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GS Paper: GS3-13.Infrastructure: Energy, Ports, Roads, Airports, Railways etc:

  • India’s Crude Oil Imports from OPEC

    OPEC’s share of India’s oil imports for the FY22 financial year remained almost steady year-on-year, arresting sharp declines over the past six years, as refiners prefer crude from West Asia to counter rising global prices.

    India’s crude oil imports from OPEC

    • OPEC oil accounted for about 88% of India’s crude imports in FY08.
    • Its share of India’s overall imports could decline because refiners in Asia’s third-largest economy are buying cheaper Russian oil.
    • However, Russian oil continued to account for less than 1% of India’s crude imports in FY22.

    What is OPEC?

    • OPEC stands for Organization of the Petroleum Exporting Countries.
    • It is a permanent, intergovernmental organization, created at the Baghdad Conference in 1960, by Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela.
    • It aims to manage the supply of oil in an effort to set the price of oil in the world market, in order to avoid fluctuations that might affect the economies of both producing and purchasing countries.
    • It is headquartered in Vienna, Austria.
    • OPEC membership is open to any country that is a substantial exporter of oil and which shares the ideals of the organization.
    • Today OPEC is a cartel that includes 14 nations, predominantly from the middle east whose sole responsibility is to control prices and moderate supply.

    What is OPEC+?

    • The non-OPEC countries which export crude oil along with the 14 OPECs are termed as OPEC plus countries.
    • OPEC plus countries include Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, Russia, South Sudan and Sudan.
    • Saudi and Russia, both have been at the heart of a three-year alliance of oil producers known as OPEC Plus — which now includes 11 OPEC members and 10 non-OPEC nations — that aims to shore up oil prices with production cuts.

    Why OPEC plus came into existence?

    • When Russia concluded the Vienna Agreement in 2016, the Russian leadership believed that it would help prepare the country for the Russian presidential elections in March 2018.
    • Higher oil prices ensured the Kremlin’s financial capacity to lead a successful electoral campaign.
    • This changed the regime’s priorities – from satisfying the needs of the general population to ensuring the sustainability of the Kremlin’s alliance with powerful tycoons, including that controlling oil production.
    • For Saudi Arabia, turning what had been an ad hoc coalition into a formal group provides a hedge (protection) against future oil-market turbulence.
    • For Russia, the formalization of the group helps expand Putin’s influence in the Middle East
    • However, both reportedly aimed at causing a drop in oil prices in order to hit US shale producers, who have continued to benefit from OPEC production cuts by expanding their market share.

    Try this PYQ:

    Q.The term ‘West Texas Intermediate’, sometimes found in news, refers to a grade of

    (a) Crude oil

    (b) Bullion

    (c) Rare earth elements

    (d) Uranium

     

    [wpdiscuz-feedback id=”fozewnon7k” question=”Please leave a feedback on this” opened=”1″]Post your answers here.[/wpdiscuz-feedback]

     

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  • RERA

    The Supreme Court has asked the Chief Secretaries of the States to respond to queries raised by the Centre on the implementation of rules framed under the Real Estate (Regulation and Development) (RERA) Act, 2016 in their respective jurisdictions.

    What is RERA, 2016?

    • The Real Estate (Regulation and Development) Act, 2016 seeks to protect home-buyers as well as help boost investments in the real estate industry.
    • It establishes a Real Estate Regulatory Authority- RERA in each state for regulation of the real estate sector and also acts as an adjudicating body for speedy dispute resolution.
    • It was enacted under Entry 6 and 7 (dealing with contracts and the transfer of property) of the Concurrent List.
    • It is followed by the principle “buyer is the king and builders will have to ensure compliances to avoid punishment”.
    • Its main objective is to reduce delay in the work or timely delivery of the project without compromising the quality.

    Objectives of this Act

    It has the following objectives:

    • To protect the interest of the allottees and ensure their responsibility
    • To maintain transparency and reduce the chances of fraud
    • To implement Pan-India standardization and bring about professionalism
    • To enhance the flow of correct information between the home buyers and the sellers
    • To impose greater responsibilities on both the builders and the investors
    • To enhance the reliability of the sector and thereby increase confidence amongst the investors

    Key Provisions of RERA Act

    • Compulsory registration: According to the central act, every real estate project (where the total area to be developed exceeds 500 sq mtrs or more than 8 apartments is proposed to be developed in any phase), must be registered with its respective state’s RERA.
    • Establishment of state level regulatory authorities: It provides for State governments to establish more than one regulatory authority such as RERA to:
    1. Register and maintain a database of real estate projects; publish it on its website for public viewing
    2. Protection of interest of promoters, buyers and real estate agents
    3. Development of sustainable and affordable housing
    4. Render advice to the government and ensuring compliance with its Regulations and the Act
    • Establishment of Real Estate Appellate Tribunal: Decisions of RERAs can be appealed in these tribunals.
    • Mandatory Registration: All projects with plot size of a minimum 500 sq.mt or eight apartments need to be registered with Regulatory Authorities.
    • Deposits: Developers needs to keep 70% of the money collected from a buyer in a temporary pass through account held by a third party (escrow account) to meet the construction cost of the project.
    • Liability of the developer: A developer’s liability to repair structural defects would be for 5 years.
    • Cap on Advance Payments: A promoter cannot accept more than 10% of the cost of the plot, apartment or building as an advance payment or an application fee from a person without first entering into an agreement for sale
    • Carpet Area over super built-up: Clearly defines Carpet Area as net usable floor area of flat. Buyers will be charged for the carpet area and not super built-up area.
    • Punishment for non-compliance: Imprisonment of up to three years for developers and up to one year in case of agents and buyers for violation of orders of Appellate Tribunals and Regulatory Authorities.

    Which projects can get RERA approval?

    • Commercial and residential projects including plotted development.
    • Projects measuring more than 500 sq mts or 8 units.
    • Projects without Completion Certificate, before the commencement of the Act.
    • The project is only for the purpose of renovation/repair / re-development which does not involve re-allotment and marketing, advertising, selling or new allotment of any apartments, plot or building in the real estate project, will not come under RERA.
    • Each phase is to be treated as standalone real estate project requiring fresh registration.

    Benefits offered by the RERA Act

    Industry

    Developer

    Buyer

    Agents
    • Governance and transparency
    • Project efficiency and robust project delivery
    • Standardization and quality
    • Enhance the confidence of investors
    • Attract higher investments and PE funding
    • Regulated Environment
    • Common and best practices
    • Increase efficiency
    • Consolidation of sector
    • Corporate branding
    • Higher investment
    • Increase in organized funding
    • Significant buyers protection
    • Quality products and timely delivery
    • Balanced agreements and treatment
    • Transparency – sale based on carpet area
    • Safety of money and transparency on utilization
    • Consolidation of the sector (due to mandatory state registration)
    • Increased transparency
    • Increased efficiency
    • Minimum litigation by adopting best practices

     

     

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  • Hits and misses: India’s Solar Power Energy Targets

    India is likely to miss its 2022 target of installing 100 gigawatts (GW) of solar power capacity a/c to a report. This is because of rooftop solar lagging behind, the authors say.

    India’s Solar Policy

    • Since 2011, India’s solar sector has grown at a compounded annual growth rate (CAGR) of around 59% from 0.5GW in 2011 to 55GW in 2021.
    • The Jawaharlal Nehru National Solar Mission (JNNSM), also known as the National Solar Mission (NSM), was commenced in January 2010.
    • It marked the first time the government focussed on promoting and developing solar power in India.
    • Under the scheme, the total installed capacity target was set as 20GW by 2022.
    • In 2015, the target was revised to 100GW and in August 2021, the government set a solar target of 300GW by 2030.

    Solar energy: India among the peers

    • India currently ranks fifth after China, U.S., Japan and Germany in terms of installed solar power capacity.
    • As of December 2021, the cumulative solar installed capacity of India is 55GW, which is roughly half the renewable energy (RE) capacity (excluding large hydro power) and 14% of the overall power generation capacity of India.
    • Within the 55GW, grid-connected utility-scale projects contribute 77% and the rest comes from grid-connected rooftop and off-grid projects.

    What does the new report say?

    • As of April, only about 50% of the 100GW target, consisting of 60GW of utility-scale and 40GW of rooftop solar capacity, has been met.
    • Nearly 19 GW of solar capacity is expected to be added in 2022 — 15.8GW from utility-scale and 3.5GW from rooftop solar.
    • Even accounting for this capacity would mean about 27% of India’s 100GW solar target would remain unmet.
    • A 25GW shortfall in the 40GW rooftop solar target, is expected compared to 1.8GW in the utility-scale solar target by December 2022.
    • Thus, it is in rooftop solar that the challenges of India’s solar-adoption policy stick out.

    What is Solar Rooftop?

    • A solar photovoltaic (PV) system mounted on a rooftop of a building is a mini-power requirement or feed into the grid.
    • The size of the installation varies significantly depending on the availability of space, amount of electricity consumed by the property and the ability or willingness of the owner to invest the capital required.
    • In December 2015, the government launched the first phase of the grid-connected rooftop solar programme to incentivise its use in residential, institutional and social areas.
    • The second phase, approved in February 2019, had a target of 40GW of cumulative rooftop solar capacity by 2022, with incentives in the form of central financial assistance (CFA).
    • As of November 2021, of the phase 2 target of 4GW set for the residential sector, only 1.1GW had been installed.

    Reasons for rooftop solar adoption not meeting targets

    • In its early years, India’s rooftop solar market struggled to grow, held back by lack of consumer awareness, inconsistent policy frameworks of the Centre/ State governments and financing.
    • Factors impeding rooftop-solar installation include:
    1. Pandemic-induced supply chain disruption to policy restrictions
    2. Regulatory roadblocks
    3. Limits to net-metering (or paying users who give back surplus electricity to the grid)
    4. Taxes on imported cells and modules
    5. Unsigned power supply agreements (PSAs) and banking restrictions
    6. Financing issues plus delays in or rejection of open access approval grants and
    7. The unpredictability of future open access charges

    Other issues: India’s storage capacity

    • About 34 GW / 136 GWh of battery storage is expected to be installed by 2030, according to the Central Electricity Authority of India.
    • This capacity would be used for RE integration, demand-side and peak load management services.

    Present state of progress

    • Recently, there has been a sharp rise in rooftop solar installations due to falling technology costs, increasing grid tariffs, rising consumer awareness and the growing need for cutting energy costs.
    • These factors are expected to persist giving a much-needed boost to this segment.
    • Going ahead, rooftop solar adoption is expected to proportionally increase as land and grid-connectivity for utility solar projects are expected to be hard to come by.

    Significance of solar power to India’s commitment

    • Solar power is a major prong of India’s commitment to address global warming according to the terms of the Paris Agreement, as well as achieving net zero, or no net carbon emissions, by 2070.
    • PM at the COP Glasgow, in November 2021, said India would be reaching a non-fossil fuel energy capacity of 500 GW by 2030 and meet half its energy requirements via renewable energy by 2030.
    • To boost the renewable energy installation drive in the long term, the Centre in 2020 set a target of 450GW of RE capacity to be achieved by 2030, within which the target for solar was 300GW.
    • Given the challenge of integrating variable renewable energy into the grid, most of the RE capacity installed in the latter half of this decade is likely to be based on wind solar hybrid (WSH).

    Way forward

    • Supportive policies and innovative technological approaches are needed for the sector to achieve its potential.
    • Indian policymakers need to plan for rooftop solar plus storage, rather than rooftop solar alone with the grid as storage (net / gross metering).
    • The declining cost of storage solutions, along with that of rooftop solar solutions, is likely to change the future of the Indian power sector.
    • Several countries such as Australia, the United States, Germany, among others have already endorsed solar power with battery storage.
    • Energy storage, therefore, represents a huge economic opportunity for India.
    • The creation of a conducive battery manufacturing ecosystem on a fast track could cement India’s opportunity for radical economic and industrial transformation in a critical and fast-growing global market.

    Also read:

    [Sansad TV] Global Solar Grid

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  • Looming Power Crisis in India

    Temperatures have shot up across many parts of the country with the early onset of summer, leading to a rise in the demand for power. Instances of power outages have been reported in several states.

    Why is there a concern around power supply?

    • The demand for power has soared.
    • Several states, including Andhra Pradesh, Madhya Pradesh, Punjab, Haryana, Telangana, and Maharashtra, are facing power outages.
    • The coal stock with power generation companies (gencos) is not adequate to meet the rising demand.

    How bad is the coal shortage?

    • Normally, a power plant must maintain 26 days of coal stock.
    • However, at present, several power plants are reporting critical levels of coal stock.
    • Data from the Central Electricity Authority (CEA) shows that 97 power plants out of the 173 that the CEA tracks have critical levels of coal inventory.
    • Of the 173, there are 155 non-pithead plants or power plants that are not near coal mines.
    • These have an average of 28% of the stock compared to the normal scenario.
    • The 18 plants that are near coal mines have an average stock of 81% of the normal requirement.

    Note: Non-pithead plants are power plants where the coal mine is more than 1,500 kilometres away.

    Is coal shortage the only reason for a power crisis?

    • The lack of railway rakes to transport coal is also a major problem.
    • The state power distribution companies (discoms) have also not been able to clear their dues to power generation companies.
    • The covid-19 pandemic has now weakened the finances of many states, raising doubts about the ability of state-owned discoms to clear their dues.

    What has led to the coal shortage?

    • Several factors have led to the shortage, including the stagnation of production by Coal India Ltd (CIL) after the bumper production in FY15 and FY16.
    • There seems to be a tussle between the Centre and coal-rich states, which delay environment and land acquisition clearances.
    • High dues of discoms towards gencos and the eventual delay in gencos paying CIL has complicated the scenario.

    How has the Centre responded?

    • CIL has made efforts to raise supply to the power sector by reducing its dispatch to other industries.
    • The power ministry said that to avoid long-distance transport, a ‘tolling’ facility would be allowed.
    • In this system, state gencos can allow other thermal power plants near a coal mine to utilize their coal linkages to generate and transmit power back.
    • This is an easier alternative compared to transportation.
    • Further, the states need to ensure that imported coal-based plants operate at reasonable tariffs.

    Try answering this PYQ:

    Consider the following statements:

    1. Coal sector was nationalized by the Government of India under Indira Gandhi.
    2. Now, coal blocks are allocated on lottery basis.
    3. Till recently, India imported coal to meet the shortages of domestic supply, but now India is self- sufficient in coal production.

    Which of the statements given above is/are correct?

    (a) 1 only

    (b) 2 and 3 only

    (c) 3 only

    (d) 1, 2 and 3

     

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

     

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  • IRMS

    Context

    A recent Gazette notification regarding the creation of the Indian Railway Management Service (IRMS) marks a paradigm shift in the management of one of the world’s largest rail networks.

    About the merger and IRMS

    • A nearly 8,000 strong cadre of the erstwhile eight services is now merged into one.
    • Eight out of 10 Group-A Indian Railway services have been merged to create the IRMS.
    • The merged services are: Indian Railway Traffic Service (IRTS), Indian Railway Personnel Service (IRPS), Indian Railway Accounts Service (IRAS), Indian Railway Service of Electrical Engineers (IRSEE), Indian Railway Service of Signal Engineers (IRSS), Indian Railway Service of Mechanical Engineers (IRSME), Indian Railway Service of Civil Engineers (IRSE) and Indian Railway Stores Service (IRSS).
    • Aims of the restructuring: Besides removing silos, this restructuring also aims at rationalising the top-heavy bureaucracy of the Indian Railways.

    Way forward: Training

    • Training the future leaders of India’s public transporter in the rapidly evolving logistics sector of the country is the most important task ahead.
    • The UPSC will recruit a few hundred IRMS officers each year from now, they will remain much less in number when compared to already serving officers for a long time to come.
    • Training of the existing cadre of officers: The fact remains that even after the creation of the IRMS, the 8,000 strong (already serving) officers of the Indian Railways will need to work in coordination and not in silos, as they will be serving in the organisation for decades to come.
    • This highlights the importance of training of the existing cadre of officers as they will have to deliver on the ambitious Gati-Shakti projects.
    • The task of training such a dynamic talent pool assumes importance in view of India’s aspirations of becoming a $5 trillion economy.
    • All this will require a massive revamp of the capacity building ecosystem of the Indian Railways.
    •  Redesign the training: The merger of services provides an opportunity to redesign the training for newly recruited IRMS officers to make them future-ready. Initial training along with mid-career training programmes may be reoriented.
    • The IRMS training needs to be designed based on the competencies required for different leadership roles.
    • Mission Karmayogi of the Government of India provides for competencies based postings of officers.
    • The Integrated Government Online Training (iGOT) programme of the Government of India will be instrumental in shaping the career progression of IRMS officers.

    Conclusion

    Future IRMS officers should be ready to face the challenges of working in an organisation that is involved in round the clock and round the year operations, has substantial social obligations to meet and, at the same time, which must earn for itself.

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  • NITI Aayog publishes Energy and Climate Index List

    Gujarat has topped the list for larger States in the NITI Aayog’s State Energy and Climate Index–Round 1 that has ranked States and Union Territories (UTs) on certain parameters.

    State Energy and Climate Index

    • The States have been categorized based on size and geographical differences as larger and smaller States and UTs.
    • The index is based on 2019-20 data.
    • It ranks the states’ performance on 6 parameters, namely
    1. DISCOM’s Performance
    2. Access, Affordability and Reliability of Energy
    3. Clean Energy Initiatives
    4. Energy Efficiency
    5. Environmental Sustainability; and
    6. New Initiatives
    • The parameters are further divided into 27 indicators. Based on the composite SECI Round I score.
    • The states and UTs are categorized into three groups: Front Runners, Achievers, and Aspirants.

    Performance by the states

    • Gujarat, Kerala and Punjab have been ranked as the top three performers in the category of larger States, while Jharkhand, Madhya Pradesh and Chhattisgarh were the bottom three States.
    • Goa emerged as the top performer in the smaller States category followed by Tripura and Manipur.
    • Among UTs, Chandigarh, Delhi and Daman & Diu/Dadra & Nagar Haveli are the top performers.
    • Punjab was the best performer in discom performance, while Kerala topped in access, affordability and reliability category.
    • Haryana was the best performer in clean energy initiative among larger States and Tamil Nadu in the energy efficiency category.

     

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  • Unlocking the potential of green hydrogen

    Context

    The ongoing tensions between Russia and Ukraine have led to the prices of crude oil shooting to $130/barrel. Green hydrogen is an emerging option that will help reduce India’s vulnerability to such price shocks.

    Four deficiencies in Renewable Energy Technologies

    • 1] Intermittent nature of RE: RE can only be generated intermittently.
    • Battery technology cannot store electricity at a grid scale.
    • 2] Financial viability: There are question marks on the financial viability of green power.
    • In India, renewable electricity is a replacement for coal-based power, the cheapest form of energy.
    • That’s a big constraint on its viability.
    • Moreover, the customers of this power – the state distribution companies – are collectively insolvent.
    • A business cannot prosper if its primary customers are not financially viable.
    • 3] Batteries are not suitable for heavy trucks: While electric cars and two-wheelers get a lot of visibility, much of India’s oil is burnt in heavy trucks.
    • Lithium batteries are not viable for trucks.
    • 4] Critical minerals: Electric vehicles require large quantities of lithium and cobalt that India lacks.
    • These minerals also have very concentrated supply chains that are vulnerable to disruptions.
    • Large-scale investments in electric vehicles may create unsustainable dependencies for the country.

    Is green hydrogen a solution?

    • Intermittent hydrogen in the energy mix can help circumvent some of these problems.
    • Hydrogen is an important industrial gas and is used on a large scale in petroleum refining, steel, and fertiliser production.
    • As of now, the hydrogen used in these industries is grey hydrogen, produced from natural gas.
    • Green hydrogen produced using renewable energy can be blended with grey hydrogen.
    • This will allow the creation of a substantial green hydrogen production capacity, without the risk that it may become a stranded asset.
    • Creating this hydrogen capacity will provide experience in handling the gas at a large scale and the challenges involved.
    • Blending with CNG: To widen the use of green hydrogen, it can be blended with compressed natural gas (CNG), widely used as a fuel for vehicles in Delhi, Mumbai and some other cities.
    • This will partly offset the need for imported natural gas and also help flag off the challenges of creating and distributing hydrogen at a national level.
    • By bringing down the price of green hydrogen sufficiently, India can help unlock some stranded assets.
    • The country has close to 25,000 megawatts of gas-fired power generation capacity that operates at a very low-capacity utilisation level. The high price of natural gas reduces the viability of such electricity.
    • These plants could use hydrogen blended with natural gas. Hydrogen should, however, be used to generate electricity after it has served its utility in other avenue.

    Way forward

    • To catalyse a hydrogen economy, India needs some specialist players to execute projects as well as finance them.
    • Participation of private players: Apart from government-backed players, the hydrogen economy will need private sector participation.
    • India’s start-up sector, with over 75 unicorns, is perhaps the most vibrant part of the country’s economy currently.
    • This ecosystem has been enabled by a mix of factors, including the presence of entrepreneurs with ideas and investors who are willing to back up these ideas
    • Creation of refueling network: One challenge of using new transport fuels, whether CNG or electric vehicles, is the creation of large-scale refuelling networks.
    • Bringing hydrogen vehicles on the road too soon will require the creation of yet another set of infrastructure.
    • Building fleets of hydrogen-fueled vehicles for gated infrastructure can be a good starting point.
    • Airports, ports and warehouses, for instance, use a large number of vehicles such as forklifts, cranes, trucks, tractors and passenger vehicles.

    Conclusion

    The government’s Green Hydrogen Policy sends the right signals about its intent. It now needs to ensure that investment can freely come into this space.

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  • Tariff problem of renewable energy

    Context

    We need to shift to a two-part tariff for solar and wind to incentivise private investments.

    Background of power generation tariff in India

    • The two-part tariff has been in vogue since 1992.
    • It applies to thermal and hydro generation.
    • 1] Fixed component: The first part is a fixed component – the cost that a generator incurs.
    • This is not linked to the amount of power generated.
    • 2] Variable component: The second part varies with the quantum of generation.
    • It does not apply to renewable generation — solar, wind, and also nuclear.
    • Under the two-part formula, the variable cost is calculated on the basis prescribed by the regulatory commissions.
    • This is based on the cost of fuel — coal or gas or lignite — as the case may be.
    • The fixed cost is also determined by regulatory commissions and it has a graded payment system depending on the extent to which the plant would be in a position to generate.
    • The point here is that when a generator is in a position to generate, it gets to recover the fixed cost (or some part of it), irrespective of whether it actually generates power.

    Single-part tariff for nuclear, wind and solar

    • In contrast, solar and wind generation and also nuclear are still governed by a single-part tariff.
    • The single-part tariff applies to nuclear power stations for various reasons including the fact that given the technology, a nuclear generator does not usually increase/decrease the generation at a quick tempo, but maintains a steady stream.
    • In any case, nuclear power accounts for only about two per cent of the entire generation, so let’s leave it aside.
    • On the other hand, solar and wind generation account for about 10 per cent of the generation today and going by the statement delivered during COP26 in Glasgow, we want to ramp it up to 50 per cent by 2030.

    Issues with single-part tariff for wind

    • Must run status: The renewable sector has been given a “must run” status.
    • This means that any generation from renewables needs to be dispatched first.
    • The problem is that “must run” runs counter to the basic economic theory that in order to minimise total cost, dispatch should commence from the source offering the cheapest variable cost and then move upwards.
    • With a single-part tariff, whenever the renewable generator is asked to back down for maintaining grid balance, it is paid nothing.
    • With a single part tariff for renewable generation, the entire cost is variable and at Rs 2.5 per unit for solar generation, it is not the cheapest source.
    • There are several NTPC coal-fired pit head plants whose variable costs are far lower, for example, Simhadri (Rs 1.36), Korba (Rs 1.36), Sipat (Rs 1.43).
    • For the older solar plants, the tariff could be well above Rs 3 per unit and for wind-based generation, it is even higher, averaging around Rs 4.5 per unit.
    • Therefore, the SLDCs often flout the principle of “must run”, since the distribution companies would save money by asking the renewable generator to back down while keeping the tap on for a coal-based generation.

    Solution

    • Two-part tariff for solar: The solution to this problem is to apply a two-part tariff for solar and wind generators as we do for hydro plants today.
    • Lowest variable cost: The overriding principle is that the percentage allocated as variable cost should ensure that renewable generation has the lowest variable cost so that there is no violation of the “must-run” principle.
    • At the same time, the fixed cost component should not be kept so high that it hurts the consumers. 
    • A fine balance between the proportion of the fixed and variable costs will have to be maintained.
    • It would also ensure a certain minimum return to developers even if they are not generating during certain hours, as in the case of coal and hydro plants.
    • Proper environment: If we are serious about having a renewable generating capacity of 450-500 GW by 2030, we need to create a proper environment and ensure adequate returns to invite fresh investments into renewable generation.

    Conclusion

    The switch from a single to a two-part tariff structure for renewables has to be made right now as we are at the cusp of ramping up our renewable generation and it takes time for matters to get streamlined as we have seen in the past.

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  • Startup India Initiative and its Success

    A research, reviewing India’s entrepreneurial policy Startup India, affirmed its positive impact in reducing regional entrepreneurial disparities.

    Startup India Initiative

    • The Startup India campaign was first announced by PM Modi during his speech on 15 August 2015 address from the Red Fort.
    • The action plan for this initiative is focusing on three areas:
    1. Simplification and Handholding.
    2. Funding Support and Incentives.
    3. Industry-Academia Partnership and Incubation.
    • An additional area relating to this initiative is to discard restrictive States Government policies within this domain, such as License Raj, Land Permissions, Foreign Investment Proposals, and Environmental Clearances.
    • It was organized by the Department for promotion of industry and internal trade (DPI&IT).

    The success of the scheme

    • Minister for Commerce and Industry has informed the Lok Sabha that the entrepreneurial portal had more than 65,000 startups registered.
    • Of which, 40 attained the ‘unicorn’ status in the last twelve months, bringing the total as of date to 90.
    • India now ranks third among global startup eco-systems.
    • The networking, training and mentoring facilities provided by Startup India alongside entrepreneurship outreach campaigns in tier-2 and tier-3 cities, helped address regional entrepreneurial disparities in India.

    Limitations to its success

    (1) Heavy concentration in megacities

    • Entrepreneurship continues to be “highly concentrated” in three megacities, namely, Mumbai, Bengaluru and Delhi NCR.
    • India’s venture capital industry is also clustered in and around these three cities.
    • Such concentration can lead to increased economic inequality and hinder emergence of entrepreneurs from industries other than those belonging to the clusters.

    (2) Narrow Representation

    • The Startup India Action Plan document has no mention of the words ‘caste’, ‘tribe’, ‘marginalised’, ‘indigenous’ or ‘social group’.
    • Additionally, the policy’s reliance on technology does not take into consideration India’s digital divide, especially with respect to urban and rural areas.

    (3) Few Women in the industry

    • There is an under-representation of women and marginalized caste groups in the national startup ecosystem.

    Dedicated measures to support Women

    • 10% of the fund in the Fund of Funds operated by Small Industries Development Bank of India (SIDBI) has been reserved for women-led startups.
    • Further, all the alternate investment funds where the SIDBI takes equity have been mandated to contribute 20% in business which are women led.
    • There is a capacity-building program and a dedicated webpage for women on the portal.

    Way ahead

    • There is a need for policies and progressive strategies from governments to encourage startups and provide access and assistance in key areas including tax clarity, incubation, affordability and licensing.
    • In any case, governments should be well prepared and dedicated to creating a culture of startups to impact the entrepreneurial ecosystem in their cities, countries and citizens.

     

    Also read:

    [Burning Issue] Five Years of Startup India Scheme

     

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  • Russia’s offer of cheaper oil is tempting, but India must be cautious

    Context

    With oil above $100, the government now has to spend twice as much to import oil as it did earlier. Russia has offered to sell oil at lower prices to India. It is a hard temptation for India to resist. But one that comes with profound and long-lasting consequences.

    Issues in buying oil from Russia

    1] Impact on India’s export due to threat of the secondary sanction by the US

    • The demise of the Soviet Union made it easier for India to abandon the Soviet-influenced ideology of a planned economy and veer towards the American version of a market economy.
    • Now, in the reverse ideological direction, Russia’s offer of cheaper oil has hidden and direct costs that India will have to deliberate upon.
    • Whenever global crude oil prices have risen above $100 in the past, India was able to cushion that shock primarily through growth in exports.
    • When oil prices were similarly high, exports rose to nearly 25 per cent of nominal GDP, which helped India withstand the shock.
    • However, exports now have fallen dramatically to 18 per cent of GDP, which must be revived.
    • The US is India’s biggest export market.
    • The US has already cautioned India about abetting Russia by buying Russian oil.
    • It remains to be seen if the US will impose secondary sanctions against India for buying discounted Russian oil, but that threat looms large.

    2] Cascading de-dollarisation

    • With US sanctions against Russia, it will insist on payment in rubles.
    • If India is forced to accept trading in rubles with Russia, then it is very likely that China, which is India’s second-largest trading partner, may also insist on payments in Chinese yuan.
    • Saudi Arabia may also insist on trading in a currency other than the US dollar.
    • This cascading “de-dollarisation” phenomenon will further irk and antagonise the US, since it weakens the dollar’s status as the world’s reserve currency.
    • If India is forced to purchase Russian oil in rubles and potentially trade in yuan with China and others, it can catapult India into the centre of a geo-economic war that it can ill afford.

    Opportunity for India

    • The Russia-Ukraine conflict can be an opportunity for India to step up and capture global market share in goods and services.
    • There is already talk of India capitalising on wheat exports, albeit a tiny share of India’s overall exports, as a fallout of global sanctions against Russian wheat.

    Conclusion

    Exports remain India’s biggest hope for a long-term sustainable economic recovery with ample job creation. India cannot risk being isolated in future global trade for near-term discounted oil deals with Russia.

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