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GS Paper: GS3

  • Europe de-recognizes 6 Indian clearing corporations

    Central Idea

    • The European Securities and Markets Authority (ESMA) has de-recognised 6 clearing corporations in India as Third Country Central Counterparty (TC-CCP) with effect from April 30.
    • However, it allowed European banks to continue business with them till April 2023 without penal consequences.

    What are Clearing Corporations?

    • Clearing corporations, also known as central counterparties (CCPs), are financial institutions that act as intermediaries between buyers and sellers in financial markets.
    • They help to manage the risk of default by ensuring that each party involved in a trade has the necessary funds or securities to fulfil their obligations.
    • Clearing corporations also ensure that trades are settled in a timely and efficient manner.
    • In the context of this article, clearing corporations refer to those involved in the clearing and settlement of trades in India’s cash and derivatives market.

    Decisions by ESMA

    • ESMA has withdrawn recognition of six Indian clearing corporations including- CCIL, Indian Clearing Corporation Ltd, NSE Clearing Ltd, Multi Commodity Exchange Clearing, India International Clearing Corporation, and NSE IFSC Clearing Corporation.
    • ESMA asked Indian regulators to sign an agreement to give it the power to monitor and supervise the clearing corporations.
    • Indian regulators refused to give supervisory power to foreign entities in Indian clearing corporations.
    • ESMA recognised these clearing corporations as Third Country Central Counterparty (TC-CCP) in the EU region.

    India’s rebuttal

    • ESMA had asked the RBI and the Securities and Exchange Board of India (SEBI) to sign an agreement giving it the power to monitor and supervise the clearing corporations.
    • Indian regulators did not agree to give supervisory power to a foreign entity on Indian clearing corporations.

     

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  • CBDC for efficient Cross-Border Payment

    cbdc

    Central Idea: RBI Deputy Governor T. Rabi Shankar commented on CBDC platforms and their potential impact on cross-border payments during the G20 TechSprint.

    About Central Bank Digital Currency (CBDC)

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

    Hurdles in Cross-Border Payments

    • Fragmented and truncated data formats: Lack of standardization in data formats creates inefficiencies in cross-border payments. Fragmented and truncated data formats create additional costs and delays in the processing of transactions.
    • Complex processing of compliance checks: Cross-border payments require compliance with different regulatory frameworks in different jurisdictions. Compliance checks can be complex and time-consuming, causing delays and additional costs.
    • Limited operating hours: Traditional banking systems have limited operating hours, which can cause delays in cross-border payments. International time zone differences also contribute to these challenges.
    • Legacy technology platforms: Traditional banking systems still rely on legacy technology platforms, which can be slow and outdated. This can lead to inefficiencies and delays in cross-border payments.
    • Long transaction chains: Cross-border payments often involve multiple intermediaries, which can lead to long transaction chains. Each intermediary adds additional costs and can increase the time it takes for a transaction to be completed.
    • Funding costs: Cross-border payments require funding in multiple currencies, which can lead to additional costs. Exchange rate fluctuations can also impact the cost of cross-border payments.
    • Weak competition: The lack of competition in the cross-border payments industry can contribute to inefficiencies and high costs. The dominance of a few large players can limit innovation and hinder the development of more efficient solutions.

    Potential benefits with CBDC

    • Less intermediaries: CBDC can reduce the need for multiple intermediaries in cross-border payments, leading to a faster and more efficient process.
    • Enhanced efficiency: It can increase the speed and efficiency of cross-border payments by reducing processing times and delays.
    • Enhanced integration: It can enable better integration between different payment systems, reducing fragmentation and increasing interoperability.
    • Enhanced technical compatibility: It can be designed to work with existing payment infrastructure, making it easier to adopt and integrate into the current system.
    • Enhanced safety: It can provide enhanced security measures that can help mitigate the risk of fraud and cyber-attacks in cross-border payments.
    • Mitigation of cross-currency risks: CBDC can help mitigate risks associated with cross-border and cross-currency transactions, such as exchange rate fluctuations, currency conversion fees, and transaction processing delays.

    How can this be implemented to practice?

     

    Description Examples
    Model 1 Enhancing Compatibility Among Domestic CBDC Systems Many central banks are working to enhance the compatibility of domestic CBDC systems. Common international standards are required, which require regulatory coordination and market practices.
    Model 2 Interlinking CBDC Systems CBDC networks are linked up by synchronizing payment actions without the need for a trusted third party or a common platform.
    Model 3 Establishing a Single mCBDC System Cross-border payments are processed through a jointly operated “corridor network”.

     

    RBI’s push for CBDC adoption @ G20

    • RBI emphasized the need for increased adoption of CBDCs across countries for them to play a role in the cross-border payments arena.
    • Countries need to decide to create CBDCs and create an infrastructure for various CBDCs to interface for CBDCs to be effective in cross-border payments.
    • RBI suggested India’s model of digitization, where the basic infrastructure was created by the public sector and the fintech/financial/start-up ecosystem was allowed to create innovative solutions, could also be successful with CBDCs globally

    Conclusion

    • CBDCs could bring about a significant change in the sphere of cross-border payments, but coordination across countries and between the public and private sectors is essential for that to happen

     

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  • Digitalizing Climate-Smart Agriculture: Framework for G20 Countries

    Agriculture

    Central Idea

    • Climate-smart agriculture (CSA) is a part of India’s and the G20 countries’ Sustainable Development Goals (SDGs) vision. It is a complex, mega-scale challenge. The objective of CSA is to optimise a country’s agriculture productivity, resilience, and emissions in response to climate change (long-term, irreversible changes in temperature, precipitation, humidity, pressure, and wind). The G20 can play a key role in addressing the challenge of climate-smart agriculture

    What is Climate-smart agriculture (CSA)?

    • Sustainable agricultural practice: Climate-smart agriculture (CSA) refers to the sustainable agricultural practices that help to increase food production and farmer incomes, improve resilience to climate change, and reduce greenhouse gas emissions.
    • CSA aims to achieve three goals simultaneously: (1) sustainably increasing agricultural productivity and incomes, (2) adapting and building resilience to climate change, and (3) reducing and/or removing greenhouse gas emissions, where possible.
    • It involves a combination of strategies, technologies, and policies that are tailored to the specific needs and conditions of each country’s agriculture sector.

    Challenges for Climate-smart agriculture (CSA)

    • Complex and multi-dimensional: CSA is a complex and multi-dimensional challenge that requires integrated solutions, which may be difficult to implement and require significant investments.
    • Lack of awareness and knowledge: Many farmers are not aware of the benefits of CSA and may not have the knowledge or skills to implement it effectively.
    • Access to finance: Financing for CSA practices may be limited, especially for smallholder farmers who may lack collateral or access to credit.
    • Policy and institutional constraints: Policies and institutions may not be aligned to support the adoption and scaling up of CSA practices.
    • Technical and technological challenges: CSA requires the use of appropriate technologies and practices, which may not be available or accessible in some regions.
    • Climate change impacts: The impacts of climate change, such as droughts, floods, and other extreme weather events, may negatively affect the productivity and resilience of agricultural systems, making it difficult to implement CSA practices.
    • Data and information gaps: There may be gaps in data and information on the impacts of CSA practices, making it difficult to assess their effectiveness and scale them up.

    G20’s role in addressing these challenges

    • The G20 must play a key role in addressing the challenge of CSA by adopting the ontological framework, method, and recommendations to set the agenda for research, policy, and practice.
    • The G20 must constitute a committee to formulate a systemic agenda for systematic research, policies, and practices for the digitalisation of CSA in a country using the ontology.
    • The Think20 Engagement Groups provide research and policy advice to the G20 and are ideal forums to develop the ontological framework as the G20 presidency rotates between the member countries each year.
    • The ontology of CSA must be adopted globally as a framework for all G20 countries by adapting the crop and region taxonomies to each country.
    • The G20 committee must help countries collaborate in their efforts, coordinate their policies, and communicate their learnings.
    • The G20 must set the trajectory for the digitalisation of CSA within the G20 and globally and must provide a ‘map’ for the global effort.

    Facts for prelims

    Initiatives

    Description
    National Innovations in Climate Resilient Agriculture (NICRA) A network project launched by the Indian Council of Agricultural Research (ICAR) in 2011 to enhance resilience of Indian agriculture to climate change
    Soil Health Card Scheme Launched in 2015 to provide farmers with information on the nutrient status of their soil and recommend appropriate soil health management practices
    Pradhan Mantri Fasal Bima Yojana Launched in 2016 to provide farmers with insurance coverage and financial support in the event of crop losses due to adverse weather conditions
    Paramparagat Krishi Vikas Yojana Launched in 2015 to promote organic farming practices in India and reduce the use of chemical fertilizers and pesticides
    National Mission for Sustainable Agriculture (NMSA) Launched in 2010 to promote sustainable agriculture practices in India and enhance agricultural productivity and income of farmers
    Rashtriya Krishi Vikas Yojana Launched in 2007 to support agricultural development in India through the provision of financial assistance for various agricultural activities
    National Agriculture Market (e-NAM) Launched in 2016 to create a unified national market for agricultural commodities in India through the use of technology and digital platforms
    Kisan Credit Card Scheme Launched in 1998 to provide farmers with access to affordable credit for agricultural and related activities
    Pradhan Mantri Krishi Sinchai Yojana Launched in 2015 to promote efficient use of water resources in agriculture and enhance water use efficiency in farming
    Zero Budget Natural Farming (ZBNF) A farming practice that aims to eliminate the use of synthetic inputs in agriculture and promote natural farming techniques

    Recommendations to the G20

    1. Outcome Management:
    • Productivity: Encourage the adoption of sustainable soil management practices, provide subsidies and financial incentives for efficient irrigation techniques, and invest in R&D of improved seed varieties.
    • Resilience: Promote crop diversification, develop a comprehensive risk management strategy, and support agroforestry practices.
    • Emissions Management: Develop and implement policies that promote reduced tillage practices, provide financial incentives and support for the adoption of renewable energy technologies, and develop and implement regulations and standards for sustainable livestock management practices.
    1. Regional Management: Utilise digitalisation tools and technologies to effectively differentiate CSA management across regions in India, gather real-time data and information on regional variations, deliver customised and region-specific extension services to farmers, optimise resource use, and facilitate stakeholder engagement and collaboration.
    2. Crop Management:
    • Differentiation of CSA management across crops: Identify the unique agro-ecological and socioeconomic conditions of each crop and design region-specific policies and programmes that promote CSA practices and technologies.
    • Integration of CSA management across crops: Promote the use of integrated crop management practices that focus on optimising resource use, reducing greenhouse gas emissions, and enhancing productivity across multiple crops.
    • Precision crop management: Adopt precision agriculture techniques that utilise real-time data and information to optimise resource use and increase productivity.
    1. Digital Semiotics Management:
    • Collect and analyse weather data: India has a vast network of weather stations across the country that collect data on temperature, precipitation, humidity, pressure, and wind fields. This data can be used to analyse weather patterns and identify trends that affect crop growth and yield. Machine learning algorithms can be used to process the data and provide real-time insights to farmers on weather forecasts, pest and disease outbreaks, and optimal planting and harvesting times.
    • Develop crop-specific models: India has a diverse range of crops grown across different regions, each with unique requirements for temperature, precipitation, and other climatic factors. Crop-specific models can be developed using data and information on climate
    • Promote precision agriculture: Precision agriculture involves the use of digital technologies such as sensors, drones, and satellite imaging to monitor crop health and growth, and provide real-time recommendations to farmers. By incorporating weather data and information into precision agriculture technologies, farmers can make data-driven decisions that are tailored to the local climatic conditions.
    • Build farmer capacity: To effectively use data and information on climate variability, farmers need to have the skills and knowledge to interpret and apply this information to their farming practices. Training programmes and extension services can be developed to build farmer capacity in using digital tools and interpreting weather data. These programmes can be designed to be accessible and affordable to all farmers, including smallholder farmers.

    Agriculture

    Conclusion

    • The digitalisation of CSA requires a roadmap. Addressing the challenge of CSA is a prerequisite to meeting the challenge of food security, and digitalisation is essential to this task. The G20 must set the trajectory for the digitalisation of CSA within the G20 and globally and must provide a map for the global effort to achieve the Sustainable Development Goals vision.

    Mains Question

    Q. What do you understand by mean Climate-smart agriculture (CSA)? Discuss the challenges for CSA and suggest a way ahead for G20 how it can address these challenges?

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     Also read:

    Idea of Urban Agriculture and Use of Technology

     

  • Oil and Gas Price Volatility: India’s Farsighted Governance

    Oil and Gas

    Central Idea

    • The present government has taken several measures to protect Indian consumers from international oil and gas price volatility. The recent Cabinet decision to approve a series of critical Administered Price Mechanism (APM) gas pricing reforms will further advance this objective. These reforms aim to protect Indians from extreme price volatility, promote more innovation and investments in exploration and production (E&P), and provide clarity for planned capex investments in gas-based sectors.

    Reasons for oil and gas price volatility

    • Global supply and demand: The balance between global supply and demand for oil and gas is a key factor in price volatility. If there is a surplus of supply, prices may decrease, while if there is a shortage of supply, prices may increase.
    • Geopolitical tensions: Political tensions between countries, such as trade disputes or conflicts, can affect oil and gas prices. For example, if there is a threat of war or supply disruption in a major oil-producing country, prices may rise.
    • Weather conditions: Extreme weather events, such as hurricanes or cold snaps, can impact oil and gas production and distribution, leading to price fluctuations.
    • Economic growth: Economic growth can drive up demand for oil and gas, which can lead to higher prices. Conversely, economic slowdowns can reduce demand and lead to lower prices.
    • OPEC decisions: The Organization of the Petroleum Exporting Countries (OPEC) plays a significant role in global oil prices by controlling production levels. Decisions made by OPEC, such as production cuts or increases, can affect prices.

    Measures taken by the Indian government to protect consumers from oil and gas price volatility?

    • Increasing domestic Administered Price Mechanism (APM) gas allocation: This step was taken to provide more clarity for planned capital expenditure investments in gas-based sectors and diverting gas from non-priority sectors to transport and domestic segments.
    • APM gas pricing reforms: The recent Cabinet decision to approve a series of critical APM gas pricing reforms will further advance the objective of protecting Indian consumers from extreme price volatility. These reforms achieve two major goals: First, to protect Indians from extreme price volatility, and second, to promote more innovation and investments in exploration and production (E&P).
    • Benchmarking APM prices: The government decided to insulate domestic gas consumers as well as national oil companies from such volatility by benchmarking APM prices to a slope of 10 per cent of Indian crude basket price to be determined on a monthly basis, together with a ceiling of $6.5/MMBTU and floor of $4.5/MMBTU for nomination fields.
    • Reduction in fertiliser subsidies: After these reforms, the reduction in fertiliser subsidies is expected to be more than Rs 2,000 crore each year.
    • Incentivising investment in the E&P sector: These reforms will also help incentivise investment in the E&P sector by providing a floor price for mature fields of nomination while also incentivising new wells of nomination fields which will receive 20 per cent higher prices.
    • Expansion of gas pipeline network and CGD stations: Since 2014, India has increased the length of its gas pipeline network from 14,700 km to 22,000 km in 2023. The number of CGD-covered districts in India has increased from 66 in 2014 to 630 in 2023 while CNG stations have gone up from 938 in 2014 to 5,283 in 2023.

    Facts for prelims

    Type of Oil/Gas Production Process Applications Advantages Disadvantages Pollutants
    Crude Oil Extracted from oil wells through drilling Transportation, fuel for power generation, industrial uses High energy density, easy to transport Air pollution, carbon emissions, oil spills Carbon monoxide, nitrogen oxides, sulfur dioxide
    Natural Gas Extracted from gas wells through drilling or extracted alongside crude oil Power generation, heating, cooking, industrial uses Cleanest burning fossil fuel, high energy efficiency Methane emissions, can leak during production and transportation Carbon dioxide, nitrogen oxides
    Liquefied Petroleum Gas (LPG) Extracted during crude oil refining or extracted alongside natural gas Cooking, heating, transportation Clean burning, easy to store and transport Non-renewable, carbon emissions during production and transportation Carbon monoxide, nitrogen oxides
    Compressed Natural Gas (CNG) Extracted alongside crude oil or natural gas Transportation, cooking Lower emissions than petrol and diesel, cost-effective Requires specialized vehicles and refueling stations, less energy-dense than petrol and diesel Carbon monoxide, nitrogen oxides
    Shale Gas Extracted through hydraulic fracturing of shale rock formations Power generation, heating, cooking, industrial uses Abundant, reduces dependence on foreign oil, lower carbon emissions than coal Requires large amounts of water, potential for groundwater contamination, methane leaks Carbon dioxide, nitrogen oxides

    Way ahead for India’s oil and gas sector

    • Encourage and promote domestic oil and gas production: The government should continue to incentivize domestic oil and gas production to reduce dependence on imports and minimize price volatility. This could be achieved by introducing more investor-friendly policies, simplifying regulations, and exploring untapped reserves.
    • Develop a comprehensive energy policy: India needs to develop a comprehensive energy policy that outlines a clear vision for the sector’s development and growth. This policy should take into account environmental concerns, technological advancements, and future energy demands.
    • Increase investment in infrastructure: The government should invest in building critical infrastructure like pipelines, terminals, and storage facilities to improve supply chain efficiency and reduce transportation costs. This will also enable the country to tap into more remote oil and gas reserves.
    • Promote alternative sources of energy: Given the pressing need to reduce greenhouse gas emissions, India should promote alternative sources of energy such as solar, wind, and hydropower. This will not only help in meeting India’s climate goals but also reduce the dependence on fossil fuels.
    • Improve pricing transparency: India should work towards improving pricing transparency in the oil and gas sector. This will help to ensure a level playing field for all players, promote healthy competition, and enable consumers to make informed decisions.
    • Strengthen international partnerships: India should strengthen its partnerships with other countries, particularly those in the Gulf region, to ensure a stable supply of oil and gas. This will also help in diversifying sources of energy and reduce dependence on a few countries.
    • Foster innovation: The government should incentivize research and development in the oil and gas sector to encourage innovation and promote the use of advanced technologies. This could help in improving extraction techniques, reducing environmental impact, and optimizing resource utilization.

    Conclusion

    • India’s efforts to protect its consumers from international oil and gas price volatility are commendable. The recent APM gas pricing reforms will further advance this objective and promote more innovation and investments in exploration and production (E&P) and provide clarity for planned capex investments in gas-based sectors. With a growing demand for natural gas, India is well on its way to realizing a gas-based economy as part of its broader energy transition goals. The vision of a cleaner, greener, and more sustainable energy future for India is steadily becoming a reality.

    Mains question

    Q. Discuss the factors behind Oil and gas sector being volatile. What are the measures taken by the Indian government to protect consumers from oil and gas price volatility?

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    Also read:

    What should India do in the current international energy market?

  • Leveraging PDS to Improve Nutrition Security

    PDS

    Central Idea

    • The Department of Food and Public Distribution (DoF&PD), in particular the Food Corporation of India (FCI), must have heaved a sigh of relief that the procurement of wheat so far has crossed 20 million tonnes (MT), a notch higher than last year. Three states Punjab, Haryana and Madhya Pradesh have contributed more than 98 per cent to the central pool.

    Wheat production estimates

    • The Ministry of Agriculture and Farmers’ Welfare (MoA&FW) had earlier estimated the wheat production for this year to be 112 MT. However, the impact of unseasonal rains on wheat production has made the revised estimate uncertain.
    • Punjab: Punjab, one of the largest contributors to wheat procurement, is also in the process of estimating losses due to rough weather just before the harvest time. Despite the unseasonal rains, interactions with Punjab Agriculture University (PAU), market functionaries and farmers suggest that the production of wheat this year is higher than last year.
    • Uttar Pradesh: Uttar Pradesh produces almost double the amount of wheat (about 35 MT) than Punjab (about 18 MT). UP is estimated to procure 3.5 MT of wheat, but so far it has procured a meagre 0.12 MT. Unless it brings a surprise in May and June, the overall wheat procurement may stop well short of even 30 MT.

    Facts for prelims

    The benefits of Mulching of paddy straw

    • Increases organic carbon in the soil: Mulching of paddy straw increases the organic carbon content of the soil. It helps in retaining moisture in the soil and improves soil health.
    • Helps in reducing weed growth: Mulching acts as a magic as it helps in reducing the weed growth, conserves soil moisture, and provides essential nutrients to the soil.
    • Increases crop productivity: It helps in improving the fertility of the soil and in turn increases the productivity of the crops.
    • Reduces soil erosion: Mulching of paddy straw protects the soil from wind and water erosion.
    • Decreases the use of fertilizers: It helps in reducing the use of fertilizers as the organic matter from the mulch provides essential nutrients to the soil.
    • Promotes sustainable agriculture: Mulching promotes sustainable agriculture practices as it is an eco-friendly and cost-effective way of managing agricultural waste.

    PDS

    Challenges for providing nutritious food through PDS

    • Infrastructure and supply chain: There is a lack of proper infrastructure and supply chain to transport and store nutritious food items such as millets, pulses, and oilseeds. This leads to spoilage, wastage, and ultimately affects the quality of food provided through PDS.
    • Cost: Providing nutritious food items through PDS may increase the cost of the program, which can be a challenge for the government to sustain in the long run.
    • Awareness and demand: There is a lack of awareness among the general public about the benefits of nutritious food items and the need to include them in their diet. Also, there may not be enough demand for these items, leading to poor offtake and wastage.
    • Operational challenges: There are several operational challenges such as sourcing, storage, and distribution of nutritious food items, which need to be addressed for an effective PDS program.
    • Political interference: There may be political interference in the selection of food items to be included in PDS, leading to a focus on populist measures rather than on nutritious food items. This can undermine the effectiveness of the program.

    agriculture

    Nutrition security through PDS and a help to climate resilient agriculture

    • Introducing more nutritious food: The introduction of more nutritious food, such as millets, pulses, and oilseeds, in PDS can help achieve the twin objectives of nutrition and climate resilience.
    • Encouraging climate-resilient food: Encouraging the production of climate-resilient food crops like millets, pulses, oilseeds, etc., can help create a steady flow of nutritious food.
    • Upgrading fair price shops to Nutritious Food Hubs: At least 10% of fair price shops can be upgraded and declared as Nutritious Food Hubs (NFHs). These NFHs can have fortified, including bio-fortified, rice and wheat, millets, pulses, oilseeds (especially soyabean products with 40% protein), fortified milk and edible oils, eggs, etc.
    • Electronic vouchers for targeted beneficiaries: Consumers of PDS list may be given electronic vouchers (like an e-food coupon in a food court) that can be charged by the government three or four times a year.
    • Government assistance for upgrading NFHs: The NFHs can be upgraded with government assistance, creating demand for more diversified and nutritious food from the masses.
    • Capping the procurement of rice: The procurement of rice would have to be capped, starting with districts where the water table has been depleting alarmingly.
    • For example, Sangrur in Punjab has witnessed a fall of groundwater level by more than 25 meters during 2000-2019. Farmers of such districts could be incentivized to grow millets, pulses, oilseeds, etc., that are climate smart, use much less water and fertilizers, thus saving power and fertilizer subsidies.
    • Giving a special package for carbon credits: The Centre and the states need to join hands to give a special package for carbon credits for growing such crops. Farmers can be rewarded about Rs 10,000/acre (to be shared equally by the Centre and the state), as these crops would save that much fertilizer subsidy of the Centre and power subsidy of the state.

    Conclusion

    • The Department of Food and Public Distribution’s Chintan Shivir on leveraging PDS to offer more nutritious food is a great vision, but there are several operational challenges to provide a steady flow of these foods. Upgrading at least 10% of the fair price shops as Nutritious Food Hubs could create a demand for more diversified and nutritious food from the masses. However, capping the procurement of rice and incentivizing farmers to grow millets, pulses, and oilseeds that are climate-smart and use less water and fertilizers is necessary.

    Mains Question

    Q. How PDS can be leveraged to provided nutritious food and also help make Indian agriculture more climate resilient? Discuss along with the challenges

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    Also read:

    Food Security and Energy Crisis In The South Asian neighbourhood

     

  • National Manufacturing Innovation Survey (NMIS), 2021-22

    Central Idea: The Department of Science and Technology under the Ministry of Science & Technology has released the National Manufacturing Innovation Survey (NMIS) 2021-22.

    About National Manufacturing Innovation Survey

    Details
    Undertaken by DST and United Nations Industrial Development Organization (UNIDO)
    History First National Innovation Survey in 2011
    Focus Manufacturing competitiveness
    Purpose Innovation performance of Indian manufacturing firms
    Insights Enabling activities and identifying barriers to innovation
    Processes Examines innovation processes, outcomes, and barriers faced by firms
    State/Sector Evaluates performance of states and sectors in producing new products, services, and business processes
    Key manufacturing sectors 5 sectors: textiles; food & beverage; automotive; pharma; ICT.

     

    Components of the survey

    (1) Firm-level survey

    innovation

    • It captured data related to types of innovations and innovative measures taken by firms.
    • Includes: the process of innovation, access to finance, resources, and information for innovation, besides also recording the factors impacting the innovation activities in a firm.
    • One in four firms have successfully implemented an innovation in the observation period.
    • Over 80% of these firms benefitted significantly in expanding markets and production and reducing costs.

    (2) Sectorial System of Innovation survey

    innovation

    • It mapped the manufacturing innovation system and its role in achieving innovations in firms.
    • It measures the interactions between stakeholders of the innovation ecosystem, barriers to innovation, and the convergence or divergence of policy instruments in select 5 key manufacturing sectors important to the Indian economy.

    Key highlights

    • Karnataka is the most “innovative” State, followed by Dadra and Nagar Haveli, Daman and Diu (DNH&DD), Telangana, and Tamil Nadu.
    • Telangana, Karnataka, and Tamil Nadu had the highest share of innovative firms at 46.18% ,39.10% and 31.90%, respectively.
    • Odisha, Bihar, and Jharkhand reported the lowest share of such firms at 12.78%, 13.47% and 13.71%, respectively.
    • Nearly three-fourths of the 8,000-odd firms surveyed, most of them micro, small, and medium enterprises (MSME), neither made any innovative product nor process innovation.
    • However, nearly 80% of the firms that did report significant gains such as expanding markets and reducing production costs.

    Barriers identified

    • The most frequent “barriers to innovation” were the lack of internal funds, high innovation costs, and lack of financing from external sources.
    • Gujarat and DNH&DD reported the highest frequencies of barriers to innovation, despite being among India’s most industrialised States.

    Significance of the survey

    • It will help in the Make-in-India programme, specifically the Production Linked Incentive (PLI) schemes.
    • It will help to boost manufacturing in a variety of sectors, including electronics, pharmaceuticals, and automobiles.

     

     

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  • Golden Globe Race: Voyage of mad men

    golden globe

    Central Idea

    • Abhilash Tomy, a former Commander in the Indian Navy, has achieved the remarkable feat of completing a solo circumnavigation worldwide by finishing second at the Golden Globe Race (GGR), 2022.
    • He achieved this record under even more challenging circumstances than his previous record-breaking feat of going worldwide on a sailboat solo and unassisted back in 2013.

    golden globe

    What is Golden Globe Race?

    • The Golden Globe Race is a non-stop, solo, unassisted yacht race around the world which was held for the first time in 1968-69.
    • The race requires contestants to use boats designed to prescribed premodern specifications and rely entirely on sextants and paper charts.
    • Satellite phones are available for extremely restricted use, and the use of modern navigational gear is not allowed.
    • The sailing would be along a stipulated route, rounding the three great capes (Cape of Good Hope in South Africa, Cape Leeuwin in Western Australia, and Cape Horn in Chile).

    His return to GGR

    • After several injuries, in 2021, Tomy began to look for sponsors and boats to participate in GGR-2022.
    • He announced his participation in the race on the Bayanat in March 2022, sponsored by a UAE-based company in the field of geospatial artificial intelligence.
    • However, just three weeks before the race, the boat collided with a ship and required massive repairs.

    Significance of his achievement

    • Only three of the 11 contestants of GGR-2022 lasted the course of the race, with Kirsten Neuschafer becoming the first woman to win a solo around-the-world yacht race.
    • Tomy’s boat was the most ‘repaired’ boat in the race and it was all carried out by the sailor fighting unimaginable sea conditions and lack of sleep.
    • In the end, Tomy became the first Asian to complete the 30,000-mile GGR by finishing second after Neuschafer.

     

     

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  • A Troubling Statistic in India’s Nutritional Landscape

    nutrition

    Central Idea

    • A troubling statistic in the fifth National Family Health Survey (NFHS-5) data, conducted in 2019-21, is not well-known. Going without food for an entire day at this critical period of a child’s development raises serious concerns related to severe food insecurity.

    Statistics from the NFHS-5 data

    • Zero-food: Among mothers with a child between ages 6-23 months, 18% reported that their child did not eat any food whatsoever (“zero-food”) in the 24 hours preceding the survey. The zero-food prevalence was 30% for infants aged 6-11 months, 13% among 12-17 months old, and 8% among 18-23 months old.
    • Zero-protein: More than 80% of children in the age group of 6-23 months had not consumed any protein-rich foods for an entire day (“zero-protein”). Close to 40% of children in the age group of 6-23 months did not eat any grains (roti, rice, etc.) for an entire day.
    • Zero-milk: Six out of 10 children in the age group of 6-23 months do not consume milk or dairy of any form every day (“zero-milk”).

    The current measures for undernutrition

    • Stunting: It is a measure of chronic malnutrition, where children are too short for their age. It is determined by comparing a child’s height with the World Health Organization (WHO) child growth standards.
    • Wasting: It is a measure of acute malnutrition, where children have a low weight for their height. It is determined by comparing a child’s weight with the WHO child growth standards.
    • Underweight: It is a measure of both chronic and acute malnutrition, where children have a low weight for their age. It is determined by comparing a child’s weight with the WHO child growth standards.

    Limitations of current measures of undernutrition

    • Anthropometric measures: The assessment of the extent of nutritional deprivation among young children in India has relied on measures of anthropometric failure such as the percentage of children short for their age (stunting) or weighing less given their height (wasting), compared to a reference population. These measures are, at best, proxies suggesting plausible overall deficiencies in the child’s environment, without any guidance on the specific nature of the deficiencies. They do not provide insight into the specific food groups that are lacking in the child’s diet.
    • Multifactorial nature: Given the multifactorial nature of what causes stunting or wasting among children, it is challenging for any single ministry or department of the Government of India to take responsibility for designing, implementing and monitoring policies to reduce undernutrition among children.
    • Sensitivity: The sensitivity of the stunting prevalence to what population reference is being used makes it problematic as a policy metric for creating and evaluating the effectiveness of current programs and interventions.
    • Lack of data: The fact that we do not know what India eats highlights a core deficiency in data related to food and dietary consumption. This limits the ability to design effective policies and programs to improve nutritional security among Indians.

    Facts for prelims

    Initiative

    Description
    NFHS-5 Conducted in 2019-21, it revealed that 18% of mothers with a child between ages 6-23 months reported zero-food intake.
    Mission Poshan 2.0 A flagship programme aimed at achieving SDG 2 “zero hunger” and focuses on food-based initiatives.
    Swachh Bharat Mission (SBM) Increased access to improved toilets among Indian households from 48% to 70% between 2016 and 2021.
    Zero Food Metric A food-based metric that provides a good start to monitor and assess the performance of Poshan 2.0.
    White House initiative on hunger, nutrition and health Launched by the US to end hunger by 2030.

    Calorie intake recommendations by WHO

    • According to the World Health Organisation, at six months of age, 33 per cent of the daily calorie intake is expected to come from food. This proportion increases to 61 per cent at 12 months of age.
    • The recommended calorie percentages mentioned here are the minimum amount that should come from food.
    • It is presumed that the child obtains the remaining calories through on-demand breastfeeding, meaning the child is breastfed whenever they need it throughout the day and night, and not solely when the mother is able to provide it.
    • Consequently, the percentage of food-sourced calories only increases further when a child cannot receive breast milk when needed.

    What is the need for Poshan 2.0?

    • Achieving SDG 2: Poshan 2.0 is a flagship program that aims to achieve SDG 2, which aims to end hunger and ensure year-round access to safe, nutritious, and sufficient food by 2030.
    • Targeting maternal and child nutrition: Poshan 2.0 focuses on food-based initiatives, including its flagship supplementary nutrition program service as mandated by the 2013 National Food Security Act, to target maternal and child nutrition.
    • Developing food-based metrics: To effectively monitor and assess the performance of Poshan 2.0, there is an immediate need to develop appropriate food-based metrics to measure the extent of food insecurity among Indian households.
    • Improving nutritional security: The goal of Poshan 2.0 is to ensure affordable access to sufficient quantity and quality of nutritionally diverse food, with a special and immediate focus on India’s youngest children to improve nutritional security among Indians.
    • Establishing routine dietary and nutritional assessments: A national effort to establish routine dietary and nutritional assessments for the entire population is the need of the hour to measure the availability, accessibility, and affordability of nutritious food, especially for disadvantaged and vulnerable populations such as young children, and constitute the foundation for any evidence-based policy to end hunger and improve nutritional security among Indians.

    Way ahead

    • Elevating food intake among young children to be of primary importance, as opposed to being referred to as “complementary” in policies and guidelines related to maternal, infant and young child nutrition.
    • Extending the 24-hour recall questions on consumption of various food items to the population of children under five years to better understand food security for all populations in India.
    • Developing appropriate food-based metrics to effectively monitor and assess the performance of Mission Poshan 2.0.
    • Establishing routine dietary and nutritional assessments for the entire population to measure the availability, accessibility and affordability of nutritious food, especially for disadvantaged and vulnerable populations such as young children.
    • Consider a strategic initiative led by the Prime Minister’s Office aimed at eliminating food insecurity in India and ensuring affordable access to sufficient quantity and quality of nutritionally diverse food, with a special and immediate focus on India’s youngest children.

    Conclusion

    • Given the urgency of the situation and the critical need for prompt action to address the issue of hunger and malnutrition among Indians, it is recommended that India takes inspiration from the United States. Recently, the US launched a high-level initiative aimed at ending hunger by 2030, which could offer valuable insights and guidance to India’s efforts in this direction.

    Mains Question

    Q. Statistic in the fifth National Family Health Survey (NFHS-5) data on hunger and malnutrition is troubling. In this backdrop discuss the need for Poshan 2.0 for India.

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    A reality check on Nutrition programs

     

  • May Day and the Challenge of Regulating Working Hours

    May Day

    Central Idea

    • May 1st commemorates the historic Haymarket Square affair and is celebrated globally as International Labour Day or May Day. The day holds immense significance as it signifies the struggle of workers to secure their rights. However, the idea of reducing working hours to improve social welfare is still a dream for many in India, despite it being adopted by several countries. Instead, we see a growing trend of increasing working hours, especially in the garment and electronic industries, in the name of increasing productivity.

    Significances of International Labour Day

    • Honouring the labour movement: International Labour Day is an occasion to pay tribute to the labour movement and honour the contributions of workers worldwide.
    • Celebrating the rights of workers: The day is an opportunity to celebrate the hard-won rights of workers, including the right to fair wages, safe working conditions, and the right to form unions.
    • Advocating for workers’ rights: International Labour Day is also a platform to raise awareness about the need to protect and advocate for workers’ rights, particularly in countries where labour laws are weak or not enforced.
    • Recognizing the role of labour unions: Labour unions have played a significant role in securing better working conditions and benefits for workers. On International Labour Day, the contributions of labour unions are recognized and celebrated.
    • Promoting social justice: The day promotes social justice by advocating for fair treatment of workers, regardless of their gender, race, or other factors that may lead to discrimination or exploitation.
    • Remembrance of struggles: International Labour Day is also an opportunity to remember the struggles of workers in the past and the sacrifices made by those who fought for workers’ rights.
    • Building solidarity among workers: The day fosters a sense of solidarity among workers, encouraging them to come together to promote their rights and advocate for better working conditions.

    May Day

    What are the reasons behind growing trend of increasing working hours?

    • Global competition: Companies feel pressure to work longer hours to keep up with international competition and maintain their market share.
    • Cost-cutting: Employers may increase working hours to cut costs and boost productivity, rather than hiring more workers.
    • Increased demand: As demand for goods and services grows, companies may feel the need to work longer hours to meet that demand.
    • Technology: Advances in technology have made it easier to work remotely, leading to an expectation of being available and connected 24/7.
    • Flexibility: Employers may offer more flexible schedules, but with the expectation of working longer hours to complete tasks.
    • Emphasis on economic growth: Mainstream economists prioritize economic growth, even if it is at the expense of labor rights and human rights. They believe that working longer hours and increasing exports will lead to economic growth.
    • Subsidies and exemptions: Regional governments offer subsidies and exemptions to attract global and domestic capital, and employers may prefer weaker unions in exchange for these incentives.

    May Day

    Facts for prelims

    International Labour Day

    • International Labour Day, also known as May Day, originated in the United States in the late 19th century when labor unions and socialist movements organized demonstrations and strikes calling for better working conditions, higher wages, and an eight-hour workday.
    • On May 1, 1886, workers in Chicago organized a massive protest rally, and the following days were marked by violent clashes between police and protesters.
    • In 1889, the International Socialist Conference declared May 1 as International Workers’ Day to commemorate the Chicago protests and honor workers around the world. Since then, May Day has been celebrated globally as a day to recognize the contributions of workers and to advocate for their rights and fair treatment.

    Maharashtra day

    • May 1 is celebrated as Maharashtra Day to commemorate the formation of the state of Maharashtra.
    • On May 1, 1960, the Bombay Reorganization Act came into effect, and the state of Maharashtra and Gujarat were formed. Hence, May 1 is celebrated as Maharashtra Day in Maharashtra, India.
    • It is a public holiday in the state, and various cultural events and parades are held to mark the occasion.

    What are the concerns over increasing working hours?

    • Adversely Affecting Health: Extending working hours can lead to physical and mental fatigue, stress, and burnout, which can affect the health of the workers. This, in turn, can lead to an increase in absenteeism, accidents, and medical costs.
    • Diminishing Marginal Productivity: As the hours of work increase, the efficiency and productivity of the worker may decrease, leading to a decline in the quality of output. It can also lead to a decrease in the quality of life of the workers, as they have less time for family and leisure activities.
    • Violation of Labour Rights: Increasing working hours can be a violation of the fundamental rights of the workers, as it denies them the right to rest and leisure, which are essential for the physical and mental well-being of the workers.
    • Job Insecurity: Increasing working hours can lead to job insecurity as employers may replace workers with automation or outsourcing to cut costs. It can also lead to a decline in wages, as employers may argue that they are paying for more working hours.
    • Adverse Impact on Women Workers: Increasing working hours can disproportionately affect women workers, who may be responsible for domestic chores and childcare. Long working hours can lead to a decline in their physical and mental health and an increase in their workload, which can have an adverse impact on their family life.

    May Day

    Why it is necessary to regulate working hours?

    • Protecting workers’ health: Working long hours can have adverse effects on workers’ physical and mental health. It can lead to fatigue, stress, sleep disorders, and other health issues.
    • Ensuring safety at the workplace: Workers who are overworked may become fatigued, which can increase the risk of accidents and injuries at the workplace. Regulating working hours can help ensure a safe and healthy work environment.
    • Promoting work-life balance: Long working hours can negatively impact workers’ personal lives, reducing their time with family and friends, and limiting their ability to engage in other activities outside of work. Regulating working hours can help promote a healthy work-life balance.
    • Enhancing productivity: Research has shown that working long hours can lead to a decline in productivity and an increase in errors and accidents. By regulating working hours, employers can ensure that workers are well-rested and productive.
    • Protecting workers’ rights: Regulating working hours is an essential component of protecting workers’ rights. It helps to prevent exploitation and ensures that workers are compensated fairly for their time and labor.

    Conclusion

    • May Day serves as a reminder of the struggle of workers for their rights. In this context, India must prioritize the welfare of its labour force and regulate working hours to improve their social welfare. The government must ensure that labour laws are not weakened, and trade unions must unite to ensure that the rights of workers are protected. Multinational corporations must be held accountable for skilling their workers and not exploiting the cheap labour offered by developing countries. Only then can India move towards inclusive and sustainable development.

    Mains Question

    Q. There is a growing trend of increasing working hours, especially in the garment and electronic industries, in the name of increasing productivity. Discuss the reasons and discuss why it is necessary to regulate working hours?

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    Also read:

    Why May 1 is observed as Labour Day?

  • Sustainable Development Goals (SDGs): India’s Progress Analysis

    SDGs

    Central Idea

    • India’s Prime Minister Narendra Modi, while addressing the first meeting of Finance Ministers and Central Bank Governors under India’s G20 Presidency, expressed concern about the slowing down of Sustainable Development Goals (SDGs). Given India’s large population, the success of achieving these goals is crucial for global progress. While India has made progress towards achieving some SDG targets, there are concerns regarding others.

    SDGs

    India’s progress on SDG’s

    • Neonatal and under-five mortality: India is on target to meet the SDG indicators for neonatal and under-five mortality. Both indicators have substantially improved in the last five years.
    • Full vaccination: India is on target to meet the SDG indicator for full vaccination.
    • Improved sanitation: India is on target to meet the SDG indicator for improved sanitation. The country has made significant progress in this area in the last five years.
    • Electricity access: India is on target to meet the SDG indicator for electricity access.
    • Access to banking: The number of women having bank accounts has improved across a vast majority of the districts between the years 2016 and 2021.
    • Adolescent pregnancy: The SDG indicator for eliminating adolescent pregnancy has improved across a vast majority of the districts between the years 2016 and 2021.
    • Multidimensional poverty: The SDG indicator for reducing multidimensional poverty has improved across a vast majority of the districts between the years 2016 and 2021.
    • Women’s well-being and gender equality: India has made progress in increasing mobile phone access, with 93% of households having access to mobile phones. However, only 56% of women report owning a mobile phone.

    Facts for prelims

    Recent findings by National Family Health Survey

    • Multidimensional poverty declined: At a compounded annual average rate of 4.8 per cent per year in 2005-2011 and more than double that pace at 10.3 per cent a year during 2011-2021.
    • Declining child mortality: There are some issues with the 2011 child-mortality data, but for each of the 10 components of the MPI index, the rate of decline in 2011-2021 is considerably faster than in 2005-2011.
    • Average decline in overall indicators: The average equally weighted decline for nine indicators was 1.9 per cent per annum in 2005-2011 and a rate of 16.6 per cent per annum, more than eight times higher in 2011-2021.
    • Consumption inequality decline: Every single household survey or analysis has shown that consumption inequality declined during 2011-2021. This is consistent with the above finding of highly inclusive growth during 2011-2021.

    Lessons from COVID-19 Approach

    • Leadership: Strong political leadership and responsive administrative structure are critical to success, and India’s COVID-19 response demonstrated that a mission-oriented ethos that provides adequate support for accomplishing district-level SDGs is urgently needed.
    • Infrastructure and Coordination: India’s success with COVID-19 was largely possible both because of the existing digital infrastructure, as well as new, indigenous initiatives such as the Co-WIN data platform and the Aarogya Setu application. Following these examples, India must put in place a coordinated, public data platform for population health management.
    • Targeted delivery: A targeted SDG strategy delivered at scale must be executed with the same timeliness of India’s COVID-19 relief package. Key to this relief programme was a mix of spending to provide direct in-kind and economic support, as well as measures aimed at revitalising the economy, small businesses, and agriculture.

    Concerns regarding India’s progress towards achieving SDGs

    • Unequal progress across districts: While India is on target to meet 14 out of 33 SDG indicators, the progress is not uniform across all districts.
    • For example: neonatal and under-five mortality rates are on target for the country as a whole, but many districts are not on track to meet these indicators.
    • Pace of improvement: The current pace of improvement is not sufficient to meet the SDG targets for 19 out of 33 indicators.
    • For instance: despite a national policy push for clean fuel for cooking, more than two-thirds of districts remain off-target for this indicator.
    • Gender inequality: India is facing significant challenges in achieving gender-related SDG targets.
    • For example: no district in India has yet succeeded in eliminating the practice of girl child marriage before the legal age of 18 years. Also, despite the overall expansion of mobile phone access in India, only 56% of women report owning a mobile phone, with many districts remaining off-target for this indicator.
    • Multidimensional poverty: Although India has made progress in reducing multidimensional poverty, many districts are still off-track to meet this SDG indicator.
    • Environmental sustainability: India has made progress in some areas related to environmental sustainability, such as improved sanitation and access to electricity. However, the country is still off-target for indicators related to clean cooking fuel, water and handwashing facilities, and reducing greenhouse gas emissions.

    Way ahead

    • Implement targeted policies and programs that are aligned with the SDG goals, particularly for areas where progress has been slow or lacking.
    • Improve the digital infrastructure, and create a coordinated public data platform for population health management.
    • Ensure strong and sustained political leadership that is supported by a responsive administrative structure at all levels.
    • Prioritize and accelerate efforts to address gender inequality and women’s well-being.
    • Strengthen implementation and monitoring mechanisms to ensure timely and effective delivery of SDG policies and programs.
    • Foster partnerships between government, civil society, and the private sector to mobilize resources and expertise to achieve SDG targets.
    • Develop a decadal plan that outlines concrete steps and targets for achieving SDG goals in the next ten years.

    SDGs

    Conclusion

    • India needs to innovate a new policy path to achieve its SDG targets, especially those related to population health and well-being, basic quality infrastructure, and gender equality. India’s successful COVID-19 response has shown that it is possible to deliver at scale in such an ambitious and comprehensive manner. To achieve SDG targets, India needs a similar concerted, pioneering, and nationwide effort.

    Mains Question

    Q. India’s progress towards SDGs id often described as mixed progress. While there have been positive improvements, there are still concerns that needs to be addressed. Discuss along with a way ahead.

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    Also read:

    A recent analysis published in The Lancet has concluded that India is not on-target to achieve 19 of the 33 Sustainable Development Goals (SDGs) indicators.