Note4Students
From UPSC perspective, the following things are important :
Prelims level: AFS
Mains level: Paper 3- Agreement on Fisheries Subsidies (AFS)
Context
The recently concluded twelfth ministerial conference of the World Trade Organisation (WTO) adopted the trade agreement called the Agreement on Fisheries Subsidies (AFS).
About the AFS
- WTO negotiations on fisheries subsidies were launched in 2001 at the Doha Ministerial Conference, with a mandate to “clarify and improve” existing WTO disciplines on fisheries subsidies.
- At the 2017 Buenos Aires Ministerial Conference (MC11), ministers decided on a work programme to conclude the negotiations by aiming to adopt, at the next Ministerial Conference, an agreement on fisheries subsidies which delivers on Sustainable Development Goal 14.6.
- The recently concluded twelfth ministerial conference of the World Trade Organisation (WTO) adopted a sustainability-driven trade agreement called the Agreement on Fisheries Subsidies (AFS).
Provisions adopted in the AFS
- Prohibits three subsidies: Fundamentally, AFS prohibits three kinds of subsidies:
- First, illegal, unreported, or unregulated (IUU) fishing.
- Second, fishing of already over-exploited stocks.
- Third, fishing on unregulated high seas.
- Two-year transition period for developing countries: As part of special and differential treatment (S&DT), developing countries like India have been given a two-year transition period for phasing out the first two kinds of subsidies within their Exclusive Economic Zone (EEZ).
- However, the final negotiated outcome, most crucially, lacks the much-needed discipline on subsidies for fishing in other members’ waters and those that contribute to overcapacity and over-fishing (OCOF).
- Limited AFS: WTO member countries agreed to a limited AFS sans regulations disciplining OCOF subsidies, which have been pushed to the future and are expected to be completed within four years.
- If negotiations fail, the AFS will stand terminated, as provided in Article 12.
- Meanwhile, all countries can continue providing most OCOF subsidies, that is, except for fishing on unregulated high seas.
What are the implications for India?
- Longer transition period required: India has been demanding that developing countries be given a longer transition period of 25 years to put an end to OCOF subsidies within their EEZ.
- Economic growth through ocean resources: Given its long coastline of nearly 7,500 kilometres, the blue economy — sustainable use of ocean resources for economic growth — occupies a cardinal place in India’s development trajectory.
- India has set a target of exporting marine products worth $14 billion by 2025.
- Policy space for marine infrastructure: India needs the policy space to invest in developing the marine infrastructure to harness the full potential of the blue economy.
- Livelihood concerns: Moreover, India needs to protect the livelihood concerns of close to four million marine farmers, the majority of whom are engaged in small-scale, artisanal fishing, which does not pose a great threat to sustainability.
- However, India’s demand for a longer transition period was not acceptable to many countries who insisted on this period being seven years
The disparity between Developed countries and Developing countries
- India rightly contends that WTO disciplines should not be developed in a manner that throttles its emerging sector while richer nations continue to negotiate exemptions for indefinite subsidisation and exclusion of horizontal, non-specific fuel subsidies in the text.
- Rich countries have historically provided massive subsidies to build capacity for large-scale fishing and fishing in distant waters, thereby contributing the most to depletion.
- India provided subsidies worth a mere $277 million in 2018, in sharp contrast to the top five subsidisers: China, EU, US, South Korea, and Japan, whose subsidies range from $7,261-$2,860 million respectively.
Way forward
- Comprehensive agreement: For the sake of sustainability, countries need to overcome their differences soon and forge a comprehensive agreement with the inclusion of meaningful S&DT, else they risk the indefinite continuation of harmful subsidies by all players.
- One balancing act could be to consider different ways to effectuate such flexibilities while accommodating the demands in a more targeted manner.
- Strengthening infrastructure: India could strengthen infrastructure and mechanisms to be able to utilise any future exemptions.
Conclusion
For India, the AFS is less-than-perfect, with a potential of no real outcome at the end of four years if the negotiations fail. But negotiations over the global commons are not easy.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Exercise Talisman Sabre
Mains level: Paper 2- India-Australia relations
Context
India and Australia, which share common values and interests, must work together with resolve to shape the economic and strategic environment so that it continues to support collective security and prosperity.
India-Australia ties: A background
- The ties are a Comprehensive Strategic Partnership full of practical, tangible actions that strengthen ties and benefit the region.
- India and Australia are a small group of countries to hold annual leaders’ summits and biennial 2+2 talks involving foreign and defence ministers.
- The defence forces of both the countries are undertaking more complex activities together, such as in Exercise Malabar with the US and Japan.
- We coordinate closely on maritime domain awareness.
- This year both countries deployed P-8 surveillance aircraft to each other’s territories for joint patrols.
- Australia has also committed to a package of partnership initiatives in our update to the India Economic Strategy.
- Cooperation on climate and sustainability: India and Australia have great potential to cooperate on climate and sustainability.
Why India matters to Australia
- Securing supply chain: India’s economy, manufacturing capabilities and talent ensure it will play a key role in securing supply chains and restarting post-pandemic growth.
- Balance of power: Its military has the capacity and capability to respond to natural disasters, help stabilise an uncertain region and contribute to an effective balance of power.
- Technological and scientific capabilities: Its technological and scientific capabilities are gateways to a cleaner and more sustainable world.
- Commitment to democracy: Most of all, India’s people have the optimism, the commitment to democracy, the drive and the goodwill to make our region safer, freer and better.
Vision for open, inclusive and resilient Indo-Pacific region
- As the bilateral relationship deepens, both the countries must begin to work more together with others in the region.
- Responding to humanitarian crises and natural disasters: There is enormous potential in the Indian and Pacific oceans, where we each have vital interests in combating climate change, illegal fishing and people smuggling and responding to humanitarian crises and natural disasters.
- Australia has a vision for an open, inclusive and resilient Indo-Pacific region.
- It is a vision for a region that is more integrated rather than divided, where trade and investment flow freely based on agreed rules and treaty commitments, where disputes are resolved through dialogue in accordance with international law, and where a strategic culture that respects the rights of all states, big and small, prevails.
- It is a vision that Australia share with partners like ASEAN, and partners like India.
- Whether through joint activities with like-minded countries, or the support of regional and multilateral architecture, Australia is ensuring the region has options and balance.
Conclusion
India and Australia’s interests don’t just align, they are inextricably entwined. Expect this relationship to grow and prosper, our cooperation to deepen.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: GSAP
Mains level: Paper 3- Communication gap between MPC and RBI
Context
Communication is a critical element of monetary policy. Yet there seems to be a gap between what the MPC says and what the RBI does.
About MPC
- The Reserve Bank of India Act, 1934 (RBI Act) has been amended by the Finance Act, 2016, to provide for a statutory and institutionalised framework for a Monetary Policy Committee, for maintaining price stability, while keeping in mind the objective of growth.
- Highest monetary policy-making body: By law, the Monetary Policy Committee is the highest monetary policy-making body in the land, tasked with deciding monetary policy changes at regular intervals.
- Composition: The MPC will have six members – the RBI Governor (Chairperson), the RBI Deputy Governor in charge of monetary policy, one official nominated by the RBI Board and the remaining three members would represent the Government of India.
- The MPC will be chaired by the Governor.
- Under the inflation targeting regime, the most important role in communication belongs to the MPC.
Communication with public
- Monetary policy changes are communicated through formal statements, with the discussions underlying these decisions also being published, so that the public can understand why the MPC decided the way that they did.
- Communication gap: Over the past few years, a communication gap seems to have opened up between what the MPC has been saying and what the RBI has been doing, thereby potentially eroding the credibility of the IT framework.
- Influencing inflation expectations: Communication is an important part of the ability of the central bank to influence inflation expectations.
Following are the ways which indicate the communication gap between the RBI and the MPC, with several implications for the credibility of the MPC.
1] Separate statements
- During the first few years of the inflation-targeting regime from 2016 to 2018, the process of communication worked quite well.
- On the days of policy announcements, the governor and his deputies would participate in a press conference.
- From 2019 onwards, however, things began to change.
- Governor’s separate statement: The RBI began to release a separate governor’s statement on the day of the monetary policy meeting, presenting an inflation outlook and even explaining the decision taken by the MPC.
- MPC statement: It has overlapped with the MPC statement; at times, it has seemed somewhat different.
- For example, following the June 8 Monetary Policy Review the MPC highlighted inflation concerns, and voted in favour of raising the policy repo rate.
- On the same day, a governor’s statement mentioned that the central bank will also remain focussed on the orderly completion of the government’s borrowing programme.
- Confusion: The issuance of two such different statements can lead to confusion, especially as lowering inflation and lowering government bond yields are contradictory policy objectives.
Why is communication so crucial? To influence inflation expectations!
- If the public believes the central bank is committed to keeping inflation under control, then it will act accordingly.
- Firms will moderate their price increases, fearing that large price rises will make them uncompetitive.
- Meanwhile, workers will accept moderate wage increases, while investors will accept low interest rates on their bond purchases.
- With everyone acting in this way, it will be easier for the central bank to ensure that inflation indeed remains low.
- Anchored inflation expectations: If inflation expectations are well anchored, then it becomes relatively easy for the central bank to ensure that inflation returns to the target level before too long.
2] Change in the Monetary Policy Corridor width during pandemic
- Deciding the repo rate: The most important task of the MPC, enshrined in the RBI Act (Amended), 2016 that introduced IT, is to decide the repo rate, since this has long been the lynchpin of India’s monetary policy framework.
- Ever since the early 2000s, policy had aimed to keep overnight money market rates in a corridor, with the lower bound established by the reverse repo rate and the upper bound by the repo rate.
- Since the width of this corridor was fixed, once the repo rate was decided, the reverse repo rate was automatically determined, and market overnight rates adjusted accordingly.
- During the Covid-19 pandemic, the RBI constantly adjusted the reverse repo rate even as the MPC kept the repo rate unchanged.
- As a result, the fixed width of the corridor was lost, and the MPC lost any role in determining interest rates.
3] Introduction of policy instruments outside the remit of MPC
- During pandemic, the RBI introduced a number of new policy instruments, again outside the remit of the MPC.
- GSAP: It brought in the GSAP programme through which it pre-commited to buying a certain amount of dated government bonds in order to control their yields.
- Variable reverse repo auctions: It then introduced variable reverse repo auctions, and more recently, replaced the reverse repo rate with the long-dormant standing deposit facility rate.
- The rationale for this was not explained in the MPC statement.
- All unconventional monetary policy announcements were kept outside the MPC statement.
- This raised the questions about the role of the committee in deciding monetary policy actions at a crucial time like the pandemic.
4] Intervention in the foreign exchange market
- The RBI has been intervening in the foreign exchange market to manage the rupee.
- Forex interventions by definition influence the domestic monetary base and inflation.
- Yet the MPC in its monetary policy statements does not discuss either the exchange rate dynamics or the forex interventions.
- Just as it does not discuss the RBI’s interventions in the bond market to lower the yields.
Way forward
- In its latest two statements, the MPC indicated that policy would now be focusing on bringing India’s inflation rate under control.
- Clear policy framework: If the RBI is going to be successful in this endeavour, the first step must be to close the communication gap, by reintroducing a simple and clear policy framework and restoring the central role of the MPC.
Conclusion
The net result of all these actions is a potential loss of both clarity and credibility. The communication gap will need to be closed in order for the RBI to become successful in bringing inflation back to its 4 per cent target level.
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Back2Basics: Monetary Policy Corridor
- The Corridor in the monetary policy of the RBI refers to the area between the reverse repo rate and the MSF rate.
- Reverse repo rate will be the lowest of the policy rates whereas Marginal Standing Facility is something like an upper ceiling with a higher rate than the repo rate.
- The MSF rate and reverse repo rate determine the corridor for the daily movement in the weighted average call money rate.
- As per the monetary policy of the RBI, ideally, the call rate should travel within the corridor showing a comfortable liquidity situation in the financial system and economy.
What is GSAP?
- The G-Sec Acquisition Programme (G-SAP) is basically an unconditional and a structured Open Market Operation (OMO), of a much larger scale and size.
- G-SAP is an OMO with a ‘distinct character’.
- The word ‘unconditional’ here connotes that RBI has committed upfront that it will buy G-Secs irrespective of the market sentiment.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- India-Sri Lanka relations and challenges
Context
The commonality between Sri Lanka and the southern parts of India remains a less-emphasised yet significant aspect of India-Sri Lanka relations.
Crisis in Sri Lanka and relief provided by India
- The present economic crisis in Sri Lanka has pushed it closer to India for immediate relief.
- India, as part of its ‘Neighbourhood First’ policy, has extended support to the people of Sri Lanka in the form of aid (close to $3.5 billion) to help secure Sri Lanka’s food, health and energy security by supplying it essential items such as food, medicines, fuel and kerosene.
- The latest in the series was the signing of an agreement on June 10 between the Government of Sri Lanka and the Export-Import Bank of India for a $55-million short term Line of Credit to facilitate the procurement of urea for paddy crop in the ongoing ‘Yala’ season.
- On its part, Tamil Nadu decided to provide aid of ₹123 crore, comprising 40,000 tonnes of rice, 137 types of life-saving drugs and 500 tonnes of milk powder.
Sri Lanka-India sub-regional context
- During his second term as Prime Minister, Mr. Wickremesinghe while delivering a lecture in Chennai, in August 2003, called for the development of the south India-Sri Lanka sub-region as a single market.
- Such a market would provide more opportunities for the economic growth of both countries.
- In 2016 he highlighted the fact that the five Indian southern States, with a total population of 250 million, had a combined gross state domestic product of nearly $450 billion; with the addition of Sri Lanka’s $80 billion GDP, the sub-region would have a $500 billion economy, having an aggregate population of around 270 million.
Challenges
- Possibility of greater economic collaboration: Whether this bonhomie can lead to greater economic collaboration between Sri Lanka and south India, not necessarily Tamil Nadu alone, given the historical baggage, is anybody’s guess.
- Baggage of history: Some sections of the Sinhalese still hold the view that India had been a threat to Sri Lanka and it can still be a threat to them.
- The manner in which the Rajapaksa regime unilaterally scrapped in February 2021 a tripartite agreement signed in 2019 with India and Japan for the development of Colombo’s East Container Terminal was a reflection of the historical baggage.
- This perception can be traced to history when Sri Lanka was invaded by rulers of south India who humbled the Sinhala kings.
- In the aftermath of the 1983 anti-Tamil pogrom, the support provided by the Indian government to Tamil rebels only strengthened this perception.
- Modest investment in Sri Lanka’s development: Despite India’s open willingness to take part in the development of Sri Lanka after the civil war, the scale of its involvement has been modest.
- Incomplete projects due to lack of political will: After the cancellation of the tripartite agreement, India was later provided with projects such as the West Container Terminal, the Trincomalee oil tank farm and a couple of renewable projects, there were several proposals that envisaged India’s participation but did not see the light of day.
- Another project, a collaboration between NTPC Limited and the Ceylon Electricity Board, was cancelled.
- Other projects too such as the development of the Kankesanthurai harbour and the expansion of the Palaly airport in Jaffna, both envisaging Indian participation, would have become a reality had there been show of political will from the other side.
- The project of building a sea bridge and tunnel, connecting Rameshwaram to Talaimannar, remains on paper.
Way forward
- Infrastructure development: Even now, there is enormous scope for collaboration between the two countries in the area of infrastructure development.
- Cross-border energy trade: The economic crisis has revived talk of linking Sri Lanka’s electricity grid with that of India.
- If this project takes off, the first point of interconnectivity on the Indian side will most likely be in Tamil Nadu.
- India has cross-border energy trade with Bangladesh, Nepal, Bhutan and Myanmar.
- Facilitating people-to-people interaction: The apprehension in the minds of sections of the Sinhalese majority about India being a threat can be dispelled only by facilitating greater people-to-people interaction, including pilgrimages by monks and other sections of Sri Lankan society to places of Buddhist importance not only in north India but also in the south (Andhra Pradesh).
Conclusion
Much more will have to be done but the opportunity created by the current circumstances should be utilised to bring Indian and Sri Lankan societies closer — a prerequisite to achieving an economic union between Sri Lanka and the southern States of India.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- Job creation by the government
Context
The government recently announced that 10 lakh government jobs will be provided over the next 18 months on a “mission mode”.
Background
- The government recently announced it would recruit 10 lakh people in “mission mode” over the next one-and-a-half years.
- The announcement came at a time when the unemployment rate for youth (aged 15-29 years) in urban areas has been hovering at over 20 per cent for the last several quarters.
- According to the Quarterly Bulletin of Periodic Labour Force Survey (PLFS), the youth unemployment rate, according to current weekly status, stood at 20.8 per cent in urban areas during October-December 2021.
- The annual PLFS report too shows that the overall youth unemployment rate, according to usual status (ps+ss), was at 12.9 per cent — 18.5 per cent in urban areas and 10.7 per cent in rural areas — during July-June 2020-21.
Three takeaways from the announcement
- One, the creation of employment is indeed a problem and can no longer be hidden from the public discourse.
- Two, the private sector, especially modern sectors such as the service and manufacturing sectors, which are dominated by multinational companies, have not created many jobs.
- Even if the Information Technology sector or the modern gig economy have created jobs, these are either very high-skilled jobs or low-skilled ones.
- Three, the government in the Nehruvian scheme of development occupied an important place in the labour market.
- The government is now forced to step in as persistently rising inflation, unemployment and underemployment threaten to politically affect it.
Employment data and issues with it
- Government is at present relying on the Employees’ Provident Fund Organisation/National Pension System/Employees’ State Insurance Scheme registrations and exits as indicators of the formal labour market.
- This could be misleading as companies may be increasing registrations to cross the threshold to become eligible to fall under any of these.
- Formalisation: Hence, this might be more a case of formalisation rather than employment generation.
- Second, media reports show that more than 85% of those aspiring for those 10 lakh jobs could be consumed by existing vacancies in Central government departments (8,72,243).
- The decline in PSU jobs: Third, 241 central public sector enterprises (CPSEs) have been shedding jobs in recent years.
- The decline in quality of jobs: Even though the labour force and workforce participation rates have increased marginally, there is a decline in the quality of jobs, viz. there is a rise in the unpaid segment of the self-employed and a rise in the share of the agricultural sector in total employment over the last three Periodic Labour Force Surveys (43% to 47%).
Role of the private sector
- The private sector creates jobs in response to market forces and while taking into consideration radically altering technological developments.
- We cannot avoid placing the government at the centre of employment creation beyond a certain point.
- Projects in the modern private sector consume a lot of capital to generate very few jobs.
- For instance, recently, there was a report that the Adani Group has invested ₹70,000 crore (or ₹700 million) in Uttar Pradesh to create merely 30,000 jobs.
- Foreign Direct Investment, which at any rate is highly capital-intensive, goes mostly into the non-manufacturing sectors.
Way forward
- The government’s role in employment generation has entered into popular discourse and discussions on policy formation.
- The government should play a significant role soon.
- Government as principal employment generator: The government should re-establish its role as the principal employment generator through jobs in its ministries and CPSEs and through assured employment generation programmes like MGNREGA.
Conclusion
Employment is not merely about numbers and growth figures. We need to concentrate on enabling the creation of decent work and a sustainable labour market to which India is committed as a member of the United Nations and the International Labour Organization.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Agnipath scheme
Mains level: Paper 3-Agnipath Scheme
Context
All major powers undertake a periodic (every 4-5 years) review of their evolving national security objectives. The government of India, on the other hand, has neglected to undertake any such exercise, in the past 75 years.
India’s defence budget for FY 2022-23
- In 2022-23, the Ministry of Defence has been allocated Rs 5,25,166 crore.
- This includes expenditure on salaries of armed forces and
civilians, pensions, modernisation of armed forces, production establishments, maintenance, and research and development organisations.
- According to the Stockholm International Peace
Research Institute (SIPRI), India was the third largest defence spender in absolute terms in 2020
after USA and China.
- In the last decade (2012-13 to 2022-23), the budget of the Ministry of Defence has grown at an annual average rate of 8.6%, while total government expenditure has grown at 10.8%.
- Defence expenditure as a percentage of GDP declined from 2.3% in 2012-13 to 2% in 2022-23.
Neglect of defence expenditure in India
- Defence expenditure as non-plan expenditure: Independent India saw defence expenditure being relegated to the “non-plan” category, within the ambit of a Soviet-inspired, central economy.
- Pension bill linked to defence budget: In another anomaly, the pension bill of veteran soldiers — a separate charge on the exchequer — was linked to the defence budget.
- Neglect of modernisation needs: And the growing pension bill was given as an excuse for the dwindling funds available for force-enhancement and hardware replacement/modernisation.
- As a result, the finance ministry, instead of finding ways and means of raising essential, additional funds for national defence demanded that they evolve measures for reducing the pension bill.
Two issues with our national security approach
1] Lack of periodic review
- Every nation faces the eternal “guns vs butter” dilemma.
- Periodic review: All major powers undertake a periodic (every 4-5 years) review of their evolving national security objectives, the options available, and the economic/military means available for achieving them.
- Apart from providing fiscal guidance, this process also facilitates the evolution of a national security strategy.
- China, has, since 2002, been issuing, with unfailing regularity, a biennial “Defence White Paper”, which encapsulates all of the foregoing, and is available on the Internet; for the information of foes and friends, alike.
- The government of India, on the other hand, has neglected to undertake any such exercise, in the past 75 years.
- India is amongst the few major powers which has failed to issue a National Security Strategy or Doctrine.
2] Lack of organisation reforms
- A second fact that we need to face is that our armed forces have remained in a Second World War time-warp, as far as their organisation and doctrines are concerned.
- Lack of political will and internal resistance: Attempts at organisational reform have come to naught due to lack of political will as well as internal resistance from the services; with the constitution of a Chief of Defence Staff and creation of a Department of Military Affairs providing the latest examples.
Way forward
- Given the transformed nature of warfare, down-sizing of the Indian army, by substituting manpower with smart technology and innovative tactics, has become an imperative need.
Agnipath Scheme
- Recently announced Agnipath scheme provides for the recruitment of youths in the age bracket of 17-and-half to 21 years for only four years with a provision to retain 25 per cent of them for 15 more years.
- Later, the government extended the upper age limit to 23 years for recruitment in 2022.
- The personnel to be recruited under the new scheme will be known as Agniveers.
Suggestions for Agneepath Scheme
- 1] Not the best time to introduce reform: Given the parlous security situation, on the country’s northern and western borders as well as the ongoing domestic turbulence, this is not the best time to cast the armed forces — already short of manpower — into turmoil, with a radical and untried new recruitment system.
- 2] The scheme is suitable for the army only: Such a scheme, in its present form, is suitable only for the army, whose large infantry component is not excessively burdened with technology.
- In case of the navy and air force, at least 5-6 years are required before a new entrant can acquire enough hands-on experience to be entrusted with the operation or maintenance of lethal weapon systems and complex machinery and electronics.
- 3] Trial before implementation: A radical change of this nature should have been subjected to a trial before service-wide implementation.
- Ideally, a few units of the regular or Territorial Army could have been earmarked as a testing ground, and feed-back obtained.
- 4] Legal backing to post-demobilisation employment: Experience of the past has shown that the home ministry has resisted induction of ex-servicemen into the armed-police and para-military forces, on the grounds that it would spoil the career path of their own cadres.
- Neglect by the state government: Similarly, state governments and other agencies have blatantly ignored the reservations mandated for ESM.
- Therefore, if the Agnipath scheme has to offer a meaningful promise of post-demobilisation employment or education, this must be mandated by an Act of Parliament, on the lines of the “GI Bill” enacted by the US Congress.
Conclusion
A scheme on the lines of Agnipath, appropriately constituted, and focused on enhancing “combat effectiveness” rather than “effecting savings” or “generating employment,” could have triggered a reformative process. But the above given caveats need to be borne in mind in this context.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Self reliance in edible oil through oil palm
Context
Supply disruptions during the pandemic and the Russia-Ukraine war have led many nations to think about “self-sufficiency” in critical food items or at least reduce their “excessive dependence” on imports of essential food products.
Challenges facing global trade
- The World Trade Organisation’s (WTO) recently concluded12th Ministerial Conference in Geneva, struggled to find answers to some of the complex questions pertaining to global trade.
- The Ministerial Conference is the top decision-making body of the agency whose basic goal is to ensure that trade flows as smoothly, predictably and freely.
- Trading rules for dire situations: As far as agriculture, trade and food security are concerned, the challenge is to figure out the most appropriate trading rules in dire situations like pandemics, wars, social/political disruptions or natural disasters.
- Export bans: Recent examples include Russia’s export ban on wheat and sunflower oil, Ukraine’s ban on exports of food staples, Indonesia’s ban on palm oil exports, Argentina’s ban on beef exports, Turkey, Kyrgyzstan and Kazakhstan’s ban on a variety of grain products, and India’s wheat export ban.
- Sudden actions such as these exacerbate the pressure on global trade leading to a spike in the prices.
India’s import dependence for edible oil
- India imports 55 to 60 per cent of its edible oil requirements.
- India’s edible oil import bill in 2021-22 (FY22) crossed $19 billion (for more than 14 MMT of imports) (see figure).
- Palm oil comprises more than 50 per cent of India’s edible oil imports, followed by soybean and sunflower.
- Atmanirbharta in edible oil: The “excessive dependence” on imports has raised the pitch for “atmanirbharta” in edible oil.
- The Prime Minister launched the National Edible Oil Mission-Oil Palm (NEOM-OP) in 2021.
Self-reliance Vs Self-sufficiency
- “Self-sufficiency” and “self-reliance” are two different concepts with very different policy implications.
- What is self-sufficiency? Self-sufficiency would imply replacing all imports of a commodity (say edible oils in India’s case) at any cost (thus raising import duties exorbitantly).
- What is self-reliance? Self-reliance would continue to embed the principle of “comparative advantage” in the endeavour to reduce dependence on imports.
- Case of India’s agriculture: The country’s agri-exports in FY22 touched $ 50.3 billion against its agri-imports of $ 32.4 billion.
- This means that Indian agriculture is largely globally competitive.
- But its biggest agri-import item, edible oil, accounts for 59 per cent of India’s agri-import basket.
Way forward
- 1] Develop oil palm: Given the way international prices of edible oils have surged in the last year or so (by more than 70 per cent), it may be time for India to ramp up its efforts in developing oil palm.
- Why oil palm? The Prime Minister launched the National Edible Oil Mission-Oil Palm (NEOM-OP) in 2021.
- Challenges in traditional oilseed: Achieving atmanirbharta in edible oils through traditional oilseeds such as mustard, groundnuts and soya would require an additional area of about 39 million hectares under oilseeds.
- Danger to food security: Such a large tract of land will not be available without cutting down the area under key staples (cereals) – this could endanger the country’s food security even more.
- So, a rational policy option to reduce import dependence in edible oils is to develop oil palm at home and ensure that it gives productivity comparable to that in Indonesia and Malaysia — about four tonnes of oil per hectare, which is more than 10 times mustard can give at existing yields.
- India has identified 2.8 million hectares of area where oil palm can be grown suitably.
- So far the objective of NEOM-OP is to bring in at least 1 million hectare under oil palm by 2025-26.
- 2] Declare oil palm as a plantation crop: The other option is to declare oil palm as a plantation crop and allow the corporate players to own/lease land on a long-term basis to develop their own plantations and processing units.
- This does not seem plausible in the current socio-political context.
Challenges
- Long gestation period: It takes four to six years to come to maturity; during this period, smallholders need to be fully supported.
- The support (subsidy) could be the opportunity cost of their lands, say profits from paddy cultivation, which is largely the crop oil palm will replace in coastal and upland areas of Andhra, Telangana and Northeast India.
- Pricing formula: Further, the pricing formula of fresh fruit bunches (FFB) for farmers has to be dovetailed with a likely long-run average landed price of crude palm oil with due flexibility in the import duty structure.
- Appropriate import duty: One needs to identify trigger points when import duties need to be raised as global prices come down, and when to reduce these duties in case of rising global prices.
- Oil recovery: Besides this, the processing industry needs to ensure an oil recovery of at least 18 to 20 per cent – that must be built into the pricing formula.
Conclusion
Overall, unless India thinks holistically and adopts a long-term vision, the chances of reducing India’s imports of edible oils from 14MMT in FY22 to 7MMT by FY27 look bleak.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Agnipath scheme
Context
Recently, the Agnipath scheme for recruitment of short-term contracted soldiers was announced.
About Agnipath Scheme
- This will be the only form of recruitment of soldiers into the three defence services from now.
- The scheme aims at strengthening national security and for providing an opportunity to the youth to serve in the armed forces.
- Recruits under the scheme will be known as ‘Agniveers’.
- After completing the four-year service, they can apply for regular employment in the armed forces.
- They may be given priority over others for various jobs in other government departments.
- The move is expected to decrease the average age profile of armed forces personnel from the current 32 to 24-26 years over a period of time.
Benefits of the Agnipath Scheme
- Lower the average age: The average age in the forces is 32 years today, which will go down to 26 in six to seven years, the scheme envisions.
- Youthful armed forces will allow them to be easily trained for new technologies.
- Employment opportunities: It will increase employment opportunities and because of the skills and experience acquired during the four-year service such soldiers will get employment in various fields.
- High-skilled workforce: The scheme will also lead to the availability of a higher-skilled workforce to the economy which will be helpful in productivity gain and overall GDP growth
Financial constraints and challenges
- Directing funds towards modernisation: It has been argued that the savings in the pensions bill — which will show up on the books only after a couple of decades — would be directed towards the modernisation of defence forces.
- The armed forces do not have that kind of time available to them to postpone their already long-delayed modernisation.
- Shortage: The Indian Air Force is already down to 30 squadrons of fighter jets against the 42 squadrons it needs, and the Indian Navy is at 130 ships when its vision was to be a 200-ship navy; the Indian Army is already short of 1,00,000 soldiers.
- Instead of expanding the economy to support the military, the Government has resorted to shrinking the military.
Issues with the short-term recruitment
- No theoretical modelling: As the short-term recruitment policy has neither been theoretically modelled nor tried out as a pilot project, the exact consequences of the move will only be known as they play out.
- Adverse effect on professional capabilities: But its adverse effect on the professional capabilities of the armed forces is certain.
- It starts with the very high turnover of young soldiers, the increase in training capacities and infrastructure and the augmentation of the administrative setup for greater recruitment, release, and retention of soldiers.
- An armed forces boasting of a poor teeth-to-tail ratio is further increasing the tail.
- Impact on operational capabilities: The tooth-to-tail ratio (T3R), in military jargon, is the amount of military personnel it takes to supply and support (“tail”) each combat soldier (“tooth”).
- The Indian Air Force and the Indian Navy employ their airmen and sailors in very specialised roles, which require technical skills, and a high degree of training and experience.
- Because the short-term contractual soldier model (the Agniveer scheme) is going to take a few years to fully play out at an organisational level, the actual degradation of operational capability will only be known then.
- Class-based recruitment abolished: In the Agnipath proposal, the class-based recruitment has been replaced with an all-India all-class recruitment.
- It will strike at the core of the organisational management, leadership structures and operating philosophy of the Indian Army.
- Even though the soldiers in the Indian Army are professionally trained, they also draw their motivation from their social identity — where each soldier cares for his reputation among the peers in his caste group or his village or his social setting.
- To replace that with a pure professional identity of a soldier will bring its own challenges in a tradition-bound army.
- Training challenges: There will be major problems in training, integrating and deploying soldiers with different levels of experience and motivations.
- An organisation which depends on trust, camaraderie and esprit de corps could end up grappling with rivalries and jealousies amongst winners and losers, especially in their final year of contract.
- Legal challenges: Even though the Government has kept the contract at four years to deny the Agniveer gratuity and is not counting the contractual period towards regular service, these provisions are bound to be challenged legally.
- Over time, this will lead to the salary and pension budget creeping back up again.
- Political imbalance: The Agnipath scheme also does away with the idea of a State-wise quota for recruitment into the Army, based on the Recruitable Male Population of that State which was implemented from 1966.
- This prevented an imbalanced army.
- Academic research shows that the high level of ethnic imbalance has been associated with severe problems of democracy and an increased likelihood of civil war.
- Impact on motivation: A short-term contractual soldier, without earning pension, will be seen as doing jobs after his military service that are not seen to be commensurate in status and prestige with the profession of honour.
- Impact on motivation: It will reduce the motivation of those joining on short-term contracts while diminishing the “honour” of a profession which places extraordinary demands on young men.
- Social unrest: There are numerous examples of demobilised soldiers leading to increased violence against minorities.
- This could happen in India as the youth who are not given regular recruitment after four year’s service would turn to violence.
Conclusion
The Government’s yearning for financial savings runs the risk of reducing the honour of a profession, the stability of a society and the safety of a country.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- Making the Parliament inclusive
Context
Due to systemic issues, Parliament continues to alienate women. The number of women representatives is still considerably small, but even more subtly, Parliament as a workspace continues to be built exclusively for men.
Women’s participation in the initial years
- In 1952, when the Indian Republic held its first Parliamentary session, there were 39 strong, intelligent, and passionate women as its member.
- Leading in the world in inclusiveness: At a time when women formed only 1.7% of the total members of the United States Congress and 1.1% of the Parliament of the United Kingdom, India was leading the way in the fight towards more inclusive world democracies with 5.5% women representation.
- Women played an important role in India’s struggle for independence and that contribution was reflected in their presence in the parliament.
- What happened in 1952 was a highly progressive step, but 70 years hence, it seems we have strayed from that path.
Electoral representation of women in India: Current scenario
- 14.6 per cent in current Lock Sabha: In India, women currently make up 14.6 per cent of MPs (78 MPs) in the Lok Sabha, which is a historic high.
- Although the percentage is modest, it is remarkable because women barely made up 9 per cent of the overall candidates in 2019.
- In electoral representation, has fallen several places in the Inter-Parliamentary Union’s global ranking of women’s parliamentary presence, from 117 after the 2014 election to 143 as of January 2020.
- In terms of electoral quotas, there were two outstanding exceptions in the 2019 general elections.
- Voluntary parliamentary quota: West Bengal under Mamata Banerjee and Odisha under Naveen Patnaik opted for voluntary parliamentary quotas, fielding 40 per cent and 33 per cent women candidates, respectively.
- Women reservation bill: The bill to reserve 33 per cent seats for women in Parliament and state legislatures was passed in the Rajya Sabha in 2010, but it was never introduced in the Lok Sabha.
- India ranks a dismal 146th in women’s representation in the national Parliament.
- At the turn of the century, it ranked 66th.
- The decline has come because progress has been piecemeal — several other countries have improved their share of women in Parliament far more rapidly.
Struggle for inclusivity
- Despite a good start in the past, our struggle with inclusivity has not eased.
- Due to systemic issues, Parliament continues to alienate women.
- The number of women representatives is still considerably small, but even more subtly, Parliament as a workspace continues to be built exclusively for men.
Lack of inclusivity in the Parliament
- Absence of gender-neutral language: A closer look at our parliamentary discourse and communication reveals a concerning and disconcerting absence of gender-neutral language.
- After 75 years of Independence, Parliament often refers to women in leadership positions as Chairmen and party men.
- In the Rajya Sabha, the Rules of Procedure continue to refer to the Vice-President of India as the ex-officio Chairman, stemming from the lack of gender-neutral language in the Constitution of India.
- The alarming degree of usage of masculine pronouns assumes a power structure biased towards men.
- Lack of gender-neutral Acts: The issue further extends to law-making.
- In the last decade, there have hardly been any gender-neutral Acts.
- Acts have made references to women not as leaders or professionals (such as policemen), but usually as victims of crimes.
- The root of such instances lies with a gender-conforming Constitution.
- In its present state, the Constitution reinforces historical stereotypes that women and transgender people cannot be in leadership positions, such as the President and the Vice-President of India.
- This represents the failure of the many Union Governments which did not take the initiative of amending it.
- In the past, amendments have been brought about to make documents gender neutral.
- In 2014, under the leadership of the then Speaker of the Lok Sabha, Meira Kumar, the Rules of Procedure of the Lok Sabha were made entirely gender neutral.
Way forward
- Correcting the language: Internationally, even mature democracies that legalised universal suffrage after India, such as Canada (1960 for Aboriginal women), Australia (1962 for Indigenous women), and the United States (1965 for women of African-American descent), have now taken concrete measures towards gender-inclusive legislation and communication..
- Amendments: India can and must begin with an amendment to the Constitution and the entire reservoir of laws.
- Focus on the deeper issues of aspiration: Once the language is corrected, the entire country, including Parliament, can focus on the deeper issues of the aspirations and growth of its woman workforce.
- Women staff in Parliament: Women are not adequately represented in Parliament staff,.
- We need a single, transparent appointment and promotion process for women staff in Parliament.
- We need to make sure that their professional growth is not being hindered by other issues such as harassment and domestic responsibilities.
Conclusion
In the 21st century, when people of all genders are leading the world with compassion, strength and ambitions, the Indian Parliament needs to reflect on its standing.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- Plugging the gaps in death penalty sentencing
Context
In a judgment delivered last month, the Supreme Court, in Manoj & others v. State of MP, embarked on a significant attempt to reform the administration of the death penalty.
Background: Crisis in the death penalty sentencing
- There has long been a judicial crisis in death penalty sentencing on account of unprincipled sentencing, arbitrariness and worrying levels of subjectivity.
- The crisis has been acknowledged by the Supreme Court, the Law Commission of India, research scholars and civil society groups.
- Crime-centric nature: Death penalty sentencing has been, by and large, crime-centric.
- This approach goes against the requirements imposed on sentencing judges by the Supreme Court in Bachan Singh (1980).
The framework laid down in the Bachan Singh case
- Take into account factors relating to crime and the accused: This framework made it binding for the sentencing judges to take into account factors relating to both the crime and accused and assign them appropriate weight.
- Judges couldn’t decide to impose the death penalty only on the basis of the crime.
- The background of the accused, the personal circumstances, mental health and age were considerations a sentencing judge had to account for.
- Judges were required to weigh “mitigating” and “aggravating” factors to ascertain if a case was fit for the death sentence and also determine if the option of life imprisonment was “unquestionably foreclosed”.
Why there is a crisis in death penalty sentencing?
- The four decades since Bachan Singh have shown us that this framework has been followed more in breach.
- There is utter confusion across all levels of the judiciary on the requirements of the framework laid down in the Bachan Singh case and its implementation.
- Nature of crime a dominant consideration: An important reason for the breakdown is that factors relating to the crime — the nature of the crime and its brutality — are often dominant considerations, and there is barely any consideration of mitigating factors.
- Little discussion on mitigating factors: There has been very little discussion on bringing the socioeconomic profile of death row prisoners as a mitigating factor into the courtroom.
Significance of the SC judgment in Manoj & others v. State of MP
- Efforts to plug the gap: The judgement identifies the lacuna as an explicit concern, states the consequences that flow from such a vital gap, and suggests measures to plug it.
- Recognising reformation: A striking part of the judgment is its commitment to recognising reformation as integral to the Indian criminal justice system, especially death penalty sentencing.
- Procedural threshold: The judgment is clear that certain procedural thresholds must be met for sentencing to be fair and explicitly rejects (once again) the idea that death sentences can be determined solely on crime-based considerations.
- The verdict recognises that aspects of the accused’s life, both pre-offence and post-offence in prison, are relevant.
- As practical steps in this process, the judgment asks courts to call for reports from the probation officer as well as prison and independent mental health experts.
- Right of the accused to present mitigating factors: The right of the accused to present mitigating factors and rebut the state, if necessary, is also recognised.
- Psychological and philosophical aspect taken into account: There is now overwhelming evidence from psychology that criminality cannot just be reduced to terrible decisions by individuals in the exercise of their free will.
- All our actions are a result of a complex web of biological, psychological, and social factors and that understanding has a very significant bearing on discussions on criminality and punishment.
Challenges
- Implementation issue: Apart from this issue of implementation, even if detailed and high-quality sentencing information is to come into our courtrooms, a bigger challenge awaits.
- The judicial treatment of sentencing information is a Pandora’s box that will inevitably have to be opened.
- Requirement for normative basis: The Supreme Court will have to provide a rigorous normative basis for consideration of these factors.
- In the absence of such foundations, death penalty sentencing will continue to be unprincipled and sentencing judges are not going to understand the need for this wide range of sentencing information.
Conclusion
The significance of last month’s judgment, authored by Justice Ravindra Bhat, is that it takes this problem head-on. It identifies the lacuna as an explicit concern, states the consequences that flow from such a vital gap, and suggests measures to plug it.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: INSTC
Mains level: Paper 2- India-Iran relations
Context
Iran’s Foreign Minister Hossein Amir-Abdollahian’s three-day visit to India, last week, was the first ministerial-level visit from Iran since Ebrahim Raisi assumed the Iranian presidency in August last year.
Background
- Bilateral relations between India and Iran span millennia marked by meaningful interactions.
- Both countries shared borders until 1947 and share several common features in their language, culture and traditions.
- The diplomatic links were established on 15th March 1950, when both countries signed a Treaty of Friendship and Perpetual Peace.
- However, Iran’s joining of Baghdad pact in 1954 and the Cold War politics prevented both countries from having closer relations until the 1990s.
- Islamic Revolution of 1979, hostage of US diplomats, Iran-Iraq War and Tehran’s support for Hezbollah and Hamas among others resulted in a range of political and economic sanctions, leading to Iran being isolated at a global level
- In the 1990s, both countries’ interests converged around energy, Central Asia and security, mostly around the Pakistan-Afghan region.
- This resulted in the signing of ‘The Delhi Declaration’, which provided the vision of the countries’ defence and strategic partnership and “Tehran Declaration”, which set forth the areas of possible cooperation
India-Iran relations: A shared vision for equitable, pluralistic and co-operative international order
- The “Tehran Declaration” signed during former Prime Minister Atal Bihari Vajpayee’s visit to Iran affirmed the shared vision of the two countries for an “equitable, pluralistic and co-operative international order”.
- It recognised then Iranian President Mohammad Khatami’s vision of a “dialogue among civilisations” as a paradigm of international relations based on principles of tolerance, pluralism and respect for diversity.
- Advancing the standing in global order: Two decades later, as India strengthens new partnerships within its regional vision centred on the Indo-Pacific, both countries remain driven by the goals of advancing their standing at the regional and global level.
- Both are keen to project themselves as independent strategic actors determined to play a role in shaping a new multipolar order in their shared Eurasian neighbourhood and also at the global level.
Why does India need Iran?
- Energy security: Conventionally, for energy security
- Iran is amongst India’s top oil suppliers
- Strategic importance: Since the 1990s, Iran’s importance has become ‘strategic’
- Security reasons: Iran’s cooperation is critical for India’s security given that
- Pak supports terrorism in India
- Influence in Afghanistan: India’s influence in Afghanistan is marginal.
- Countering Pakistan: India needs Iran to moderate Pak’s influence in West Asia
- Iran is a leader in the Muslim world.
- Access to Afghanistan and Central Asia
Significance of Iran for India
- Geopolitical logic in relations: The sanctions imposed by the US on Iran after it withdrew from the nuclear deal in 2018 may have virtually destroyed India-Iran trade, especially India’s energy imports from Iran, but the geopolitical logic underpinning relations between the two countries remains firm.
- Land bridge to Central Asia and Eurasia: Iran has sought to leverage its crossroad geographical location straddling the Persian Gulf and the Caspian Sea, India has come to see it as its land bridge to Central Asia and Eurasia.
- INSTC: Despite the difficulties posed by decades of American sanctions, Iran has, along with India, Russia and a few other countries in the Eurasian region, continued to work on the multi-modal International North-South Transport Corridor (INSTC).
- During Raisi’s visit to Moscow, the two sides had pledged to redouble their efforts to build the railway line between Iran’s Caspian port of Rasht and Astara on the Iran-Azerbaijan border.
- Alternative Caspian Sea Route: The activation of an alternative Caspian Sea route speaks volumes about the positive outlook of Iran, India and Russia on this corridor despite a variety of geopolitical challenges.
- Iran’s Chabahar port, where India is developing two berths that it will lease for commercial operations for 10 years, is also a story of perseverance in the ties between the two countries.
Irritants in Indo-Iran ties
- India’s relations with Saudi Arabia, US and Israel: Growing Saudi-India-US-Israel relations have irked Iran.
- In retaliation, Iran, for the first time, has linked the plight of Muslims in Gaza, Yemen, and Bahrain, with those in Kashmir
- Iran-Pak-China ties: Warming Iran-Pak-China ties have annoyed India.
- Sluggish Chabahar port development: Slow Chabahar port development has annoyed Iran.
- China-Iran strategic partnership:
- An economic and security partnership deal between Iran and China was recently made public, creating a global alarm, especially for India and the US.
- The foundation for this deal was laid during Chinese President Xi Jinping’s visit to Iran in 2016
- The draft agreement involves Chinese investments worth $400 billion into the Iranian economy over 25 years.
- Of this, $280 billion will be allocated for the oil and gas sector and the remaining funding will be for other core sectors like banking, telecommunications, ports and railways.
- In return, China would get a steady supply of Iranian oil at a heavily discounted rate during the same period.
- This deal creates a win-win situation for both countries.
- It lifts Iran’s sanction-hit economy and helps China set a firm foothold in the Middle East.
US sanctions:
- Iran’s aim to develop nuclear weapons has come under strong criticism from Trump Administration since the beginning.
- Thus, the US has withdrawn from the Iran nuclear deal in 2018 after it was signed in 2015 and imposed unilateral sanctions on Iran.
- The US’ sanctions and aggressive policies have created a situation of economic and geostrategic uncertainty.
- Indian investors are wary of having businesses in Iran for the fear of the US.
- Also, India deviated from the policy of not abiding by unilateral sanctions by ceasing to purchase Iranian oil.
- Due to this, Iran did not back India’s bid to mobilise international support against Beijing’s aggression in the Ladakh.
Other issues:
- Iran is against India’s decision to abrogate Article 370 and 35A.
- It has called on India and Pakistan to show restraint and prevent the killing of innocent Kashmiris, revealing possible close ties between Pakistan and Iran.
- Iran also voiced against “extremist Hindus and their parties” during the 2020 Delhi riots.
- Apart from these issues, Iran also sidelined India’s ONGC from exploration rights at its Farzad B Gas field, stating that it will engage the company at a later date.
Way forward
- As India is treading a fine line in balancing relations with the US, China and Iran while striving to augment its political influence in West Asia, embracing one country over the other is not an option for India.
- Therefore, a multilateral foreign policy is a way forward.
- India must retain its involvement in the Chabahar port development because of the geostrategic significance.
- In the immediate term, India should improve its multi-alignment credentials to absorb investments into the port projects from the public and private sector, boost maritime cooperation among littoral countries to enhance the transit of goods, and foster regional partnership for the Chabahar port development.
- Based on the mutual geostrategic and energy interests, India could collaborate with Japan under the Asia-Africa Growth Corridor.
- Japan’s participation would enhance the multilateral characteristics of the transit hub in the region, unlike the China-owned Gwadar port. This will further enhance multilateral investments to solidify regional economic partnerships that enable the sustainability of the port.
- Also, India needs to evolve a better strategy on Iran beyond waiting to see how the US may react, beyond having to issue a clarification in response to Iran’s sudden provocations and beyond allowing voids of partnerships that China may fill.
- In order to do so, India must create a new alliance of countries having similar geostrategic interests, which are also facing issues with US’ unrealistic and aggressive foreign policy strategy and China’s expansionistic policies.
Conclusion
While the revival of the nuclear deal could give a fillip to India’s economic ties with Iran, India’s interests in continental Asia will be served well by heeding to the calls for developing a long-term roadmap for bilateral relations.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Positive externalities
Mains level: Paper 3- What commodities should be distributed for free or subsidised level
Context
The newly elected Punjab government’s announcement of providing up to 300 units of free power to every household has raised questions: What constitutes “freebies”?
Two categories for providing support
- In India government provides two types of support.
- 1] support to low-income households for augmenting their consumption of selected goods and services.
- 2] Government also provides incentives to support selected categories of investors and producers.
- Different objectives: The economic objectives in these two categories are quite different.
- The first category would include the free or subsidised provision of foodgrains and services such as health and education.
- Examples of the second group include the central government’s recent initiative for production-linked incentives to various sectors and tax concessions.
- In the past, incentives in the form of reduction of corporate taxes have been offered to promote investment in general, or in certain regions such as backward areas.
What commodities should be distributed free?
- The key question is to decide what commodities should be distributed free or at a subsidised level and what the level of subsidy should be.
- Essential goods: The provision of foodgrains at a heavily subsidised price to target groups has found general acceptance, particularly among political parties, even though there are some critics of the measure.
- The distribution of commodities which are considered “essential”, primarily foodgrains, faces no criticism.
- Merit goods: There is also a category of goods which are called “merit” goods where significant positive externalities are associated with their consumption — for instance, health and education-related provisions, including mid-day meals and breakfast.
- In such cases, subsidisation is justified: If only market prices prevail, the community will consume less than what is socially desirable.
What should be the suitable mode of providing support?
- The question of a suitable model for providing budgetary support arises in the context of both consumption and production-supporting initiatives.
- 1] In the first case, budgetary support to a targeted segment of the population for augmenting their consumption of essential items may be provided either through direct income support or by a free or highly subsidised provision.
- Procurement set up and distribution system: When the provision of subsidised goods is involved, there may, in general, be a requirement of a procurement set-up and a public distribution system.
- Managing procurement and distribution by government agencies involves additional costs which tend to be higher than the corresponding supply through the market because of leakages and avoidable administrative costs.
- 2] Production-related incentives: In the case of production-related incentives, alternative methods include direct budgetary support and indirect support through tax concessions.
- Both have a differential impact.
- These schemes also require to be carefully designed to avoid their misuse and minimise their costs. The provision of free power to farmers was often misused.
- In the case of tax concessions, there have not been any convincing studies as to whether the stated initial objectives were achieved in line with the large budgetary costs.
- The magnitudes involved amounted to 1.9 per cent and 2.5 per cent of the GDP in 2018-19 and 2019-20 respectively.
What should be a prudent fiscal limit for funding such programmes?
- Let us consider the case of distribution of commodities that are meant to support consumption.
- Limited budgetary resources: This question should be considered in light of our limited budgetary resources.
- Stagnating revenue to GDP ratio: In India, the revenue to GDP ratio has been stagnating over a long period of time.
- During 2010-11 to 2019-20, combined revenue receipts of central and state governments, relative to GDP, have languished in the narrow range of 18.4 per cent to 20.3 per cent.
- In contrast, in many developed and emerging market economies, this ratio tends to be much higher.
- In 2019, these ratios were 36 per cent and 30.1 per cent for the UK and USA.
Suggestions
- It is advisable to limit the distribution of commodities and services at highly subsidised levels to essential and merit goods.
- Infrastructure expansion: Production may be incentivised more effectively by other methods such as infrastructure expansion.
- Determining the total quantum of support: In respect of production-related incentives also, greater care is required for determining the total quantum of support as well as the specific forms of such support.
- Limit of 10 %: It would be prudent to limit overall fiscal support for the distribution of commodities to less than 10 per cent of the total expenditure of the central government and state governments until their revenue GDP or GSDP ratios are successfully increased in a sustained way.
Conclusion
Governments that do not pay adequate attention to the strength of their fisc eventually become exposed to the cost of the choices that they make.
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Back2Basics: Merit goods
- Merit goods are the goods that are provided generally by the government to certain sections of the society.
- Unlike in the case of pure public goods, the merit goods are not provided to the entire society; rather they are given to certain targeted people.
- The government here believe that the deserving people may under-consume such goods and hence provides these to them at low cost or no cost.
Positive externalities
- A positive externality exists if the production and consumption of a good or service benefits a third party not directly involved in the market transaction.
- For example, education directly benefits the individual and also provides benefits to society as a whole through the provision of more informed and productive citizens.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- Child marriage issue
Context
There has been an ongoing debate on whether increasing the age of marriages can solve the problem of child marriage in India.
Background
- It is defined as a marriage of a girl or boy before the age of 18 and refers to both formal marriages and informal unions in which children under the age of 18 live with a partner as if married.
- The Prohibition of Child Marriage (Amendment) Bill, 2021, fixes 21 years as the marriageable age for women.
Prevalence of child marriage in India
- NFHS-5 data show that about 25% of women aged 18-29 years married before the legal marriageable age of 18.
- Marginal decline: The proportion has declined only marginally from NFHS-4 (28%).
- Higher in rural India: Expectedly, the prevalence is higher in rural than urban India (28% and 17%, respectively).
- West Bengal has the highest prevalence (42%), followed by Bihar and Tripura (40% each).
- Oddly, the decline in child marriage has been paltry at best in these high-prevalence States.
- At the other end of the spectrum are Goa, Himachal Pradesh and Kerala (6% to 7%).
- 39% of child marriages in India take place among Adivasis and Dalits.
- The share of advantaged social groups is 17% and the remaining share is of Other Backward Classes.
Role of structural issues in adverse health and educational outcomes
- Impact: Studies associate early marriage of women with early pregnancy, lower likelihood of accessing ante-natal care, higher risks of maternal morbidity and mortality, poor nutritional status of women and poor nutritional and educational outcomes of children.
- These studies seem to provide a rather compelling case for increasing the age of marriage of women from 18 to 21 years, as a delayed marriage might offer significant public health dividends.
- Structural factors at play: But a closer reading of the evidence shows that the association between child marriage and adverse health outcomes does not emerge in a vacuum.
- Rather, it is abetted by structural factors, including social norms, poverty, and women’s education.
- Role of social norms: It is because of social norms in many regions and cultures that parents begin preparations for a girl’s marriage once she has reached menarche.
- Role of poverty: A large proportion of child marriages take place primarily because of poverty and the burden of the huge costs of dowry associated with delayed marriages.
- Role of education: The NHFS-5 data confirm that a significant proportion of child marriages takes place among women with less than 12 years of schooling and households that are socially and economically disadvantaged.
- The average age at marriage increases from 17 years among women who are illiterate and have had up to five years of schooling to 22 years among women who have had more than 12 years of schooling.
- This indicates that an increase in years of schooling goes hand in hand with an increase in age at marriage.
- While an increase in education is most likely to delay marriage, the increase in age at marriage may or may not increase women’s education.
Why the age of marriage of women matters
- Age of marriage has bearing on maternal mortality rates, fertility levels, nutrition of mother and child, sex ratios, and, on a different register, education and employment opportunities for women.
- It is also argued that other factors — such as poverty and health services — were far more effective as levers for improving women’s and children’s health and nutritional status.
- Child marriage curtail a girl’s opportunities to continue her education.
- And in turn, the lack of educational opportunities plays an important role in facilitating child marriage.
Way forward
- The fact that about one-fourth of women (18-29 years) in India have married before 18 years despite the law tells us that legally increasing the age of marriage may not fully prevent child marriages.
- 1] Ensure education for at least up to 12 years: Much of the benefits can be reaped by ensuring that women complete education at least up to 12 years.
- Bangladesh shows that improving women’s education and imparting modern skills to them that increase their employability reduces child marriage and improves health and nutrition.
- 2] Educational attainment criteria in schemes: Schemes which ease the financial burden of marriage but the eligibility criteria of which should essentially link to educational attainment in addition to age demand attention.
- The lessons from Janani Suraksha Yojana and the zeal demonstrated in ending open defecation might provide valid insights here.
Conclusion
A legalistic approach to increasing the age at marriage will produce positive results only if it leads to an improvement in women’s education and skill acquisition for employability. In the absence of an enhancement in women’s schooling or skills, a legalistic approach to ending child marriage might become counterproductive.
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Context
A virtual meeting of BRICS+ foreign ministers was held on May 20 in which the ministers of Brazil, Russia, India, China, and South Africa (BRICS) were joined by representatives from Argentina, Egypt, Indonesia, Kazakhstan, Nigeria, the UAE, Saudi Arabia, Senegal, and Thailand.
About BRICS
- BRICS is an acronym for the grouping of the world’s leading emerging economies, namely Brazil, Russia, India, China and South Africa.
- The BRICS Leaders’ Summit is convened annually.
- It does not exist in form of organization, but it is an annual summit between the supreme leaders of five nations.
- The grouping was formalized during the first meeting of BRIC Foreign Ministers on the margins of the UNGA in New York in September 2006.
- The first BRIC Summit took place in 2009 in the Russian Federation and focused on issues such as reform of the global financial architecture.
- South Africa was invited to join BRIC in December 2010, after which the group adopted the acronym BRICS.
- South Africa subsequently attended the Third BRICS Summit in Sanya, China, in March 2011.
- The Chairmanship of the forum is rotated annually among the members, in accordance with the acronym B-R-I-C-S.
What are the factors leading to the expansion of BRICS?
- Ukraine war and hardened Western positions: The disruption in the international order, heightened by Russia’s invasion of Ukraine and the hardening of Western positions, are leading to the making of competitive plurilateral fora.
- Russia and China have decided that this is an opportune time to expand BRICS and challenge the domain of the G7 by including members from the G20.
- China is challenging Western influence over countries and wants to use BRICS to that end.
- China is taking the lead and setting the agenda for BRICS expansion.
- The New Development Bank associated with BRICS, expanded membership in 2021, admitting Bangladesh, the UAE, Uruguay and Egypt
- This shows the Chinese determination for an expansion process on its watch.
Criteria and the process of inducting new members into BRICS and challenges
- Prioritise G20 members: The first likely criteria will be to prioritise G20 members.
- Among the recent guests of the BRICS+ virtual meeting, Argentina, Indonesia and Saudi Arabia would qualify for this category.
- From among Mexico, Indonesia, Korea, Turkey and Australia (MIKTA), only Indonesia was invited.
- Thus, China, backed by Russia, is creating cleavages to choose its friends from among the G20 and beyond
- Emerging economy: Another criteria which could come up would be an emerging economy status and adherence to BRICS objectives.
- The push for setting criteria is actually a battle to choose partners who are more amenable to the individual members of the current BRICs.
- Russia and China would prefer to have Indonesia, Kazakhstan, Saudi Arabia, UAE and Argentina excluding Egypt since it is a close ally of the US.
- Brazil would have a say on including Argentina – the two countries have a longstanding rivalry in Latin America.
- If Argentina is excluded, it may unravel the G20 membership criteria for inclusion in the BRICS.
- South Africa has views on Nigeria and, particularly, Egypt. Being a member of G20 gives it leadership in Africa.
- Being in the BRICS gave it heft as the African representative.
- If Nigeria and Egypt are admitted, South Africa would no more be the African representative in the BRICS.
- New Development Bank membership: The UAE and Egypt could utilise their membership of NDB as a qualifier.
- There could be an easier consensus on Indonesia because India is unlikely to oppose it as its relationship has been improving politically, even if not economically.
- On Kazakhstan, the decision would be that of Russia and China and how they deal with the other Central Asian countries.
- China may also back Iran and Malaysia but then Indonesia may feel a loss of uniqueness.
- A consensus with Brazil and South Africa for members from their regions will be critical.
Way forward for India
- Membership of the UAE and Saudi Arabia: The UAE and Saudi Arabia are two countries with whom India has rapidly enhanced its engagement and are good contributors to development.
- Having them in the BRICS could be of advantage to India.
- Both countries have a longstanding relationship with the US, but seek to diversify and would not be averse to joining BRICS.
- Avoid BRICS expansion on Chinese terms: China, backed by Russia, is hastening the process of expansion of BRICS as part of its strategic challenge to the international order and to collect middle powers around them.
- India needs to ensure that expansion is not on Chinese terms and that the countries admitted are equally receptive to India.
- Bilateral engagement with them should see this perception built up.
- Consultations on criteria and members must be strong.
- Leverage ISBA: IBSA may act as a phalanx within BRICS to prevent China from running away with the expansion agenda over the views of other members.
Conclusion
Since Russia is simply with Chinese priorities, it’s time for the IBSA trilateral of democracies within BRICS to assert itself.
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Back2Basics: What is the fundamental difference between ISBA, BRICS and BASIC?
- IBSA is between three democracies – India, Brazil and South Africa wanting to engage in deeper economic aspects and discuss security related issues.
- BASIC includes Brazil, South Africa, India and China.
- These three expressions of multilateralism steer clear from articulating the softer aspects of foreign policy like refugee rights or human rights invoking the ‘sovereignty’ clause with domestic political sanctity paramount.
- BRICS comprises Brazil, Russia, India, China and South Africa.
- Russia is a democracy with its political spectrum anchoring around an individual.
- China is a socialist country, successful by implementing economic reforms that do not agree with the basic tenets of socialism/communism.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- Lessons from Ukraine crisis
Context
The Russia-Ukraine conflict, now more than three months old, will cause major, long-term shifts in the global energy and commodity trade.
Factors responsible for high prices
- Ukraine war: Western sanctions on Russia and efforts of European nations to diversify their energy supplies are already causing market distortions and high prices.
- Crude oil prices are at their highest level since 2014; the price of LNG is at its highest ever, fertiliser and food are up and markets for several other commodities such as nickel have been disrupted.
- Expensive commodities are already causing distress in India’s neighbourhood, for example, in Sri Lanka and Pakistan.
- Insufficient investment: Insufficient investment in oil and gas production in preceding years resulted in high prices, and shortages were being felt.
- A number of European investors, such as Norway’s sovereign wealth fund, announced they would no longer invest in traditional fuels — oil, gas, coal.
- Natural gas is used as a feedstock for fertiliser.
- An energy shock is then inevitably followed by a food price shock.
Future trends
1] Strained EU-Russia relations will distort prices
- In the immediate term, the EU is trying to source its raw materials — most critically oil and natural gas, but also fertiliser, agricultural goods and metals — from non-Russian sources.
- This will cause distortions and price spikes for those commodities in the global market, as can already be seen in the natural gas market, up 300 per cent in the last year.
2] Sanctions are unlikely to achieve the desired political outcome
- The US and its allies are quick to impose sanctions — and these are rarely withdrawn, if ever.
- Iran has been under US sanctions since 1979, and the same with Venezuela for over a decade.
- In both cases, sanctions have failed to achieve the desired political outcome.
- As Russia is much better placed than either of those two countries to weather sanctions, the restrictions are likely to remain for a long while.
3] Emerging world unwilling to align with West on sanctions
- The high price of energy and the resulting inflation shows why much of the emerging world is unwilling and unable to align with the West on the current sanctions.
- Russia is 11 per cent of the global landmass and among the world’s top five producers and exporters of oil, gas, fertiliser and other critical commodities like nickel.
- It is too big to be replaced as a supplier.
- In emerging economies, it can fan public anger and political unrest, as was seen in Tunisia and other Arab countries from 2010 on.
4] Larger emerging economies will disregard sanction
- Larger emerging economies such as China, India and Brazil will disregard sanctions on their key economic interests, particularly food, fertilisers and energy.
- Specifically for India, its dependence on these essentials is unlikely to reduce meaningfully over the next 15-20 years.
Way forward for India
- Collaborate with other economies: In the immediate future, the India should collaborate with other similar economies to ensure that Russia doesn’t get locked out of global commodity markets.
- Work on insulating the supply chains: For the long term, it must work on insulating its supply chains from global political crises.
Conclusion
India needs to brace for the price shock emanating from the distortion caused by the shift in the energy policies of Europe. At the same time, India needs to collaborate with other similar economies to ensure that Russia doesn’t get locked out of global commodity markets.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: CERC
Mains level: Paper 3- Power crisis
Context
The recent power crisis due to the coal shortage in India underscores the need for measures to avoid a repeat of episodes in the future.
Factors contributing to power crisis
- Spike in power demand: With the sudden early onset of summer in 2022, power demand spiked, riding on the back of the post-Covid economic recovery.
- Increase in price due to Ukraine crisis: The matter was further exacerbated by the Ukraine conflict, which led to a sharp increase in the price of imported coal.
- Consequently, power stations designed on imported coal stopped importing because it was no longer economical for them to generate, given their contract price with the distribution companies.
- Availability of railway rakes: It’s not that domestic coal was not available since enough stock had been built in the mines.
- The issue was of availability of railway rakes for transportation.
What were the measures taken by the government ?
- 1] Import of coal to 10 per cent: First, all generators have been asked to import coal to the extent of 10 per cent (as against 4 per cent earlier) and that half of this should be physically available by the end of June.
- CIL as aggregator: Coal India will function as the aggregator on behalf of the generators.
- CIL functioning as the aggregator is a better idea and it may be able to import at a cheaper cost by accumulating demand as well as standardising the coal grade to be procured.
- Moreover, it would be easier for regulators to calculate the revised energy charge since the price at which coal was imported would be well-documented.
- 2] Section 11 of the Electricity Act 2003 (Act) invoked: Under this section, the government directed imported coal-based plants to run at full capacity with the assurance that their enhanced cost of operation would be compensated.
- 3] Tolling: The government invoked the concept of tolling, which allowed states to transfer their allotted coal to private generators located near the mines instead of transporting it to far away state generators.
- This move would ease the burden on the availability of railway rakes.
- 4] Seeking the consent of beneficiaries for hike: the government issued policy directions to the Central Electricity Regulatory Commission (CERC) overriding CERC’s regulations that made it mandatory to seek the consent of beneficiaries if the tariff went up by more than 30 per cent, if some alternate fuel is used.
- 5] Committee to rework the energy charge: A committee of officials was set up to rework the energy charge for imported coal-based generators.
- 6] Additional working capital: The government is cognisant of the fact that there is a need for additional working capital and has advised REC/PFC as well as commercial banks to arrange for this.
Issues with the measures
- Use of Section 11: The government invoked Section 11 to give direction to private generators to import coal at a higher cost.
- Section 11(1) allows the government to give direction to a generation company to operate and maintain a generating station in extraordinary circumstances.
- Section 11(2) of the Act mentions that the adverse financial impact on generating compacy due to directions referred to in sub-section (1) would be offset by the regulator.
- Going by Section 11(2), the government should have left the job of working out the energy charge to the regulator instead of setting up a committee of officials to do so though, of course, the CERC was represented in the committee.
- 2] No transparency: The committee has already worked out the revised energy costs for six of the plants but there is no transparency regarding the coal cost assumed, its calorific value, transportation cost, etc.
- 3] Additional rakes: We have to bear in mind that the coal problem arose because of the non-availability of rakes.
- With 38 MT of coal to be imported by October this year, and half of that by end of June, the need for rakes will not only go up but would be front-loaded.
- We need the requisite number of rakes otherwise, we are back to where we began.
Conclusion
While the government is taking steps to increase coal imports and addressing the other issues, it must ensure that domestic production does not dip during monsoon season.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Consultative Group on International Agricultural Research (CGIAR)
Mains level: Paper 3- Food crisis due to price shocks
Context
This increase in global food prices which manifested itself in the three food price crises since the 1960s offers some pertinent lessons for global food systems and the international community.
Managing year-to-year volatility Vs. periodic spikes in food prices
- Year-to-year volatility is easily managed by most countries through changes in their trade and domestic policies.
- But steep and severe periodic price shocks can lead to some sort of a crisis at the global and national levels.
- Implications: The crisis can emerge in the form of food shortages, trade disruptions, a rise and spread in hunger and poverty levels, depletion of foreign exchange reserves, a strain on a nation’s fiscal resources, a threat to peace, and even social unrest in some places.
History of food crises after since adoption of Green Revolution
- Data from Food and Agriculture Organization of the United Nations, the World Bank/International Monetary Fund show that since the onset and the adoption of Green Revolution technology in the early 1960s, the world has been struck thrice by food price crises.
- First shock-1973-76: The first shock was experienced during 1973-76 when the food price index (based on prices in U.S. dollars) doubled in nominal terms.
- Declining trend: For the next two decades, food prices in real terms followed a declining trend and were at their lowest around 2002.
- After this, nominal as well as the real prices of food began rising.
- Second crisis-2008: This momentum built up to culminate in the next food price crisis of 2008, which was further intensified by 2011.
- While the price shock began softening after 2014, food prices did not move back to their pre-2006 level.
- Third crisis-2020: This time the increase in the food price index happened very quickly and it turned out to be very big – it has taken the food price index to its historically highest level.
- Cause outside agriculture: All the three food price crises were triggered by factors outside agriculture.
- They were not caused by any serious shortfall in agriculture production.
- The interval between crises is reducing: The interval between two consecutive price shocks has narrowed down considerably and the severity of shock is turning stronger.
What are the causes responsible for the recent food price crisis?
- 1] Covid-19 and Ukraine crisis: It was triggered by supply disruptions due to COVID-19 and further aggravated by the Russia-Ukraine war.
- The current food price spike first began in vegetable oils and then expanded to cereals.
- Higher the global trade higher disruption: The effect of global trade disruption will be higher for commodities that are traded more and vice-versa.
- 2] Diversion of food for biofuel: Another factor underlying the rising trend and spikes in food prices is the diversion of food for biofuel needs.
- When crude prices increase beyond a certain level it becomes economical to use oilseeds and grains for biodiesel and ethanol, respectively.
- The second reason for the use of food crops for biofuel is the mandates to increase the share of renewable energy resources.
- 3] Increased cost of agrochemicals and fertilisers: Food prices are also expected to go up in the current and next harvest season because of an increase in the prices of fertilizer and other agrochemicals.
Way forward for India
- Transmission of international prices to domestic prices can be prevented only if there is no trade.
- 1] Trade policy changes: This transmission of global prices to the domestic market can be moderated through trade policy and other instruments.
- When international prices go too low, India has checks on cheap imports to protect the interests of producers; and when international prices go too high, the country liberalises imports and imposes checks on exports to ensure adequate availability and reasonable food prices for domestic consumers.
- 2] Buffer stock: The policy of having a buffer stock of food staples has also been very helpful in maintaining price stability, especially in the wake of global food crises.
- 3] Strategic liberalisation: India should continue with a policy of strategic liberalisation, as followed in the past, to balance the interests of producers and consumers.
- 4] Maintain image as a reliable and credible exporter: The importance of agriculture exports to mop up food and agriculture surplus from the country is increasing.
- Ongoing trends in domestic demand and supply imply that India will be required to dispose of 15% of its domestic food output in the overseas market by 2030.
- This underscores the need to maintain India’s image as a reliable and credible exporter.
- However, it is important to differentiate between the two situations: disturbing normal export and regulating exports exceeding the normal level.
What are the implications for India?
- Increased prices in India: Export and import in the agriculture sector constituted 13% of gross value added in agriculture during 2020-21.
- Therefore, some transmission of an increase in global prices on domestic prices is inevitable.
- Wheat export ban and implications: The recent ban on wheat exports and restrictions on the export of other food commodities by India need to be seen in the light of an abnormal situation created by spikes in international prices.
- Some experts see it as a setback to India’s image as a reliable exporter as this move is seen to disrupt (regular) export channels.
- A closer examination of data reveals that India’s action to ban or restrict food exports is not disrupting its normal exports.
- India was a very small exporter of wheat, with its share in global wheat trade ranging between 0.1% to 1% during 2015-16 to 2020-21.
- The international market is looking for around 50 million tonnes of wheat to compensate for the disruption in wheat exports from Russia and Ukraine.
- If India had not imposed a ban on wheat export, it would have resulted in a severe shortage of wheat within the country.
Global impact and suggestions
- As the steam of Green Revolution technology slowed down with the start of the 21st century, food prices began increasing in real terms.
- New breakthroughs required: The world requires new breakthroughs such as Green Revolution technology, for large-scale adoption in order to enable checks on food prices rising at a faster rate.
- Increase spending on agri-research: This in turn requires increased spending on agriculture research and development (especially by the public sector and multilateral development agencies).
- Strengthen global agri-research system: There is a need to strengthen and rejuvenate the global agri-research system under the Consultative Group on International Agricultural Research (CGIAR) which is heading towards disarray.
- Rethink biofuel protocols: Biofuel protocols have contributed to the global food crisis for the second time in the last 15 years.
- Diversion of land under food crops and food output for biofuel should be carefully calibrated with implications for food availability.
Conclusion
- The last three food price crises were primarily caused due to an increase in energy prices and disruptions in the movement of food across borders.
- Factors related to climate change are going to be an additional source of supply shocks in the years ahead.
- Therefore, the global community must plan to have a global buffer stock of food in order to ensure reasonable stability in food prices and supply.
Back2Basics: Consultative Group on International Agricultural Research (CGIAR)
- CGIAR (formerly the Consultative Group for International Agricultural Research) is a global partnership that unites international organizations engaged in research about food security.
- CGIAR research aims to reduce rural poverty, increase food security, improve human health and nutrition, and sustainable management of natural resources.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Duopoly threat in India's telecom sector
Context
The near-death of competition signalled by the incipient exit of Vi late last year pushed the Department of Telecommunications (DoT) to announce steps to prevent the premature exit of a sagging operator.
About 5G
- 5G is the 5th generation mobile network.
- It is a new global wireless standard after 1G, 2G, 3G, and 4G networks.
- 5G can be significantly faster than 4G, delivering up to 20 Gigabits-per-second (Gbps) peak data rates and 100+ Megabits-per-second (Mbps) average data rates.
- 5G enables a new kind of network that is designed to connect virtually everyone and everything together including machines, objects, and devices.
- 5G wireless technology is meant to deliver higher multi-Gbps peak data speeds, ultra low latency, more reliability, massive network capacity, increased availability, and a more uniform user experience to more users.
- Higher performance and improved efficiency empower new user experiences and connects new industries.
- With high speeds, superior reliability and negligible latency, 5G will expand the mobile ecosystem into new realms.
- 5G will impact every industry, making safer transportation, remote healthcare, precision agriculture, digitized logistics — and more — a reality.
India’s telecom sector: From monopoly to hyper-competition to duopoly
- India’s telecom market has seen monopoly as well as hyper-competition.
- Twenty-five years ago, the government alone could provide services.
- Technology and deregulation: In the following years, the combined forces of technology and deregulation helped break the shackles of public sector dominance despite the latter’s stiff resistance
- In the following years, there were nearly a dozen competing operators. Most service areas now have four players.
- However, the possible exit of the financially-stressed Vodafone Idea would leave only two dominant players-Airtel and Jio in the telecom sector.
- A looming duopoly, or the exit of a global telecommunications major, are both worrying.
- They deserve a careful and creative response.
Government package for telecom sector to prevent duopoly
- The near-death of competition signalled by the incipient exit of Vi late last year pushed the Department of Telecommunications (DoT) to announce steps to prevent the premature exit of a sagging operator.
- As a part of its support package for the telecom sector, in October 2021, it dispensed with the requirement of performance bank guarantees required earlier as security.
- It increased the tenure of spectrum holding from 20 to 30 years.
- It allowed for the surrender of the unutilised or underutilised spectrum after 10 years.
- Most importantly removed the levy of spectrum usage charges.
Why competitive telecom market is important?
- Key to achieving digital ambitions: A competitive telecom sector is fundamental to realising India’s digital ambitions.
- Innovation: Monopolies have no incentive to innovate.
- Investment: The competition will guarantee that operators find it attractive to invest in network infrastructure upgradation and offer consumers a wide range of innovative service options.
- Source of revenue: A competitive telecom sector would be an indirect source of tax revenue as well.
- How to make market competitive? Competition cannot be willed into the sector.
- It needs careful nurturing, assiduous fostering and regulatory neutrality.
Way forward on 5G
- Structural changes: While the package may have prevented the exit of Vi from the market, to embed competition within the sector, structural changes are necessary.
- The imminent 5G networks demand massive investment and sophistication of operations.
- 1] Level playing field: This will not be achieved unless the playing field is level across the relevant operators and honest incentives are provided to operators to embrace new technology.
- 2] Change the spectrum allocation method: There is no doubt that spectrum auctions have served India well in the past due to the acrimonious political economy associated with administrative spectrum assignment, including First Come First Serve (FCFS) method.
- The auction regime worked well when demand exceeded supply, but if there is an adequate quantity of spectrum for everyone, that constraint would not exist.
- Administrative assignments can thus be considered once again.
- 3] Administrative assignments: An administrative assignment will include the possibility that all spectrum can be assigned at reasonable prices and in the process, a grand bargain can be struck with telecom operators.
- 4] Assigning 5G spectrum for private enterprise business: TRAI and the Digital Communications Commission (DCC) are considering whether 5G spectrum should be assigned to companies like TCS, Amazon and Google, among others, for their private enterprise business.
- 5G spectrum assignment for enterprises would adversely affect the business model of telcos.
- But there will be enterprises that telcos could serve that are not large enough to purchase 5G spectrum.
- A grand bargain that allows enterprises to buy 5G spectrum while assigning spectrum to the existing telcos through the administrative route will also serve the revenue needs of the government.
- 5] Privatise public sector operator: This is an opportunity to also signal to the public sector operator that 5G business is outside the range of its capability set.
- Hence like Air India it needs to be privatised in the fullness of time.
- These are difficult decisions and will need much more political will than in 1994.
Consider the question “Why a competitive telecom market is a prerequisite for achieving India’s digital dream and why an eminent duopoly in the sector stands to threaten that dream? Suggest way forward.”
Conclusion
It would be tragic if India’s telecom-access market was to be reduced to only two competing operators, as we have a long way to go. What we need is structural changes in the sectors as well as the way the sector is regulated.
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Back2Basics: Spectrum usage charges
- Companies had to pay 3-5 per cent of their adjusted gross revenue (AGR) as spectrum usage charge to the department of telecom.
- If they share spectrum with another operator, operators must pay an additional 0.5 per cent of AGR for that band as SUC.
- However, in September 2021, the Department of Telecommunications (DoT) decided to remove the floor rate of 3% of the adjusted gross revenue (AGR) for operators to pay their spectrum usage charge (SUC).
- The removal of the clause fixing a floor rate of 3% was done to give effect to the recently announced telecom relief package.
- Though the telecom package talks of scrapping SUC only on spectrum acquired in future auctions like that of 5G, if the 3% floor is abolished, as and when operators acquire more spectrum in future auctions, their SUC will become zero on the entire holding.
- This is because of a complex weighted average formula to calculate the SUC of operators who have a mix of administratively allocated spectrum and acquired through auctions.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: CoWIN
Mains level: Paper 2- CoWIN platform
Context
Seeing its success, other nations have also expressed interest in availing CoWIN and using it as a bridge for erecting their digital health systems. Responding to this incoming interest, our prime minister has offered CoWIN as a digital public good, free of cost, for all nations globally to adopt.
About CoWIN
- In late 2020, even before the Covid-19 vaccines had arrived, the Government of India had commenced preparations for launching the world’s largest vaccination drive.
- This led to the beginning of the CoWIN journey in January 2021.
- Scalability, modularity, and interoperability: CoWIN, or the Covid-19 Vaccine Intelligence Network, was developed in a record time, with consideration given to scalability, modularity, and interoperability.
- The platform has been made available in English and 11 regional languages to allow citizens across multiple states to access the platform with ease.
- To circumvent the lack of digital access, the platform allows for up to six members to be registered under one mobile-number linked account.
- CoWIN has scaled every 100 million milestone faster than any other platform.
- It reached the coveted one billion registered user mark which only a handful of platforms have been able to achieve globally, and none in such a short time.
- A key feature of the platform has been its modularity and evolvability.
- The CoWIN team has been adept at keeping pace with the changing policy environment and scientific research and developments in the administration of vaccines.
- It was never that CoWIN became the bottleneck or delayed the implementation of our vaccination policies or drive.
- Time and again, CoWIN has proved itself as one of the most secure and robust platforms with minimal data input and zero risk of personal data hacks.
Major phases of CoWIN
- The journey of CoWIN was staggered across three major phases, with multiple additions subsequently.
- In phase 1, the registration process went online where healthcare workers and frontline workers were sent system-generated notifications about their vaccination schedule.
- In subsequent phases, beneficiaries were allowed both walk-in and online vaccination registration, along with the choice of location and time slot as per their convenience.
- An assisted mode was also made available through the 240,000+ Common Service Centres (CSCs) and a helpline number.
- After ensuring successful orchestration using scalability and agile features of the platform to vaccinate individuals over 45 years of age, the APIs of the platform were made available to private players at the beginning of Phase III of the vaccination drive.
- Once access to its services was opened through APIs, more than 100 applications integrated with CoWIN for providing search, booking and certification facilities to their users.
Way ahead
- The inevitable question is what will we do with CoWIN when no further Covid-19 vaccines are to be administered?
- Repurpose the platform: The decision is to repurpose the platform as a universal immunisation platform.
- The credentialing service of DIVOC, used in CoWIN, has proven to be a game-changer in the world of digital certificates.
- CoWIN service is being implemented in five other countries after India and receiving global acceptance for its veracity and sound architecture.
- There is a proposal for opening the credentialing service for more use cases in health.
Conclusion
The story of CoWIN has truly been one of national impact and importance. And while the story started during the pandemic, it won’t end with the pandemic: it will segue into a repurposed digital platform for more health use-cases.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: EPI
Mains level: Paper 3- Environmental Performance Index (EPI) and related issues
Context
The 2022 Environmental Performance Index (EPI) produced by Yale and Columbia Universities and released on World Environment Day (June 5) has triggered much consternation in India, as the country is ranked last (180th).
Issues with EPI 2022
- Ignoring the past effects: Indicators may focus on current rates of increase or decrease in environmental pressures (flows) — as the EPI does for carbon dioxide emissions and tree cover gains — but under-state the accumulated effect (stocks) that relates to actual harm, thereby ignoring past effects.
- Same standard in different socio-ecological context: When ranking countries, one is essentially applying the same standard across vastly different socio-ecological contexts – this involves difficult choices.
- For example, the EPI leaves out arsenic in water, which is a major threat in Bangladesh.
- Difficulty in measurement of frogress on climate change: Climate change is a global environmental problem, and because its effects depend on the accumulation of greenhouse gases over time, measuring progress in a given country is challenging.
- Climate change mitigation has to be measured against what it is reasonable and fair to expect from different countries, taking into account their past emissions as well as national contexts.
- There has been an inconclusive 30-year debate on this question; any choice of benchmark involves major ethical choices.
- EPI has given 38 per cent weight to the climate change in the index.
- They assume that the world must reach net zero emissions by 2050, and so the appropriate benchmark is whether all countries are reducing emissions and reaching zero by 2050.
- Against CBDR: This approach is contrary to widely accepted ethical principles, especially the global political agreement on common-but-differentiated-responsibility (CBDR).
- The Yale-Columbia approach ignores the fact that countries have different responsibilities for past accumulations and are at different levels of emissions and energy use.
- The inclusion of indicators on emissions intensity and emissions per capita partly addresses this issue, but these two account for 7 per cent of the weight, versus 89 per cent for indicators derived from current emission trends.
Implications EPI’s approach
- This approach is guaranteed to make richer countries look good, because they have accumulated emissions in the past, but these have started declining in the last decade.
- Meanwhile, poorer countries that have emitted comparatively little in the past, look bad.
- The EPI’s flawed and biased approach distracts from a much-needed honest conversation about the environment in India.
- India’s local environmental performance on air, water and forests is deeply problematic.
- Air quality in India is now the second largest risk factor for public health in India, behind only child and maternal nutrition.
- Rivers and lakes are increasingly polluted, rivers are drying, groundwater tables are rapidly declining, and gains in tree cover hide declining natural productivity and diversity of forests and grasslands.
Conclusion
While indices like these have a limited attention-grabbing purpose, they serve this purpose well only when they are focused, limited to easy-to-measure metrics, and consciously minimise value judgements. The EPI 2022 resoundingly fails this test.
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