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[RSTV Archive] Central Bank Digital Currency

In the recent past, worldwide interest in cryptocurrency has risen. A recent survey says 86% of the central banks across the world are actively researching cryptocurrency while 60% are engaged in CBDC. Against this backdrop, the Reserve Bank of India (RBI) discussed its “phased implementation strategy” of a Central Bank Digital Currency (CBDC).

Central Bank Digital Currency (CBDC)

  • CBDC is a central bank issued digital currency which is backed by some kind of assets in the form of either gold, currency reserves, bonds and other assets, recognised by the central banks as a monetary asset.
  • The present concept of CBDCs was directly inspired by Bitcoin, but a CBDC is different from virtual currency and cryptocurrency.
  • Cryptocurrencies are not issued by a state and lack the legal tender status declared by the government.

What is Currency chest?

Currency in India is managed by Currency chest. Currency chest is a place where the Reserve Bank of India (RBI) stocks the money meant for banks and ATMs. These chests are usually situated on the premises of different banks but administrated by the RBI.

Why India needs a digital rupee?

  • Online transactions: India is a leader in digital payments, but cash remains dominant for small-value transactions.
  • High currency in circulation: India has a fairly high currency-to-GDP ratio.
  • Cost of currency management: An official digital currency would reduce the cost of currency management while enabling real-time payments without any inter-bank settlement.

Why is CBDC preferred over Cryptocurrency?

  • Sovereign guarantee: Cryptocurrencies pose risks to consumers.  They do not have any sovereign guarantee and hence are not legal tender.
  • Market volatility: Their speculative nature also makes them highly volatile.  For instance, the value of Bitcoin fell from USD 20,000 in December 2017 to USD 3,800 in November 2018.
  • Risk in security: A user loses access to their cryptocurrency if they lose their private key (unlike traditional digital banking accounts, this password cannot be reset).
  • Malware threats: In some cases, these private keys are stored by technical service providers (cryptocurrency exchanges or wallets), which are prone to malware or hacking.
  • Money laundering: Cryptocurrencies are more vulnerable to criminal activity and money laundering.  They provide greater anonymity than other payment methods since the public keys engaging in a transaction cannot be directly linked to an individual.
  • Regulatory bypass: A central bank cannot regulate the supply of cryptocurrencies in the economy.  This could pose a risk to the financial stability of the country if their use becomes widespread.
  • Power consumption: Since validating transactions is energy-intensive, it may have adverse consequences for the country’s energy security (the total electricity use of bitcoin mining, in 2018, was equivalent to that of mid-sized economies such as Switzerland).

Features of CBDC

  • High-security instrument: CBDC is a high-security digital instrument; like paper banknotes, it is a means of payment, a unit of account, and a store of value.
  • Uniquely identifiable: And like paper currency, each unit is uniquely identifiable to prevent counterfeit.
  • Liability of central bank: It is a liability of the central bank just as physical currency is.
  • Transferability: It’s a digital bearer instrument that can be stored, transferred, and transmitted by all kinds of digital payment systems and services.

Key benefits offered

  • Faster system: CBDC can definitely increase the transmission of money from central banks to commercial banks and end customers much faster than the present system.
  • Financial inclusion: Specific use cases, like financial inclusion, can also be covered by CBDC that can benefit millions of citizens who need money and are currently unbanked or banked with limited banking services
  • Monetary policy facilitation: The move to bring out a CBDC could significantly improve monetary policy development in India.
  • Making of a regional currency: In the cross border payments domain, India can take a lead by leveraging digital Rupee especially in countries such as Bhutan, Saudia Arabia and Singapore where NPCI has existing arrangements.

Others:

  • It is efficient than printing notes (cost of printing, transporting, and storing paper currency)
  • It reduces the risk of transactions
  • It makes tax collection transparent
  • Prevents money laundering

Issues involved with CBDC

  • Innovation with centralization: The approach of bringing a sovereign digital currency stands in stark contrast to the idea of decentralization.
  • Liability on RBI:  when bank customers wish to convert their deposits into digital rupee, the RBI will have to take these liabilities from the books of banks and onto its own balance sheet.
  • Inflationary risk: Central banks would indulge in issuing more digital currencies which could potentially trigger higher inflation.
  • User adoption: User adoption could also pose a major setback for the smooth roll out of the CBDC in India. The main challenges would always be user adoption and security.
  • Reduced savings: Many, including various central bankers, fear that people may begin withdrawing money from their bank accounts as digital currencies issued by Central banks become more popular.
  • Volatility: the risk is higher and there is more price volatility and lesser acceptance as a money instrument globally, unless the trust factor and investor protection factors change.

Way forward

  • The launch of CBDCs may not be a smooth affair and still requires more clarity in India. There are still a lot of misconceptions about the concept of digital currency in the country.
  • The effectiveness of CBDCs will depend on aspects such as privacy design and programmability.
  • There is a huge opportunity for India to take a lead globally via a large-scale rollout and adoption of digital currencies.

Conclusion

  • RBI is creating small pivot for experimenting CBDC where financial transaction is happening through digital currency.
  • CBDC has to be a gradual process, various nuances has to be taken care not only about its utilization but also about the impact it will make.
  • More clarity on the concept in the days to come will be the key for CBDCs and much will depend on how the whole concept will evolve in India which is predominantly a paper currency market.
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RSTV Archive Yojana/RSTV

[RSTV Archive] Carbon Border Tax: Why is India opposing it

The two-day G-20 ministerial meeting on environment and climate change in Italy are expected to raise their concerns over the European Union’s recent proposal on the first of its kind carbon border tax.

Under this proposal, the 27 EU nations will impose a border tax on imports of carbon-intensive goods.  Yet to be legally formalized, the tax plan could come into force from 2026.

So, what exactly is a carbon border tax? Why do developed countries want to impose such a tariff and why are developing nations opposed to the idea?

What is Carbon Pricing?

  • Carbon pricing is an approach to reducing carbon emissions that uses market mechanisms to pass the cost of emitting to emitters.
  • Its goal is to discourage the use of fossil fuels, address the causes of the climate crisis and meet national and international agreements.
  • Well-designed carbon pricing can change the behavior of consumers, businesses and investors while encouraging technological innovation and generating revenue that can be used productively.
  • There are a few carbon pricing instruments, such as a carbon tax and cap-and-trade programmes.

What is Carbon Border Tax?

  • A carbon border tax (CBT) is a tax on carbon emissions attributed to imported goods that have not been carbon-taxed at source.
  • The carbon border tax proposal is part of the European Commission’s European Green Deal that endeavours to make Europe the first climate-neutral continent by 2050. 

Objective:

  • To ‘incentivize’ greener manufacturing around the world and create parity with European manufacturers who are already subjected to substantial carbon levies.

A move to benefit local EU manufacturers

The carbon border tax has wide appeal in Europe. It is supported by the new president of the European Commission.

  • A carbon border tax is able to protect a country’s local manufacturers, motivating them to adhere to green regulations.
  • Many EU companies are at a cost disadvantage as they have been paying a carbon border tax and for carbon emissions since 2005 under the EU’s Emissions Trading System.
  • The new carbon border tax can therefore lead to a more level playing field against importers, especially those from nations with more lax environmental standards.

What could the new proposal mean politically?

  • Notably, China’s continuing reliance on non-renewable energy to power its economy leaves it particularly vulnerable in this matter.
  • For example, given that China produces steel with blast furnaces that release a large amount of carbon, it will have to pay an additional layer of carbon border tax, which will increase its costs and its market price.
  • This will consequently reduce the competitiveness of steel produced in China, compared to steel from other countries that is made in more carbon-efficient mills that do not have to pay this additional tax.

This suggests that the carbon border tax is also politically preferable to Europe as it slows down the gradually rising economy in China, and would therefore preserve the European countries’ competitiveness. 

The BASIC (Brazil, South Africa, India and China) countries’ grouping had opposed the EU’s proposal.

How does this impact India?

  • As India’s third largest trading partner, the EU accounted for €62.8 billion ($74.5 billion) worth of trade in goods in 2020, or 11.1% of India’s total global trade.
  • India’s exports to the EU were worth $41.36 billion in 2020-21, as per data from the commerce ministry.
  • The CBT would cover energy-intensive sectors such as cement, steel, aluminium, oil refinery, paper, glass, chemicals as well as the power sector.
  • By increasing the prices of Indian-made goods in the EU, this tax would make Indian goods less attractive for buyers and could shrink demand.
  • Sadly, India’s many ‘self-reliance’ tariffs are also a contributor to this.

Issues with CBT

  • Impact on trade: The degree of impact on industrial sectors would be largely influenced by two factors: carbon intensity and trade intensity.
  • Altering competitiveness: For companies, it will raise the administrative burden of crossing borders and increase trade frictions, especially for small businesses. That will inevitably reduce choice and raise costs for consumers.
  • Promoting protectionism: The carbon tax may end up being protectionist, and will hit emerging economies like India hard.
  • Unfair practices under WTO: Depending on their design they could fall foul of WTO measures designed to prevent importing countries from discriminating against particular exporting countries.
  • A violation of Paris Accord: CBT compels developing countries to pay the same price as the developed countries to climate change. The EU is essentially bypassing the principle of ‘common but differentiated responsibilities’ that should guide international climate action.

Way forward

  • Carbon taxing is just one way of holding large emitters accountable for their role in harming the environment.
  • However, fundamental changes can’t be forced by tariffs.
  • If the planet is to have any hope of meeting the Paris Agreement goals, drastic measures that consider both the economic and social wellbeing of nations’ inhabitants must be taken.
  • This should take all nations into confidence than imposing such overnight tariffs.
  • It is no doubt that India must be in the forefront in climate politics. But it must also be cautious about the negotiations in global laws to protect domestic interests.
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[RSTV Archive] Marine Aids to Navigation Bill, 2021

The government has introduced the Marine Aids to Navigation Bill, 2021 in the Rajya Sabha to replace a nine-decade-old law to pave the way for shifting from lighthouses to modern aids for marine navigation.  Lok Sabha passed the Bill in March this year.

In this article, we shall study the salient features, its application, the changes the bill would bring about in marine navigation.

Marine Aids to Navigation Bill, 2021

  • The Bill repeals the Lighthouse Act, 1927 and seeks to provide a framework for the development, maintenance, and management of aids to navigation in India.
  • Key features of the Bill include:

Application:

  • The Bill applies to the whole of India including various maritime zones including territorial waters, continental shelf, and exclusive economic zone.

Aid to navigation:

  • The Bill defines aid to navigation as a device, system, or service, external to the vessels designed and operated to enhance the safety and efficiency of navigation of vessels and vessel traffic. 
  • A vessel includes a ship, boat, sailing vessel, fishing vessel, submersible, and mobile offshore drilling units.
  • Vessel traffic service is defined as a service to improve the safety and efficiency of vessel traffic and protect the environment.

Director-General of Aids to Navigation:

  • The Bill provides that the central government will appoint: (i) a Director General, (ii) Deputy Director Generals, and (iii) Directors for districts (which the centre may demarcate). 
  • The Director General will advise the central government on matters related to aids to navigation, among others.

Central Advisory Committee:

  • The central government may appoint a Central Advisory Committee (CAC) consisting of persons representing the interests affected by the Bill, or having special knowledge of the sector. 
  • The government may consult the CAC on matters including: (i) establishment of aids to navigation, (ii) additions, alteration, or removal of, any such aids, (iii) cost of any proposal relating to such aids.
  • Further, the CAC may also appoint sub-committees for additional advice on these matters.

Management of General Aids: 

  • The central government will be responsible for the development, maintenance, and management of all general aids to navigation and vessel traffic services.
  • Its powers with regard to management of aids to navigation include: (i) establishing, maintaining, adding, altering, or removing any aid to navigation, (ii) authorising to inspect any such aid which may affect the safety of navigation, and (iii) acquiring any land as may be necessary.

Training and certification:

  • The Bill provides that no person shall be allowed to operate on any aid to navigation (including any ancillary activities), or any vessel traffic service in any place unless he holds a valid training certificate. 
  • The central government will accredit training organizations for imparting training to, or conduct assessments of, persons in the operation of aids to navigation and vessel traffic services.

Levy of marine aids to navigation dues:

  • The Bill provides that marine aids to navigation dues will be levied and collected for every ship arriving at or departing from any port in India, at the rate specified by the central government from time to time. 
  • The central government may wholly or partially exempt certain vessels from these dues. 
  • These vessels include: (i) any government ship, which is not carrying cargo or passengers for freight or fares, or (ii) any other ship, classes of ships, or ships performing specified voyages.
  • Any dispute related to the marine aids to navigation dues, expenses, or costs, will be heard and determined by a civil court having jurisdiction at the place where the dispute arose.

 Heritage Lighthouse:

  • The central government may designate any aid to navigation under its control as a heritage lighthouse. 
  • In addition to their function as aids to navigation, such lighthouses will be developed for educational, cultural, and tourism purposes.

Why was such bill needed?

  • India has a long coastline. There are radar beacons, GPS Navigation system to guide a ship for proper directing  of the ship.
  • In India there are 18 light houses which are more than 75 years old.
  • There are light house districts where safe navigation is provided. Cost of Maintaining of these Light houses is also very high.
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[RSTV Archive] Drone Draft rules: Impetus to future tech

The Union Civil Aviation ministry has released the draft of the national drone policy, making it significantly easier for people and companies to own and operate drones, while also streamlining the certification process for manufacturers, importers and users.

Drones have been in the spotlight since such a device was used to target an Indian Air Force (IAF) base in Jammu with explosives last month.

In this article we will discuss and analyse all aspects of this issue.

Why such urgent promulgation?

  • Drones now form a significant new consumer tech category, particularly among hobbyists and visual artists.
  • They are being tested for a range of practical as well as industrial uses such as automated package deliveries by e-commerce companies.
  • They have wide range of applications such as in disaster management, delivery systems.
  • The new draft rules provide a positive move. They present a lot of clarity in the usage of drones.

Draft Drone Rules 2021

The objective of the policy is to enable more types of unmanned aircraft operational scenarios, increase the ease of compliance for the unmanned aviation industry, and ensure safety and security.

Some of the key features are as under:

Number of forms: The rules propose to reduce the number of forms required for manufacturing, importing, testing, certifying and operating drones in India from 25 to six.

Abolishing authorization number: The draft seeks to abolish the unique authorisation number, unique prototype identification number, and certificate of conformance that were previously required for approval of drone flights.

Digital Sky Platform: Digital Sky, a platform launched by the government in December 2018, will become a single-window system for all approvals under the newly proposed rules.

Airspace map: An airspace map segregating the entire landmass of India into Green, Yellow and Red zones will be published on the platform within 30 days of notification of the new rules, the government said. The map will also be machine-readable through an Application Programming Interface (API) for easier plotting of drone flight paths.

Airport Perimeter: The draft rules reduced the airport perimeter from 45 km to 12 km. The rules state that no flight permissions would be required to fly up to 400 feet in green zones and up to 200 feet in the area between 8 and 12 km from the airport perimeter.

Drone corridors: The government will also publish a policy framework for Unmanned Aircraft System Traffic Management (UTM) within 60 days of notifying the rules. This will also include frameworks for developing “drone corridors” for the safe transfer of goods by drones.

Drone Promotion Council: The Rules also propose the setting up of a Drone Promotion Council, with the aim of facilitating a business-friendly regulatory regime for drones in India, the establishment of incubators for developing drone technologies and organizing competitive events to showcase drones and counter-drone solutions.

Others: To implement safety features such as “no permission, no take-off”, real-time tracking and geofencing, drone manufacturers, importers and operators will get six months’ time to comply from the date of notification of the rules.

Security imperative and Drones

  • The integration of unmanned aircraft systems into national air-force is critical and challenging both.
  • We have incidences were arms, narcotic drugs have been dropped by drones. So, security challenges are increasing.
  • DRDO has come up with an Anti-drone system. This makes India capable of where drones can be jammed.
  • Other is one can shoot the drone through lasers. But this has potential threats to humans.
  • Drones are called eyes in the sky as they are used by law enforcement agencies, fire emergency services, health care facilities.

Digital Sky Platform: Key to Success

  • The success of these initiatives will depend in large part on the ‘Digital Sky’ platform — a single-window online system where most permissions to own and operate drones will be self-generated.
  • Bureaucratic red tape and ‘rubber stamp culture’ has been the bane of Indian aviation for decades.
  • Paper trails with needless human intervention lend themselves to ‘discretionary powers’ and opens doors for corruption.
  • It is encouraging to see the shift to paperless approval.

Conclusion

  • The drone industry (manufacturing and operation) is still grappling with evolutionary challenges in India.
  • The ministry of civil aviation’s decision to liberalize the drone policy even after the recent drone incidents in Jammu showcases the government’s bold approach.
  • They are necessary to promote the use of the drone and the government must focus on the development of counter-drone technology to address the threat posed by rogue drones.
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[RSTV Archive] Subsidy Reforms & Fiscal Position

Finance Secretary has recently underlined the need for improving the fiscal position of the government through reforms in farm, food and fertilizer subsidies so that additional funds can be generated for the development of infrastructure and education systems.

In this article we will discuss and analyse all aspects of this issue.

Financial crunch of India

  • India’s fiscal deficit at 9.3% of GDP for FY21, down from a revised estimate of 9.5%.
  • This is expected to rise due to covid induced welfare schemes announced recently.

Role of Subsidies

  • In India, food and fertilizer subsidies formed a major chunk of the overall subsidy followed by education, health, corporate concession, etc.
  • Farm, food and fertilizer reforms are administratively easy but politically difficult in view of the ramifications.

At the present juncture we have two main kinds of buckets of reform-

  1. We have to set our fiscal house in order and also provide for the many things that governments legitimately should provide.
  2. We will need to reform some of our subsidies — farm subsidies, food subsidies, fertilizer subsidies. Some of them are intertwined with each other.

Burden of Subsidies in India

(1) Farm Subsidies

  • The continued trust in Centre is established with the ever-increasing support to farmers.
  • Various farm subsidies from the govt include fertilizers, farm credit, crop insurance and MSP etc.
  • A similar support from State Governments towards electricity power subsidies, irrigation subsidies crop insurance subsidies.
  • Public investment in agriculture through major irrigation projects by States, is almost equal to the annual farm subsidies of the Government of India.
  • In addition, 50% of the food subsidies are granted to farmers under National Food Security Mission, as 75% of rural population covered.
  • State Governments also waived farm loans of Rs. 1,22,000 crores.

Thus, farm subsidies form about two percent of India’s GDP.

(2) Fertilizer Subsidies

  • The government’s role in shaping the fertilizer landscape goes back to 1957 when it introduced the Fertilizer Control Order (FCO) to regulate the sale, price, and quality of fertilizers in the market.
  • This has not only contributed to the start of a green revolution but also increased the use of fertilizer by farmers and resulted in higher yields.
  • India is currently the second-largest consumer of fertilizer globally after China.

Over the years, the distribution of fertilizer in India became prone to leakages. This is due to:

  1. Lack of a dedicated fertilizer beneficiary database
  2. Absence of a cap on fertilizer entitlements (Presently farmers can buy any amount, irrespective of need)
  3. Different levels of subsidy provided to the manufacturing plants based on their cost of production
  4. Disproportionate use of urea as opposed to other types of fertilizer, such as fertilizers containing phosphorous (P) or Potassium (K) nutrients, or both.

(3) Food Subsidies

India has one of the largest food subsidy programmes in the world that has created a relatively effective social safety net.

  • Food subsidies are under increasing criticism because of its large contributions to government budget deficits, economic inefficiency and poor targeting.
  • The food subsidy bill is becoming unmanageably large.
  • For the 2021/22 fiscal year, India’s total outlay toward the food subsidy is expected to cross Rs 2.1 lakh crore.
  • The Economic Survey 2020-21 released on Friday recommended an increase in the issue price at which poor households receive food grains.
  • Central issue price (CIP) is the amount priority households pay, ₹2 per kg of wheat and ₹3 per kg of rice, to avail grain from the subsidized PDS.
  • This issue price for wheat and rice has not been revised since the introduction of the National Food Security Act in 2013.

The total cost of food subsidies that amounted to about 2.2 per cent of agricultural GDP during the 1990s increased significantly to about 5 per cent during the last decade.

Why these subsidies are a cause of concern?

  • Current level of fiscal deficit is difficult to address as even during 1991, fiscal deficit was around 7.5%
  • Historically countries like England and Germany faced similar problems during global meltdown.
  • Our type of subsidy pattern is similar to these countries.
  • Giving subsidies are not empowering people is not the true way. It is not helping the poors the way it should have been.

Challenges to bring subsidies reforms in India

  • Subsidy benefits are not reaching to intended person in supply chain due to leakages like middlemen in MSP payments, fertilizer leakage to industry, etc.
  • Over the years, subsidies have not empowered the poor people. Ex. Poor spends lakh and lakh of crores on health even after getting subsidy.
  • Political will and cooperation from opposition is required in bringing changes to subsidy structure. Ex. Due to lack of opposition support, farmers are protesting against new farm laws
  • Government needs to address those details mentioned in NFSA. Ex. Provision of providing rice at Rs. 3 per kg.

Subsidy reforms is really a big fraud affair that it’s hard for govt to go forward.

Way forward

  • Indian needs to implement Brazil “Conditional Subsidy Model” called ‘Bolsa Família’ which even Bangladesh has also adopted. It is based on conditional cash transfer.
  • Reform should be focused on two points – Direction of change and Time of change. In the direction of change, food subsidy reform should be at last due to covid.
  • There should be a public and private partnership model for community health center and public health center in rural India to utilize subsidies in a much better manner.
  • A voucher system can be the perfect alternative to food subsidy as it will significantly reduce administrative costs.
  • Active centre & states partnership is required to strengthen the health and education sector as both these comes under state legislature.
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[RSTV Archive] Cooperative Based Economic Development

A new Ministry of Cooperation has been created to strengthen cooperative movement. This separate administrative structure was proposed in Union Budget earlier this year. New ministry is expected to streamline processes for cooperatives and realise the vision of ‘ Sahkar se Samriddhi’.

In this article we will discuss and analyse all aspects of this issue.

What is a Cooperative?

  • A cooperative is “an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned enterprise”.
  • Cooperatives are democratically owned by their members, with each member having one vote in electing the board of directors.

Cooperative Movement in India

The history of cooperatives in India goes back to more than a hundred years and they continue to stay relevant due to their grassroots reach and ability to bring economic growth to underserved sections.

  • The cooperative movement, which has its roots in the 19th century Europe, developed in pre-Independence India in response to agricultural distress and indebtedness.
  • Their growth was fostered, first by India’s erstwhile British rulers and, post-Independence, several steps have been taken to put assist in their growth and functioning.
  • The formal launch of the cooperative movement in India occurred with the introduction of the Cooperative Societies Act in 1904.
  • However, it notes that even before the passing of that law, “the practice of the concept of cooperation and cooperative activities were prevalent in several parts of India”.
  • In 1912, another Cooperative Societies Act was passed to rectify some of the drawbacks of the earlier law.
  • The next landmark change came in 1919 when cooperation was made a state subject. That allowed the various states to come up with their own legislation governing cooperatives.

Who can form a cooperative in India?

  • Cooperatives are geared towards benefiting the chunk of Indian people — about 65 per cent of the country’s population — who depend on agriculture and related activities.
  • According to the Co-operative Societies Act, 1912, at least 10 persons aged above 18 years with common economic objectives, like farming, weaving, consuming, etc, can form a cooperative society.

Which are the key sectors where cooperatives operate in India?

  1. Consumer Cooperative Society
  2. Producer Cooperative Society
  3. Co-operative Credit Societies
  4. Marketing Cooperative Society
  5. Housing Cooperative Society
  6. Co-operative Farming Societies
  • The various kinds of cooperatives in India include consumers’ cooperative societies, which seek to protect the interest of general consumers by making goods available at reasonable rates.
  • Then there are producers’ cooperative societies that protect the interest of small producers by enabling access to raw materials, tools and equipment, machinery, etc. are examples of producers’ co-operative societies.
  • Among the most famous cooperative brands in the country, Amul developed out of the Gujarat Co-operative Milk Marketing Federation, which is owned by 36 lakh milk producers in Gujarat.
  • It is an example of a cooperative marketing society, formed by small producers and manufacturers who find it difficult to sell their products individually.
  • Among other types of cooperatives are cooperative credit societies, which accept deposits from members and grant them loans at reasonable rates, and cooperative farming societies, which are formed by small farmers to work jointly and thereby enjoy the benefits of large-scale farming.

Why needs cooperatives?

It is easier to understand the need of the cooperatives by knowing its specific objectives. They can be summed as follows:      

  • Cooperatives are good, reliable opportunities for growth
  • They provide an opportunity for collective decision making.
  • They eliminate the unnecessary profits of middlemen in trade and commerce.
  • They aim to protect the rights of people both producers and consumers.
  • They promote mutual understanding and education among their members and people in general.
  • They bring together people at the grassroots and provide them collective bargaining power and benefits of economies of scale.
  • They provide an economic model with a higher level of entrepreneurial or social sustainability and often work as pressure groups to voice the views of their members in a larger market.
  • Being a part of a co-op improves your creditworthiness as a producer as well as a consumer.
  • They are easy to join, ensure equitable distribution of profits, prioritise welfare over individual profits, are stable in their functioning and output, and receive a substantial amount of government support.

Why need a separate ministry?

  • Over the years, the cooperative institutions have experienced drying out of funding.
  • While the capital came from the Centre, in the form of equity or working capital, only a few states like Maharashtra, Gujarat, Karnataka got to enjoy it, while other states could not receive much.
  • It had become important to restore the structure of these cooperatives.
  • Under the new Ministry, the cooperative movement would get the required financial and legal power needed to penetrate into other states also.

How do these cooperative structures influence politics?

  • The cooperative institutions ranging from the village-level primary agricultural credit societies (PACSs) or the urban housing societies have been the starting point of a lot of present leaders.
  • That’s because these cooperatives elect their own board of directors.
  • Many veteran politicians of the day have been in connection with the cooperative movement in the past.
  • They often tend to start their political career through cooperative elections.
  • Control of co-operatives allows politicians to influence decisions upstream (who gets a cabinet seat) as well as downstream and ancillary fields (where are the votes coming from).
  • They are a source of funding and patronage.
  • A canny politician can leverage his/her power at the cooperative level all the way to state and national prominence.

Challenges for cooperatives

  • Capital: As the income from agriculture in the rural sector has declined drastically there these banks need a new business model to function.
  • Regionality: Milk cooperatives are a huge source of income for the farmers but the growth of the dairy sector is dismal. The North and northeast do not contribute substantially to the dairy sector.  There is a need for policies for supporting ancillary services for the dairy sector.
  • State laws: State cooperative Laws are not in tune with the current socio-economic situation.

Opposition from the states

  • In Maharashtra and Gujarat, there are many big cooperative societies engaged in sugar and milk production, power looms, and running urban and rural non-agri credit societies.
  • In Mh alone there are around 21,000 primary agriculture credit societies and 31 district cooperative banks.
  • It is believed that around 150 MLAs in Maharashtra are connected to this sector.
  • The Left parties have also expressed concern over the move, stating that it seeks to undermine the federal structure of the country. 
  • Cooperative societies are a state subject in the Constitution’s 7th Schedule.

What will be the new cooperation ministry’s role?

  • Separate administration: With a focus to help deepen cooperatives as a true people-based movement, the ministry is mandated to “provide a separate administrative, legal and policy framework for strengthening the cooperative movement”.
  • Facilitation: The ministry will streamline processes for ease of doing business for cooperatives and enable the development of multi-state cooperatives.
  • Expansion: With the coming up of handicraft and weavers’ cooperatives and so on the farmers’ income can be doubled.
  • Economic boost: It will contribute towards economic growth and development. It will help in identifying other sectors where the cooperatives can come up which will be beneficial for the ones down the value chain.

What should be the key areas where the ministry should focus?

  • Rural sector: Double farmers’ income can be achieved by growth of the food processing industry. India can learn from the Netherlands in this aspect.
  • Housing for all: Mass housing through cooperative societies in urban areas as majority urban poor live in slums.
  • Consumer cooperatives in urban areas: There are none in the country with credible work. As these can act as a balancing sector.
  • Ease of doing business: EODB norms should be extended to all cooperatives so that they are able to function without obstructions.

Way forward

  • The new ministry should empower cooperatives to form their SPVs.
  • It should promote companies under the companies act which are formed by the cooperatives.
  • The cooperative should not be dependent only on govt or borrowing for capital.

Reference:

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[RSTV Archive] Open Network for Digital Commerce

Moving ahead with its plans to make e-commerce processes open source and curbing digital monopolies, the government on has appointed an advisory council to design and accelerate the adoption of open network for digital commerce.

The move by the government is the latest in a series of changes announced or being planned to be rolled out by the government for the e-commerce sector.

So, what changes will the open network for digital commerce bring about? What are its aims and objectives? How significant a move it is towards streamlining the country’s e-commerce ecosystem?

These are some aspects we will analyse on in this article.

What is ONDC Project?

  • ONDC seeks to promote open networks, which are developed using the open-source methodology.
  • The project is aimed at curbing “digital monopolies”.
  • This is a step in the direction of making e-commerce processes open-source, thus creating a platform that can be utilized by all online retailers.
  • They will encourage the usage of standardized open specifications and open network protocols, which are not dependent on any particular platform or customized one.

What does one mean by ‘Open-sourcing’?

  • An open-source project means that anybody is free to use, study, modify and distribute the project for any purpose.
  • These permissions are enforced through an open-source licence easing adoption and facilitating collaboration.

What processes are expecting to be open-sourced with this project?

  • Several operational aspects including onboarding of sellers, vendor discovery, price discovery and product cataloguing could be made open source on the lines of Unified Payments Interface (UPI).
  • If mandated, this could be problematic for larger e-commerce companies, which have proprietary processes and technology deployed for these segments of operations.

What is the significance of making something open-source?

  • Making a software or a process open-source means that the code or the steps of that process is made available freely for others to use, redistribute and modify.
  • If the ONDC gets implemented and mandated, it would mean that all e-commerce companies will have to operate using the same processes.
  • This could give a huge booster shot to smaller online retailers and new entrants.

What does the DPIIT intend from the project?

  • ONDC is expected to digitize the entire value chain, standardize operations, promote inclusion of suppliers, derive efficiencies in logistics and enhance value for stakeholders and consumers.

Countering ‘Digital Monopoly’

  • Digital monopolies refer to a scenario wherein e-commerce giants or Big Tech companies tend to dominate and flout competition law pertaining to monopoly.
  • The Giants have built their own proprietary platforms for operations.
  • In March, India moved to shake up digital monopolies in the country’s $ 1+ trillion retail market by making public a draft of a code of conduct — Draft Ecommerce Policy, reported Bloomberg.
  • The government sought to help local start-ups and reduce the dominance of giants such as Amazon and Walmart-Flipkart.
  • The rules sought to define the cross-border flow of user data after taking into account complaints by small retailers.

Processes in the ONDC

  • Sellers will be onboarded through open networks. Other open-source processes will include those such as vendor and price discovery; and product cataloguing.
  • The format will be similar to the one which is used in the Unified Payments Interface (UPI).
  • Mega e-commerce companies have proprietary processes and technology for these operations.
  • Marketplaces such as Amazon, Flipkart, Zomato, BigBasket and Grofers will need to register on the ONDC platform to be created by DPIIT and QCI.
  • The task of implementing DPIIT’s ONDC project has been assigned to the Quality Council of India (QCI).

Why such a move by the govt?

  • This COVID pandemic has made every business to go digital.
  • India is a country with 700 million internet users of whom large crunch of population are active buyers on e-coms.
  • There are 9 platforms in the world which are billion user platform and all are private. This is the monopoly which the govt aims to hit.
  • No country would ever want a few (foreign) companies to control their domestic e-commerce ecosystem.
  • Countries like US are struggling to control their monopoly over the e-commerce giants leaving no space for Indian legislations to control these overseas companies.
  • In India Amazon, Walmart, Uber are controlling larger crunch of share in the market leaving very less scope for domestic companies to cope up with.

Scope for ONDCs success

  • Over last 50 years India is dealing with Big Tech companies with responsibility and pragmatic manner. Now it is also coming with new policies to control them.
  • The drafting panel has extraordinary persons like Mr. Nandan Nilekani and others who were in Aadhar, NPCI, MyGov, Retail industry and these make it inclusive and innovative.
  • India has successfully executed various public digital platforms like JAM Trinity, Aadhar linked projects. India for sure can handle its digital ecosystem better in e-coms too.
  • Open-sourcing will benefit society at large as did the UPI.

Issues that can be raised

  • Draft E-Commerce policy can raise resistance from companies like Amazon, Flipkart, Walmart etc.
  • They may raise hues over operability and ease of doing business.
  • MSMEs have already raised the growing compliance burden for e-commerce.
  • They have argued that the govt is technologically and digitally motivating everybody to get online and on the other hand it is culling their very ability to reach out to the consumer to get more people on board.

Possible issues with ONDC

  • Every platform has its own challenges so would the ONDC may have.
  • While UPI was ruled out (BHIM being the first) people were reluctant in using it due to transaction failures.
  • With subsequent improvements and openness people and businesses are using it in every walks of life. So it would work with ONDC.

Conclusion

  • Once adopted, ONDC will make sure consumer and seller interest will be protected as the UPI did.
  • Best is yet to come and we are in 4th industrial revolution where the Govt should strengthen itself accordingly and make businesses inclusive and restrict the monopolies.

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[RSTV Archive] National Space Transportation Policy

Context

  • India is planning to put in place a technological & regulatory framework.
  • The Department of Space (DoS) has released the draft National Space Transportation Policy.
  • Private players eager to leverage national facilities and the new policy aims to unlock the potential in space sector.

In this article we will discuss and analyse all aspects of this issue.

National Space Transportation Policy

  • The Department of Space (DoS) has placed the ‘Draft National Space Transportation Policy 2020 – Norms, Guidelines & Procedures (NGP)’ for implementation in public domain for comments & suggestions.
  • It covers all aspects of rocket launching, launchpads, reentry of a space object and others.
  • Indian National Space Promotion & Authorization Center (IN-SPACe), an independent body under the DoS has been specified as the nodal agency for all approvals related to launches by the private sector.

A boost for private players

  • The policy aims to unlock the potential of the space sector in the country with respect to space transportation systems.
  • It will create a healthy ecosystem for private companies to develop launch vehicles and launch them from Indian Territory.

(1) Launching of rockets

  • The draft policy allows Indian private companies to establish and operate rocket launch sites within and outside the country, after getting prior authorization from the government.
  • Rocket launch (orbital or sub-orbital) from Indian or overseas territory can be carried out only with authorization from IN-SPACe.
  • The launch could be from own or leased launch site and also from mobile platforms (land, sea or air).

(2) Financial guarantee

  • As per the policy, IN-SPACe authorization requires financial guarantee or insurance cover by proposer under its ownership to fulfil nation’s liability as per international agreements.

(3) Launches outside India

  • If the launch site is overseas, all necessary approvals for undertaking the activities in another country must be under the applicable laws of that country.
  • IN-SPACe will authorize the launch activity by the Indian Entity after verifying clearances accorded by Ministry of External Affairs or any other Ministry.
  • IN-SPACe or India shall not have any liability related to launches performed outside of the territory of India.

(4) Green technologies

  • The draft policy states that ISRO should focus on Research and Development (R&D), green fuels, robotic space exploration and reusable rockets.
  • It states that focused research on new propulsion systems based on semi-cryogenic, liquid oxygen-methane and green propellants is essential.
  • ISRO is developing green propulsion through hydrogen peroxide for the rocket that will power the ‘Gaganyaan’ mission (India’s 1st Human Space Flight Programme).
  • ISRO is developing a green fuel – LOX (Liquid Oxygen)/Methane – LOX as oxidiser and methane as fuel.

Why need such a policy?

  • Indian entities can eye the big opportunity to capture a share of the global launch services market.
  • It facilitates R&D to build space transportation capabilities for future space endeavours along with commercial exploitation.
  • The establishment of space enterprises has the potential to boost the economy by creating direct & indirect employment.
  • It enables the commercial utilization of the launch capacity and space transportation technologies developed by the DoS through its commercial arms.
  • Private sector ecosystem in Space Transportation is growing globally.
  • It paves the way for engaging in mutually beneficial partnerships with international space agencies/technology providers towards the joint development of advanced space transportation capabilities. 

Salient features of the policy

  • The policy is a comprehensive document with guidelines right from the start of the mission and till the coming back of the rocket.
  • The draft policy also talks about robotics which is needed for space stations.
  • The policy is really a futuristic document since it talks of private launch pads.

Some shortcomings

  • Space is an important sector where we require capital investments from outside. This is where the policy is silent.  
  • Indian big players have no keen interest in space-based industries. This would make the private arm totally based on startups.
  • The policy is also silent on the military, space weapons, suborbital tourism etc.
  • The policy also talks about launching activities from Seas.  This can create security issues that need to be taken care of.
  • It can create challenges in implementation since it has created a single-window approval agency like IN-SPACe. This could hamper the Ease of Doing Business.
  • Also, the policy is not clear about startups and research.

Way forward

  • It is essential for the DOS to work towards advanced space transportation capabilities including new propulsion systems, reusability as well as heavy lift capabilities to undertake robotic/human space exploration.
  • In order to enable missions like human spaceflight and robotic space exploration, the current capabilities of DOS/ISRO have to be significantly enhanced towards heavy lift and reusable space transportation systems.

Conclusion

  • ISRO till now proved it’s worth and has brought a lot of laurels to India. Now the time has come that Indian industry also lives up to the standards set up by ISRO.

Reference

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[RSTV Archive] Economic Reforms – Journey & Road Ahead

India has completed 30 years of liberalization regime. Multi-pronged reforms agenda was launched in 1991. Over the years India has become one of the fastest growing economies in 21st century and the reforms agenda continues to be in focus along with the quest for self-reliance. In this edition we will discuss and analyse all aspects of this issue.

In 1991, India’s population was 83.8 crore. In 2021, it is estimated at 139 crore. Effectively four of ten Indians, or 55 crore Indians scarcely know of an India which existed in perpetual want – when people waited for years for a phone, LPG connection and even a scooter. Today, the Aadhaar-based digital infrastructure enables Indians to get a phone connection or open a bank account in minutes.

1991 Economic Reforms

  • The 1991 economic reforms refer to the economic liberalization of the country’s economic policies with the goal of making the economy more market and service-oriented and expanding the role of private and foreign investment.
  • It was part of a general pattern of economic liberalization and modernization occurring across the world in the late 20th century.
  • It was prompted by a balance of payments crisis that had led to a severe recession.
  • Specific changes included reducing import tariffs, deregulating markets, and reducing taxes, which led to an increase in foreign investment and high economic growth in the 1990s and 2000s.

What was the pre-liberalization economic policy?

  • Indian economic policy after independence was influenced by the exploitative colonial experience and by those leaders’ exposure to socialism.
  • Policy tended towards protectionism, with a strong emphasis on import substitution industrialization under state intervention.
  • Licence Raj established an “irresponsible, self-perpetuating bureaucracy” and corruption flourished under this system which created widespread economic stagnation.

The story of 30 years

This can be categorized into:

  • Growth: with many regime changes, fiscal deficit has been reduced to 4% from then 8%.
  • Trade policy: Tariff got reduced eventually facilitating import and multilateral trade.
  • Industry and licence policy: Except Railways and atomic energy got delicensed. India has become Startup capital of the world.
  • Financial sector reforms: Banking, NPAs were crux of this reforms.
  • RBI and Govt relations: This have been redefined since then. Govt has not been using Ad-Hoc treasury bills and replaced by T-Bills of RBI.
  • Employment: Now private companies have raised to give employment to innumerable and the hunt for govt jobs has reduced.

Major outcomes of the reforms

1991 reforms ushered in an era of high growth, declining poverty, a burgeoning, aspirational middle class and the very real possibility of a seat on the global stage.

  • By the first decade of the 21st century, India began to be seen as one of the fastest growing emerging markets.
  • The 1991 reforms unleashed the energies of Indian entrepreneurs, gave untold choice to consumers and changed the face of the Indian economy.
  • Far from poverty increasing, for the first time, there was a substantial reduction in it.
  • From 1992 to 2005, foreign investment increased 316.9%, and India’s GDP grew from $266 billion in 1991 to $2.3 trillion in 2018.
  • It redefined the role of State as facilitator & neutral regulator.

“For sure, China is enabled by the authoritarian system whereas India is a vocal democracy. Yet the fact is the authoritarian state has done better on every development indicator.”

Shortcomings of the reforms

  • When we see the growth of economy on one side, on the other side, inequality has sustained. The reforms has not reached to socials sectors like education, health, skill development.
  • The share of manufacturing in the GDP has largely remained stagnant.
  • Economic liberalization has failed to provide secure and decent jobs to the mass of the population.
  • Informality, under-employment and low inter-generational mobility persisted through the heady days of growth
  • State now has become redundant and its role in the economy has reduced only as facilitator of business. This has damaged the government’s capacity in two ways.
  • First, it incapacitated the government to respond to emergencies based on credible information. Second, the logic and policies of economic liberalization seriously undermined the manufacturing capabilities of India.

Challenges in 2021

Markets in India operate in the context of deep structural inequalities. Our 1991 economic imagination responded to these realities by framing the debate in false binaries of growth versus inequality.

  • The pandemic-induced lockdown brought the wheels of economic activity to a grinding halt, triggering a sharp economic contraction.
  • This has resulted in a collapse in production following the disruption caused by the pandemic, which, in turn, has caused a fall in demand.
  • Public expenditure must happen for the next stage of economic growth.

” The economic reforms and agenda of 1991 has lot of challenges and opportunities which lie ahead in terms of economic growth, above mentioned reforms have to be taken at the earliest”

Liberalization 2.0 needed

  • Economic growth is sustained by the virtuous cycle of income- consumption-demand-investment-growth.
  • In theory, India dismantled licence raj but permission raj persists. Successive governments have shied away from reviewing the process of clearances.
  • Small and medium enterprises are the bulwark of employment and exports but suffer from over-regulation and under-provision of capital.
  • India’s policy on FDI has been defined less by objectives and more by crises.
  • This has detained expansion in the areas where access to capital and technology could have made India a dominant player – for instance in electronics and computer hardware.
  • Growth at a macro level is but a means to achieve ends.
  • No country has progressed without investing in human development and yet India has struggled to up the spending on education and health.

Conclusion

  • The defining factor in success is a sense of political purpose and efficiency of the state.
  • Three decades after liberalization, India continues with a ministerial structure designed for state-led industrialization.
  • Five decades after the first Administrative Reforms Commission, the political economy wrestles with the very same issues which it interrogated in the 1960s.
  • To deliver on the promise of its potential, India needs to complete the unfinished agenda —install Gov 2.0 to enable minimum government and maximum governance.
  • Finally, the limitations to invest in human capital, health, education, nutrition, worse, treating these as an afterthought, a luxury of high growth. This is both an economic and a moral failure.

There can be no sustainable growth without first investing in people and enabling them the opportunity to be active participants in the economy. If there is only one lesson to be learnt from the 1991 moment, let it be this.


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[RSTV Archive] India and Afghan Peace Process

External Affairs Minister S Jaishankar set out India’s red lines for the settlement process in Afghanistan during a UNSC debate. A Qatari official revealed that there was a “quiet visit by Indian officials to speak with the Taliban”.

India has been becoming more central to the negotiations with the Talibans. In this article we will discuss and analyse all aspects of Afghan peace process from India’s perspective.

The tension is the change in “the balance of influence between regional powers and the wider international community” where non-Western states have become more influential in matters of regional security.

Afghan Peace Process

  • The Afghan peace process comprises the proposals and negotiations in a bid to end the ongoing war in Afghanistan.
  • This US-Taliban deal signed in February 2020 was seen in India as a “victory for Taliban and Pakistan”.
  • Although sporadic efforts have taken place since the war began in 2001, negotiations and the peace movement intensified in 2018 amid talks between the Taliban, which is the main insurgent group.
  • Besides the US, major powers such as China, India, Russia, as well as NATO play a part that they see as facilitating the peace process.
  • The Afghan peace group People’s Peace Movement sees regional and global powers as a cause of continued war.

The peace process has not made much headway mainly because violence by the Taliban continues unabated. The Taliban now view this as an important milestone and is busy trying to establish their military superiority on the ground.

Taliban prowess is ever increasing

  • Every single day since the ceasefire, the Taliban is strengthening and violence is mounting high.
  • Taliban is now more organized as an organization with diplomats on par with modern democratic nations with a state apparatus propaganda.
  • The Taliban strategy seems to be to capture power in Kabul by violence and intimidation despite warnings from the international community.
  • At the core of its diplomacy lies the untenable violent extremism based on radical religious ideology.

India and Afghanistan

  • India’s contribution has been phenomenal in every area in Afghanistan since India built the Afghan Parliament.
  • India has been a major military and developmental assistance partner for Afghanistan.

After years of mortal enmity, India is reportedly recalibrating its approach to the Taliban. Reports say New Delhi has opened an exploratory channel with a few Taliban factions. What explains this shift?

Why is India engaging with the Taliban?

  • As the world and India have changed there is an aspiration that Afghan can’t be brought back from the brink.
  • India wants to play a positive role and sabotage those countries that support other terror groups in Afghan.
  • It is visibly clear and Taliban has claimed that the US withdrawal is a victory for them. At the same time, the democratically elected Afghan government is crashing.
  • India is pressing on a peace process all around Afghanistan so that all countries shall be peaceful.

India’s concerns

  • India is concerned over the violence and loss of lives in Afghanistan. Violence has increased manifold after peace talks have started.
  • India, which has committed $3 billion in development aid and reconstruction activities, backs the Ashraf Ghani government in war-torn country.
  • New Delhi wants an all-inclusive “Afghan-led, Afghan-owned and Afghan-controlled” peace process—not one that is remote-controlled by Pakistan, seen as the backers of the Taliban.
  • It supports zero tolerance against violence.
  • Our EAM has iterated that there is need of double peace i.e., within and around Afghan indirectly pointing towards the terror breeding centre, Pakistan.

What are the stakes for India?

  • Afghanistan is a part of  India’s  extended  neighborhood and a link to Central Asia.
  • But for Pakistan occupying part of Kashmir, India would have had a direct border with Afghanistan.
  • Despite claims that the Taliban have changed in the past two decades, there is no proof that it has shed any of its obscurantist ideology which leans heavily towards Pakistan’s official foreign policy towards India.
  • A Taliban-controlled government in Kabul would mean Pakistan controlling Afghan policy on India.
  • And a repeat of the past when Pakistan used Afghanistan territory for anti-India activities.

US withdrawal raises the prospect of an India-Pakistan ‘proxy war’ in Afghanistan, it is neither inevitable nor will it be in India’s interest to engage in such a messy conflict with Pakistan in Afghanistan, especially when Pakistan will likely have the dominant hand.

Fear over sudden US withdrawal

  • US withdrawal at this moment is very dangerous to Afghan. The Taliban is waiting for the US to withdraw.
  • Once the last US marine leaves, it is no doubt that the Taliban would seize Kabul and bring the entire Afghan nation under control.
  • With violence continuing, Afghanistan may slip back into civil war, with warlords cutting deals with the Taliban to control their areas of influence, triggering an indefinite period of instability in the entire region.

Terrorism and its export

  • Cross border terrorism is increasing at the Indian borders. Pakistan has been since long sponsoring them modern arms.
  • A ceasefire in Afghanistan may spill over the terror in the Union territory of Jammu and Kashmir.

International community’s role

  • Many countries have been trying through multiple tracks to kickstart the stalled peace process in Afghanistan.
  • UN-backed talks among Russia, China, Pakistan, Iran, India, and the US “to discuss a unified approach to supporting peace in Afghanistan,” do not seem to be happening.

Role of regional actors: India and Pakistan

  • Both rivals India and Pakistan have been in conflict regarding the Afghan peace process.
  • Following a May 2020 attack at a hospital in Kabul, which the Afghan state blamed on the Taliban while the US blamed the regional ISIS branch, Pakistan accused India of trying to derail the process.
  • The Afghan government denied Pakistan’s claims and cited that India is a partner.

Way forward

  • India’s role in Afghan’s peace process and the road ahead is difficult as we see more process and less peace.
  • India has urged for a permanent & comprehensive ceasefire in Afghanistan.
  • Our External Affairs Minister has said that durable peace requires peace within & around Afghanistan. India also asserted the need for zero tolerance for terrorism.

 For a peaceful subcontinent

  • Taliban have several sections that are both radical and some want talks with the international community.
  • So international organizations like the UN must come forward to stop Pakistan sponsor of terrorism. The FATF should move beyond grey-listing itself.
  • Nations should come together against the Taliban so that it can’t move forward without any foreign aid.
  • Aid and developmental cooperation through the UN, India, USA must be done simultaneously for the restoration of democracy.

Conclusion

  • A lot of complexities are involved in the Afghan theatre; tangible demonstration of commitment is required from all stakeholders for a political settlement and to have a permanent ceasefire in Afghanistan.

Reference

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[RSTV Archive] Road to a Hydrogen Economy

Hydrogen is all set to play a significant role in decarbonizing energy systems. Green Hydrogen has no carbon footprint through several challenges remain in its usage at a wider level. National Hydrogen Mission was announced by the center govt in this year’s Budget to tackle all these challenges. In this edition, we will discuss and analyze all aspects of this issue.

Green Hydrogen: Fuel of the future

  • Hydrogen is primarily used in the petrochemicals and fertilizer industry and is produced largely from natural gas, thereby emitting enormous amounts of carbon dioxide.
  • Depending on the nature of the method of its extraction, hydrogen is categorized into three categories, namely, grey, blue and green.
  • Green hydrogen gas is produced by splitting water (H2O) into hydrogen and oxygen using an electrolyzer that may be powered by electricity generated from renewable energy sources.
  • This gives hydrogen the edge over other fuels to unlock various avenues of green usage.
  • However, challenges lie in terms of technology, efficiency, financial viability, and scaling up which the summit will aim to address.

What is National Hydrogen Mission?

  • The Union Budget for 2021-22 has announced a National Hydrogen Energy Mission (NHM) that will draw up a road map for using hydrogen as an energy source.
  • The initiative has the potential of transforming transportation.

Why shift for Hydrogen?

  • India has a huge edge in green hydrogen production owing to its favorable geographic conditions and presence of abundant natural resources.
  • Presently India has around 6 million Metric tonnes of Hydrogen production every year which is almost 8% of the global hydrogen production.
  • Hydrogen also offers an opportunity to decrease the dependence on Fossil fuel.
  • The fertilizer, Steel, and transport sector need a lot of energy so we can decarbonize by using green hydrogen. Thus future of clean energy depends a lot on Green Hydrogen.
  • The growth of solar has given a unique advantage for the growth of green hydrogen.
  • Cheap solar tariffs mean the cost of powering the electrolysis process through surplus electricity at peak hours to generate hydrogen remains low.
  • Setting up hydrogen generation plants near solar parks will further reduce transmission costs.

Major challenges

Overt regulations: Currently, multiple regulatory authorities regulate hydrogen use. The MoRTH regulates vehicle’s fuel carrier specification, MNRE regulates renewable energy sources, Petroleum and Natural Gas Regulatory Board regulates pipelines and Petroleum and Explosives Safety Organization regulates explosive substances, storage and fuel station’s specifications.

Economic sustainability: One of the colossal challenges faced by the industry for using hydrogen commercially is the economic sustainability of extracting green or blue hydrogen. Furthermore, the maintenance costs for fuel cells post-completion of a plant can be costly, like in South Korea.

Technological limitations: The technology used in production and use of hydrogen like carbon capture and storage (CCS) and hydrogen fuel cell technology are at nascent stage and is expensive which in turn increases the cost of production of hydrogen.

Lack of investment: The commercial usage of hydrogen as a fuel and in industries requires mammoth investment in R&D of such technology and infrastructure for production, storage, transportation, and demand creation for hydrogen.

Although, the draft regulations of NHM are expected to contain details pertaining to hydrogen technology, including storage, R&D, pilot projects, and other specification and safety standards.

Going Forward

De-carbonization: We need to decarbonize many Industries to shift towards green hydrogen technology.

De-regulation: Hydrogen being a versatile resource will require coordination among the various ministries and regulators.

Collaboration: Proactive industry collaboration with the government is key to creating a hydrogen economy in India. This will help bring best-in-class hydrogen technology, equipment, and know-how to create a hydrogen supply chain in India — in many cases, these could be “Made in India”.

Infrastructure: Hydrogen is highly explosive so storage must be highly secured. The NHM should aim to establish appropriate physical infrastructure and legal framework for the usage of hydrogen.  India also plans to extend the production linked incentive (PLI) scheme for manufacturing electrolyzer, which are used for producing green hydrogen.

R&D: The NHM can also highlight the need for global cooperation and generate opportunities for exchange of technology. To augment the NHM, constructive synergies among leading industries from different sectors like automobiles, power generation, refining, chemicals is necessary.

Capacity building: Hydrogen generation cost is very high. The draft regulations for NHM shall have a roadmap for affordable targets and capacity installation. Designated hydrogen hubs can be established to attract investment by providing infrastructural support like pipelines and renewable electricity for production, storage and transportation of green hydrogen.

Global cooperation: Global hydrogen initiatives have been gaining traction. The year 2020 saw 20 countries, including Australia, Canada, the USA, Japan, and Germany, announce hydrogen policies. India should ramp up international collaborations for more effortless transfer of technology and resources related to hydrogen.

Conclusion

  • Green hydrogen is one of the most promising fuels in the efforts to reduce carbon emissions.
  • India should aim to reduce the cost of hydrogen to less than $2 by 2030. By doing so, the demand is expected to increase by at least five times today’s demand to 30 million tonnes per annum by 2050.
  • At this juncture, with calibrated approach, India can uniquely position itself to take advantage of increasing investment in R&D, capacity building, compatible legislation, and the opportunity for the creation of demand among its vast population.

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[RSTV Archive] India-China Ties Post-Galwan

There has been one year since the Galwan Valley clash in which 20 of our soldiers lost their lives and a number of Chinese troops were also killed. Both in terms of geography and numbers, China’s intrusion was neither local nor limited. This incident is touted to be the biggest face-off since the 1962 war.

Background: LAC Dispute

  • In what was the worst clash between the two countries in over 40 years, the Galwan incident reverberated around the world.
  • The casualties in the clash were the first in the disputed Sino-Indian border since 1975.
  • The Galwan episode led to a rapid build-up of forces on both sides of the Line of Actual Control.
  • This incident is being seen as major punctuation in the bilateral relations between India and China and what does the future hold for both neighbors.

Disengagement is yet incomplete

  • Following multiple rounds of talks both at the military and diplomatic levels, an agreement was made on de-escalation and disengagement from all friction points in Ladakh.
  • So far, the two militaries have disengaged only in the Pangong Tso lake area.
  • But other hotspots remain, including the Chinese intrusions in the Depsang plains, Galwan, Goghra and Hot Springs. 
  • Unless the Chinese troops vacate and redeploy along the pre-standoff alignment, a deep dive rebooting of ties might be impossible to commence. 

Where did China focus during these clashes?

  • Chinese focused mainly on Siachin, Galwan areas, Depsang plateau, Kailash Range.
  • This is the side where India always wanted to create a buffer zone since the 1962 war.

What is China’s consideration?

  • There are many theories why China did so, what are its intention.
  • Chinese are demanding area in Depsang side, North Bank of Pangong Tso.
  • Infringement and stalemate persist in these areas since both countries clashed one year ago.
  • China is living in denial.
  • India is in no mood to ignore the “new realities” on the ground, and go ahead with a full- blown trade, commercial and people-to-people relationship between the two civilizational states.

Did India just win at the Line of Actual Control?

Military deterrence and economic and diplomatic maneuvering could not have altered China’s cost-benefit calculus on their own.

  • If China had aimed to coerce India into accepting its territorial claims along the LAC, the massacre at Galwan Valley emboldened New Delhi’s resolve to fight back.
  • Militarily, the effort marked the biggest mobilization of the Indian Armed Forces in recent decades.
  • What followed was a concerted effort to use all of the economic, diplomatic, and military power at India’s disposal to push China to return to the status quo—what it called a “strategy of hurt.”
  • This strategy communicated a simple dictum to Beijing: China should remove its soldiers and its bases, or India would inflict economic, diplomatic, and military costs.
  • Diplomatically, too, India embraced the West more firmly, signing an agreement that furthers military cooperation between the US and QUAD.   It also sent an Indian destroyer to the South China Sea,

Repercussions of this incident

  • The border has gone beyond the red line; it has become a major constraint between the two nations.
  • Chinese will try to link the border issue to another thing: G7, QUAD, Pandemic, Virus is not natural, Chinese involvement in this, Australia joining Malabar exercise.
  • But above everything, geopolitics still remain. Our EAM, S Jaishankar has outrightly clarified that it cannot be business as usual with China.

A lesson for the world

  • Due to increasing engagement of India with the alliances like QUAD, G 7, etc., it is understandably palpable to China regarding the act of deterrence being showcased by the rest of the world.
  • The QUAD, NATO and G7 are identifying China as a malign competitor, which has hegemonic ambitions in guise of trade.
  • The Wuhan Lab Leak theory has raised eyebrows about China’s alleged role in the Coronavirus spread.
  • In any case, the skirmishes with China are global incidences of utmost importance in cognizance with what China does in the South China Sea or Hong Kong.

Roadmap for the world

  • Major countries have a heavy dependency on trade with China which all of a sudden cannot be de-linked.
  • Thus China is a largely globalized country. Nations need to change this and create new alignments.
  • India has to create its own upliftment and reduce dependence on China.

The ball is in China’s court, so the future moves depend on whether it accepts peace in the border through talks or it disengages on its own.

Lessons for China

China needs to scan carefully if it wishes a durable, good neighborly relationship with India:

  1. First, China must not impede India’s rise as a global heavyweight. China should stop being conspicuous in denying India’s presence in other international decision-making bodies such as the UNSC, NSG etc.
  2. Second, China needs to appreciate that India too is a deep civilizational state, whose cultural bandwidth extends from Southeast Asia to West Asia.
  3. Finally, after years of friction, India wants to settle the border issue with China once and for all.

Way forward for India

  • Since the Galwan incident, it is understandable that Indian forces remain vigilant throughout.
  • India is now considering to explore all avenues which will make itself atma-nirbhar.

Conclusion

  • Both sides have a history of prolonged and armed coexistence normally.
  • Only a truly effective and general military deterrent will help India stand up to China’s bullying.
  • And New Delhi today seems more determined than ever to move in that direction.
  • This is likely to be a new phase in not only Sino-Indian ties but also the geopolitics of the larger Indo-Pacific.

Reference:

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[RSTV ARCHIVE] Aspirational Model: Inspiration for the world

The United Nations Development Programme (UNDP) has lauded the Centre’s Aspirational Districts Programme (ADP), saying that it should serve as a “best practice” for other countries where regional disparities in development status persist for many reasons.

UNDP has termed ADP as the most successful model of the Local Area Development.

Aspirational Districts Programme (ADP)

  • Launched in January 2018, the ‘Transformation of Aspirational Districts’ initiative aims to remove this heterogeneity through a mass movement to quickly and effectively transform these districts.
  • The broad contours of the program are Convergence (of Central & State Schemes), Collaboration (of Central, State level ‘Prabhari’ Officers & District Collectors), and Competition among districts driven by a spirit of mass Movement.
  • With States as the main drivers, this program will focus on the strength of each district, identify low-hanging fruits for immediate improvement, measure progress, and rank districts.

Behind the name

  • Hon’ble PM has negated the idea of naming any scheme based on their backwardness.
  • Rather the name ‘Aspirational’ presents a more affirmative action-based execution of the scheme.

Selection of districts

  • A total of 117 Aspirational districts have been identified by NITI Aayog based upon composite indicators.
  • The objective of the program is to monitor the real-time progress of aspirational districts based on 49 indicators (81 data points) from the 5 identified thematic areas.

Weightage has been accorded to these districts as below:

  • Health & Nutrition (30%)
  • Education (30%)
  • Agriculture & Water Resources (20%)
  • Financial Inclusion & Skill Development (10%)
  • Basic Infrastructure (10%)

Strategy of the ADP

The core Strategy of the program may be summarized as follows.

  • Making development a mass movement in these districts
  • Identify low hanging fruits and the strength of each district, to act as a catalyst
  • for development.
  • Measure progress and rank districts to spur a sense of competition.
  • Districts shall aspire to become State’s best to Nation’s best.

Features of the ADP

  • It has transformed into a Jan Andolan.
  • The ADP is different in trying to monitor the improvement of these districts through real-time data tracking.
  • The programme seeks to develop convergence between selected existing central and state government programmes.
  • District performance in the public domain and experience building of the district bureaucracy is another notable feature.
  • The programme is targeted, not towards any single group of beneficiaries, but rather towards the population of the district as a whole.

What makes this program special?

The program reflects what has become of the development project in India under neoliberalism, especially after the end of planning.

  • Long overdue sectors have been given more emphasis.
  • It is not a tailormade program with one-size-fit strategy. More onus has been laid on the districts. It has a district-intervention strategy.
  • It works on the principle of SWOT (strength, weakness, opportunity and threats) model and comparison with national best parameters for effective resource management.
  • It is the most reviewed programme by the Prime Minister.
  • A general idea behind the idea is that a good work never goes un-noticed. It is duly appreciated on social media as well as by the officials.
  • Through ADP, momentum in expediting growth is maintained as well so for the success of the program to be scaled and replicated in other districts which are still ranking low.
  • In principle, the programme does note the importance of quality of life and quality of services available.

COVID and ADP

  • ADP had found elderly citizens as the mist vulnerable in this pandemic.
  • Programs such as Surakshit Dada-Dadi Nana-Nani were held and almost every elderly person was reached.
  • Omnicus Platform with a panel of experienced doctors for COVID and ‘India Fights Covid’ Platform are other such initiatives.

Programmatic Strengths

  • A key strength of the ADP is the collection of baseline data and follow-ups at regular intervals.
  • Sustaining this effort would create a robust compilation of statistics for use by both researchers and policy-makers.
  • In doing this, the government also brings much-needed attention to human development and a willingness to meet the Sustainable Development Goals (SDGs).
  • Incremental progress being made in the chosen districts as reflected in the rankings.
  • The programme also claims to be “non-partisan and unbiased” and geared towards all-India growth.
  • The selection of districts indeed suggests that the programme has not favored any bias either regional, political or any other.
  • The programme seeks convergence of central and state schemes anchored around specific activities.

Issues with the programme

  • The programmatic limitations of the ADP with respect to agricultural development or poverty eradication are clearly visible.
  • Using the case of Bihar, they argue that the programmes selection of districts itself is problematic.
  • In fact, it actually excludes the most backward districts because per capita income, the most basic measure of development, has not been considered.
  • There seems to be some ambiguity around the issue of whether the programme is concerned only with improved access or also with the quality of service provided.
  • The indicators used are not defined relationally, rather they are static human development indicators that do not see people mired in dynamic social relations.
  • Similarly, the programme envisages “development’ in these districts as taking place in isolation from wider development.
  • For instance, under skill development, the programme seeks to encourage industry-relevant training and apprenticeship of youth in an environment of jobless growth.
  • It is also accused that the state is not making any new or focused public investment (except for possible use of Flexi-funds) into these districts, on the other hand, it is moralizing about their inability to improve (through rankings). 
  • The programme is carrying the burden of proving the government’s “developmental” work without addressing any of the fundamental issues around achieving equitable development.
  • Yet, the NITI Aayog justifies the overall approach as capitalizing on “low-hanging fruit.”

Way forward

  • The program has been able to make difference in the lives of citizens of India, in education, health, nutrition, financial inclusion, skill development and this has made a difference to some most backward and most geographically far-flung districts of the nation.
  • ADP is ‘aligned to the principle of “leave no one behind—the vital core of the SDGs. Political commitment at the highest level has resulted in the rapid success of the program the report said.
  • UNDP has recommended revising a few indicators that are slightly close to reaching their saturation or met by most districts like ‘electrification of households’ as an indicator of basic infrastructure.

Conclusion

  • The resounding success of the ADP is a testament to the efforts of the national, state and district level administrations, at the head of which is the empowering vision of our PM.
  • The transformational growth story of these districts would not have been possible without the continuous support of knowledge and development partners as well as civil society organizations.
  • A programme of this scale has redefined the contours of India’s development narrative and will continue to garner many more accolades as it achieves one progressive milestone after another.
  • The challenge of improving the country’s human development is real and pressing, as is the need to refocus on the most marginalized districts.
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[RSTV-Big Picture]- DGP Selection

The Supreme Court on 16 December dismissed the pleas of five states seeking modification of its order issued last year on the selection and appointment of director generals of police. The apex court was hearing applications of various state governments, including Punjab, Kerala, West Bengal, Haryana and Bihar, seeking implementation of their local laws regarding the selection and appointment of DGPs.

A bench headed by Chief Justice Ranjan Gogoi said the earlier directions of the court on selection and appointment of DGPs were issued in larger public interest and to protect the police officials from political interference.

The top court, on July 3 last year, passed a slew of directions on police reforms in the country and chronicled the steps for appointment of regular DGPs. It said the states will have to send a list of senior police officers to the UPSC at least three months prior to the retirement of the incumbent. The commission will then prepare a panel and intimate the states, which in turn will immediately appoint one of the persons from that list.

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[RSTV-Big Picture]-Aviation:Flying For All

Civil Aviation Minister Suresh Prabhu inaugurated the Global Aviation Summit 2019 in Mumbai on Tuesday.The two-day summit, with a theme ‘Flying for all-especially the next 6 Billion’,is being organised by the Ministry of Civil Aviation in association with FICCI.It offers stakeholders an opportunity to explore, deliberate and understand how technology-driven innovations will change air travel in the decades to come.

India is the seventh-largest country by area and the second-most populous with over 1.35 billion people. It is one of the fastest growing economies of the world and is likely to become the 5fth largest in 2019.

The Indian aviation market is on a high growth path. Total passenger traffic to, from and within India, during Apr-Nov 2018 grew by around 15% year on year as compared to around 6% globally. India is now the seventh largest aviation market with 187 million passengers in FY 2017-18. It is expected to become the third largest by 2022.

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[RSTV-Big Picture]-Artice 370:A Review

The Supreme Court on 14 January agreed to hear the PIL, challenging Article 370 and separate Constitution of Jammu and Kashmir. The Apex Court tagged it with another pending matter and will hear all matters on Tuesday 2nd April.

Article 370 of the Indian constitution is an article that gives autonomous status to the state. The article is drafted in Part XXI of the Constitution: Temporary,Transitional and Special Provisions, the state of Jammu & Kashmir has been accorded special status under Article 370.

All the provisions of the Constitution which are applicable to other states are not applicable to J&K. For example, till 1965, J&K had a Sadr-e-Riyasat for governor and prime minister in place of Chief Minister.

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[RSTV-Big Picture]-US Shutdown and Emergency

President Donald Trump,facing the prospect soon of the longest U.S. government shutdown in history,was considering declaring a national emergency that would likely escalate a policy dispute with Democrats over his proposed U.S.-Mexico border wall into a court test of presidential power.

To escape a political trap of his own making,Trump suggested strongly on Thursday that he might declare an emergency so that he can bypass Congress to get funding for his wall,which was a central promise of his 2016 election campaign.

Trump is demanding that Congress provide $5.7 billion in U.S. taxpayer funding for the wall.That is opposed by Democrats in Congress,who call the wall an ineffective,outdated answer to a complex problem.The standoff has left a quarter of the federal government closed down and hundreds of thousands of federal employees staying home or working for no pay.

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[RSTV-Big Picture]-Reservation-Who will Benefit

After intense debate for nearly five hours, the Lok Sabha today passed The Constitution (One hundred and twenty-fourth amendment) Bill, 2019 to provide reservation in public employment and higher education for economically weaker sections.At the voting held at around 10 PM on the last day of the winter session, 323 out of 326 MPs present voted in support of the Bill.

Economic reservation in jobs and education is proposed to be provided by inserting clause(6) in Articles 15 and 16 of the Constitution. The proposed Article 15(6) enables State to make special provisions for advancement of any economically weaker section of citizens, including reservations in educational institutions. It states that such reservation can be made in any educational institution, including private institutions, whether aided or unaided, except minority educational institutions covered under Article 30(1).

It further states that the upper limit of reservation will be ten percent,which will be in addition to the existing reservations.As regards job reservations,the proposed Article 16(6) enables State to make provision for reservation in appointments,in addition to the existing reservations, subject to a maximum of ten percent.

At present, reservations account for a total of 49.5%, with 15%, 7.5% and 27% quotas for Scheduled Castes,Scheduled Tribes and Other Backward Classes respectively.”Economically weaker sections” for the purposes of Articles 15 and 16 mean such sections as notified by the State from time to time on the basis of family income and other indicators of economic disadvantage. This will be a class distinct from the already specified classes of SCs, STs and socially and educationally backward classes.

The economically weaker sections of citizens have largely remained excluded from higher education and public employment due to their financial capacity.Therefore, there is a need to amend the constitution to give them a fair chance of getting higher education and public employment,so as to fulfill the mandate of Article 46 of the Constitution.

The nine judge bench decision of the SC in the Indira Sawhney case(1992) had capped the upper limit of reservation at 50%. The proposed amendments seek to get over this limit. The Indira Sawhney case had further held that social backwardness cannot be determined only with reference to economic criterion.

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[RSTV-Big Picture]-India’s Role in Afghanistan

Developmental assistance can play a major role in transforming Afghanistan,official sources said on 3 January, rejecting US President Donald Trump’s jibe at Prime Minister Narendra Modi over funding of a “library” in the war-ravaged country. Trump had taken a jibe at PM Modi for funding a “library” in Afghanistan, saying it is of no use in the war-torn country as he criticised India and others for not doing enough for the nation’s security.

In his first cabinet meeting in the new year on 1st Jan,Trump asked India,Russia,Pakistan and other neighbouring countries to take responsibility for Afghanistan’s security as he defended his push for the US to invest less overseas.

India may be building small libraries as part of the community development initiative,but most of its investments in Afghanistan were on mega infrastructure projects including the 218 km road from Zaranj to Delaram,the Salma Dam and the new Afghan Parliament building.India has also been supplying military equipment to Afghanistan besides providing training to hundreds of Afghan security personnel.

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[RSTV-Big Picture]-Defiant Taiwan,Adamant China

Taiwan’s President Tsai Ing-wen on Wednesday rejected the Chinese President Xi Jinping’s call for unification under a “one country, two systems” approach.

Tsai said her island of 23 million people would never accept the approach proposed by Beijing.One country, two systems refers to a framework similar to Hong Kong in which the territory became part of China but retained a degree of autonomy.

Taiwan and China split in a civil war that brought the Communist Party to power in China in 1949.The rival nationalists set up their own government on Taiwan,an island 160km off the Chinese mainland.