Note4Students
From UPSC perspective, the following things are important :
Prelims level: Critical Minerals
Mains level: Read the attached story
Central idea
- A recent working paper from Centre for Social and Economic Progress (CSEP) extends the earlier minerals assessment for 23 minerals by assessing the criticality levels of 43 select minerals for India.
- This is based on their economic importance (demand-side factors) and supply risks (supply-side factors) which are determined through the evaluation of specific indicators.
What are Critical Minerals?
- Critical minerals are elements that are crucial to modern-day technologies and are at risk of supply chain disruptions.
- These minerals are used in making mobile phones, computers, batteries, electric vehicles, and green technologies like solar panels and wind turbines.
- Minerals such as antimony, cobalt, gallium, graphite, lithium, nickel, niobium, and strontium are among the 22 assessed to be critical for India.
- Many of these are required to meet the manufacturing needs of green technologies, high-tech equipment, aviation, and national defence.
Why are these resources critical?
- Clean energy transition: Critical minerals are essential to the ecosystem that fuels the world’s transition towards clean energy and digital economy.
- Strategic nature: Any supply shock can severely imperil the economy and strategic autonomy of a country that is over-dependent on others to procure critical minerals.
- Rare availability: Supply risks exist due to rare availability, growing demand, and complex processing value chain.
What is the China ‘threat’?
- Dominant role: China is the world’s largest producer of 16 critical minerals, including cobalt and rare earth elements.
- Monopoly in processing: The country has a strong presence across the board in processing operations, with a share of refining around 35% for nickel, 50-70% for lithium and cobalt, and nearly 90% for rare earth elements.
- Control over offshore mines: China also controls cobalt mines in the Democratic Republic of Congo, from where 70% of this mineral is sourced.
- Supply chain dominance: The country’s dominance in critical minerals production and processing raises concerns of a supply disruption in case of a geopolitical conflict.
Challenges in ensuring resilient critical minerals supply
- Limited availability of critical minerals: The rare availability of critical minerals poses a challenge in meeting the growing demand for these minerals.
- Geopolitical risks: Complex supply chains can be disrupted by hostile regimes or politically unstable regions, leading to supply chain disruptions.
- Dominance of certain countries: A few countries, such as China, are the dominant producers of critical minerals, leading to concerns over supply disruptions in case of a geopolitical conflict.
- Increasing demand for critical minerals: With the shift towards renewable energy technologies and electric vehicles, the demand for critical minerals such as copper, lithium, and rare earth elements is increasing rapidly.
- Reliance on foreign partners: Countries with limited reserves and higher requirements for critical minerals may have to rely on foreign partners to meet their domestic needs, leading to supply chain vulnerabilities.
- Environmental and social concerns: The extraction and processing of critical minerals can have negative environmental and social impacts, leading to challenges in meeting sustainability goals.
What are countries around the world doing about it?
Several countries are taking measures to ensure a consistent supply of critical minerals to their domestic markets.
- India: It has set up Khanij Bidesh India Ltd. (KABIL), a joint venture of three public sector companies, to ensure a consistent supply of critical and strategic minerals to the Indian domestic market.
- US: It has ordered a review of vulnerabilities in its critical minerals supply chains and shifted its focus on expanding domestic mining, production, processing, and recycling of critical minerals and materials.
- Australia: Its Critical Minerals Facilitation Office (CMFO) and KABIL had recently signed an MoU aimed at ensuring reliable supply of critical minerals to India.
- UK: It has unveiled its new Critical Minerals Intelligence Centre to study the future demand for and supply of these minerals, and its critical mineral strategy will be unveiled later this year.
What should India do to ensure resilient supply?
- Developing domestic sources of critical minerals: This can be achieved by promoting exploration and mining activities, both by public and private sector entities.
- Encouraging responsible mining practices: The Indian government should encourage responsible mining practices that minimize negative environmental and social impacts of mining activities.
- Developing recycling capabilities: This can be achieved by promoting research and development in recycling technologies and incentivizing the adoption of recycling practices.
- Promoting transparency in the supply chain: India should promote transparency in the critical minerals supply chain by ensuring the traceability of minerals from the point of extraction to the point of end-use.
- Investing in research and development: India should invest in research and development to develop new technologies and processes for efficient extraction, processing, and recycling of critical minerals.
- Developing a national critical minerals strategy: India should develop a national critical minerals strategy that identifies priority minerals, promotes domestic exploration and mining, and promotes sustainable and responsible mining practices.
Conclusion
- India has a significant mineral geological potential, many minerals are not readily available domestically.
- Hence, India needs to develop a national strategy to ensure resilient critical minerals supply chains, which focuses on minerals found to be critical in this study.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Private sector startups and recent developments
Mains level: Indian Space Policy 2023, Role of private sector, advantages and potential drawbacks
Central Idea
- The Indian Space Policy 2023 has been approved by the Indian Cabinet Committee on Security. The policy has opened up the Indian space sector, facilitating an enhanced role for the private sector to augment the development and competitiveness of the Indian space program.
All you need to know about Indian Space Policy 2023
- Clear roles and responsibilities: The Indian Space Policy 2023 policy clarifies the roles and responsibilities of the Indian Space Research Organization (ISRO), NewSpace India Limited (NSIL), and the Indian National Space Promotion and Authorization Center (IN-SPACe), as well as that of the private players in the Indian space sector.
- Opportunities for private sector players: One of the key aspects of the new policy is to open up the Indian space sector to provide opportunities for private sector players to play an active role in augmenting the development and competitiveness of the Indian space program. This will allow ISRO to focus on non-commercial missions, such as research and development of advanced space technologies and space exploration.
- Enhance overall ISRO missions: The policy is expected to enhance overall ISRO missions with greater participation of non-government entities, including academia, the research community, startups, and industry.
- Institutional setups: Strategic activities within the space sector will be handled by NSIL, an institutional set up within the Department of Space that will address these activities in a demand-driven mode. The other recent institutional set up that will be critical in coordination between the public sector and the private players is IN-SPACe.
- Framework for use of ISRO facilities: The policy outlines a framework under which the private sector can use ISRO facilities for a small fee.
- Making Indian space programme competitive: The private players are also expected to create new infrastructure in the space sector. This will be critical in ensuring that the Indian space program becomes more competitive and developed.
- ISRO will focus on research and development: In a significant move, ISRO has stated that it will not do any operational and production work for the space sector and will instead focus its energies on developing new technologies, new systems, and research and development. This essentially means that the routine production and launches that the ISRO was involved in until now will be handled by the private sector completely.
- An Open Space Policy refers to a policy that allows for open and transparent participation in space activities.
- It involves the collaboration between public and private entities in the exploration and use of space.
- The goal of an open space policy is to promote innovation, competition, and the growth of the space industry while ensuring the safety and security of space activities.
- This policy allows for the development of new technologies, research and development, and increased cooperation and collaboration between different countries and organizations.
Facts for prelims: Private space sector startups in India
|
Company Name
|
Area of Specialization |
Recent Developments
|
| Skyroot Aerospace, Hyderabad |
Launch Vehicles for Small Satellites |
Successfully launched their first indigenously designed and developed launch vehicle, Vikram I. Vikram S (Mission Prarambh) rocket recently launched as first privately built Indian rocket to make it to space |
| Agnikul Cosmos, Chennai |
Launch Vehicles for Small Satellites |
Successfully tested their fully 3D printed rocket engine, the Agnilet, in January 2021. |
| Bellatrix Aerospace, Bangalore |
Electric Propulsion Systems |
Signed an agreement with Skyroot Aerospace for the use of electric propulsion technology in their launch vehicles. |
| Pixxel, Bangalore |
Earth Observation Satellites |
Launched their first satellite, Anand, in February 2021, and plans to launch a constellation of 30 satellites by 2023. |
| Kawa Space, Mumbai |
Space-Related Technologies |
Developed a ground station in collaboration with the Indian Institute of Technology, Bombay, to track and receive data from satellites. |
| Skylo, Bangalore |
Low-Cost Satellite-Connected Devices for IoT |
Raised $103 million in Series B funding round led by SoftBank Group Corp in August 2021. |
| SatSure, Bangalore |
Data Analytics Services for Agriculture Industry |
Launched their new product, SatSure Agri, in May 2021 to provide crop yield forecasting services to farmers. |
| Dhruva Space, Bangalore |
Satellite-Based Communication Solutions |
Signed a Memorandum of Understanding with Ananth Technologies in October 2021 to provide satellite-based communication services to the aviation industry. |
Benefits of having an open space policy
- Messaging tool: An open space policy can be used as a messaging tool, both for friends and potential foes. It can demonstrate India’s commitment to the peaceful use of outer space and build confidence among other nations.
- Moderating fears and concerns: An open space policy can help to moderate fears and concerns about India’s space activities, by providing greater clarity on India’s space objectives and priorities.
- Rebuilding confidence: An open space policy can help to rebuild confidence among other nations that India is committed to the peaceful use of outer space.
- Outlining objectives: An open space policy can provide a clear outline of India’s short-term and long-term space objectives and priorities.
- Better resource allocation: An open space policy can help to ensure better resource allocation for India’s space program, by providing a clear framework for decision-making and prioritization.
Potential drawbacks of open space policy
- Increased competition: An open space policy could lead to increased competition among countries and private entities to gain access to space and its resources. This could lead to a potential arms race in space and increased tensions between countries.
- Security concerns: Open access to space could also create security concerns, as countries may develop space weapons or use space to conduct surveillance on other countries.
- Environmental impact: An open space policy could also have environmental consequences, as increased space activity could lead to more space debris and pollution, potentially harming the Earth’s orbit and its environment.
- Lack of regulation: Without proper regulation, an open space policy could lead to the exploitation of space resources, such as minerals and water, which could negatively impact the environment and lead to unfair distribution of resources.
- Cost: Increased space activity and access could also lead to higher costs for countries and private entities, which may not be sustainable in the long run.
Conclusion
- The new policy is expected to bring about significant changes in the Indian space ecosystem, including greater private sector participation, better resource allocation, and institutional clarity. This is an important step towards an open space policy that integrates both commercial and national security requirements in a balanced fashion.
Mains Question
Q. The Indian Space Policy 2023 has been approved by the Indian Cabinet Committee on Security. Note down some of its key aspects. What do you understand by mean open space policy? Discuss its advantages and potential drawbacks.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Initiatives for private investment and labour force participation
Mains level: India’s Growth Prospects, Private Investment and challenges
Central Idea
- India has had an established track record of high growth, with an average annual GDP growth of 6.6% in the decade leading up to the Covid-19 pandemic. In fiscal 2023, India is seen growing at 7%, making it the fastest-growing large economy. But with an imminent global slowdown and the full manifestation of the lagged impact of interest rate hikes since May 2022, the economy is expected to decelerate and grow at 6% in fiscal 2024.
- Growth accounting: Growth accounting provides a useful framework to analyse medium-term prospects by decomposing their drivers into the contribution of capital, labour and efficiency.
- Economic growth next five years: Indian economy expected to grow at 6.8 per cent per year for the next five years with 52 per cent of it from capital, 38 per cent from efficiency and 10 per cent from labour.
- Changing growth model: The growth model is changing to an infrastructure and manufacturing-driven one.
- Capital spending: The Union Budget has raised capital spending by almost a third in high-multiplier infrastructure segments. But such support to capex will moderate in the years to come, given fiscal consolidation pressures.
- Investment ratio: Investment as a percentage of GDP has already touched a decadal high of 34 per cent in fiscal 2023. So far, the onus to lift the investment ratio has been shouldered by the government. The contribution of the private sector to investments is set to improve, primed as it is with healthier balance sheets, cash reserves and low leverage.
- Contribution of productivity to growth: The creation of physical and digital infrastructure in conjunction with efficiency-enhancing reforms will raise the contribution of productivity to growth. The economy is expected to continue seeing efficiency gains from reforms such as GST and Insolvency and Bankruptcy Code (IBC).
What is holding back a swift and broad-based lift in private investments?
- Economic uncertainty, primarily, and geopolitical events to a lesser extent.
- Sustainability challenge looms for the manufacturing sector as manufacturing and infrastructure growth are carbon-intensive.
- Low-quality skilling of the workforce is holding back its contribution to growth.
- Quality and the skilling of the workforce
- Falling labour force participation of women
What is holding back in Labour’s contribution to growth?
- Labour’s contribution to growth is likely to be low not because India does not have sufficient people in the working-age group, this cohort is 67 per cent of the population and is set to expand by 100 million over the next decade. It is the quality and skilling of the workforce that is holding it back.
Why private investment is essential for Indian economic growth?
- Capital formation: Private investment helps in creating capital formation, which is essential for economic growth. It helps in building infrastructure, creating jobs, and generating income, which in turn drives consumer spending and boosts economic growth.
- Innovation: Private investment is often associated with innovation and technological advancements. Companies that invest in research and development (R&D) can develop new products and processes that can boost productivity and create new markets. This, in turn, can lead to increased profits and more investment in R&D, creating a virtuous cycle of innovation and growth.
- Employment: Private investment creates jobs, which is critical for economic growth and development. When companies invest in new projects or expand their operations, they often need to hire additional workers, which reduces unemployment and boosts consumer spending.
- Foreign investment: Private investment is also an important driver of foreign investment. When companies invest in India, they often bring new technology, skills, and expertise that can help boost local industries and drive economic growth.
- Tax revenue: Private investment can also help increase tax revenues, which can be used by the government to fund public goods and services such as education, healthcare, and infrastructure.
Steps taken by the government to encourage private investment
- Investment-Friendly Policies: The Indian government has launched several investment-friendly policies, such as Make in India, Start-up India, and Digital India, to encourage private investment in the country.
- Infrastructure Development: The government is investing heavily in infrastructure development, including roads, railways, airports, and ports, to create a conducive environment for private investment.
- Tax Reforms: The Indian government has implemented several tax reforms, such as the Goods and Services Tax (GST), to simplify the tax structure and make it more investor-friendly.
- FDI Liberalization: The government has liberalized foreign direct investment (FDI) norms in several sectors, including defense, insurance, and retail, to attract more foreign investment.
- Insolvency and Bankruptcy Code (IBC): The government has implemented the Insolvency and Bankruptcy Code (IBC), which has made it easier for businesses to exit, and has increased investor confidence in the Indian economy.
- Production Linked Incentives (PLI): The government has launched the Production Linked Incentives (PLI) scheme to encourage manufacturing in India and make it more competitive globally.
- Easing of Business Regulations: The Indian government has eased several business regulations to improve the ease of doing business in the country and attract more private investment.
- Skill Development: The government has launched several initiatives, such as Skill India and Pradhan Mantri Kaushal Vikas Yojana, to develop the skills of the Indian workforce and make it more attractive to investors.
Facts for prelims: Steps taken by the government to encourage labour force participation of women
|
Initiatives
|
Description
|
| Maternity Benefit Programme |
A scheme to provide financial assistance to pregnant women and lactating mothers for their health and nutrition needs. |
| Pradhan Mantri Ujjwala Yojana |
A scheme to provide LPG connections to women from Below Poverty Line households. |
| National Urban Livelihood Mission |
A programme to provide self-employment opportunities and skill development training to urban poor women. |
| National Rural Livelihood Mission |
A scheme to provide self-employment opportunities and skill development training to rural women. |
| Mahila E-Haat |
A digital platform to provide a market for women entrepreneurs to sell their products online. |
| Beti Bachao Beti Padhao |
A campaign to address the declining child sex ratio and to promote education among girls. |
| Sukanya Samriddhi Yojana |
A savings scheme for the girl child to ensure their education and marriage expenses are taken care of. |
Way ahead
- Focus on green transition: As the manufacturing and infrastructure growth are carbon-intensive, so it’s important to have a significant and simultaneous focus on green transition. Having a high sustainability quotient can only embellish India’s credentials as a production destination.
- For instance: Research suggests that between fiscals 2023 and 2027, over 15 per cent of India’s capex could be towards green initiatives involving renewable energy, transportation, altering the fuel mix, and green hydrogen. In the fragmented geopolitical milieu, which is shifting towards supply-chain diversification and friend shoring, India can attract foreign investments.
- Enhancing labour force participation of women: The labour force participation of women is falling. This will have to be reversed through employment policies and investing in the health and education of women.
- For instance: According to a World Bank report in 2018, India could add 1.5 percentage points to its GDP growth by improving the participation of women in its workforce.
Conclusion
- India is going to become a $5 trillion economy by fiscal 2029, given the current growth dynamics. However, the impact of climate risk mitigation will be felt across revenue, commodity prices, export markets, and capital spending. To win the growth marathon, India’s focus must be sharp on the drivers of pace.
Mains Question
Q. Highlight India’s growth prospects in the next five years? Discuss the significance of private investment for economic growth and enlist factors that holding back the private investment.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Quantum Computing, National Quantum Mission (NQM)
Mains level: National Quantum Mission (NQM)
Central idea: The Union Cabinet has approved the National Quantum Mission (NQM) with a budget of ₹6,003 crore. The mission aims to fund research and development in quantum computing technology and associated applications.
What is Quantum Computing?
|
Explanation |
| What is it? |
A type of computing that uses quantum-mechanical phenomena to perform operations on data. |
| Qubits |
Quantum bits, which can be 0, 1, or both simultaneously (a superposition of 0 and 1). |
| Computational speed |
It can perform certain calculations much faster than traditional computing, especially for complex algorithms and large amounts of data. |
| Entanglement |
The use of entanglement allows quantum computing to process multiple pieces of data simultaneously, further increasing computational power. |
| Research |
Governments, universities, and private companies around the world are researching quantum computing. |
| Challenges |
Building practical quantum computers is a major challenge due to the fragility of qubits and the difficulty of controlling and measuring them accurately. |
| Development stage |
Quantum computing is still in its early stages of development. |
National Quantum Mission (NQM)
| Mission duration |
2023-2031 |
| Total cost |
Rs. 6,003.65 crore |
| Leading Department |
Department of Science and Technology (DST) |
| Supporting departments |
Other government departments |
| Focus |
Development of physical qubit-based quantum computers |
| Applications |
Healthcare and diagnostics, defense, energy, and data security |
| India’s positioning |
Among the top six nations involved in quantum research and development |
Key focus areas
(1) Thematic Hubs
- The mission will be structured around four broad themes:
- Quantum Computing,
- Quantum Communication,
- Quantum Sensing and Metrology, and
- Quantum Material and Devices.
- Thematic hubs will be established at research institutes and R&D centres already working in the field.
- The effort is to create an ecosystem that favours quantum technology development in the country.
(2) Satellite-based Communication
- One of the key areas of focus for the NQM will be the development of satellite-based secure communication between ground stations and receivers located within a 3,000 km range over the first three years.
- NQM will lay communication lines using Quantum Key Distribution over 2,000 km for satellite-based communication within Indian cities.
- Tests will be conducted in the coming years for long-distance quantum communication, especially with other countries.
(3) Quantum Computing
- The mission will focus on developing quantum computers (qubit) with physical qubit capacities ranging between 50 – 1000 qubits, developed over the next eight years.
- The development of computers up to 50 physical qubits will take three years.
- 50 – 100 physical qubits will be developed in five years, and computers up to 1000 physical qubits will be developed in eight years.
Applications
- The mission would have a wide range of applications, including in healthcare and diagnostics, defense, energy, and data security.
- Quantum technologies are expected to be far more powerful than traditional computing systems and capable of performing the most complex problems in a highly secure manner.
Various challenges
- Sub-zero temperatures: Current prototype systems require extremely cold (close to -273 C) conditions to work, along with developing the materials capable of such computations.
- Still evolving: Quantum computers are still a work in progress globally, and no one has built a practical computer that can actually work and solve meaningful problems.
- No global breakthrough: IBM, D-Wave of Canada or China’s Zuchongzhi 2.1, all of whom have prototype systems, have not built a quantum computer that can solve a problem that anybody cares about.
Conclusion
- The NQM represents a significant step forward for India’s research and development efforts in the quantum technology sector.
- By focusing on the development of quantum computers and related technologies, the country is positioning itself as a key player in this field, with wide-ranging applications across multiple sectors.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Freedom of speech and reasonable restrictions
Mains level: Global population trends
Central idea: India is set to overtake China as the world’s most populous country by mid-2023, according to data released by the United Nations.
State of World Population Report
- The report is an annual report published by the United Nations Population Fund (UNFPA), which provides a global overview of population trends and issues.
- The report covers a wide range of topics related to the population, such as fertility, mortality, migration, family planning, and gender equality.
- It also includes analysis and recommendations for policymakers and governments to address population challenges and promote sustainable development.
- The report is widely regarded as a key reference for researchers, policymakers, and international organizations working on population and development issues.
Highlights of the 2023 report
Facts
|
Data
|
| World Population (2022) |
8 billion |
| Most populous regions |
Eastern and Southeastern Asia, Central and Southern Asia |
| World Population Growth Rate (since 2020) |
Less than 1% |
| Fertility Rate (replacement level) |
2.1 children per woman |
| Population aged 65 years or above (2050) |
16% |
| Persons aged 65 years and above (2050) |
More than double that of 5-year-olds and same as 12-year-olds |
| Regions with fertility rate at or below 2.1 |
60% |
| Top countries accounting for global population increase by 2050 |
DR Congo, Egypt, Ethiopia, India, Nigeria, Pakistan, Philippines, Tanzania |
Population anxieties in India
|
Facts |
| India’s population |
India is now the most populous country in the world, having overtaken China in population, with 1,428.6 million people. |
| Age distribution |
68% of India’s population belongs to the 15-64 years category, and 26% in the 10-24 years group, making India one of the youngest countries in the world. |
| Fertility rate |
National Family Health 5 Survey (2019-21) found that India attained a Total Fertility Rate of 2.0 for the first time, less than the replacement level of 2.1, falling from 2.2 in NFHS 4 (2015-16). |
| Life expectancy |
Life expectancy for men in India is 71 years, the same as the global life expectancy, while it is marginally lower for women at 74 years. |
| Population growth |
India’s population growth rate has decreased from 2.3% in 1972 to less than 1% now. |
| Demographic dividend |
With 68% of its population as youth, and working population, India could have one of the largest workforces in the world, giving it a global advantage. |
Way forward
The UNFPA report strongly recommended that governments introduce policies with gender equality and rights at their heart to address changing demographics. These recommendations include:
- Parental leave programs: Introducing parental leave programs that provide paid leave to both mothers and fathers after the birth or adoption of a child. This can help promote gender equality in the workplace and support families in raising children.
- Child tax credits: Providing tax credits or financial support to families with children to help them meet the costs of raising children. This can help address child poverty and support families in providing for their children’s basic needs.
- Policies to promote gender equality at workplace: Implementing policies and practices that promote gender equality in the workplace, such as equal pay for equal work, flexible work arrangements, and anti-discrimination policies.
- Universal access to sexual and reproductive health and rights: Ensuring that all people have access to comprehensive sexual and reproductive health services, including family planning, maternal health services, etc. This can help prevent unintended pregnancies, reduce maternal mortality, and promote the health and well-being of individuals and families.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Windfall Tax
Mains level: Not Much
The government has revised a windfall tax on domestically-produced crude oil. According to an official notification, the windfall tax rate of Rs 6,400 per tonne.
What is a Windfall Tax?
- Windfall taxes are designed to tax the profits a company derives from an external, sometimes unprecedented event — for instance, the energy price-rise as a result of the Russia-Ukraine conflict.
- These are profits that cannot be attributed to something the firm actively did, like an investment strategy or an expansion of business.
- The US Congressional Research Service (CRS) defines a windfall as an “unearned, unanticipated gain in income through no additional effort or expense”.
- One area where such taxes have routinely been discussed is oil markets, where price fluctuation leads to volatile or erratic profits for the industry.
Features of Windfall Tax
- Imposed on unanticipated and unearned gains: Windfall tax is imposed on the profits or gains that a company earns from external events or factors beyond their control, which they did not actively seek or pursue.
- One-time tax: It is typically imposed as a one-time tax retrospectively, over and above the normal rates of tax, and is not a regular or ongoing tax.
- Imposed on specific sectors or industries: Windfall taxes are usually imposed on specific sectors or industries where there is a significant increase in profits due to external factors such as price fluctuations, supply disruptions, or changes in regulations.
- Rationale for imposition: The imposition of windfall taxes is based on the rationale of redistributing unexpected gains, funding social welfare schemes, and creating a supplementary revenue stream for the government.
- Design problems: Introducing windfall taxes may suffer from design problems, given their expedient and political nature.
- Potential impact on investment: Windfall taxes may lead to uncertainty in the market and negatively impact future investment, as companies may feel uncertain about investing in a sector with an unstable tax regime.
When did India introduce this?
- In July 2022, India announced a windfall tax on domestic crude oil producers who it believed were reaping the benefits of the high oil prices.
- It also imposed an additional excise levy on diesel, petrol and air turbine fuel (ATF) exports.
- Also, India’s case was different from other countries, as it was still importing discounted Russian oil.
How is it levied?
- Governments typically levy this as a one-off tax retrospectively over and above the normal rates of tax.
- The Central government has introduced a windfall profit tax of ₹23,250 per tonne on domestic crude oil production, which was subsequently revised fortnightly four times so far.
- The latest revision was on August 31, when it was hiked to ₹13,300 per tonne from ₹13,000.
Reasons for re-introduction
- There have been varying rationales for governments worldwide to introduce windfall taxes like:
- Redistribution of unexpected gains when high prices benefit producers at the expense of consumers,
- Funding social welfare schemes, and
- Supplementary revenue stream for the government
Issues with imposing such taxes
- Design problems: Windfall taxes may suffer from design problems, given their expedient and political nature. There is also the issue of determining what constitutes true windfall profits and who should be taxed, which raises questions about the threshold for exemption of smaller companies.
- Potential impact on investment: Windfall taxes may lead to uncertainty in the market and negatively impact future investment, as companies may feel uncertain about investing in a sector with an unstable tax regime.
- Internalization of potential taxes: Introducing a temporary windfall profit tax may reduce future investment since prospective investors may internalize the likelihood of potential taxes when making investment decisions.
- Threshold for exemption of smaller companies: Determining the threshold for exemption of smaller companies raises questions about which companies should be taxed and what level of profit is normal or excessive.
- Difficulty in determining true windfall profits: There is also the issue of determining what constitutes true windfall profits, as it may be challenging to differentiate between profits attributable to external events versus those attributable to a company’s active investment strategy or business expansion.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Web 3.0
Mains level: Not Much
Central idea: The article discusses the key features of Web3, including its decentralized nature, peer-to-peer transactions, and greater control over data and digital assets for users.
What is Web3?
- Web3, also known as Web 3.0, is the next generation of the World Wide Web that emphasizes decentralization, security, and user privacy.
- It is essentially a vision of the internet where users have more control over their data, identities, and online interactions.
- It is built on blockchain technology, which enables peer-to-peer transactions without the need for intermediaries such as banks, governments, or other third parties.
- This decentralized approach to the web allows for greater transparency and trust, as well as more secure and private transactions.
- Web3 technologies include blockchain platforms like Ethereum, IPFS (InterPlanetary File System) for distributed file storage, decentralized identity systems like uPort, and decentralized marketplaces like OpenBazaar.
Features of Web 3
Feature
|
Web3
|
Web2
|
|
Centralisation
|
Decentralised |
Centralised |
|
Intermediaries
|
Peer-to-peer |
Rely on intermediaries |
|
Data ownership and control
|
Users have control |
Large corporations have control |
Challenges for Web3:
|
Challenge
|
Scalability
|
Current blockchain infrastructure can only handle a limited number of transactions per second. |
User Adoption
|
Despite being around for over a decade, blockchain technology is still relatively unknown to the general public. |
Interoperability
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Web3 is being developed by different organisations, each with their own unique vision for the technology, leading to challenges in integration. |
Complexity
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Technical expertise is required to use and understand Web3, which may be a barrier for some users. |
Examples of Web3 use:
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Use
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Cryptocurrencies
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Built on blockchain technology, cryptocurrencies enable secure, decentralised transactions without the need for intermediaries. |
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Decentralised Finance
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Aims to build a new financial system on top of blockchain technology. DeFi applications enable users to borrow, lend, and trade crypto. |
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Decentralised storage
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Used to create decentralised social networks and develop decentralised identity verification systems. |
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: YZ Ceti exoplanet , Exoplanets
Mains level: NA
Central idea: Astronomers have detected a repeating radio signal from the YZ Ceti exoplanet that suggests the presence of a magnetic field around it.
What is YZ Ceti b?
- YZ Ceti b is an earth-sized exoplanet (a planet that orbits a star other than our sun).
- It is located barely 12 light-years from Earth, and it rotates around a small red dwarf star called YZ Ceti.
How was the discovery made?
- The researchers had to make multiple rounds of observations before they could detect the radio signals from the star YZ Ceti, which seemed to match the orbital period of the planet YZ Ceti b.
- From this, they deduced that the signals were a result of the interaction between the planet’s magnetic field and the star.
Why does the magnetic field matter?
- Intense bursts of energy from the YZ Ceti star-exoplanet exchange produce spectacular auroral lights, similar to the energy surges from the sun that disrupt telecommunications on earth.
- The radio waves confirmed the existence of an exoplanetary magnetic field.
- This can only be produced if the exoplanet orbits very close to its parent star and has its own magnetic field to influence the stellar wind and generate the signals.
What’s the implication for YZ Ceti b?
- The small orbit of YZ Ceti b indicates that the planet takes just a couple of earth days to circle its star.
- Nearly half of all the stars visible in the sky could potentially harbor rocky, earth-sized planets in habitable orbits around them.
- Astronomers indicated that the possibility of the existence of a magnetic field on the Earth-like exoplanet, called YZ Ceti b, probably hints at the habitability of life on that planet.
How common are such magnetic fields?
- Planetary scientists have never been able to identify magnetic fields on smaller, rocky exoplanets until now.
- The survival of a planet’s atmosphere may depend on its having, or not having, a strong magnetic field, since the field protects its atmosphere from being eroded by the charged particles blowing in from its star.
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