Mains level: NA

The Centre has approved the contribution of Grant-in-aid (Corpus) of ₹1,650 Crore to the National Export Insurance Account (NEIA).

National Export Insurance Account Scheme

  • NEIA Trust was established in 2006 to promote project exports from India that are of strategic and national importance.
  • The NEIA Trust promotes Medium and Long Term (MLT) /project exports.
  • It extends (partial/full) support to covers issued by ECGC (ECGC Ltd, formerly known as Export Credit Guarantee Corporation of India Ltd.) to MLT/project export and to Exim Bank for Buyer’s Credit (BC-NEIA) tied to project exports from India.

Benefits offered

  • The capital infusion in NEIA Trust will help the Indian Project Exporters (IPE) to tap the huge potential of project exports in focus market.
  • Support to project exports with Indian content sourced from across the country will enhance the manufacturing in India.
  • In addition, assuming an average 75% Indian content in the projects, it is estimated that around 12000 workers will move into formal sector.

Performance highlights

  • Since inception, NEIA has extended 213 covers, with a consolidated project value of Rs. 53,000 crores, to 52 countries as of 31st August 2021.
  • Its impact in enabling project exports has been most significant in Africa and South Asia.

 

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