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GS Paper: GS3

  • 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

     

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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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  • India’s first Global Bullion Exchange unveiled

    Prime Minister has launched India’s first International Bullion Exchange (IIBX) at the Gujarat International Finance Tec-City (GIFT City) near Gandhinagar.

    What is Bullion?

    • Bullion refers to physical gold and silver of high purity that is often kept in the form of bars, ingots, or coins.
    • It can sometimes be considered legal tender and is often held as reserves by central banks or held by institutional investors.

    When was the IIBX announced?

    • During her 2020 budget speech, Finance Minister announced the setting up of India International Bullion Exchange (IIBX) at International Financial Services Center (IFSC) at GIFT City in Gandhinagar.
    • The International Financial Services Centres Authority (Bullion Exchange) Regulations, 2020, was notified in December 2020 for trading of precious metals, including gold and silver.
    • These regulations also cover bullion exchange, clearing corporation, depository and vaults.

    What is the IIBX?

    • India for the first time had liberalised gold imports through nominated banks and agencies in the 1990s.
    • Now, the eligible qualified jewellers in India have been allowed to directly import gold through IIBX.
    • For this, jewellers will have to become a trading partner or a client of an existing trading member.
    • In addition, the exchange has set up necessary infrastructure to store physical gold and silver.
    • The exchange will sell physical gold and silver and aims to be set up on the lines of the Shanghai Gold Exchange and Borsa Istanbul in order to make India a key regional hub for bullion flows.

    How will it work?

    • The thought process behind setting this up is to enable the trading of commodities on an exchange.
    • Since this is international exchange, trading can take place in US dollars as well.
    • India has positioned itself as one of the biggest trading hubs in Asia.
    • Because of the competitive pricing on IIBX, international players will be happy to use our vaulting services.
    • Moreover, with this being a free trade zone, no duty will be paid.

    What was the practice up until now?

    • Currently, gold in India is imported on a consignment model into different cities by nominated banks and agencies approved by the RBI and then supplied to traders/jewellers.
    • The banks and other agencies get a fee from the gold exporter for handling, storage, etc, and also add a premium to the gold while transacting with domestic buyers.
    • The buyer passes this charge on to the value chain until it reaches the end customer.

    What change did IIBX bring?

    • With the IIBX becoming operational today, qualified domestic buyers can, through a branch in Gift City, purchase the bars and coins.
    • This purchase can be done from an international supplier who is a member of the IIBX.

    What is the advantage of an exchange?

    • Through the dis-intermediation by facilitating transactions through an anonymously traded exchange platform, bullion is made available across special economic zones (SEZs) at International Financial Services Centres Authority (IFSCA)-approved vaults.
    • This means the growth of IIBX is not just limited to GIFT City but across jewellery manufacturing hubs nationwide.
    • The qualified jeweller allowed to import gold through IIBX, or a jeweller who is a client of an IIBX member, can view the available stock and place the order.
    • This shall nudge jewellers towards just-in-time inventory management.
    • It will also result in greater transparency in pricing, and order sequencing, thereby removing any room for unfair preference by supplier, importing or logistics agency.

    Which jewellers have come on board?

    • So far, 64 big jewellers have come onboard and more applications are in the pipelines.
    • Some of the big names include Malabar Gold Pvt Ltd, Titan Company Ltd, Bangalore Refinery Pvt Ltd, RBZ Jewellers Pvt Ltd, Zaveri and Company Pvt Ltd.

    What are the new RBI guidelines for importing gold?

    • Banks may now allow qualified Jewellers to remit advance payments for 11 days for import of gold through IIBX in compliance to the extant Foreign Trade Policy and regulations issued under IFSC Act.
    • According to the RBI, all payments by qualified jewellers for imports of gold through IIBX shall be made through the exchange mechanism as approved by IFSCA.

    Who can enrol on the exchange?

    1. Non-Resident Individual / Proprietorship Firm
    2. Registered Partnership Firm
    3. Private Limited Company
    4. Public Limited Company
    5. Qualified Jewellers
    6. Branches of IBU at GIFT City
    7. Foreign Bullion Suppliers who follow OECD guideline
    • In order to become a qualified jeweller, entities require a minimum net worth of Rs 25 crore.
    • And 90 per cent of the average annual turnover in the last three financial years through deals in goods categorised as precious metals.
    • NRIs and institutes will also be eligible to participate in the exchange after registering with the International Financial Services Centre Association (IFSCA).
    • Jewellers will be able to transact on IIBX only as trading members or as clients of a trading member.
    • If one wants to become a trader, a qualified jeweller will have to establish a branch or a subsidiary in IFSC (international financial services centre) and apply to the IFSCA.

    What products does IIBX offer?

    • IIBX offers a diversified portfolio of products and technology services at a cost which is far more competitive than the Indian exchanges as well as other global exchanges in Hong Kong Singapore, Dubai, London and New York.
    • Gold 1 kg 995 purity and gold 100 gm 999 purity with a T+0 settlement (100% upfront margin) are expected to trade at IIBX initially.
    • All contracts will be listed, traded and settled in US Dollar
    • The exchange will have three vaults – one operated by Sequel Global (ready and approved), the second one to be operated by Brinks India is ready and awaiting final approval and the third is under construction.
    • Once the gold is imported by the authorised entities it will be deposited at one of the vaults which will issue bullion depository receipts.
    • These receipts will then be traded in dollars on the exchange.

    Significance of IIBX

    • The IIBX shall be the “Gateway for Bullion Imports into India”, wherein all the bullion imports for domestic consumption shall be channelized through the exchange.
    • The exchange ecosystem is expected to bring all the market participants to a common transparent platform for bullion trading.
    • It would provide efficient price discovery, assurance in the quality of gold, and enable greater integration with other segments of financial markets.

     

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  • Core Sector output expands by 12.7%

    India’s eight core sectors’ output growth moderated to 12.7% in June, from 18.1% in May, with all sectors except crude oil registering an uptick in production.

    What are the Core Industries in India?

    • The main or the key industries constitute the core sectors of an economy.
    • In India, there are eight sectors that are considered the core sectors.
    • They are electricity, steel, refinery products, crude oil, coal, cement, natural gas and fertilizers.

    Index of Eight Core Industries (ICI) vs Index of Industrial Production (IIP)

    [A] Index of Eight Core Industries

    • The monthly Index of Eight Core Industries (ICI) is a production volume index.
    • ICI measures collective and individual performance of production in selected eight core industries viz. Coal, Crude Oil, Natural Gas, Refinery Products, Fertilizers, Steel, Cement and Electricity.
    • Prior to the 2004-05 series six core industries namely Coal, Cement, Finished Steel, Electricity, Crude petroleum and Refinery products constituted the index basket.
    • Two more industries i.e. Fertilizer and Natural Gas were added to the index basket in 2004-05 series. The ICI series with base 2011-12 will continue to have eight core industries.

    Components covered in these eight industries for the purpose of compilation of index are as follows:

    • Coal – Coal Production excluding Coking coal.
    • Crude Oil – Total Crude Oil Production.
    • Natural Gas – Total Natural Gas Production.
    • Refinery Products – Total Refinery Production (in terms of Crude Throughput).
    • Fertilizer – Urea, Ammonium Sulphate (A/S), Calcium Ammonium Nitrate (CAN), Ammonium chloride (A/C), Diammonium Phosphate (DAP), Complex Grade Fertilizer and Single superphosphate (SSP).
    • Steel – Production of Alloy and Non-Alloy Steel only.
    • Cement – Production of Large Plants and Mini Plants.
    • Electricity – Actual Electricity Generation of Thermal, Nuclear, Hydro, imports from Bhutan.

    [B] Index of Industrial Production

    • The Index of Industrial Production (IIP) is an index for India which details out the growth of various sectors in an economy such as mineral mining, electricity and manufacturing.
    • The all India IIP is a composite indicator that measures the short-term changes in the volume of production of a basket of industrial products during a given period with respect to that in a chosen base period.

    Difference between the two

    • IIP is compiled and published monthly by the National Statistics Office (NSO), Ministry of Statistics and Programme Implementation six weeks after the reference month ends.
    • However, ICI is compiled and released by Office of the Economic Adviser (OEA), Department of Industrial Policy & Promotion (DIPP), and Ministry of Commerce & Industry.
    • The Eight Core Industries comprise nearly 40.27% of the weight of items included in the Index of Industrial Production (IIP).
    • These are Electricity, steel, refinery products, crude oil, coal, cement, natural gas and fertilisers.

    Importance of Core Industries

    • The core sectors have a major impact on the Indian economy and significantly affect most other industries as well.
    • Their measures help account for the physical volume of production in India.
    • Their analysis offers a clearer and more realistic assessment of what’s happening in the economy
    • Their progress is used by government agencies for policy-making purposes.
    • They remain extremely relevant for the calculation of the quarterly and advanced Gross Domestic Product (GDP) estimates.
    • The core sector is also known as Infrastructure output as they represent the basic industries that form the base of the economy.

    Do you know about the Strategic Sectors?

    The government has identified four strategic sectors where the presence of state-run companies will be reduced to a minimum.

    1. Atomic energy, space and defence
    2. Transport and telecommunications
    3. Power, petroleum, coal and other minerals and
    4. Banking, insurance and financial services

     

    Try this PYQ:

    Q.In the ‘Index of Eight Core Industries’, which one of the following is given the highest weight?

    (a) Coal production

    (b) Electricity generation

    (c) Fertilizer production

    (d) Steel production

     

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  • Why the govt plans to scrap the decades-old Coffee Act?

    The Ministry of Commerce and Industry is planning to replace the 80-year-old Coffee Act with the new Coffee (Promotion and Development Bill), 2022, which has been listed for the Monsoon Session of Parliament.

    What is the Coffee Act?

    • The Coffee Act, 1942 was first introduced during World War II, in order to protect the struggling Indian coffee industry from the economic downturn caused by the war.
    • In the 1930s, the Indian coffee industry was facing significant problems, such as large-scale damage by pests and diseases, and the global economic downturn caused by the Great Depression.
    • With coffee planters making significant losses, the government passed the Coffee Cess Act (XIV of 1935) and established the first Indian Cess Committee in November 1935.
    • This aimed to promote the sale of coffee and increase consumption of Indian coffee at home and abroad.
    • These problems from the 1930s were compounded with the outbreak of World War II, as low demands and a loss of foreign markets led to a sharp decline in coffee prices.
    • Since the Cess Committee was not able to deal with the crisis faced by the industry, the government formed the Coffee Board, through the introduction of the Coffee Act, 1942.

    Purpose of the Act

    • The purpose of the Act was to provide for the development of the coffee industry.
    • The Board was tasked with supporting the industry in marketing, promotion of consumption, finance and research and development.

    Why scrap the old law?

    • The government is now trying to scrap the law because it claims that many of the provisions have become redundant and are too restrictive.
    • It has also proposed to repeal the decades old laws on tea, spices and rubber, and introduce new legislations in order to increase the ease of doing business and promote the development of these sectors.
    • These are very old laws and the idea is only to simplify them, make it easier to do business.
    • It aims to ensure that the small people in the different areas like coffee growing, tea growing do not have to suffer from high levels of compliance burden.

    Major contentious factor: Pooling System

    • Before India liberalised its economy in 1991, the Coffee Board controlled the marketing of the commodity in its entirety, both in India and abroad.
    • The Act introduced a pooling system, where each planter was required to distribute their entire crop to a surplus pool managed by the Board, apart from the small quantities that were allowed for domestic use and seed production.
    • The Board marketed 70% of the total pool for export and 30% for domestic markets, and sold them in separate auctions, according to Takamasa Akiyama, an economist affiliated with the World Bank.
    • In order to spur domestic consumption, the price of domestic coffee was kept artificially low.

    The changes since liberalization

    • While the Coffee Board no longer maintains its monopolistic control over the marketing of Indian coffee.
    • Through a series of amendments, the Board’s authority was reduced, and in 1996, the pooling system was abolished and growers were allowed to directly sell to processing firms.
    • The coffee market was entirely deregulated and the growers exposed to the free market.
    • Since liberalization, the Coffee Board plays more of an advisory role, and aims at increasing production, promoting further export and supporting the development of the domestic market.

    What are the proposed changes?

    • In order to facilitate growth and ease of doing business, the government would remove the restrictive and redundant provisions.
    • The centre wants to introduce a simplified version of the Act to suit the present needs of the industry.
    • The government would not close the Coffee Board, but would rather shift it from the Ministry of Commerce to the Ministry of Agriculture.
    • Here it aims to ensure that the benefits of all agricultural schemes are extended to coffee growers.
    • The new legislation is now primarily concerned with promoting the sale and consumption of Indian coffee including through e-commerce platforms, with fewer government restrictions.
    • It also aims at encouraging further economic, scientific and technical research in order to align the Indian coffee industry with “global best practices.”

    Back2Basics: Coffee Production in India

    • India is the third-largest producer and exporter of coffee in Asia and the sixth-largest producer and fifth-largest exporter of coffee in the world.
    • The country accounts for 3.14% (2019-20) of the global coffee production.
    • Coffee production in India is dominated in the hill tracts of South Indian states, with Karnataka accounting for 71%, followed by Kerala with 21% and Tamil Nadu (5%).
    • Indian coffee is said to be the finest coffee grown in the shade rather than in direct sunlight anywhere in the world.
    • Almost 80% of Indian coffee is exported.
    • The two well-known species of coffee grown are the Arabica and Robusta. The first variety was introduced in the Baba Budan Giri hill ranges of Karnataka in the 17th century.
    • Brazil is, the largest coffee producer in the world.

     

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  • Supreme Court orders status quo on Kaleshwaram Project expansion

     

    The Supreme Court has ordered status quo on the Kaleshwaram Lift Irrigation Project (KLIP) after it was told the Telangana government was increasing the capacity of the project without any environmental clearances.

    Kaleshwaram Lift Irrigation Project (KLIP)

    • The KLIP is a multi-purpose irrigation project on the Godavari River in Kaleshwaram, Bhupalpally in Telangana.
    • Currently the world’s largest multi-stage lift irrigation project, its farthest upstream influence is at the confluence of the Pranhita and Godavari rivers.
    • The Pranahita River is itself a confluence of various smaller tributaries including the Wardha, Painganga, and Wainganga rivers which combine to form the seventh-largest drainage basin on the subcontinent.
    • It remains untapped as its course is principally through dense forests and other ecologically sensitive zones such as wildlife sanctuaries.

    Grandeur of the project

    • Till date, the biggest lift schemes in the world were the Colorado lift scheme in America and the Great Manmade River in Egypt.
    • The capacities of these schemes are in horsepower and they took over three decades for completion.
    • Now, the Kaleshwaram lift irrigation project, an Indian lift scheme has become the worlds biggest in terms of capacities.

    Key facts associated

    • Built across Godavari river, KLIP will lift the water to a height of half-a-kilometre.
    • It is designed to irrigate 45 lakh acres for two crops in a year, meet the drinking water requirement of 70 percent of the state and also cater to the needs of the industry.
    • The foundation stone for the Rs 80,500 crore project was laid in 2016 and claimed to be the world’s biggest project of its kind, completed in the shortest time.
    • The government is planning to lift two thousand million cubic (TMC) feet of Godavari water per day from Medigadda barrage.
    • Claimed to be an engineering marvel, the project comprises 1,832 km water supply route, 1,531 km gravity canal, 203 km tunnel routes, 20 lifts, 19 pump houses and 19 reservoirs with a storage capacity of 141 TMCs.
    • It requires nearly 4,992 MW of electricity to pump 2 TMC of water every day in the first phase. The requirement will go up to 7,152 MW for lifting 3 TMC from next year.

    How important is KLIP to Telangana?

    • The project will enable farmers in Telangana to reap multiple crops with a year-round supply of water wherein earlier they were dependent on rains resulting in frequent crop failures.
    • This year, Telangana farmers have already delivered bumper rabi crops of paddy and maize due to better irrigation facilities and an extended monsoon.
    • KLIS covers several districts which used to face rainfall deficit and the groundwater is fluoride-contaminated.
    • Apart from irrigation, a main component of the project is the supply of drinking water to several towns and villages and also to twin cities of Hyderabad and Secunderabad.
    • Mission Bhagiratha, to supply drinking water to every household in villages, draws a large quantity of water from the KLIS and some quantity from projects on River Krishna.
    • There is a burgeoning freshwater fishing industry in the state.

    Issues with the Project

    • The NGT has observed that the Telangana government subsequently changed the design of the project to increase its capacity.
    • By increasing its capacity to pump 3 TMC water from 2 TMC, large tracts of forest land and other land were taken over and massive infrastructure was built causing an adverse impact on the environment.
    • Extraction of more water certainly requires more storage capacity and also affects hydrology and riverine ecology of Godavari River.
    • Such issues have to be examined by the statutory authorities concerned.

    Back2Basics: National Green Tribunal

    • It is a specialized body set up under the National Green Tribunal Act (2010) for effective and expeditious disposal of cases relating to environmental protection and conservation of forests and other natural resources.
    • With the establishment of the NGT, India became the third country in the world to set up a specialized environmental tribunal, only after Australia and New Zealand, and the first developing country to do so.
    • NGT is mandated to make disposal of applications or appeals finally within 6 months of filing of the same.
    • The NGT has five places of sittings, New Delhi is the Principal place of sitting and Bhopal, Pune, Kolkata and Chennai are the other four.

    Structure of NGT

    • The Tribunal comprises of the Chairperson, the Judicial Members and Expert Members. They shall hold office for a term of five years and are not eligible for reappointment.
    • The Chairperson is appointed by the Central Government in consultation with the Chief Justice of India (CJI).
    • A Selection Committee shall be formed by the central government to appoint the Judicial Members and Expert Members.
    • There are to be at least 10 and a maximum 20 full-time judicial members and Expert Members in the tribunal.

     

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  • Celebrating World Tiger Day

    As the world celebrates yet another World Tiger Day July 29, 2022, there is sobering news.

    Why in news?

    • The International Union for the Conservation of Nature (IUCN) recently confirmed that the tiger has gone extinct in Cambodia, Laos and Vietnam.

    Tigers in India

    • India is home to a third of the global tiger population and the country’s success in saving the big cat is crucial to global efforts to protect their numbers.
    • India was the first country in the world to champion the cause of conservation of the tiger and its natural habitats.
    • The aesthetic, ethical and cultural value of tigers have also proved to be critical factors for saving tigers, which has also ensured the success of tiger conservation in India.

    Why is it necessary to conserve Tigers?

    The tiger is a unique animal that plays a pivotal role in the health and diversity of an ecosystem.

    • Predation balance: It is a top predator which is at the apex of the food chain.
    • Regulation of herbivores: It keeps the population of wild ungulates in check, thereby maintaining the balance between prey herbivores and the vegetation upon which they feed.
    • Ecosystem balance: Therefore, the presence of tigers in the forest is an indicator of the well being of the ecosystem.
    • Tourism: Apart from the ecological services provided by the animal, the tiger also offers direct use such as attracting tourists, which provide incomes for local communities.

    Various efforts to save Tigers

    India is home to 70 percent of the global tiger population. Therefore, the country has an important role to play in tiger conservation.

    [1] Project Tiger

    • The Government of India started ‘Project Tiger’ in 1972 with a view to conserving the animal.
    • As part of this project nine core buffer areas for maintaining tiger population were notified. Now, this has >expanded to 48 tiger reserves.

    [2] CITES (Convention on International Trade in Endangered Species of Wild Fauna and Flora)

    • Besides protecting tiger territory, other measures being taken to save the tiger include: curbing wildlife trade through international agreements.
    • CITES is an international agreement between governments aimed at ensuring that international trade in specimens of wild animals and plants, including tigers, does not threaten their survival. India ratified this treaty in 1976.

    [3] Global Tiger Forum and Tiger Range Countries

    • Established in 1994, the Global Tiger Forum is the only inter-governmental body for tiger conservation.
    • Its membership includes seven tiger range countries: Bangladesh, Bhutan, India, Cambodia, Myanmar, Nepal and Vietnam.

    [4] CA|TS

    • 14 tiger reserves have been accredited under CA|TS (Conservation Assured | Tiger Standards) categories.
    • The CA|TS is a set of criteria that examines the management of tiger sites to gauge the success rates of tiger conservation.

    [5] St. Petersburg Declaration

    • This resolution was adopted In November 2010, by the leaders of 13 tiger range countries (TRCs) assembled at an International Tiger Forum in St. Petersburg, Russia
    • It aimed at promoting a global system to protect the natural habitat of tigers and raise awareness among people on white tiger conservation.

    [6] Various NGOs

    • International NGO members consist of World Wildlife Fund, International Fund for Animal Welfare (IFAW), and TRAFFIC.
    • Several national NGOs from India and Nepal are also members.

    Success of these efforts

    The four-year tiger census report, Status of Tigers in India, 2018 shows the number of the big cat has increased across all landscapes.

    The total count has risen to 2,967 from 2,226 in 2014 — an increase of 741 individuals (aged more than one year), or 33%, in four years.

    • At present, India has around 75% of tiger population and its source areas amongst the 13 tiger range countries in the world.
    • 2.24% of country’s geographical area is spread out in 51 tiger reserves in 18 States.

    Various threats to Tigers

    • Despite measures being initiated to protect wild tigers, habitat loss and poaching continue to pose a threat to the animal’s survival.
    • Tiger parts are used in traditional Chinese medicines, tiger skin is used for decorative and medicinal purposes and tiger bones are again used for medicinal purposes for curing body pain, et al.
    • Between 2000 and 2014, TRAFFIC’s research found that parts of a minimum of 1,590 Tigers were seized in Tiger range States, an average of two Tigers per week.

    Other existential threats to tigers

    • Man-Animal conflict: This largely seems a normal phenomenon in India. We broadly remember the case of Tigress Avni which was finally shot dead by the forest officials in Maharashtra.
    • Shrinking habitat: This often leads to territorial conflicts among the Tigers.
    • Issues with Tourism: Excess of tourist activities is problematic for animals. Frequent visits in reserved forests areas disrupt them to move freely for their prey.
    • Climate Change: The effects of climate change and floods are a major problem.  The latest study by WWF shows that Sundarban which is one of the biggest home of tigers in India would sink entirely in 2070.

    Way forward

    • The process of tiger conservation should be more dynamic and compatible with the future possibilities of climatic changes as well.
    • The Forest Department and the Central government can collaborate to protect the natural corridors to ensure the free movement of the tigers for better food resources.
    • Campaigns such as ‘Save the Tiger’ are recommended as effective measures to make people across the country and globe aware of the significance of conserving tiger species.
    • Sensitization of local communities against poaching is also a crucial measure in this regard.
    • We have to make the environment and development co-exist and go hand in hand by planning our future developmental goals in such a manner that our environmental goals are not compromised.

     

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