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GS Paper: GS3

  • Kuznets Hypothesis and India’s unique Jobs Crisis

    In India, there are fewer people employed in agriculture today, but the transformation has been weak. Those moving out of farms are working more in construction sites and the informal economy than in factories.

    What is the news?

    • India has too many people in agriculture and the inability to move surplus labour from farms constitutes a major policy failure of successive governments.
    • In 1993-94, agriculture accounted for close to 62% of the country’s employed labour force.
    • Overall, between 1993-94 and 2018-19, agriculture’s share in India’s workforce came down from 61.9% to 41.4%.
    • In other words, roughly a third in 25 years. That isn’t insignificant.
    • The declining trend continued, albeit at a slower pace, in the subsequent seven as well.

    What is our point of analysis?

    • Even the movement of workforce from agriculture that India has witnessed over the past three decades or more does not qualify as what economists call “structural transformation”.
    • Such transformation would involve the transfer of labour from farming to others sectors – particularly manufacturing and modern services – where productivity, value-addition and average incomes are higher.
    • The surplus labour pulled out from the farms is being largely absorbed in construction and services.
    • The bulk of the jobs are in petty sectors such as retailing, small eateries, domestic help, sanitation, security staffing, transport and similar other informal economic activities.
    • This is also evident from the low, if not declining, share of employment in organised enterprises, defined as those engaging 10 or more workers.

    What is the crux of the story?

    • Simply put, the structural transformation process in India has been weak and deficient.
    • Yes, there is movement of labour taking place away from farms – even if stalled, possibly temporarily.
    • But that surplus labour isn’t moving to higher value-added non-farm activities, specifically manufacturing and modern services.
    • This is familiar to the ‘Kuznets Process’ named after the American economist and 1971 Nobel Memorial Prize winner, Simon Kuznets.

    What is Kuznets’ Hypothesis?

    • In the 1950s and 1960s, Simon Kuznets hypothesized that as an economy develops, market forces first increase and then decrease the overall economic inequality of the society.
    • This is illustrated by the inverted U-shape of the Kuznets curve.
    • For instance, the hypothesis holds that in the early development of an economy, new investment opportunities increase for those who already have the capital to invest.
    • These new investment opportunities mean that those who already hold the wealth have the opportunity to increase that wealth.
    • Conversely, the influx of inexpensive rural labor to the cities keeps wages down for the working class thus widening the income gap and escalating economic inequality.

    Basis of this hypothesis

    • The Kuznets curve implies that as a society industrializes, the center of the economy shifts from rural areas to the cities as rural laborers, such as farmers, begin to migrate seeking better-paying jobs.
    • This migration, however, results in a large rural-urban income gap and rural populations decrease as urban populations increase.
    • But according to Kuznets’ hypothesis, that same economic inequality is expected to decrease when a certain level of average income is reached.
    • This process is triggered by the processes associated with industrialization, such as democratization and the development of a welfare state, take hold.
    • It is at this point in economic development that society is meant to benefit from trickle-down effect and an increase in per-capita income that effectively decreases economic inequality.

    What does the inverted Kuznets Curve mean?

    • The inverted U-shape of the Kuznets curve illustrates the basic elements of the Kuznets’ hypothesis with income per capita graphed on the horizontal x-axis and economic inequality on the vertical y-axis.
    • The graph shows income inequality following the curve, first increasing before decreasing after hitting a peak as per-capita income increases over the course of economic development.

    Criticism of the theory

    • Critics say that the Kuznets curve does not reflect an average progression of economic development for an individual country.
    • Rather it is a representation of historical differences in economic development and inequality between countries in the dataset.
    • It suits to the countries that have had histories of high levels of economic inequality as compared to their counterparts in terms of similar economic development.
    • The critics hold that when controlling for this variable, the inverted U-shape of the Kuznets curve begins to diminish.

     

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  • Over 59 lakh cases pending in High Courts: Law Minister

    Over 59 lakh cases were pending in the High Courts until July 22, Law Minister said in a written reply in Rajya Sabha.

    What else?

    • There are serving women judges in various courts, including 4 in the Supreme Court and 96 in the High Courts, as of July 25.

     Indian Judiciary: A Backgrounder

    • Our Judicial system has been the nation’s moral conscience keeper.
    • It speaks truth to political power, upholds the rights of citizens, mediates between Centre-state conflicts, provides justice to the rich and poor alike, and on several momentous occasions, saved democracy itself.
    • Despite its achievements, a gap between the ideal and reality has been becoming clear over the years.
    • The justice delivery is slow, the appointment of judges is mired in controversy, disciplinary mechanisms scarcely work, hierarchy rather than merit is preferred, women are severely under-represented, and constitutional matters often languish in the Supreme Court for years.
    • As Justice Chelameswar said in his dissent in the NJAC judgment, the courts must reform, so that they can preserve.

    Challenges to the judicial system

    • Lack of infrastructure of courts
    • High vacancy of judges in the district judiciary
    • Pendency of Cases
    • Ineffective planning in the functioning of the courts
    • Delay in the delivery of judgements
    • Lack of transparency in appointments and transfers.
    • Corruption
    • Undertrials serving Jail
    • Outdated laws ex. Section 124A IPC

    What led to the underperformance of the Indian Judiciary?

    The primary factors contributing to docket explosion and arrears as highlighted by the Justice Malimath Committee report are as follows:

    • Population explosion
    • Litigation explosion
    • Hasty and imperfect drafting of legislation
    • Plurality and accumulation of appeals (Multiple appeals for the same issue)
    • Inadequacy of judge strength
    • Failure to provide adequate forums of appeal against quasi-judicial orders
    • Lack of priority for disposal of old cases (due to the improper constitution of benches)

    Recent developments:

    Proposal for the creation of National Judicial Infrastructure Corporation (NJIC)

    • The CJI has pitched to set up a National Judicial Infrastructure Corporation (NJIC) to develop judicial infrastructure in trial courts.
    • He indicated a substantial gap in infrastructure and availability of basic amenities in the lower judiciary.
    • There is a dearth of court halls, residential accommodation, and waiting rooms for litigants in trial courts, especially in smaller towns and rural areas.
    • Experience shows that budgetary allocation for state judiciary often lapses since there is no independent body to supervise and execute such works.
    • NJIC is expected to fill this vacuum and overcome problems related to infrastructure.

    Way forward

    • Creating NJIC: It will bring a revolutionary change in the judicial functioning provided the proposed body is given financial and executive powers to operate independently of the Union and the State governments.
    • Appointment reforms: There are many experts who advocate the need to appoint more judges with unquestionable transparency in such appointments.
    • Creating All Indian Judiciary Services: It would be a landmark move to create a pan-India Service that would result in a wide pool of qualified and committed judges entering the system.
    • Technology infusion: The ethical and responsible use of AI and ML for the advancement of efficiency-enhancing can be increasingly embedded in legal and judicial processes. Ex. SUPACE.
    • Legal education: This should be in alignment with the evolving dynamics of the law and must be propagated in trial and constitutional courts. This will improve the competence of the judicial system.
    • Alternate Dispute Resolution (ADR): ADR mechanisms should be promoted for out-of-court settlements. Primary courts of appeal should be set up.

     

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  • Dwindling fighter strength of the IAF

    In a tragic accident, a MIG-21 trainer jet of the Indian Air Force (IAF) crashed in Rajasthan killing both the high-ranked officer pilots onboard.

    What is the status of the MIG-21 jets in the IAF?

    • The MIG-21 was inducted into the IAF in the early 1960s and since then more than 800 variants of the supersonic fighter were inducted into service.
    • It remained the frontline fighter jet of the force for a long time.
    • During this period, there were over 400 accidents involving the jet which claimed the lives of around 200 pilots.

    Nature of service

    • Currently, there are four MIG-21 squadrons in service consisting of the upgraded Bison variant.
    • IAF officials have stated that there is technical life still left in them.
    • There are only four squadrons of the MIG-21 aircraft.

    Why use outdated aircraft?

    • With delays in new inductions, the IAF has been forced to continue the last four MIG-21 Bison squadrons in service.
    • One squadron is set to be phased out in the next few months, while the remaining three squadrons are planned to be phased out in the next three years.
    • This phase-out was worked out much before last week’s tragic incident.

    What is the present fighter strength of the IAF?

    • The IAF has an authorized strength of 42 fighter squadrons.
    • As time passes, the drawdown is increasing as the total technical life is completed.
    • However, the rate of new inductions is not matching the drawdown, depleting the overall number of fighter squadrons.
    • Additionally, several frontline aircraft in the inventory including the Jaguars, and MIG-29s will begin phasing out by the end of the decade.
    • For instance, by 2027-28 the first of the MIG-29s, inducted in the late 1980s, will start going out.

    New squadrons to be inducted

    • In the last few years, the IAF has inducted two squadrons of the indigenous Light Combat Aircraft (LCA) Tejas and two squadrons of Rafale fighter jets procured from France which pushed the squadron strength to 32.
    • In January 2021, the IAF had signed a contract with Hindustan Aeronautics Limited (HAL) for 83 of the more advanced LCA MK-1A which it will start receiving from early 2024 onwards.
    • Along with that the to-be-acquired 114 Multi-Role Fighter Aircraft (MRFA) will help arrest the drawdown.
    • A larger and even more capable LCA-MK2, as well as the fifth generation Advanced Medium Combat Aircraft (AMCA), are under development.
    • However, their availability in enough numbers will take some time.

    Inherent limitations to the IAF

    • Hardware/Technological Challenges: Technology is at the core of an air force – acquiring and assimilating it is our primary challenge. The lack of it curtails national options, impacting postures and doctrines. Denial and selective availability of technology are all enmeshed in international relations.
    • Maintenance Challenges: Maintenance challenges determine how long aircrafts last and their cost-effectiveness. ‘Maintainability’, which includes logistical issues, is therefore, crucial.
    • Relying on Upgrades: IAF is badly in need of new Fighter Aircraft to compete with new 5th generation Modern jets. At current there are old aircraft and it is mostly dependant on Super Manoeuvrable Modern Generation Fighter Jet Su 30 MKI.
    • Delaying of Aircraft Delivery: The current order of IAF the Rafale is expected to be completed in 2024. The LCA Tejas of HAL has now produced 21 but still it has to manufacture in more number to replace the retiring MIG 21 BISON.

    Roadmap to shore up fighter strength

    • No easy roadmap: The IAF has acknowledged that they will not be able to achieve the desired strength for the time being and that they are doing the best they can.
    • Indigenous aircraft: In addition to the indigenous aircraft coming up, the IAF is confident that increasing the low availability rates of Su-30 and other fighters in service will offset some of the shortfalls in the interim.
    • Offsets of war: This could be potentially impacted due to the war in Ukraine even though officials have said that they are assessing the impact of the war and western sanctions.

    Way forward

    • Air power is becoming technologically more refined with unmanned platforms, cyber-space linkages and AI advances.
    • The inherent trans-border nature of this military capability needs astute professional and political husbanding.
    • Acquiring credible aerospace power with a meaningful degree of indigenization will need a greater degree of national resolve, professional integrity and resource allocation than is the case now.
    • China has demonstrated the degree of suasion and intimidation that airpower can bring to bear in relation to Taiwan.

     

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  • AlphaFold: AI-based Protein Structure Prediction Tool

    DeepMind, a company based in London and owned by Google, announced that it had predicted the three-dimensional structures of more than 200 million proteins using AlphaFold.

    This is the entire protein universe known to scientists today.

    What is AlphaFold?

    • AlphaFold is an AI-based protein structure prediction tool.
    • It is based on a computer system called deep neural network.
    • Inspired by the human brain, neural networks use a large amount of input data and provide the desired output exactly like how a human brain would.
    • The real work is done by the black box between the input and the output layers, called the hidden networks. AlphaFold is fed with protein sequences as input.
    • When protein sequences enter through one end, the predicted three-dimensional structures come out through the other.
    • It is like a magician pulling a rabbit out of a hat.

    How does AlphaFold work?

    • It uses processes based on “training, learning, retraining and relearning.”
    • The first step uses the available structures of 1,70,000 proteins in the Protein Data Bank (PDB) to train the computer model.
    • Then, it uses the results of that training to learn the structural predictions of proteins not in the PDB.
    • Once that is done, it uses the high-accuracy predictions from the first step to retrain and relearn to gain higher accuracy of the earlier predictions.
    • By using this method, AlphaFold has now predicted the structures of the entire 214 million unique protein sequences deposited in the Universal Protein Resource (UniProt)

    What are the implications of this development?

    • Proteins are the business ends of biology, meaning proteins carry out all the functions inside a living cell.
    • Therefore, knowing protein structure and function is essential to understanding human diseases.
    • Scientists predict protein structures using x-ray crystallography, nuclear magnetic resonance spectroscopy, or cryogenic electron microscopy.
    • These techniques are not just time-consuming, they often take years and are based mainly on trial-and-error methods.
    • The development of AlphaFold changes all of that.
    • It is a watershed movement in science and structural biology in particular.

    What does this development mean for India?

    • Vaccine development: Understanding the accurate structures of COVID-19 virus proteins in days rather than years will accelerate vaccine and drug development against the virus.
    • Structural biology: From the seminal contribution of G. N. Ramachandran in understanding protein structures to the present day, India is no stranger to the field and has produced some fine structural biologists.

    Back2Basics: Proteins

    • Protein is found throughout the body—in muscle, bone, skin, hair, and virtually every other body part or tissue.
    • It makes up the enzymes that power many chemical reactions and the hemoglobin that carries oxygen in your blood.
    • At least 10,000 different proteins make you what you are and keep you that way.
    • Protein is made from twenty-plus basic building blocks called amino acids.
    • Because we don’t store amino acids, our bodies make them in two different ways: either from scratch or by modifying others.
    • Nine amino acids—histidine, isoleucine, leucine, lysine, methionine, phenylalanine, threonine, tryptophan, and valine—known as the essential amino acids, must come from food.
    • Chemically, amino acids are organic compounds made of carbon, hydrogen, nitrogen, oxygen or sulfur.
    • There are seven types of proteins: antibodies, contractile proteins, enzymes, hormonal proteins, structural proteins, storage proteins, and transport proteins.

     

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  • RBI and the rupee: To break a free fall or not to

    Context

    The Indian rupee has been in free fall. Some commentators have pointed out that it has fallen less against the US dollar than a lot of other currencies.

    Significance of foreign exchange reserves

    • Decline by 10 per cent: A large part of the current relative strength of the rupee vis-à-vis other currencies is due to the sale of dollars by the RBI — it has lost more than 10 per cent of its foreign reserves in the space of about nine months.
    • Why country needs foreign exchange: A developing economy needs foreign exchange to finance its international transactions for both the current account (goods and services) and capital account (assets) transactions.
    • Cost involved: The benefits of this stock are obvious, but there are also costs associated with the holding of these.
    •  The larger the stock, the more its reassuring value.
    • Typically, because of their “liquid” nature, the returns on these are low.

    How RBI manages the foreign exchange reserves?

    • How country accumulates foreign exchange reserves? A country can accumulate reserves by running current account surpluses that is, keeping its total expenditure below its gross national product, and/or by interventions in the foreign exchange markets.
    • India (usually) runs a current account deficit.
    • Its reserves are then accumulated solely through “sterilised” interventions.
    • When foreign entities want to invest in Indian assets (stocks and debt), the RBI gives them rupees in exchange for foreign exchange.
    • Mindful of the fact that this may cause a surge in inflation, the RBI then sells government bonds, sucking out the additional rupees.
    • The foreign exchange reserves rise, and are matched by an increase in government bonds outstanding.

    How outflow of foreign financial capital affects foreign exchange reserves?

    • When capital inflows were taking place, the RBI accumulated foreign exchange and allowed some currency appreciation.
    • As long as capital flows were strong, foreign reserves kept piling up and the currency (in real terms) was strong.
    • Depreciation of rupee: In recent months, we have witnessed an outflow of foreign financial capital, with reserves falling and the rupee depreciating.
    • International capital flows tend to be pro-cyclical, that is, they move with the world economic activity.
    • Unlikely to increase export: A depreciation of our currency is unlikely to see our exports rise very much because the world income levels are down.
    • Inflation: What this depreciation will cause is imported inflation and bankruptcies.

    Analysing the RBI’s role

    • Allowed outward remittances: The RBI threw caution to the winds and allowed outward remittances in foreign currency by Indian residents, with almost no questions asked (up to $2,50,000 annually). 
    • The RBI could have had a much larger supply of foreign exchange had they not generously handed out foreign currency to be frittered away.
    • While they have not restricted outward remittances, they are trying to shore up reserves by making FCNR (B) and FRE deposits more attractive.
    • It is not in any individual’s interest to bail out the RBI.
    • The RBI has also committed to using reserves to ensure an orderly depreciation.
    • Futility of RBI’s intervention: If the world financial markets want a depreciated rupee, the RBI’s intervention would not be able to prevent it.
    • But in spite of this, the RBI, with its commitment to inflation targeting, would try to prevent a depreciation (because it causes the price of imported goods to rise).
    • Possible impact on the poor: Having too open a capital account policy was always fraught with risks.
    • When countries are confronted with a crisis, the IMF is asked to provide assistance.
    • But assistance from IMF would involve a “structural adjustment”, including cutting back on subsidies for the poor and vulnerable.

    Conclusion

    We are standing at the edge of a precipice, but, hopefully, the world will pull back in the nick of time. If not, it would be the chronicle of a death foretold.

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    Back2Basics: FCNR(B) Account

    • An FCNR ( Foreign Currency Non-resident) account is a type of term deposit that NRIs can hold in India in a foreign currency.
    • FCNR (A) was introduced in 1975 to encourage NRI deposits.
    • The Reserve Bank of India (RBI) guaranteed the exchange rate prevalent at the time of a deposit to eliminate risk to depositors.
    • In 1993, the apex bank introduced FCNR (B), without exchange rate guarantee, to replace FCNR (A).

  • Manufacturing PMI hits 8-month high

    India’s manufacturing sector rebounded in July, with sales and output growing at the fastest pace since November. The PMI quickened last month to 56.4, from June’s 9-month low of 53.9.

    Purchasing Managers’ Index (PMI)

    • PMI is an indicator of business activity — both in the manufacturing and services sectors.
    • It is a survey-based measure that asks the respondents about changes in their perception of some key business variables from the month before.
    • It is calculated separately for the manufacturing and services sectors and then a composite index is constructed.
    • The PMI is compiled by IHS Markit based on responses to questionnaires sent to purchasing managers in a panel of around 400 manufacturers.

    How is the PMI derived?

    • The PMI is derived from a series of qualitative questions.
    • Executives from a reasonably big sample, running into hundreds of firms, are asked whether key indicators such as output, new orders, business expectations and employment were stronger than the month before and are asked to rate them.

    How does one read the PMI?

    • A figure above 50 denotes expansion in business activity. Anything below 50 denotes contraction.
    • Higher the difference from this mid-point greater the expansion or contraction. The rate of expansion can also be judged by comparing the PMI with that of the previous month data.
    • If the figure is higher than the previous month’s then the economy is expanding at a faster rate.
    • If it is lower than the previous month then it is growing at a lower rate.

    What are its implications for the economy?

    • The PMI is usually released at the start of the month, much before most of the official data on industrial output, manufacturing and GDP growth becomes available.
    • It is, therefore, considered a good leading indicator of economic activity.
    • Economists consider the manufacturing growth measured by the PMI as a good indicator of industrial output, for which official statistics are released later.
    • Central banks of many countries also use the index to help make decisions on interest rates.

     

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  • E-waste management

    A proposed framework by the Centre for regulating e-waste in India has upset a key link of India’s electronic waste collection system and threatens the livelihood of thousands of people.

    Menace of E-Waste in India

    • Electronic waste, or electronic goods that are past their productive life and old parts, is largely handled by India’s vast informal sector.
    • Spent goods are dismantled and viable working parts refurbished, with the rest making their way into chemical dismantling units.
    • Many of these units are run out of unregulated sweatshops that employ child labour and hazardous extraction techniques.

    Remedy against this: Extended Producer Responsibility (EPR)

    • To address all of this, the Environment Ministry brought the E-waste (Management) Rules, 2016.
    • This introduced a system of Extended Producer Responsibility (EPR) compelling makers of electronic goods to ensure a proportion of the goods they sold every year was recycled.
    • They are expected to maintain records annually demonstrating this.
    • Most companies however did not maintain an in-house unit in charge of recycling and this gave rise to a network of government-registered companies, called Producer Responsibility Organisations (PRO).

    How PROs work?

    • PROs act as an intermediary between manufacturers and formal recycling
    • They are (expected to be) technologically equipped to recycle end-of-life electronic goods safely and efficiently.
    • The PROs typically bid for contracts from companies and arrange for specified quantities of goods to be recycled.
    • They provide companies certified proof of recycling that they then maintain as part of their records. Several PROs work on consumer awareness and enable a supply chain for recycled goods.

    Functional PROs in India

    • As of March 2022, the Central Pollution Control Board (CPCB) has registered 74 PROs and 468 authorised dismantlers.
    • They have a collective recycling capacity of about 1.3 million tonnes.

    What is the extent of E-Waste production in India?

    • The Ministry estimated 7.7 lakh tonnes of e-waste to have been generated in 2018-19.
    • Around one million tonnes in 2019-20 of which only a fifth (about 22% in both years) has been confirmed to be “dismantled and recycled”.

    What is the controversy now?

    • This May, the Ministry issued a draft notification that does away with the PROs and dismantlers and vests all responsibility of recycling with authorised recyclers.
    • Only a handful of authorised recyclers exist in India.
    • Recyclers will source a quantity of waste, recycle them and generate electronic certificates.
    • Companies can buy these certificates equivalent to their annual committed target and thus do not have to be involved with engaging the PROs and dismantlers.
    • Dismantling a fledgling system was detrimental to the future of e-waste management in India.

    What is the rationale behind?

    • The Centre has not explained its rationale for dismantling the existing system in its draft notification.
    • However, a final policy is yet to emerge.
    • The new rules would track the material that went in for recycling with the output claimed by a recycler when they claimed GST (Goods and Services Tax) input credit.

    Also read this comprehensive article:

    [Yojana Archive] E-waste Management

     

    Try this PYQ:

    Q.In India, ‘extended producer responsibility’ was introduced as an important feature in which of the following?

    (a) The Bio-medical Waste (Management and Handling) Rules, 1998

    (b) The Recycled Plastic (Manufacturing and Usage) Rules, 1999

    (c) The e-Waste (Management and Handling) Rules, 2011

    (d) The Food Safety and Standard Regulations, 2011

     

    [wpdiscuz-feedback id=”soxwqxn8gi” question=”Please leave a feedback on this” opened=”1″]Post your answers here.[/wpdiscuz-feedback]

     

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  • Uncontrolled Descent of Space Debris

    A Chinese booster rocket made an uncontrolled return to earth, leading to US furore against Beijing for not sharing information about the potentially hazardous object’s descent.

    Yet another Chinese irresponsibility

    • Ending over a week of global anxiety and alarm, the debris from a large Chinese rocket – the Long March 5B — crashed to earth over the Pacific and the Indian oceans.
    • It felt into the Sulu Sea near Malaysia.
    • The 22-tonne core stage of the rocket hurtled uncontrollably back to earth. There were fears that it might hit a populated area.
    • China, however, had dismissed these fears despite widespread criticism for rocket re-entry risks imposed by it on the world.

    What is an Uncontrolled Re-entry?

    • Generally, the core or first stage of a rocket is made up of heavy pieces that usually don’t reach orbit after liftoff, and fall back safely along a near-precise projected trajectory.
    • If they do enter an orbit, then a costly de-orbit manoeuvre is required for a steered, controlled return using engine burn.
    • Without a de-orbit manoeuvre, the orbital core stage makes an uncontrolled fall.

    Why did it fell back?

    • Gigantic remnants from China’s Long March 5B rockets’ core stage are known to make such fiery, out-of-control descents back to earth.
    • Most nations’ rockets, separate the launcher from the payload before leaving the atmosphere.
    • An extra engine then gives the payload a final boost.
    • But China’s 5B series does NOT use a second engine and pushes right into orbit, the report points out.

    Why is it difficult to track uncontrolled descents?

    • The variables involved make it difficult to precisely track the re-entry time and drop zone of rocket debris in uncontrolled descents.
    • The factors that make this prediction extremely challenging include atmospheric drag, variations in solar activity, angle and rotational variation of the object among others.
    • A miscalculation of even a minute in re-entry time could result in the final resting place of the debris changing by hundreds of kilometres.
    • It’s important to understand that among the 10 tough things that we do in space, debris re-entry is probably one of the toughest ones to predict.

    Are there laws regulating space junk?

    Yes. The Space Liability Convention of 1972.

    • It defines responsibility in case a space object causes harm.
    • The treaty says that a launching State shall be absolutely liable to pay compensation for damage caused by its space objects on the surface of the earth or to aircraft, and liable for damage due to its faults in space.
    • The Convention also provides for procedures for the settlement of claims for damages.
    • However, there is no law against space junk crashing back to earth.
    • In April this year, suspected debris from a Chinese rocket was found in two Maharashtra villages.

    Cases of settlements

    • In 1979, the re-entry of NASA’s 76-ton Skylab had scattered debris over uninhabited parts of Australia, and the space agency was fined $400 for littering by a local government.
    • The only settlement using the Liability Convention was between the erstwhile Soviet Union and Canada over the debris of Soviet Cosmos 954 falling in a barren region.
    • Canada was paid CAD 3 million in accordance with international law for cleaning up the mess.

    Do you know?

    The 1979 Skylab was rumoured to be falling in India. We may ask our parents who were apparently kids at that time. The event was widely perceived as a Pralay (doomsday) in rural India back then! People were in all joy with festive food/partying every day fearing so that they would never see the next dawn!!

  • Exercise AL NAJAH-IV

    India and Oman will carry out a 13-day military exercise with a focus on counter-terror cooperation.

    Exercise AL NAJAH-IV

    • This is the fourth edition of India-Oman joint military exercise ‘AL NAJAH-IV’.
    • It is held between contingents of Indian Army and the Royal Army of Oman is scheduled to take place at the Foreign Training Node of Mahajan Field Firing Ranges.
    • The previous edition of the exercise was organised in Muscat in March 2019.
    • The scope of the exercise includes “professional interaction, mutual understanding of drills and procedures, the establishment of joint command and control structures and elimination of terrorist threats”.

    India-Oman Relations: A Backgrounder

    • The Sultanate of Oman is a strategic partner of India in the Gulf.
    • Both nations are linked by geography, history and culture and enjoy warm and cordial relations.
    • An Indian consulate was opened in Muscat in February 1955 which was upgraded to a consulate general in 1960 and later into a full-fledged embassy in 1971.
    • The first ambassador of India arrived in Muscat in 1973.

    History of the ties

    • Oman, for many years, was ruled by Sultan Qaboos bin Said al Said, who was a friend of India.
    • Sultan Qaboos, the longest-reigning leader of the modern Arab world, died in January ‘2020 at the age of 79.
    • He was a man who was, as a student, taught by Shankar Dayal Sharma who went on to become the President of India.
    • Sultan Qaboos’s father, an alumnus of Ajmer’s Mayo College, sent his son to study in Pune for some time, where he was former President Shankar Dayal Sharma’s student.

    Economic ties

    • Expatriate community: Oman has over five hundred thousand Indian nationals living there making them the largest expatriate community in Oman. They annually remit $780 million to India.
    • Bilateral trade: In 2010, bilateral trade between India and Oman stood at $4.5 billion. India was Oman’s second-largest destination for its non-oil exports and its fourth-largest source for Indian imports.
    • Energy: India has been considering the construction of a 1,100-km-long underwater natural gas pipeline from Oman called the South Asia Gas Enterprise (SAGE).

    Defense cooperation

    Oman is the first Gulf nation to have formalized defense relations with India.

    • Naval cooperation: The Indian Navy has berthing rights in Oman, and has been utilizing Oman’s ports as bases for conducting anti-piracy operations in the Gulf of Aden.
    • Tri-services base: In February 2018, India announced that it had secured access to the facilities at Duqm for the Indian Air Force and the Indian Navy. Duqm had previously served as a port for the INS Mumbai.
    • Arms trade: The standard issue rifle of the Royal Army of Oman is India’s INSAS rifle.
    • Bilateral exercises: Naseem al-Bahr (Arabic for Sea Breeze) is a bilateral maritime exercise between India and Oman. The exercise was first held in 1993.

    Significance of Oman for India

    • Oman is India’s closest defense partner in the Gulf region and an important anchor for India’s defense and strategic interests.
    • It is the only country in the Gulf region with which all three services of the Indian armed forces conduct regular bilateral exercises and staff talks, enabling close cooperation and trust at the professional level.
    • It also provides critical operational support to Indian naval deployments in the Arabian sea for anti-piracy missions.

    Duqm port and its strategic imperative

    • In a strategic move to expand its footprint in the Indian Ocean region, India has secured access to the key Port of Duqm in Oman for military use and logistical support.
    • This is part of India’s maritime strategy to counter Chinese influence and activities in the region.
    • The Port of Duqm is strategically located, in close proximity to the Chabahar port in Iran.
    • With the Assumption Island being developed in Seychelles and Agalega in Mauritius, Duqm fits into India’s proactive maritime security roadmap.
    • In recent years, India had deployed an attack submarine to this port in the western Arabian Sea.

    Deterrent in ties: Chinese influence in Oman

    • China started cultivating ties with the Arab countries following the former Soviet Union’s invasion of Afghanistan.
    • Beijing has cultivated close ties with Oman and the latter was, in fact, the first country to deliver oil to China.
    • As of today, 92.99 per cent of Oman’s oil exports go to China, making China Oman’s largest oil importer.
    • Oman and China signed an agreement to establish an Oman-China Industrial Park at Duqm in 2016.
    • China has identified Oman as a key country in the region and has been enhancing defence ties with it steadily.

    Way forward

    • India does not have enough energy resources to serve its current or future energy requirements. The rapidly growing energy demand has contributed to the need for long term energy partnerships with countries like Oman.
    • Oman’s Duqm Port is situated in the middle of international shipping lanes connecting East with West Asia.
    • India needs to engage with Oman and take initiatives to utilise opportunities arising out of the Duqm Port industrial city.

     

     

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  • Government bailouts are not the answer to India’s energy sector woes

    Context

    Across several states, the fiscal situation is becoming increasingly challenging. Yet, the common thread that runs through these deficits — state ownership and control — remains unaddressed.

    State ownership: structural cause of India’s deficit

    • Coal India’s inability to raise production to meet growing demand contributed to the recent power crisis.
    • The state-owned power distribution companies have failed to bring down losses despite many schemes and packages.
    • The state control of these critical aspects of India’s power chain is central to a higher current account deficit and growing fiscal risks at the state level.

    Coal output fails to meet the demand

    • From 2013-14, the Indian economy has grown by around 50 per cent (in real terms).
    • But Coal India, which accounts for around 80 per cent of India’s total coal production, was able to raise its output by just 34 per cent over the same period.
    • Increased reliance on imported coal: India’s coal imports (thermal and cooking) rose to a staggering 230.3 million tonnes in 2020-21, up 37 per cent from 168.5 million tonnes in 2013-14.
    • Coal imports for thermal power alone have more than doubled in the first quarter, compared to the same period last year.
    • To put this in perspective — the value of coal imports in just the first three months of this year is likely to be around half of what was imported in all of last year.
    • Increase in current account deficit: This growing reliance on coal imports (along with crude and gold) is at the root of the country’s widening current account deficit.
    • An inability to ramp up production, to forecast demand accurately, as every episode of coal shortage over the years has exposed, is the hallmark of the coal sector that is still largely the preserve of a public sector monopoly.

    Problem of DISCOMS

    • No improvement in financial and operational issues: Despite repeated attempts to turn around their financial and operational positions, on key metrics, the divide between the public and private sector discoms is deepening.
    • In 2019-20, public sector discoms lost Rs 0.72 per unit of power sold, while private discoms made Rs 0.20 per unit.
    • High AT&C losses: Similarly, in 2019-20, the AT&C losses (due to operational inefficiencies) for state discoms were pegged at 21.7 per cent, while for the private sector, losses were at 8 per cent.
    • With deteriorating finances, the net worth of all public sector discoms put together stands at a negative Rs 61,757 crore, while for the private sector, it is a positive Rs 24,965 crore.
    • There have been several attempts to rescue state discoms.
    • In the early 2000s, the scheme for repayment of SEB dues amounted to Rs 41,473 crore.
    • In 2012, the financial restructuring plan added up to Rs 1.19 lakh crore.
    • In 2015, UDAY involved a transfer of Rs 2.01 lakh crore to state government balance sheets.
    • Notwithstanding various schemes to turn around their finances, the total debt of all discoms put together stood at Rs 5.14 lakh crore at the end of 2019-20.
    • Of this, Rs 4.87 lakh crore is owed by state discoms.
    • Impact on entire power chain: A deterioration in the financial position of discoms means that their dues to power generating companies start mounting, which in turn delay payments to coal miners, affecting the financial stability of the entire power chain.

    Declining cross-subsidisation

    • As tariffs charged by discoms are much higher than the cost of alternatives, a sizeable part of non-agricultural sales of discoms (industrial and commercial consumers) have already shifted towards captive and solar.
    •  And with the ministry of power recently reducing the threshold for green energy open access, more and more consumers will increasingly opt out.
    • This would mean that discom losses will rise as cross subsidisation from commercial and industrial consumers will decline, increasing their dependence on state subsidies.
    • In 2019-20, the total state subsidy claimed and released was around Rs 1.1 lakh crore or 17 per cent of total discom revenue.
    • This will only increase down the line, making future bailouts even more fiscally challenging.

    Conclusion

    Tackling these deficits requires addressing the issue of government control over critical aspects of India’s energy sector. Without shifting to market-determined prices — reforms are ultimately about price — little headway is likely to be made.

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