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Distribution: yearly

  • India’s first underwater transport tunnel spanning the Hooghly River

    tunnel

    Central idea: The East-West Metro corridor, the second line of Kolkata’s Metro network that is currently under construction, will connect Kolkata and Howrah, and one of its highlights is India’s first underwater transport tunnel spanning the Hooghly river.

    Hooghly River: Some facts

    Description
    Name Bhagirathi Hooghly River (Anglicized alternatively spelled Hoogli or Hugli)
    Source Close to Giria, north of Baharampur and Palashi, in Murshidabad
    Length 260 km
    Flows through West Bengal
    Endpoint Bay of Bengal
    Importance Lifeline for Kolkata, transportation route for goods and people, historical trade route, cultural and ecological resource
    Challenges Changing course, frequent floods, pollution from industrial effluents and sewage
    Additional Information A man-made canal called the Farakka Feeder Canal connects the Ganges to the Bhagirathi to bring the abundant waters of the Himalayan river to the narrow river that rises in West Bengal.

    The main course of the Ganges then flows into Bangladesh as the Padma.

    The Bhagirathi Hooghly River is also called the Ganga or the Kati-Ganga in the Puranas.

    About the East-West Corridor

    • The East-West Corridor is expected to significantly ease congestion in the city.
    • The line connects Kolkata’s IT hub of Salt Lake Sector V to the western suburb of Howrah.
    • The eastern part of the East-West line is operational while the western portion of the corridor is underground.
    • There are 12 stations on the entire route, including the country’s deepest, Howrah, at a depth of 33 meters.

    Key feature: Underwater Tunnel

    • The tunnels under the Hooghly River are 520 meters long and more than 30 meters below the river surface at its deepest point.
    • The trains will have an operational speed of 80 km/h and will cover the half-kilometre stretch under the Hooghly in about 45 seconds.
    • The underwater tunnels have an internal diameter of 5.55 meters and an external diameter of 6.1 meters.

     

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  • Species in news: Olive Ridley Turtles

    olive

    Millions of baby Olive Ridley Turtles crawled towards the Bay of Bengal after emerging from eggshells along Odisha’s Rushikulyabeach in the Ganjam district.

    Olive Ridley Turtles

    Description
    Scientific name Lepidochelys olivacea
    Habitat Warm and tropical waters
    Found in Pacific and Indian Oceans
    Nesting sites Rushikulya rookery in Odisha
    Largest mass nesting site Coast of Odisha in India
    Conservation status Vulnerable in IUCN Red List
    Listed in Schedule 1 in Wildlife Protection Act, 1972

    Special feature: Mass nesting

    Notable behavior Arribadas
    Nesting habits Synchronized mass nesting and return to the same beach where they hatched
    Nest structure Conical nests about one and a half feet deep, dug with hind flippers
    Incubation period 45 to 60 days, influenced by temperature of the sand and atmosphere

     

     

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  • India’s Fighter Jet Conundrum

    india

    Central idea: The article discusses the challenges faced by the Indian Air Force (IAF) in modernizing its fighter jet fleet due to unending delays in procurement and limited resources.

    Why discuss this?

    • Against the sanctioned strength of 42 fighter squadrons, the IAF has only 31 squadrons today.
    • And this number is expected to remain the same or even decrease by 2029.
    • The IAF representative informed the Parliamentary standing committee that the shortfall may not be accomplished anytime soon.

    Indian Air Force (IAF): A quick backgrounder

    • The IAF was established in 1932, and it played an important role in India’s defence during World War II and later in the 1947-48 Kashmir War.
    • It underwent modernization in the 1960s and 70s with the induction of new aircraft and weapons systems.
    • Since then, the IAF has grown to become one of the largest air forces in the world, with a significant role to play in India’s defence and security.

    Evolution of the IAF

    Key Events
    Pre-Independence Phase – Small organization with only six officers and 19 airmen

    – Played a crucial role in World War II and the 1947-48 Kashmir War
    1947-1962 Phase – Expansion and modernization of the IAF

    – Acquisition of new aircraft and weapons systems
    1962-1980 Phase – Involvement in the 1965 and 1971 Indo-Pak wars

    – Modernization with the induction of new aircraft and missiles
    1980-Present Phase – Further modernization with the acquisition of new aircraft, missiles, and weapons systems

    – Focus on enhancing operational readiness

     

    Current Status of the IAF

    • Large workforce: The IAF has around 1,500 aircraft and 140,000 personnel, making it one of the largest air forces in the world.
    • Fleet details: The IAF has a sanctioned strength of 42 fighter squadrons, but the current strength stands at 31 squadrons.
    • Victorious wars: It has played an essential role in various conflicts, including the 1965 and 1971 Indo-Pak wars and the Kargil conflict in 1999.
    • HADR operation: It has also been involved in humanitarian assistance and disaster relief operations, such as the 2004 tsunami and the 2013 Uttarakhand floods.

    Challenges faced

    The IAF faces multiple challenges in the 21st century.

    • Decommissioning aircraft: By the end of the decade, many of the Jaguars, Mirage-2000s, and Mig-29s will begin going out, which is why the decision on Multi-Role Fighter Aircraft (MRFA) is essential to arrest this drawdown.
    • Arsenal shortages: The IAF faces a shortage of fighter aircraft, which is a significant concern given the current geopolitical environment.
    • Selective modernization: One of the critical issues is modernization, which includes the upgrading of its aircraft and weapons systems.
    • Diverse threat: The IAF also needs to ensure operational readiness to address the changing nature of warfare, which involves non-state actors, asymmetrical warfare, and cyber threats.
    • Logistic fallouts: Furthermore, the IAF needs to improve its logistics and infrastructure to support its operations effectively.
    • Maintenance challenges: There is a slow synergy with vendors for ‘long-term spares and repair contracts’.

    Opportunities for the IAF

    There are several opportunities for the IAF to enhance its capabilities in the modern era.

    • Modernization: The acquisition of new aircraft, weapons systems, and technologies can significantly enhance the IAF’s combat capabilities.
    • Joint cooperation: Additionally, the IAF can improve its international cooperation with other air forces to gain experience and enhance its interoperability.
    • UAV induction: The IAF can also explore the use of unmanned aerial vehicles (UAVs) for surveillance, reconnaissance, and combat roles.
    • Indigenization: The IAF is emphasizing the need for indigenization of its fighter jet production via LCA and Fifth Gen fighter aircraft program.

    Challenges in fleet modernisation

    • Procurement delay: The IAF faces significant challenges in modernizing its fleet due to delays in procurement and limited resources.
    • R&D, Infra bottlenecks: Implementing indigenization is a complex process that involves significant investment in research and development, infrastructure, and human capital.
    • Others: Other challenges include a lack of skilled labour, limited funding, and the need for technology transfer from foreign partners.

    Way forward

    • The IAF needs to prioritize the acquisition of MRFA, focus on increasing the availability rates of the Su-30, and invest in its own industry to achieve self-reliance in the long term.
    • Effective collaboration between industry, government, and the armed forces is crucial for the success of indigenization efforts in the defence sector.

     

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  • Oceans absorb 90% of human-induced planet warming: Study

    ocean

    The study published in the journal Earth System Science Data estimates that almost 90% of the warming that has occurred in the last 50 years has been absorbed by the ocean, with the remaining heat absorbed by the land, cryosphere and atmosphere.

    Earth’s energy balance: A quick recap

    ocean

    • It is the balance between the amount of energy that Earth receives from the Sun and the amount of energy that Earth radiates back into space.
    • It is also known as the radiation budget.
    • The energy from the Sun that Earth receives is mainly in the form of visible light and ultraviolet radiation.
    • This energy is absorbed by the Earth’s surface and atmosphere, which then radiate it back into space in the form of infrared radiation.
    • The balance between incoming and outgoing radiation is crucial for maintaining the Earth’s temperature and climate.
    • Any imbalance between the two can lead to global warming and climate change.
    Description
    Total incoming solar radiation Approximately 342 W/m² reaches Earth’s atmosphere
    Albedo About 30% of incoming solar radiation is reflected back to space
    Greenhouse effect Remaining 70% of incoming solar radiation is absorbed by Earth’s surface and atmosphere, creating the greenhouse effect
    Atmospheric heat Atmosphere contains only 0.001% of Earth’s heat energy, but is crucial in regulating heat budget

     

    Key highlights of the Study: Heat Accumulation

    heat

    • The study estimates that approximately 381 zettajoules (ZJ) of heat accumulated on the planet from 1971-2020 due to anthropogenic emissions.
    • This roughly equals a heating rate of approximately 0.48 watts per square metre (Earth Energy Imbalance or EEI). EEI is the difference between incoming and outgoing solar radiation.
    • According to the study, about 89% of the accumulated heat is stored in the ocean, 6% on land, a percent in the atmosphere, and about 4% available for melting the cryosphere.

    Implications

    (1) Land Heat Accumulation

    • Heat accumulated on land drives up ground surface temperatures, which may increase soil respiration, releasing carbon dioxide in the process.
    • Higher soil respiration will likely decrease soil water, depending on climatic and meteorological conditions and factors.

    (2) Inland Water Bodies and Permafrost Thawing

    • Heat storage within inland water bodies has increased to roughly 0.2 ZJ since 1960. For permafrost thawing, it was about 2 ZJ.
    • The accumulation of heat in inland water increases lake water temperatures, making conditions ripe for algal blooms.
    • Permafrost heat content could inject methane and carbon dioxide into the atmosphere, the researchers warned.

    (3) Ocean and Troposphere heating

    • The upper ocean (0-300 and 0-700 meters depth) has taken up a major fraction of heat, according to the new estimates.
    • During 2006-2020, ocean warming rates for the 0-2,000 meters depth reached record rates of roughly 1.03 watts per square meter.
    • The troposphere is also warming up due to increased heat accumulation.

    (4) Cryosphere heating

    • The cryosphere – the frozen water part of the Earth system – gained roughly 14 ZJ of heat from 1971-2020.
    • Half of the uptake triggered the melting of grounded ice, while the remaining half is linked to the melting of floating ice.
    • The Antarctic Ice Sheet contributed about 33% to the total cryosphere heat gain, while Arctic sea ice stood second, having contributed 26%.

     

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  • NASA develops Exobiology Extant Life Surveyor (EELS)

    eels

    NASA is developing a snake-like robot- Exobiology Extant Life Surveyor (EELS), which it says can boost space exploration through its diverse adaptability to various terrains.

    Exobiology Extant Life Surveyor (EELS)

    Details
    Purpose Designed to explore internal and enclosed dynamic terrain structures to assess evidence for life.
    Focus To explore ocean-world-inspired terrain, and besides Enceladus, it can explore Martian polar caps and descending crevasses in Earth’s ice sheets.
    Enceladus and EELS system Enceladus is a small and icy body, and the Cassini spacecraft dubbed it to be one of the most scientifically interesting destinations in the solar system.
    Scientific investigations Work is underway to identify high-priority and high-impact scientific investigations to show the capabilities of the snake-like robot.

     

    Features of EELS Robot

    Details
    Propulsion and gripping mechanism EELS robot has an actuation and propulsion mechanism, driven by power and communication electronics.

    It uses a rotating propulsion unit that acts as tracks, while the gripping mechanism and propeller unit help it to access a plume vent exit.
    Adaptability The robot’s adaptability to various terrains and its unique features make it capable of exploring areas that were once inaccessible.
    Enceladus Geyser-like jets spew water vapor and ice particles from an underground ocean beneath Enceladus’s icy crust, making it a promising lead for NASA in its search for life.

     

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  • Exercise INIOCHOS-23

    iniochos

    The Indian Air Force (IAF) will be participating in a multi-national air exercise called Exercise INIOCHOS-23, which will be hosted by the Greece Air Force.

    Ex. INIOCHOS-23

    • Exercise INIOCHOS-23 will be conducted at the Andravida Air Base in Greece.
    • The IAF will be participating with four Su-30 MKI and two C-17 aircraft.
    • The objective of the exercise is to enhance international cooperation, synergy, and interoperability among the participating Air Forces, as stated by the IAF in a statement.

    Strategic significance

    • The exercise will be conducted in a realistic combat scenario involving multiple types of air and surface assets
    • This will provide valuable insight into each other’s best practices and enable the participating contingents to interact professionally.

     

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  • Critical Minerals and India

    critical

    Central idea

    • A recent working paper from Centre for Social and Economic Progress (CSEP) extends the earlier minerals assessment for 23 minerals by assessing the criticality levels of 43 select minerals for India.
    • This is based on their economic importance (demand-side factors) and supply risks (supply-side factors) which are determined through the evaluation of specific indicators.

    What are Critical Minerals?

    • Critical minerals are elements that are crucial to modern-day technologies and are at risk of supply chain disruptions.
    • These minerals are used in making mobile phones, computers, batteries, electric vehicles, and green technologies like solar panels and wind turbines.
    • Minerals such as antimony, cobalt, gallium, graphite, lithium, nickel, niobium, and strontium are among the 22 assessed to be critical for India.
    • Many of these are required to meet the manufacturing needs of green technologies, high-tech equipment, aviation, and national defence.

    Why are these resources critical?

    • Clean energy transition: Critical minerals are essential to the ecosystem that fuels the world’s transition towards clean energy and digital economy.
    • Strategic nature: Any supply shock can severely imperil the economy and strategic autonomy of a country that is over-dependent on others to procure critical minerals.
    • Rare availability: Supply risks exist due to rare availability, growing demand, and complex processing value chain.

    What is the China ‘threat’?

    • Dominant role: China is the world’s largest producer of 16 critical minerals, including cobalt and rare earth elements.
    • Monopoly in processing: The country has a strong presence across the board in processing operations, with a share of refining around 35% for nickel, 50-70% for lithium and cobalt, and nearly 90% for rare earth elements.
    • Control over offshore mines: China also controls cobalt mines in the Democratic Republic of Congo, from where 70% of this mineral is sourced.
    • Supply chain dominance: The country’s dominance in critical minerals production and processing raises concerns of a supply disruption in case of a geopolitical conflict.

    Challenges in ensuring resilient critical minerals supply

    • Limited availability of critical minerals: The rare availability of critical minerals poses a challenge in meeting the growing demand for these minerals.
    • Geopolitical risks: Complex supply chains can be disrupted by hostile regimes or politically unstable regions, leading to supply chain disruptions.
    • Dominance of certain countries: A few countries, such as China, are the dominant producers of critical minerals, leading to concerns over supply disruptions in case of a geopolitical conflict.
    • Increasing demand for critical minerals: With the shift towards renewable energy technologies and electric vehicles, the demand for critical minerals such as copper, lithium, and rare earth elements is increasing rapidly.
    • Reliance on foreign partners: Countries with limited reserves and higher requirements for critical minerals may have to rely on foreign partners to meet their domestic needs, leading to supply chain vulnerabilities.
    • Environmental and social concerns: The extraction and processing of critical minerals can have negative environmental and social impacts, leading to challenges in meeting sustainability goals.

    What are countries around the world doing about it?

    Several countries are taking measures to ensure a consistent supply of critical minerals to their domestic markets.

    • India: It has set up Khanij Bidesh India Ltd. (KABIL), a joint venture of three public sector companies, to ensure a consistent supply of critical and strategic minerals to the Indian domestic market.
    • US: It has ordered a review of vulnerabilities in its critical minerals supply chains and shifted its focus on expanding domestic mining, production, processing, and recycling of critical minerals and materials.
    • Australia: Its Critical Minerals Facilitation Office (CMFO) and KABIL had recently signed an MoU aimed at ensuring reliable supply of critical minerals to India.
    • UK: It has unveiled its new Critical Minerals Intelligence Centre to study the future demand for and supply of these minerals, and its critical mineral strategy will be unveiled later this year.

    What should India do to ensure resilient supply?

    • Developing domestic sources of critical minerals: This can be achieved by promoting exploration and mining activities, both by public and private sector entities.
    • Encouraging responsible mining practices: The Indian government should encourage responsible mining practices that minimize negative environmental and social impacts of mining activities.
    • Developing recycling capabilities: This can be achieved by promoting research and development in recycling technologies and incentivizing the adoption of recycling practices.
    • Promoting transparency in the supply chain: India should promote transparency in the critical minerals supply chain by ensuring the traceability of minerals from the point of extraction to the point of end-use.
    • Investing in research and development: India should invest in research and development to develop new technologies and processes for efficient extraction, processing, and recycling of critical minerals.
    • Developing a national critical minerals strategy: India should develop a national critical minerals strategy that identifies priority minerals, promotes domestic exploration and mining, and promotes sustainable and responsible mining practices.

    Conclusion

    • India has a significant mineral geological potential, many minerals are not readily available domestically.
    • Hence, India needs to develop a national strategy to ensure resilient critical minerals supply chains, which focuses on minerals found to be critical in this study.

     

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  • Centre gives nod for National Quantum Mission (NQM)

    quantum

    Central idea: The Union Cabinet has approved the National Quantum Mission (NQM) with a budget of ₹6,003 crore. The mission aims to fund research and development in quantum computing technology and associated applications.

    What is Quantum Computing?

    Explanation
    What is it? A type of computing that uses quantum-mechanical phenomena to perform operations on data.
    Qubits Quantum bits, which can be 0, 1, or both simultaneously (a superposition of 0 and 1).
    Computational speed It can perform certain calculations much faster than traditional computing, especially for complex algorithms and large amounts of data.
    Entanglement The use of entanglement allows quantum computing to process multiple pieces of data simultaneously, further increasing computational power.
    Research Governments, universities, and private companies around the world are researching quantum computing.
    Challenges Building practical quantum computers is a major challenge due to the fragility of qubits and the difficulty of controlling and measuring them accurately.
    Development stage Quantum computing is still in its early stages of development.

     

    National Quantum Mission (NQM)

    Mission duration 2023-2031
    Total cost Rs. 6,003.65 crore
    Leading Department Department of Science and Technology (DST)
    Supporting departments Other government departments
    Focus Development of physical qubit-based quantum computers
    Applications Healthcare and diagnostics, defense, energy, and data security
    India’s positioning Among the top six nations involved in quantum research and development

     

    Key focus areas

    (1) Thematic Hubs

    • The mission will be structured around four broad themes:
    1. Quantum Computing,
    2. Quantum Communication,
    3. Quantum Sensing and Metrology, and
    4. Quantum Material and Devices.
    • Thematic hubs will be established at research institutes and R&D centres already working in the field.
    • The effort is to create an ecosystem that favours quantum technology development in the country.

    (2) Satellite-based Communication

    • One of the key areas of focus for the NQM will be the development of satellite-based secure communication between ground stations and receivers located within a 3,000 km range over the first three years.
    • NQM will lay communication lines using Quantum Key Distribution over 2,000 km for satellite-based communication within Indian cities.
    • Tests will be conducted in the coming years for long-distance quantum communication, especially with other countries.

    (3) Quantum Computing

    • The mission will focus on developing quantum computers (qubit) with physical qubit capacities ranging between 50 – 1000 qubits, developed over the next eight years.
    • The development of computers up to 50 physical qubits will take three years.
    • 50 – 100 physical qubits will be developed in five years, and computers up to 1000 physical qubits will be developed in eight years.

    Applications

    • The mission would have a wide range of applications, including in healthcare and diagnostics, defense, energy, and data security.
    • Quantum technologies are expected to be far more powerful than traditional computing systems and capable of performing the most complex problems in a highly secure manner.

    Various challenges

    • Sub-zero temperatures: Current prototype systems require extremely cold (close to -273 C) conditions to work, along with developing the materials capable of such computations.
    • Still evolving: Quantum computers are still a work in progress globally, and no one has built a practical computer that can actually work and solve meaningful problems.
    • No global breakthrough: IBM, D-Wave of Canada or China’s Zuchongzhi 2.1, all of whom have prototype systems, have not built a quantum computer that can solve a problem that anybody cares about.

    Conclusion

    • The NQM represents a significant step forward for India’s research and development efforts in the quantum technology sector.
    • By focusing on the development of quantum computers and related technologies, the country is positioning itself as a key player in this field, with wide-ranging applications across multiple sectors.

     

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  • India’s population to edge ahead of China’s by mid-2023: UN

    population

    Central idea: India is set to overtake China as the world’s most populous country by mid-2023, according to data released by the United Nations.

    State of World Population Report

    • The report is an annual report published by the United Nations Population Fund (UNFPA), which provides a global overview of population trends and issues.
    • The report covers a wide range of topics related to the population, such as fertility, mortality, migration, family planning, and gender equality.
    • It also includes analysis and recommendations for policymakers and governments to address population challenges and promote sustainable development.
    • The report is widely regarded as a key reference for researchers, policymakers, and international organizations working on population and development issues.

    population

    Highlights of the 2023 report

    Facts

    Data
    World Population (2022) 8 billion
    Most populous regions Eastern and Southeastern Asia, Central and Southern Asia
    World Population Growth Rate (since 2020) Less than 1%
    Fertility Rate (replacement level) 2.1 children per woman
    Population aged 65 years or above (2050) 16%
    Persons aged 65 years and above (2050) More than double that of 5-year-olds and same as 12-year-olds
    Regions with fertility rate at or below 2.1 60%
    Top countries accounting for global population increase by 2050 DR Congo, Egypt, Ethiopia, India, Nigeria, Pakistan, Philippines, Tanzania

     

    Population anxieties in India

    Facts
    India’s population India is now the most populous country in the world, having overtaken China in population, with 1,428.6 million people.
    Age distribution 68% of India’s population belongs to the 15-64 years category, and 26% in the 10-24 years group, making India one of the youngest countries in the world.
    Fertility rate National Family Health 5 Survey (2019-21) found that India attained a Total Fertility Rate of 2.0 for the first time, less than the replacement level of 2.1, falling from 2.2 in NFHS 4 (2015-16).
    Life expectancy Life expectancy for men in India is 71 years, the same as the global life expectancy, while it is marginally lower for women at 74 years.
    Population growth India’s population growth rate has decreased from 2.3% in 1972 to less than 1% now.
    Demographic dividend With 68% of its population as youth, and working population, India could have one of the largest workforces in the world, giving it a global advantage.

     

    Way forward

    The UNFPA report strongly recommended that governments introduce policies with gender equality and rights at their heart to address changing demographics. These recommendations include:

    • Parental leave programs: Introducing parental leave programs that provide paid leave to both mothers and fathers after the birth or adoption of a child. This can help promote gender equality in the workplace and support families in raising children.
    • Child tax credits: Providing tax credits or financial support to families with children to help them meet the costs of raising children. This can help address child poverty and support families in providing for their children’s basic needs.
    • Policies to promote gender equality at workplace: Implementing policies and practices that promote gender equality in the workplace, such as equal pay for equal work, flexible work arrangements, and anti-discrimination policies.
    • Universal access to sexual and reproductive health and rights: Ensuring that all people have access to comprehensive sexual and reproductive health services, including family planning, maternal health services, etc. This can help prevent unintended pregnancies, reduce maternal mortality, and promote the health and well-being of individuals and families.

     

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  • Windfall Tax back on local crude oil

    windfall

    The government has revised a windfall tax on domestically-produced crude oil. According to an official notification, the windfall tax rate of Rs 6,400 per tonne.

    What is a Windfall Tax?

    • Windfall taxes are designed to tax the profits a company derives from an external, sometimes unprecedented event — for instance, the energy price-rise as a result of the Russia-Ukraine conflict.
    • These are profits that cannot be attributed to something the firm actively did, like an investment strategy or an expansion of business.
    • The US Congressional Research Service (CRS) defines a windfall as an “unearned, unanticipated gain in income through no additional effort or expense”.
    • One area where such taxes have routinely been discussed is oil markets, where price fluctuation leads to volatile or erratic profits for the industry.

    Features of Windfall Tax

    • Imposed on unanticipated and unearned gains: Windfall tax is imposed on the profits or gains that a company earns from external events or factors beyond their control, which they did not actively seek or pursue.
    • One-time tax: It is typically imposed as a one-time tax retrospectively, over and above the normal rates of tax, and is not a regular or ongoing tax.
    • Imposed on specific sectors or industries: Windfall taxes are usually imposed on specific sectors or industries where there is a significant increase in profits due to external factors such as price fluctuations, supply disruptions, or changes in regulations.
    • Rationale for imposition: The imposition of windfall taxes is based on the rationale of redistributing unexpected gains, funding social welfare schemes, and creating a supplementary revenue stream for the government.
    • Design problems: Introducing windfall taxes may suffer from design problems, given their expedient and political nature.
    • Potential impact on investment: Windfall taxes may lead to uncertainty in the market and negatively impact future investment, as companies may feel uncertain about investing in a sector with an unstable tax regime.

    When did India introduce this?

    • In July 2022, India announced a windfall tax on domestic crude oil producers who it believed were reaping the benefits of the high oil prices.
    • It also imposed an additional excise levy on diesel, petrol and air turbine fuel (ATF) exports.
    • Also, India’s case was different from other countries, as it was still importing discounted Russian oil.

    How is it levied?

    • Governments typically levy this as a one-off tax retrospectively over and above the normal rates of tax.
    • The Central government has introduced a windfall profit tax of ₹23,250 per tonne on domestic crude oil production, which was subsequently revised fortnightly four times so far.
    • The latest revision was on August 31, when it was hiked to ₹13,300 per tonne from ₹13,000.

    Reasons for re-introduction

    • There have been varying rationales for governments worldwide to introduce windfall taxes like:
    1. Redistribution of unexpected gains when high prices benefit producers at the expense of consumers,
    2. Funding social welfare schemes, and
    3. Supplementary revenue stream for the government

    Issues with imposing such taxes

    • Design problems: Windfall taxes may suffer from design problems, given their expedient and political nature. There is also the issue of determining what constitutes true windfall profits and who should be taxed, which raises questions about the threshold for exemption of smaller companies.
    • Potential impact on investment: Windfall taxes may lead to uncertainty in the market and negatively impact future investment, as companies may feel uncertain about investing in a sector with an unstable tax regime.
    • Internalization of potential taxes: Introducing a temporary windfall profit tax may reduce future investment since prospective investors may internalize the likelihood of potential taxes when making investment decisions.
    • Threshold for exemption of smaller companies: Determining the threshold for exemption of smaller companies raises questions about which companies should be taxed and what level of profit is normal or excessive.
    • Difficulty in determining true windfall profits: There is also the issue of determining what constitutes true windfall profits, as it may be challenging to differentiate between profits attributable to external events versus those attributable to a company’s active investment strategy or business expansion.

     

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