💥Join UPSC 2027,2028 Mentorship (July Batch) + XFactor Notes & Microthemes PDF
Talk to Mentor

Civilsdaily

Login

Distribution: weekly

  • [Burning Issue] ‘Climate Smart’ Agriculture and GHG Emissions

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

    Context

    In the backdrop of the 2070 carbon neutrality target set by India at the CoP26 in Glasgow, the Union Budget for 2022-23 has listed “climate action” and “energy transition” as one of the four priorities for the Amrit Kaal.

    Agriculture contributes 73 percent of the country’s methane emissions. India has kept away from the recent EU-US pledge to slash methane emissions by 30 percent by 2030, despite the country being the world’s third-largest emitter of methane.

    India’s status with respect to emissions

    • World Air Quality Report 2020: 22 of the 30 most polluted cities in the world are in India and Delhi is the world’s most polluted capital.
    • Global Carbon Atlas: India ranks third in total greenhouse gas emissions by emitting annually around 2.6 billion tonnes (Bt) CO2eq.
    • India’s per capita emission is just 1.8 tonnes, significantly lower than the world average of 4.4 tonnes per capita.
    • India ranked seventh on the list of countries most affected due to extreme weather events, incurring losses of $69 billion (in PPP) in 2019 (Germanwatch, 2021).
    • In India, energy sector contributes highest emission (44 %), followed by manufacturing and construction sector (18 %), agriculture, forestry and land use sectors (14 %), with remaining being shared by transport, industrial processes and waste sectors.
    • Share of agriculture in total emissions has gradually declined from 28% (1994) to 14% (2016).
    • But in absolute terms, emissions from agriculture have increased to about 650 Mt CO2 in 2018, which is similar to China’s emissions from agriculture.
    • Agricultural emissions in India are primarily from livestock sector (54.6 %), use of nitrogenous fertilizers (19 %), rice cultivation (17.5 %), livestock management (6.9 %) and burning of crop residues (2.1 %).

    Agriculture and Greenhouse gases

    • Farming in particular releases significant amounts of methane and nitrous oxide, two powerful greenhouse gases.
    • Methane is produced by livestock during digestion due to enteric fermentation and is released via belches.
    • It can also escape from stored manure and organic waste in landfills. Livestock is alone responsible for 44% of methane emissions.
    • 53% of Nitrous oxide emissions are an indirect product of organic and mineral nitrogen fertilizers. Fertilizers rich in nitrogen pollute water and threaten the aquatic ecosystem.

    Monoculture

    • Monocultures along with pesticides and herbicides lead to the loss of biodiversity. Monoculture cropping systems leave soil bare for much of the year, rely on synthetic fertilizer, and plow fields regularly.
    • These practices leave soils low in organic matter and prevent formation of deep, complex root systems leading to reduced water holding capacity.
    • Clearing uncultivated land for farming can lead to the destruction of natural ecosystems, which may have a devastating effect on the local wildlife and biodiversity and the micro-climate.
    • Many agricultural sectors need large amounts of water, which may cause water scarcity and drought.

    Reasons for agricultural emissions to be so high

    • Subsidies: The damage is largely a result of the various kinds of subsidies — on urea, canal irrigation and power for irrigation.
    • The Minimum Support Prices (MSP) and procurement policies concentrated on a few states and largely on two crops, rice, and wheat has led to their overproduction.
    • Unplanned wheat and rice production: As of 1 January 2022, the stocks of wheat and rice in the country’s central pool were four times higher than the buffer stocking requirement.
    • Despite the record distribution of rice in the Public Distribution System (PDS) and exports in 2020-21, the rice stocks with the Food Corporation of India (FCI) are seven times the buffer norms for rice.
    • This data not only reflects inefficient use of scarce capital, but also the large amount of greenhouse gases (GHG) embedded in these stocks.

    Changing Climate Affecting Agriculture

    • Extreme heat: Crops need suitable soil, water, sunlight, and heat to grow. However, extreme heat events and reductions in precipitation and water availability have hampered the crop productivity.
    • Changing Rainfall Patterns: Rainfall patterns have already begun shifting across the country, and such changes are expected to intensify over the coming years.
      • This is likely to mean more intense periods of heavy rain and longer dry periods, even within the same regions.
    • Floods: Flooding in many agricultural regions of the country have been witnessed and these floods have devastated crops and livestock, accelerated soil erosion and have polluted water.

    What is climate-smart agriculture?

    • Climate-Smart Agriculture (CSA) is an approach to help the people who manage agricultural systems respond effectively to climate change. 
    • The CSA approach pursues the triple objectives of:
      • Increased Productivity: Produce more and better food to improve nutrition security and boost incomes, especially of 75% of the world’s poor who live in rural areas and mainly rely on agriculture for their livelihoods.
      • Enhanced Resilience: Reduce vulnerability to drought, pests, diseases and other climate-related risks and shocks, and improve capacity to adapt and grow in the face of longer-term stresses like shortened seasons and erratic weather patterns.
      • Reduced Emissions: Pursue lower emissions for each calorie or kilo of food produced, avoid deforestation from agriculture and identify ways to absorb carbon out of the atmosphere.
    • Different elements of climate-smart agricultural systems include:
      1. Management of farms, crops, livestock, aquaculture and capture fisheries to balance near-term food security and livelihoods needs with priorities for adaptation and mitigation.
      2. Ecosystem and landscape management to conserve ecosystem services that are important for food security, agricultural development, adaptation and mitigation.
      3. Services for farmers and land managers to enable better management of climate risks/impacts and mitigation actions.
      4. Changes in the wider food system including demand-side measures and value chain interventions that enhance the benefits of CSA.

    What are the issues raised in global negotiation on climate change?

    • Nations are still quibbling about historical global emitters and who should take the blame and fix it.
    • Global negotiations on climate change often talk about emissions on a per capita basis and the emission intensity of GDP.
    • Per capita emission: Of the top five absolute emitters, the US has the highest per capita emissions (15.24 tonnes), followed by Russia (11.12 tonnes).
    • India’s per capita emissions is just 1.8 tonnes, significantly lower than the world average of 4.4 tonnes per capita.
    • If one takes emissions per unit of GDP, of the top five absolute emitters, China ranks first with 0.486 kg per 2017 PPP $ of GDP, which is very close to Russia at 0.411 kg per 2017 PPP $ of GDP.
    • India is slightly above the world average of 0.26 (kg per 2017 PPP $ of GDP) at 0.27 kg, while the USA is at 0.25, and Japan at 0.21.
    • In our Nationally Determined Contributions (NDCs) submitted in 2016, India committed to “reduce emission intensity of its GDP by 33 to 35 per cent by 2030 from 2005 level.”

    Way Forward

    1. Reward farmers through carbon credit: A carbon policy for agriculture must aim not only to reduce its emissions but also reward farmers through carbon credits which should be globally tradable.
    2. Focus on livestock: With the world’s largest livestock population (537 million), India needs better feeding practices with smaller numbers of cattle by raising their productivity.
    3. Efficient fertiliser use: Agricultural soils are the largest single source of nitrous oxide (N2O) emissions in the national inventory.
    4. An alternative for better and efficient fertiliser use would be to promote fertigation and subsidise soluble fertilisers.
    5. Incentives and subsidies: The government should incentivise and give subsidies on drips for fertigation, switching away from rice to corn or less water-intensive crops, and promoting soluble fertilisers at the same rate of subsidy as granular urea.
    6. Revisiting Policies: The Economic Survey 2021-22 points out that the country is over-exploiting its ground water resource, particularly in the northwest and some parts of south India which is primarily due to paddy cultivation on 44 million hectares.
    1. This calls for revisiting policies to subsidise power and fertilisers, MSP and procurement and reorient them towards minimising GHG emissions.
    2. Three-Pronged Approach for GHG Emissions: India has the potential to cut 18% of its annual greenhouse gas emissions from the agriculture and livestock sector. 50% of this reduction could be achieved by implementing these three measures:
      1. Efficient use of fertiliser
      2. Adoption of zero-tillage
      3. Management of water used to irrigate paddy
    3. Carbon Pricing: According to the International Monetary Fund (IMF), the world needs a carbon tax of $75 per tonne by 2030 to reduce emissions to a level consistent with a 2℃ warming target.
      1. Many countries have begun to implement carbon pricing; Sweden leads the pack with a carbon price as high as $137 per tonne of CO2 equivalent while EU is at $50/tonne of CO2 equivalent.
      2. It is high time for India to announce indicative carbon pricing and create a vibrant carbon market to incentivise green growth in Amrit Kaal.
    4. Increasing Farmer Awareness: The right approach is to give the rice-producing-farmers the right advice and incentives at the right time so that they add only as much water or fertilisers as the rice plant needs.
      1. Rice farming shall be made more sustainable, without having a negative impact on farmers livelihood.
    5. Sustainable Dairy Practices: There is a need to proactively ramp up sustainable dairy practices, which may include:
      1. Realising the existing potentials for GHG emission reduction through technological and farm best practices interventions and solutions.
      2. Reducing its demand for resources by better integrating livestock into the circular bio-economy.
      3. This can be achieved by recycling and recovering nutrients and energy from animal waste.
      4. Closer integration of livestock with crops and agro-industries at various scales to make use of low value and low-emission biomass.

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • What is a Ratings Agency and why do they matter?

    Finance Secretary has accused rating agencies of “double standards” when assessing emerging markets and developing economies.

    What is the news?

    • Fitch, a rating agency, has termed India as the most indebted emerging market.
    • It claimed that the latest budget did not provide clarity on fiscal consolidation plans.

    What is a Rating Agency?

    • Rating agencies assess the creditworthiness or potential of an equity, debt or country.
    • Their reports are read by investors to make an informed decision on whether or not to invest in a particular country or companies in that geography.
    • They assess if a country, equity or debt is financially stable and whether it at a low/high default risk.
    • In simpler terms, these reports help investors gauge if they would get a return on their investment.

    What do they do?

    • The agencies periodically re-evaluate previously assigned ratings after new developments geopolitical events or a significant economic announcement by the concerned entity.
    • Their reports are sold and published in financial and daily newspapers.

    What grading pattern do they follow?

    • The three prominent ratings agencies, viz., Standard & Poor’s, Moody’s and Fitch subscribe to largely similar grading patterns.
    • Standard & Poor’s accord their highest grade, that is, AAA, to countries, equity or debt with the exceedingly high capacity to meet their financial commitments.
    • Its grading slab includes letters A, B and C with an addition a single or double letter denoting a higher grade.
    • Moody’s separates ratings into short and long-term definitions. Its longer-term grading ranges from Aaa to C, with Aaa being the highest.
    • Fitch, too, rates from AAA to D, with D being the lowest. It follows the same succession scheme as Moody’s and Fitch.

    Criticism of rating agencies

    • Popular ratings agencies publicly reveal their methodology, which is based on macroeconomic data publicly made available by a country, to lend credibility to their inferences.
    • However, credit rating agencies were subjected to severe criticism for allegedly spurring the financial crisis in the United States, which began in 2017.
    • The agencies underestimated the credit risk associated with structured credit products and failed to adjust their ratings quickly enough to deteriorating market conditions.
    • They were charged for methodological errors and conflict of interest on multiple counts.

    Do countries pay attention to ratings agencies?

    • Lowered rating of a country can potentially cause panic selling or offloading of investment by a foreign investor.
    • In 2013, the European Union opted for regulating the agencies.
    • Over reliance on credit ratings may reduce incentives for investor to develop their own capacity for credit risk assessment.
    • Ratings Agencies in the EU are now permitted to issue ratings for a country only thrice a year, and after close of trade in the entire Union.

     

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • What is Privilege Motion?

    An MP from Telangana submitted a Privilege Motion against PM regarding his remarks over the bifurcation of the erstwhile state of Andhra Pradesh.

    What is Parliamentary Privilege?

    • Parliamentary privilege refers to the right and immunity enjoyed by legislatures.
    • The legislators are granted protection against civil or criminal liability for actions done or statements made in the course of their legislative duties.
    • They are granted so that the MPs/MLAs can effectively discharge their functions.
    • The powers, privileges, and immunities of either House of the Indian Parliament and of its members and committees are laid down in Article 105 of the Constitution.
    • Article 194 deals with the powers, privileges and immunities of the State Legislatures, their members and their committees.

    What is a Privilege Motion?

    • When any of the rights and immunities are disregarded, the offence is called a breach of privilege and is punishable under the law of Parliament.
    • A notice is moved in the form of a motion by any member of either House against those being held guilty of breach of privilege.
    • Each House also claims the right to punish as contempt actions which, while not breach of any specific privilege, are offenses against its authority and dignity.

    What are the rules governing privilege?

    • Rule No 222 in Chapter 20 of the Lok Sabha Rule Book and correspondingly Rule 187 in Chapter 16 of the Rajya Sabha rulebook govern privilege.
    • It says that a member may, with the consent of the Speaker or the Chairperson, raise a question involving a breach of privilege either of a member or of the House or of a committee thereof.
    • The rules however mandate that any notice should be relating to an incident of recent occurrence and should need the intervention of the House.
    • Notices have to be given before 10 am to the Speaker or the Chairperson.

    What is the role of the Speaker/Rajya Sabha Chair?

    • The Speaker/RS chairperson is the first level of scrutiny of a privilege motion.
    • The Speaker/Chair can decide on the privilege motion himself or herself or refer it to the privileges committee of Parliament.
    • If the Speaker/Chair gives consent under Rule 222, the member concerned is given an opportunity to make a short statement.

    What is the Privileges Committee?

    • In the Lok Sabha, the Speaker nominates a committee of privileges consisting of 15 members as per respective party strengths.
    • A report is then presented to the House for its consideration. The Speaker may permit a half-hour debate while considering the report.
    • The Speaker may then pass final orders or direct that the report be tabled before the House.
    • A resolution may then be moved relating to the breach of privilege that has to be unanimously passed.
    • In the Rajya Sabha, the deputy chairperson heads the committee of privileges, which consists of 10 members.

    Answer this PYQ in the comment box:

    Q.With reference to the Parliament of India, which of the following Parliamentary Committees scrutinizes and reports to the House whether the powers to make regulations, rules, sub-rules, by-laws etc. conferred by the constitution of delegated by the Parliament are being properly exercised by the Executive within the scope of such delegation?

    (a) Committee on Government Assurances

    (b) Committee on Subordinate Legislation

    (c) Rules Committee

    (d) Business Advisory Committee

     

    [wpdiscuz-feedback id=”1zmlyzvld5″ question=”Please leave a feedback on this” opened=”1″]Post your answers here.[/wpdiscuz-feedback]

     

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • Species in news: White-Cheeked Macaque

    In an important discovery, scientists have recorded presence of White-Cheeked Macaque (Macaca leucogenys) from central Arunachal Pradesh.

    White-Cheeked Macaque

    • White- Cheeked Macaques are distinct from other macaques found in the region by displaying white cheeks, long and thick hairs on the neck area, and a longer tail.
    • The species was discovered in 2015 by a group of Chinese scientists from the Modog region in southeastern Tibet.
    • This discovery was considered a significant breakthrough as far as primates are concerned.

    Existence in India

    • From India, the species has not been sighted or reported after a single incidence of photographic capture from Anjaw district, Arunachal Pradesh in 2015.
    • The number of these mammals reported from India stands at 434.
    • The significance of the discovery is that it marks a new addition to mammals of India.

    Protection status

    • It has NOT been yet included in the Wildlife (Protection) Act, 1972 of India.
    • The potential threat to all species of macaques in the landscape is due to hunting by locals for consumption and habitat degradation due to urbanization and infrastructure development.

     

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • Intensified Mission Indradhanush (IMI) 4.0 launched

    The Union Health Minister has launched the Intensified Mission Indradhanush (IMI) 4.0.

    About IMI 4.0

    • The IMI 4.0 will have three rounds and will be conducted in 416 districts (including 75 districts identified for Azadi ka Amrit Mahotsav) across 33 States and UTs, a Health Ministry statement said.
    • It will immensely contribute in filling the gaps and make lasting gains towards universal immunisation.
    • It will ensure that Routine Immunisation (RI) services reach the unvaccinated and partially vaccinated children and pregnant women” he said.

    What is Mission Indradhanush ?

    • With the aim to increase the full immunisation coverage, the PM launched Mission Indradhanush in December 2014.
    • It aimed to cover the partially and unvaccinated pregnant women and children in pockets of low immunisation coverage, high-risk and hard-to-reach areas and protect them from vaccine preventable diseases.
    • The first two phases of the Mission resulted in 6.7% increase in full immunisation coverage in a year.

    Aims and objectives

    • It aims to immunize all children under the age of 2 years, as well as all pregnant women, against eight vaccine-preventable diseases.
    • The diseases being targeted are diphtheria, whooping cough, tetanus, poliomyelitis, tuberculosis, measles, meningitis and Hepatitis B.
    • In 2016, four new additions have been made namely Rubella, Japanese Encephalitis, Injectable Polio Vaccine Bivalent and Rotavirus.
    • In 2017, Pneumonia was added to the Mission by incorporating the Pneumococcal conjugate vaccine under Universal Immunisation Programme

     

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • What is a Solar Storm?

    Spacex’s newest fleet of satellites is tumbling out of orbit after being struck by a solar storm.

    Solar Storm

    • A solar storm or a Coronal Mass Ejection as astronomers call it is an ejection of highly magnetized particles from the sun.
    • These particles can travel several million km per hour and can take about 13 hours to five days to reach Earth.
    • Earth’s atmosphere protects us, humans, from these particles.
    • But the particles can interact with our Earth’s magnetic field, induce strong electric currents on the surface and affect man-made structures.

    How did they impact SpaceX satellites?

    • The issue came up due to increased drag created by the solar storm in the upper reaches of the Earth’s atmosphere.
    • These storms cause the atmosphere to warm and atmospheric density at our low deployment altitudes to increase.
    • In fact onboard GPS suggests the escalation speed and severity of the storm caused atmospheric drag to increase up to 50 percent higher than during previous launches.

    History of solar storms

    • The first recorded solar storm occurred in 1859 and it reached Earth in about 17 hours.
    • It affected the telegraph network and many operators experienced electric shocks.
    • A solar storm that occurred in 1921 impacted New York telegraph and railroad systems and another small-scale storm collapsed the power grid in Quebec, Canada in 1989.
    • A 2013 report noted that if a solar storm similar to the 1859 one hit the US today, about 20-40 million people could be without power for 1-2 years, and the total economic cost will be $0.6-2.6 trillion.

    Why are they a cause of concern?

    • The Sun goes through an 11-year cycle – cycles of high and low activity.
    • It also has a longer 100-year cycle.
    • During the last three decades, when the internet infrastructure was booming, it was a low period.
    • And very soon, either in this cycle or the next cycle, we are going towards the peaks of the 100-year cycle.
    • So it is highly likely that we might see one powerful solar storm during our lifetime.

     

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • International Thermonuclear Experimental Reactor (ITER)

    Scientists in the United Kingdom have achieved a new milestone in producing nuclear fusion energy or imitating the way energy is produced in the Sun. The record and scientific data from these crucial experiments are a major boost for ITER.

    ITER Project

    • ITER is international nuclear fusion research and engineering megaproject, which will be the world’s largest magnetic confinement plasma physics experiment.
    • The goal of ITER is to demonstrate the scientific and technological feasibility of fusion energy for peaceful use.

    Project details

    • The project is funded and run by seven member entities—the European Union, India, Japan, China, Russia, South Korea and the United States.
    • The EU, as host party for the ITER complex, is contributing about 45 per cent of the cost, with the other six parties contributing approximately 9 per cent each.
    • Construction of the ITER Tokamak (doughnut-shaped apparatus) complex started in 2013 and the building costs were over US$14 billion by June 2015.

    How does it work?

    • Hydrogen plasma will be heated to 150 million degrees Celsius, ten times hotter than the core of the Sun, to enable the fusion reaction.
    • The process happens in a doughnut-shaped reactor, called a tokamak, which is surrounded by giant magnets that confine and circulate the superheated, ionized plasma, away from the metal walls.
    • The superconducting magnets must be cooled to -269°C (-398°F), as cold as interstellar space.
    • Scientists have long sought to mimic the process of nuclear fusion that occurs inside the sun, arguing that it could provide an almost limitless source of cheap, safe and clean electricity.
    • Unlike in existing fission reactors, which split plutonium or uranium atoms, there’s no risk of an uncontrolled chain reaction with fusion and it doesn’t produce long-lived radioactive waste.

    Back2Basics: Nuclear Fusion

    Major breakthrough on nuclear fusion energy - BBC News

    • Nuclear fusion is the process of making a single heavy nucleus (part of an atom) from two lighter nuclei. This process is called a nuclear reaction.
    • The nucleus made by fusion is heavier than either of the starting nuclei. It releases a large amount of energy.
    • Fusion is what powers the sun. Atoms of Tritium and Deuterium (isotopes of hydrogen, Hydrogen-3 and Hydrogen-2, respectively) unite under extreme pressure and temperature to produce a neutron and a helium isotope.
    • Along with this, an enormous amount of energy is released, which is several times the amount produced by fission.
    • Scientists continue to work on controlling nuclear fusion in an effort to make a fusion reactor to produce electricity.

    How it is different from nuclear fission?

    • Simply put, fission is the division of one atom into two (by neutron bombardment), and fusion is the combination of two lighter atoms into a larger one (at a very high temperature).
    • Nuclear fission takes place when a large, somewhat unstable isotope (atoms with the same number of protons but a different number of neutrons) is bombarded by high-speed particles, usually neutrons.

     

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • Privatisation and Related issues

    Context

    There is a consensus that privatization is the panacea. Policymakers often cite the private sector’s ability to grow faster. This may not always be true.

    Meaning of Privatisation

    It means the transfer of ownership, management, and control of the public sector enterprises to the private sector. India adopted a mixed economy model, where the Public Sector Enterprises (PSEs) were established on a socialistic pattern of development. However, due to the poor performance of several PSEs and the consequent huge fiscal deficits, privatization was pursued. 

    Privatization can suggest several things-

    • Migration of something from the public sector to the private sector.
    • It is also used as a metonym for deregulation when a massively regulated private firm or industry becomes less organized.
    • Government services and operations may also be (denationalised) privatised. In these circumstances, private entities are tasked with the application of government plans or the execution of government assistance that had earlier been the vision of state-run companies. Some instances involve law enforcement, revenue collection, and prison management.
    • Privatization of the public sector companies by selling off parts of the equity of PSEs to the public is known as disinvestment.

    Objectives of Privatisation

    1. Providing strong momentum for the inflow of FDI

    2. Improving the efficiency of public sector undertakings (PSUs)

    • The efficiency of PSUs is improved by giving them the autonomy to make decisions.
    • Some companies were given special categories of Navratna and Miniratna.

    3. Reduce the fiscal burden on the government in maintaining PSEs.

    Ways of Privatisation

    Government companies are transformed into private companies in two ways.

    Transfer of ownership

    Government companies can be converted into private companies in the following two ways:

    • By the withdrawal of the government from the ownership and management of public sector companies
    • By the outright sale of public sector companies.

    Disinvestment

    • Disinvestment, or divestment, refers to the act of a business or government selling or liquidating an asset or subsidiary or the process of dilution of a government’s stake in a PSU.
    • The rationale for disinvestment is that the government has no business to be in a business. Thus, the government continues to disinvest in sectors where private companies are already the dominant player.

    However, there are six methods of privatization.

    • Public sale of shares
    • Public auction
    • Public tender
    • Direct negotiations
    • Transfer of control of enterprises that were controlled by the state or by municipalities
    • Lease with a right to purchase

    Benefit of Disinvestment

    • Improves corporate governance: It would result in the introduction of corporate governance in the privatized companies by freeing the PSEs from Government control and giving more scope to innovation. Enhanced corporate and with the introduction of independent Directors.
    • Develops and deepens the capital market through the spread of equity culture: The disinvestment would benefit the small investors and employees as it would lead to a wider distribution of wealth in the form of public offerings of privatized companies.
    • Disinvestment funds can be utilized for long-term goals such as:
      • Financing large-scale infrastructure development.
      • Investing in the economy to encourage spending
      • Expansion and Diversification of the firm
      • Repayment of Government Debts: Almost 40-45% of the Centre’s revenue receipts go towards repaying public debt/interest
      • Investing in social programs like health and education
    • Fiscal space for the relocation of resources locked with CPSEs: Disinvestment also assumes significance due to the prevalence of an increasingly competitive environment, which makes it difficult for many PSUs to operate profitably. This leads to a rapid erosion of the value of the public assets making it critical to disinvest early to realize a high value.
    • Resources locked in sectors developed enough to raise money from the market are channelized into areas of the economy that are less likely to access resources for the market because of their stage of economic development. Letting go of these assets is best in the long-term interest of the taxpayers as the current yield on these investments is abysmally low.
    • Unlocking of shareholder value: It is done with the help of issuing IPO. IPO means Initial Public Offering. It is a process by which a privately held company becomes a publicly-traded company by offering its shares to the public for the first time. Offering an IPO is a money-making exercise. Every company needs money for expansion, to improve their business, to better the infrastructure, to repay loans, etc.
    • Employees: Employees of a firm are benefitted by disinvestment through:
      • Pay rises, which has been done in past disinvestments.
      • Greater opportunities and avenues for career growth and further employment generation through capacity expansion.

    Is privatization a solution?

    • No significant difference in performance: Studies indicate that the gap in growth (and service) between public sector undertakings (PSUs) with autonomy and private firms is not significant.
    • Experience of the privatization in the UK: One study highlighted that the famed British privatization initiative of British Airways, British Gas, and the Railways led to no systemic difference in performance.
    • Evidence on performance after privatization is even more mixed in developing countries.
    • Multiple factors: Growth post-privatization is often due to multiple factors, for example, better funding under a private promoter versus a starved government budget, a better business cycle.

    Failure of Privatisation

    • Privatization as a revenue source:  As a state, we have sought to hock our generational wealth in PSUs for the past two decades, with limited success.
    • Failure to raise funds: Actual receipts from disinvestment have always fallen significantly short of targets.
    • In total, between FY11 and FY21, about ₹5 lakh crore was raised (that is, about 33% of just FY22’s projected fiscal deficit (PRS India, 2021) – some of this, notably through stake sale to other PSUs.
    • Considering social and institutional constraints, it is a slow process. For instance, BPCL’s long-awaited journey.

    Challenges

    • Challenge of valuation: For instance, about 65% of about 300 national highway projects have been recording significant toll collection growth; any valuations of such assets will need to ensure they capture potential growth in toll revenue, as NHAI’s highway expansion bears fruit and the economy recovers.
    • Social consequences: There were about 348 CPSUs in existence in 2018, with a total investment of ₹16.4 trillion and about 10.3 lakh employees in Central Public Sector Enterprises (in 2019). Push for massive privatization resulting in mass layoffs in a period of low job creation.
    • Concentration of wealth: A greater concentration of public assets in select private hands is also a medium-term concern. About 70% of all profits generated in the corporate sector in FY20 were with just 20 firms.
    • Across sectors, a whiff of oligopoly is emerging – cigarettes continue to be dominated by a single player, paints have one entity with ~40% in FY21, airports now have a new operator with about six airports plus a 74% stake in Mumbai’s international airport, while telecom has just three players left.
    • Such concentration, mixed with the privatization of public assets, is likely to lead to higher usage fees (already being seen in telecom) and inflation, coupled with a loss of strategic control.

    Way forward

    • Outright privatization is not a solution: Selective PSU Reform must be considered.
    • The Maruti model is instructive – the government had a joint venture with the Suzuki Corporation, but ceded control, despite Suzuki having only 26% shareholding, in return for a push by Suzuki for greater exports from India and manufacture of global models in India
    • Stake sale route: Empirical evidence highlights that stake sales are considered a preferred route (about 67% of all PSUs sales in about 108 countries between 1977 and 2000 were conducted via this route), as it gives time to ensure price discovery, allowing improved performance to raise valuations over time.
    • Global Experience: In China, for the past few decades, growth has been led by corporatized PSUs, all of them held under a holding company (SASAC), which promotes better governance, appoints leadership, and executes mergers and acquisitions.
    • In Singapore, the Ministry of Finance focuses on policymaking, while the holding firm is focused on corporatizing and expanding its PSUs on a global scale.
    • PSUs with greater autonomy, with the government retaining control via a holding firm, can also be subject to the right incentives.

    Conclusion

    The time has come to take a relook at privatization. Simply pursuing this path, while utilizing such proceeds for loan write-offs or populist giveaways in the election cycle will not do.

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • [Sansad TV] Perspective: Indian Army: Marching with times

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

    This January 15th, India celebrated its 74th Army Day, to offer remembrance to the enlightening journey of courage and sacrifice of the Indian Army.

    In this article, we will look back at how the year gone by has been for the Indian Army, the security challenges they faced and continue to face in the year ahead, their preparedness in meeting these challenges and the opportunities in further enhancing our defence capabilities.

    Why is this year special?

    Ans. New Combat Uniform

    • The Indian Army will be provided with new combat uniform for its personnel aimed to provide more comfort and sustainability.
    • The new uniform will increase the comfort of women officers as well.
    • The new uniform is provided with a digital disruptive pattern and won’t be available in the open market.
    • The uniform has been designed by keeping 4Cs in mind: comfort, climate, camouflage and confidentiality.
    • They will be barcoded and QR coded to maintain the uniqueness and will be available only through the ordnance chain or military canteens.

    Why do we need an Army?

    • India is not the member of any traditional military alliance and thus has to maintain an independent military capability.
    • The army is tasked to retain its strategic autonomy while protecting itself against possible threats to its unity and integrity.
    • The Indian Armed Forces are structured to deal with the possible threats from potential adversaries as part of its capability to carry out its mandated role and tasks.

    Role played by Indian Army

    1. The primary role of the Indian Army is to ensure the territorial integrity of the nation by deterrence or by waging war.
    2. The secondary role of the Army is to provide assistance to civil authorities, when requisitioned, to respond to heightened law and order situations, for disaster management or for providing essential services.

    A brief background of Indian Army

    • The Indian Army is the third largest army in the world in terms of size, based on the number of personnel.
    • But this description obfuscates the fact that it is not as powerful as what such a portrayal should signify.
    • This implies its capacity to undertake military operations optimally in the multi-domain, technology dominated battlefields of the future.

    Challenges to Indian Army

    • The Indian Army essentially remains a force largely organised, equipped and trained to fight wars.
    • That is not to say that the Army cannot carry out its role and tasks successfully in the current context, more so, if it is provided the requisite means.
    • Nonetheless, it needs no emphasis that the Army needs to modernize expeditiously if it has to be prepared to take on the security challenges of the future.

    [A] Future Security Scenarios

    • Disputed neighbours: India’s threats and challenges in the military realm primarily emanate from the historically inherited territorial disputes over which five wars have already been fought.
    • Nuke and the Military: All wars will be fought under a nuclear overhang, implying that escalation to the level of nuclear exchanges is possible, and must be planned for.
    • Unresolved territorial disputes going ugly: The fact that the existing territorial disputes are ‘land-centric’ highlights the pre-dominant role of the Army in the Indian security context.
    • Proxy-wars through radicalization: Pakistan, has been running a sub-conventional campaign against India since the early 1990s which essentially involves stoking militancy and pushing cross-border terror modules.
    • Nukes plus terror:  Nuclear ‘sabre-rattling’ is used in conjunction with the cross-border terror strikes, to prevent India from ‘raising the ante’ and retaliating with a punitive conventional response.

    [B] Changing Nature of Conflicts

    Hybrid Warfare: In the aftermath of the Afghanistan and Iraq wars of the first decade of this century, the world has witnessed a reduction in full-fledged ‘state vs state’ wars.

    It appear to be the new norm, involving a combination of two or more of the following:

    • Conventional / Regular warfare: – state vs state wars, primarily waged by conventional forces or regular troops on both/ all sides.
    • Irregular warfare: Conflict against a state by employing trained combatants who are not regular military. Pakistan has launched such ‘irregulars’ in all its wars against India.
    • Asymmetric warfare: War between sides whose military power differs greatly, waged by the weaker side using non-traditional means like terrorism.  Ex. Jihadists vs Army
    • Unconventional warfare: War waged by a country using means other than established forms of armed conflict, to make the adversary capitulate even without a classical war (economic wars, water wars, legal wars etc.)
    • Technological/ Informational warfare: Combination of cyber, space, electronic, propaganda, psychological, media and social media wars.

    There are perceptible threats that all above discourses might happen simultaneously if any war escalates.

    Present perceptible threats

    As most of our current threats pertain to conventional conflict over:

    1. Disputed land borders
    2. Insurgencies and cross-border terrorism
    3. Natural calamities and their mitigation
    4. Disaster management

    Need of the hour:

    [A] Capability Building

    • In keeping with its mandated roles, the Army has to ensure multi-dimensional capability to deal with the threats from our potential adversaries (external as well as internal).
    • Capability building of the Army is a continuing process, where budget, especially capital funds, are requested for annually, based on the projected needs for implementing a 15 year long term perspective plan.

    [B] Modernisation Needs of the Army

    • Technological advancement: The Army of the future will have to be technologically oriented, with many more specialists, as compared to generalists.
    • Modern equipment: It will have to be equipped progressively with modern weapons and weapon systems, supported by technology based processes and automation to meet the needs and challenges of the future battlefield.
    • Arms and ammunitions: Accordingly, the Army will need to replace or upgrade its ageing inventory of weapons and equipment while also restructuring and right-sizing in a transformational way.

    As far as weapons and equipment are concerned, the Army needs the following on priority to replace or rejuvenate vintage equipment as part of the capability development programme:

    1. Infantry – The infantry, which is continuously being employed in counter-terrorist or counter-insurgency operations, needs to be empowered immediately by provision of new generation lightweight assault rifles, bullet proof jackets and helmets, hand held thermal imagers (HHTIs) etc.
    2. Artillery–Adequate quantities of new artillery guns, including indigenously manufactured Dhanush systems, as well as more lethal, precision artillery systems like BrahMos cruise missiles, Smerch and Pinaka rocket systems, need to be inducted immediately.
    3. UAVs – More quantities of Unmanned Aerial Vehicles (UAVs) of latest technology must be inducted in adequate numbers for surveillance and precision attack operations in both peace and war.
    4. Mechanised Forces–Additional quantities of ‘current technology’, T-90 tanks and ICVs, night enabled and equipped with long range ant-tank guided missiles, need to be inducted on priority.
    5. Army Aviation–Acquisition of three squadrons’ worth of new generation Apache attack helicopters into the Army Aviation has been reportedly sanctioned, as a follow up of the Air Force order.
    6. Air Defence (AD) –The Army AD is undergoing a total revamp of equipment. The various army air defence weapon acquisition projects for acquisition of all types of surface to air missile systems as well as upgrading old generation systems.
    7. Engineers- The combat engineers need to be provided new generation of bridging equipment,mine-laying equipment as well as mine clearance equipment. Where possible, old equipment must be upgraded indigenously.

    Challenges in Capability Building

    There are huge ongoing challenges in the process of capacity building of the Indian Army. The more important of these are discussed as follows:

    • Capital crunch: It has been the experience for many years now that adequate capital funds for modernisation are not allotted.
    • Budgetary constraints: Considering that the modernisation plans of the Army are lagging far behind already, budgetary constraints will play an important part in formulating and executing plans for the future.
    • Sizing constraints: The Indian Army must cap its overall numbers at the current level of 1.3 million, while making fresh efforts at making up the shortfall of officers.
    • Strategic constraints: Currently, military planning is hamstrung by lack of a clearly articulated and integrated military strategy. In such a situation, the three wings of the military are left to devise their own strategies and philosophies.
    • Lack of modernisation: An alarmingly large percentage of equipment is of old vintage, due to many proposals for acquisition and upgradation of new equipment having been inordinately delayed.
    • Quality issues: Arms and ammunition over the years undergo quality degradation.
    • Procurement issues: There is lack of sustained effort within the Army to develop expertise on defence procurement and financial issues. The Army remains rooted to the outdated policies of employing ‘generalists’ rather than ‘specialists’.

    Way forward

    India needs to progressively build capability of hard military power, soft power and demonstrated power in its quest to be recognised as a ‘regional power with global influence’.

    • Right-sizing: The Indian Army needs to undergo transformation and ‘right-sizing’ towards becoming an optimised modern force, with a more efficient ‘teeth to tail’ ratio.
    • Logistics optimization: Our logistics need to be integrated and optimised on priority.
    • Interoperability: Enhanced jointness and interoperability as promised under the integrated theatre command needs to be implemented at its earliest.
    • Re-orientation: The Indian Army must fully operationalize the concept of the Reorganised Army’s Multi-role Quick Reaction Force (RAMFOR).
    • Enhancing informational warfare capability: Special Operations, Cyber and Space Commands must be provided manpower from within the existing establishment.
    • Policy input for strategizing: And last but not the least, the government must provide guidance to the military through issue of national security strategy, defence policy and military strategy.

    Conclusion

    • There can be no doubt that the Indian Army needs to be modernised on priority.
    • To achieve this objective, the Government and the Army will have to take a look at the entire issue afresh and come up with innovative solutions to address the various obstacles standing in the way.

  • BrahMos Deal and India’s Defence Exports

    On January 28, the Philippines signed a $374.96 million deal with BrahMos Aerospace Pvt. Ltd. for the supply of shore-based anti-ship variant of the BrahMos supersonic cruise missile.

    Details of the contract

    • The Philippines contract includes delivery of three BrahMos missile batteries, training for operators and maintainers as well as the necessary Integrated Logistics Support (ILS) package.
    • The coastal defence regiment of the Philippine Marines, which is under the Navy, will be the primary employer of the missile system.

    What makes the deal special?

    • This is the first export order for the missile which is a joint product between India and Russia and also the biggest defence export contract of the country.
    • This adds impetus to meet the ambitious target set by the Government to achieve a manufacturing turnover of $25 billion in aerospace and defence goods and services by 2025.

    What is the BrahMos Missile System?

    • BrahMos is a joint venture between India’s Defence Research and Development Organisation (DRDO) and Russia’s NPO Mashinostroyeniya.
    • The missile derives its name from the Brahmaputra and Moskva rivers.
    • Beginning with an anti-ship missile, several variants have since been developed.
    • It is now capable of being launched from land, sea, sub-sea and air against surface and sea-based targets and has constantly been improved and upgraded.

    Its range

    • The range of the BrahMos was originally limited to 290 kms as per obligations of the Missile Technology Control Regime (MTCR) of which Russia was a signatory.
    • Following India’s entry into the club in June 2016, plans were announced to extend the range initially to 450 kms and subsequently to 600 kms.
    • BrahMos with extended range upto 450 kms has been tested several times since.

    Deployments in India

    • The missile has been long inducted by the Indian armed forces.
    • The Army has recently deployed the system along the Line of Actual Control (LAC) in Arunachal Pradesh.

    Which other countries are in discussion for the BrahMos missiles?

    • While the first export order for BrahMos took a long time, the next order is likely to be concluded soon with negotiations with Indonesia and Thailand in advanced stages.
    • Philippines is also looking at several other military procurements from India and South East Asia as the region has emerged as a major focus area for India’s defence exports.
    • For instance, the HAL has received interest from Philippines Coast Guard for procurement of seven Dhruv Advanced Light Helicopters and eight Dornier Do-228 aircraft under the $100mn Line of Credit.
    • In addition, maritime domain and ship building is another potential area for Indian companies in the Philippines.

    What is the status of defence exports?

    • India has put out a range of military hardware on sale which includes various missile systems, Light Combat Aircraft (LCA), helicopters, warship and patrol vessels, artillery guns, tanks, radars etc.
    • From 2016-17 to 2018-19, the country’s defence exports have increased from ₹1,521 crore to ₹10,745 crore, a staggering 700% growth.

    Steps taken by the Centre to boost defence production

    • Licensing relaxation: Measures announced to boost exports since 2014 include simplified defence industrial licensing, relaxation of export controls and grant of no-objection certificates.
    • Lines of Credit: Specific incentives were introduced under the foreign trade policy and the Ministry of External Affairs has facilitated Lines of Credit for countries to import defence product.
    • Policy boost: The Defence Ministry has also issued a draft Defence Production & Export Promotion Policy 2020.
    • Indigenization lists: On the domestic front, to boost indigenous manufacturing, the Government had issued two “positive indigenization lists” consisting of 209 items that cannot be imported.
    • Budgetary allocation: In addition, a percentage of the capital outlay of the defence budget has been reserved for procurement from domestic industry.

    Issues retarding defence exports

    • Excess reliance on Public Sector: India has four companies (Indian ordnance factories, Hindustan Aeronautics Limited (HAL), Bharat Electronics Limited (BEL) and Bharat Dynamics Limited (BDL)) among the top 100 biggest arms producers of the world.
    • Policy delays: In the past few years, the government has approved over 200 defence acquisition worth Rs 4 trillion, but most are still in relatively early stages of processing.
    • Lack of Critical Technologies: Poor design capability in critical technologies, inadequate investment in R&D and the inability to manufacture major subsystems and components hamper the indigenous manufacturing.
    • Long gestation: The creation of a manufacturing base is capital and technology-intensive and has a long gestation period. By that time newer technologies make products outdated.
    • ‘Unease’ in doing business: An issue related to stringent labour laws, compliance burden and lack of skills, affects the development of indigenous manufacturing in defence.
    • Multiple jurisdictions: Overlapping jurisdiction of the Ministry of Defence and Ministry of Industrial Promotion impair India’s capability of defence manufacturing.
    • Lack of quality: The higher indigenization in few cases is largely attributed to the low-end technology.
    • FDI Policy: The earlier FDI limit of 49% was not enough to enthuse global manufacturing houses to set up bases in India.
    • R&D Lacunae: A lip service to technology funding by making token allocations is an adequate commentary on our lack of seriousness in the area of Research and Development.
    • Lack of skills: There is a lack of engineering and research capability in our institutions. It again leads us back to the need for a stronger industry-academia interface.

    Way forward

    • Reducing import dependence: India was the world’s second-largest arms importer from 2014-18, ceding the long-held tag as the largest importer to Saudi Arabia, says 2019 SIPRI report.
    • Security Imperative: Indigenization in defence is critical to national security also. It keeps intact the technological expertise and encourages spin-off technologies and innovation that often stem from it.
    • Economic boost: Indigenization in defence can help create a large industry which also includes small manufacturers.
    • Employment generation: Defence manufacturing will lead to the generation of satellites industries that in turn will pave the way for a generation of employment opportunities.

    Back2Basics: Missile Technology Control Regime (MTCR)

    • MTCR is an informal political understanding between countries to limit the spread of missiles and missile technology.
    • MTCR was started by like-minded countries to prevent nuclear proliferation.
    • In 1992, the original focus of the MTCR was to prevent the proliferation of missiles capable of carrying chemical, biological and nuclear warheads and as a threat to international peace and security.

    Also read:

    Growth of India’s Defence Exports

     

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)