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GS Paper: GS3

  • Ethanol blend in petrol to be raised to 20% in 3 years

    The Union Cabinet has approved amendments to the National Policy on Biofuels, 2018, to advance the date by which fuel companies have to increase the percentage of ethanol in petrol to 20%, from 2030 to 2025.

    What is the news?

    • The policy to introduce 20% ethanol in petrol will take effect from April 1, 2023.

    Why such move?

    • A 2021 report by the NITI Aayog said that 20% ethanol blending by 2025 could accrue immense benefits such as:
    1. Saving ₹30,000 crore of foreign exchange per year
    2. Increased energy security
    3. Lowered carbon emissions
    4. Better air quality
    5. Self-reliance
    6. Better use of damaged foodgrains
    7. Increase farmers’ incomes and investment opportunities

    What is the present status of ethanol blending in India?

    • India achieved 9.45% ethanol blending as on March 13, 2022, according to the Ministry of Petroleum and Natural Gas.
    • The Centre projects that this will reach 10% by the end of financial year 2022.
    • The government first announced its plans of advancing the 20% blending target in December 2020.

    Why is it so difficult to raise the blending?

    • A 10% blending of petrol does not require major changes to engines.
    • But a 20% blend could require some changes and may even drive up the prices of vehicles.
    • A greater percentage of blending could also mean more land being diverted for water-intensive crops such as sugar cane, which the government currently subsidises.

    Back2Basics: Ethanol Blended Petrol (EBP) Programme

    • EBP programme was launched in January, 2003 for supply of 5% ethanol blended petrol.
    • The programme sought to promote the use of alternative and environment-friendly fuels and to reduce import dependency for energy requirements.
    • OMCs are advised to continue according to priority of ethanol from 1) sugarcane juice/sugar/sugar syrup, 2) B-heavy molasses 3) C-heavy molasses and 4) damaged food grains/other sources.
    • At present, this programme has been extended to the whole of India except UTs of Andaman Nicobar and Lakshadweep islands with effect from 01st April 2019 wherein OMCs sell petrol blended with ethanol up to 10%.

    Also read:

    [RSTV ARCHIVE] Ethanol Blending: Significance & Road Ahead

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  • Places in news: Sela Tunnel

    The strategically-significant Sela Tunnel project in Arunachal Pradesh is nearing completion well before the deadline.

    What is Sela Tunnel Project?

    • The Sela Tunnel is the longest bi-lane road tunnel in the world.
    • The total length of the project, including the tunnels, the approach and the link roads, will be around 12 km.
    • The tunnel is being constructed by the Border Roads Organisation at an altitude of 13,800ft near the Indo-China border.
    • It is being built on the 317km long Balipara-Charduar-Tawang (BCT) road which connects West Kameng, East Kameng and Tawang districts of Arunachal Pradesh to the rest of the country.

    Why is the project important?

    • All-weather connectivity to Tawang and other forward areas in the sector will be the most important advantage that the project promises.
    • At the moment, Sela pass stays closed for a few winter months.
    • The project will provide a new alignment on the axis towards the LAC, and allow movement of military and civil vehicles all through the year.

    Significance of the tunnel

    • China is undertaking massive infrastructure development and troop build-up in the Rest of Arunachal Pradesh (RALP) area.
    • In military parlance, the RALP is an area in Arunachal Pradesh other than the Kameng area.
    • Other than the Kameng area consisting of East and West Kameng districts, the rest of the State is referred to by the Army as the RALP.

     

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  • What is Sudden Infant Death Syndrome (SIDS)?

    A team of scientists from Australia have found that babies at risk of the mysterious Sudden Infant Death Syndrome, or SIDS, generally have low levels of an enzyme called butyrylcholinesterase (BChE) in their blood.

    What is SIDS?

    • Sudden Infant Death Syndrome refers to the sudden and unexpected death of an otherwise healthy infant under the age of one, generally while they are sleeping.
    • Most SIDS-related deaths occur in infants between the age of 1-4 months.
    • According to the NHS website, parents can reduce the risk of SIDS by not smoking while pregnant or after the baby is born and ensuring that the baby is placed on their back when they sleep.
    • Some health experts have said that it is associated with issues in the part of an infant’s brain that controls breathing and waking up.

    Prevalence of SIDS

    • SIDS, also known as ‘cot death’, has claimed the lives of thousands of children across the West.
    • US estimates that about 3,400 babies die suddenly and unexpectedly every year.
    • Meanwhile, the United Kingdom reports about 200 such deaths annually.

    What does the new study say?

    • The study assessed whether there was something inherently different in babies that succumbed to SIDS.
    • The researchers compared dried blood samples from 655 healthy babies, 26 babies who died due to SIDS and 41 babies who died of other causes.
    • The team found that around nine of ten babies who died from SIDS had lower levels of BChE enzymes than the babies in the other two groups.

    What is the BChE (Butyrylcholinesterase) enzyme responsible for?

    • These enzymes are responsible for sending out signals that make a baby wake up, turn her head, or gasp for breath.
    • It is part of the autonomic system, and controls function like blood pressure and breathing.

     

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  • Biological Diversity (Amendment) Bill, 2021

    What is issue:

    A senior parliamentarian has expressed concern over the Biological Diversity (Amendment) Bill, 2021, which is in the final stages of consultations in the Joint Parliamentary Committee.

    Biological Diversity Act (BDA), 2002: 

    • The BDA, 2002 was enacted for the conservation of biological diversity and fair, equitable sharing of the monetary benefits from the commercial use of biological resources and traditional knowledge.
    • The main intent of this legislation is to protect India’s rich biodiversity and associated knowledge against their use by foreign individuals.
    • It seeks to check biopiracy, protect biological diversity and local growers through a three-tier structure of central and state boards and local committees.
    • The Act provides for setting up of a National Biodiversity Authority (NBA), State Biodiversity Boards (SBBs) and Biodiversity Management Committees (BMCs) in local bodies.
    • The NBA will enjoy the power of a civil court.

    What are the proposed Amendments?

    The amendment bill seeks to reduce the pressure on wild medicinal plants by encouraging the cultivation of medicinal plants and Decriminalizes certain offences.

    • Biological resources sharing: Exempts Ayush practitioners from intimating biodiversity boards for accessing biological resources or knowledge (Vaids and Hakims)
    • Research promotion: Facilitates fast-tracking of research, simplify the patent application process
    • Bring in foreign investment: Seeks to bring more foreign investments in biological resources, research, patent and commercial utilisation, without compromising the national interest

    Need for the Amendment

    • Simplifying process: Concerns were raised by Ayush medicine, seed, industry and research sectors urging the government to simplify, streamline the profession.
    • Easing compliance: They urged govt to reduce the compliance burden to provide for a conducive environment for collaborative research and investments.
    • Access and Benefit-sharing: It also sought to simplify the patent application process, widen the scope of access and benefit-sharing with local communities.
    • Exemptions: Ayush practitioners have been exempted from the ambit of the Act, a huge move because the Ayush industry benefits greatly from biological resources in India.
    • Certain offences: Violations of the law related to benefit-sharing with communities, which are currently treated as criminal offences and are non-bailable, have been proposed to be made civil offences.
    • Imbibing Nagoya Protocol: This bill provides to reconcile the domestic law with free prior informed consent requirements of the 2010 Nayogya Protocol on ABS.

    Criticisms of the bill

    • No consultation: The bill has been introduced without seeking public comments as required under the pre-legislative consultative policy.
    • No profit-sharing: There are ambiguous provisions in the proposed amendment to protect, conserve or increase the stake of local communities in the sustainable use and conservation of biodiversity.
    • Commercialization: Activists say that the amendments were done to “solely benefit” the AYUSH Ministry.
    • Loopholes to Biopiracy: The Bill would mean AYUSH manufacturing companies would no longer need to take approvals.
    • Ignoring Bio-utilization: The bill has excluded the term Bio-utilization which is an important element in the Act.  Leaving out bio utilization would leave out an array of activities like characterization, incentivisation and bioassay which are undertaken with commercial motive.
    • Exotic plants cultivation: The bill also exempts cultivated medicinal plants from the purview of the Act but it is practically impossible to detect which plants are cultivated and which are from the wild.
    • De-licensing: This provision could allow large companies to evade the requirement for prior approval or share the benefit with local communities.

  • India’s Total Factor Productivity (TFP)

    India’s total factor productivity (TFP) growth has seen a moderate decline compared to the global experience, though it remains above that of emerging markets and developing economies, according to a recent report.

    What is Total factor productivity (TFP)?

    • Productivity levels measure the relationship between total products or output, and inputs or factors of production employed.
    • Labour productivity is a measure of total output divided by the units of labour employed in the process of production.
    • However, TFP is a measure of total output divided by a weighted average of inputs; i.e., labour and capital.
    • Improvements in TFP bring down production costs, raise output levels, and lead to a higher gross domestic product.
    • While total productivity measures all-inclusive productivity, TFP is a measure of production efficiency.

    How has India fared thus far?

    • A recent Reserve Bank of India (RBI) report points to a moderate decline in TFP growth compared to the global experience.
    • TFP growth rate for India during the 2010-2019 period was approximately 2.2%, as against -0.3% for emerging markets and developing economies.
    • During the pandemic, the TFP for India declined by 2.9% in 2020 and marginally improved by 0.1% in 2021.
    • In 2022, TFP growth rate is projected to increase to 2%.
    • As per estimates, TFP growth contributed to 30% of India’s GDP growth during 2010-2018.
    • It was largely driven by public administration, quality education and social works.

    What has been the TFP trend across the world?

    • Global productivity growth has witnessed a prolonged slowdown since 2010, with the deceleration sharper in emerging and developing economies.
    • This is ascribed to a weakening investment climate, and lower employment growth levels in developed economies, among others.
    • TFP growth for the world economy was 0.7% in 2021 and may shrink by 0.5% in 2022.

    What are the ways to improve TFP?

    • India’s initiatives around skill development and the new education policy are steps in the right direction, since they focus on boosting manpower employability.
    • Quality education, better healthcare, nurturing of innovation, introduction of efficient technology and processes in domestic companies and reduction in misallocation of resources can help improve TFP levels.
    • Though the country’s ranking in the Global Innovation Index, 2021 has improved to 46, it still has some distance to go.

    How can the industry improve productivity?

    • Improved TFP minimizes per-unit cost facilitating the horizontal expansion of consumption demand, thereby improving the standard of living.
    • Employers have fortunately started acknowledging the fact that manpower is an essential component in profit earnings.
    • Today, the focus has shifted to retaining talent, which is limited in supply.
    • This positive transformation seen after the pandemic needs to be further extended.

     

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  • Highlights of the Seoul Forest Declaration

    The participants from 141 countries gathered in person and online at the 15th World Forestry Congress in Seoul, Republic of Korea adopted the Seoul Forest Declaration.

    Seoul Forest Declaration

    • Shared responsibility: The Declaration urges that responsibility for forests should be shared and integrated across institutions, sectors and stakeholders.
    • Increased investment: Investment in forest and landscape restoration globally needs to triple by 2030 to meet internationally agreed commitments and targets on restoring degraded land.
    • Moving towards circular economy: One of the key takeaways was the importance of moving towards a circular bioeconomy and climate neutrality.
    • Innovative green financing mechanisms: To upscale investment in forest conservation, restoration and sustainable use, and highlighted the potential of sustainably produced wood as a renewable, recyclable and versatile material.
    • Decision-making: It urged the continued development and use of emerging innovative technologies and mechanisms to enable evidence-based forest and landscape decision-making.

    Other takeaways

    • Close cooperation among nations is needed to address challenges that transcend political boundaries.
    • This was strengthened at the Congress by the launch of new partnerships such as the:
    1. Assuring the Future of Forests with Integrated Risk Management (AFFIRM) Mechanism and
    2. Sustaining an Abundance of Forest Ecosystems (SAFE) Initiative

    Back2Basics: World Forestry Congress

    • The first World Forestry Congress first held in Rome in 1926. After that, it is held about every six years by the UN-FAO.
    • In 1954, FAO was entrusted with supporting Congress preparations in close cooperation with the host country and proudly continues to do so today. .
    • It has been providing a forum for inclusive discussion on the key challenges and way forward for the forestry sector.

     

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  • Explained: Repo Rate in India

    Earlier this month, the RBI, in a surprise move decided unanimously to raise the “policy repo rate by 40 basis points to 4.40%, with immediate effect”.

    What is the Repo Rate?

    • The repo rate is one of several direct and indirect instruments that are used by the RBI for implementing monetary policy.
    • Specifically, the RBI defines the repo rate as the fixed interest rate at which it provides overnight liquidity to banks against the collateral of government and other approved securities under the liquidity adjustment facility (LAF).
    • In other words, when banks have short-term requirements for funds, they can place government securities that they hold with the central bank and borrow money against these securities at the repo rate.
    • Since this is the rate of interest that the RBI charges commercial banks such as SBI and ICICI Bank when it lends them money, it serves as a key benchmark for the lenders to in turn price the loans they offer to their borrowers.

    Why is the repo rate such a crucial monetary tool?

    • According to Investopedia, when government central banks repurchase securities from commercial lenders, they do so at a discounted rate that is known as the repo rate.
    • The repo rate system allows central banks to control the money supply within economies by increasing or decreasing the availability of funds.

    How does the repo rate work?

    • Besides the direct loan pricing relationship, the repo rate also functions as a monetary tool by helping to regulate the availability of liquidity or funds in the banking system.
    • For instance, when the repo rate is decreased, banks may find an incentive to sell securities back to the government in return for cash.
    • This increases the money supply available to the general economy.
    • Conversely, when the repo rate is increased, lenders would end up thinking twice before borrowing from the central bank at the repo window thus, reducing the availability of money supply in the economy.
    • Since inflation is caused by more money chasing the same quantity of goods and services available in an economy, central banks tend to target regulation of money supply as a means to slow inflation.

    What impact can a repo rate change have on inflation?

    • Inflation can broadly be: mainly demand driven price gains, or a result of supply side factors.
    • This in turn push up the costs of inputs used by producers of goods and providers of services.
    • It is thus spurring inflation, or most often caused by a combination of both demand and supply side pressures.
    • Changes to the repo rate to influence interest rates and the availability of money supply primarily work only on the demand side.
    • It makes credit more expensive and savings more attractive and therefore dissuading consumption.
    • However, they do little to address the supply side factors, be it the high price of commodities such as crude oil or metals or imported food items such as edible oils.

     

    Try this PYQ:

    Q.If the RBI decides to adopt an expansionist monetary policy, which of the following would it not do?

    1. Cut and optimize the Statutory Liquidity Ratio
    2. Increase the Marginal Standing Facility Rate
    3. Cut the Bank Rate and Repo Rate

    Select the correct answer using the code given below:

    (a) 1 and 2 only

    (b) 2 only

    (c) 1 and 3 only

    (d) 1, 2 and 3

     

    [wpdiscuz-feedback id=”dqr429v2pr” question=”Please leave a feedback on this” opened=”1″]Post your answers here.[/wpdiscuz-feedback]

     

     

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  • Ramgarh Vishdhari notified as India’s 52nd Tiger Reserve

    Ramgarh Vishdhari Wildlife Sanctuary is now notified as a tiger reserve after a nod by the Union Ministry of Environment, Forest and Climate Change (MoEF&CC).

    Ramgarh Vishdhari TR

    • Ramgarh Vishadhri, located mostly in Bundi district and in part in Bhilwara and Kota districts.
    • It is also home to the Indian wolf, leopard, striped hyena, chinkara, antelope and foxes among other animals.
    • It is now India’s 52nd tiger reserve and Rajasthan’s fourth, after Ranthambore, Sariska and Mukundra.
    • The reserve will be spread in an area of 1,501.89 sq km.
    • The area has been called ‘critical’ for the movement of tigers by wildlife experts and conservationists.
    • Though the tiger population in Ramgarh itself was not high, it plays an important role in connecting the Ranthambore and Mukundra Tiger Reserves of Rajasthan.

    Back2Basics: Tiger Reserves

    • The Tiger Reserves of India were set up in 1973 and are governed by Project Tiger, which is administrated by the National Tiger Conservation Authority.
    • A National Park or Wildlife Sanctuary that is considered significant for protecting tigers can be additionally designated as a Tiger Reserve.
    • A Tiger Reserve consists of a ‘Core’ or ‘Critical Tiger Habitat’, which is to be managed as an inviolate area, and a ‘Buffer’ or Peripheral area immediately abutting a Core area, which may be accorded a lesser degree of habitat protection.
    • This is the typical zonation of a Tiger Reserve.

     

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  • Brace for higher interest rates

    Context

    Inflation has now remained above the RBI’s upper tolerance limit of 6 per cent for four months in a row.

    Broad based inflation

    • The second-order impact of higher fuel prices is also visible as inflation in transport and communication surged to nearly 11 per cent, from 8 per cent in the previous month.
    • The latest data also indicates that inflation is becoming broad-based. 
    • With demand rebounding, the pass-through of higher input costs is also gaining momentum.
    • Considering that demand for goods recovered faster than services, goods producers passed on input costs to consumers.
    • But as services recover, there will be greater pass-through of prices to consumers in the coming months.
    • While there may be a slight moderation, inflation is expected to remain above the RBI’s threshold of 6 per cent in the coming months.
    • The Ukraine conflict continues to impact markets for foodgrains and vegetable oils.
    • Rising fertiliser prices are likely to push up farmers’ production costs, leading to high food prices.
    • While the government has extended price support through higher subsidies, if this will be enough to cool prices needs to be seen.

    Inflation targeting by the RBI

    • With sticky crude oil prices and continuing supply-side disruptions amplified by the Covid-induced lockdowns in China, the RBI has rightly reverted its focus on inflation targeting.
    • This is needed as central banks around the world are pursuing tight monetary policies to counter inflation.
    • The US Fed followed its 25 basis points hike by another 50 basis points rise in May.
    • These will be followed by hikes of similar magnitude in the coming months.
    • In its April policy, the RBI announced the withdrawal of excess liquidity but did not raise the policy rate.
    • Rate hikes by RBI: The RBI is now likely to respond with aggressive rate hikes to prevent the price spiral from getting entrenched.
    • The continued strength of the dollar index and sharp rupee depreciation in the last few days could impose further pressure on prices through higher imported inflation.
    • Withdrawal of liquidity support: In addition to calibrated rate hikes, the RBI needs to fast-track the withdrawal of the ultra-accommodative liquidity support provided during the pandemic.

    Implications

    • Discretionary spending: Rising inflation will cut back discretionary spending and adversely impact consumption that had only just started picking up.
    • Recession concerns: There are concerns about a recession in advanced economies as rising prices have started manifesting in a decline in purchasing power and a fall in consumer sentiments.
    • The demand destruction could trigger a moderation in prices.
    • Base metals prices have eased from the peak seen in the last few months.

    Conclusion

    Monetary policy support needs to be accompanied by fiscal support measures. The policy response will have to be tailored to the evolving geopolitical situation and the paths of commodity and food prices while balancing the imperatives of fiscal consolidation.

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  • Inflation in India

    Context

    Recently, the RBI raised the repo rate by 40 basis points (bps) and the cash reserve ratio (CRR) by 50 bps with a view to tame inflation.

    How effective would be the rate hike in taming the inflation?

    • High inflation is always an implicit tax on the poor and those who keep their savings in banks.
    • Will the increases in the repo rate and CRR control inflation, especially food inflation?
    • The RBI has been behind the curve by at least by 4-to 5 months, and its optimism in controlling inflation in the earlier meetings of the Monetary Policy Committee was somewhat misplaced.
    • The reason for this is that food prices globally are scaling new peaks as per the FAO’s food price index.
    • The disruptions caused by the pandemic and now the Russia-Ukraine war are contributing to this escalation in food prices.
    • India cannot remain insulated from this phenomenon.

    Opportunities and challenges for India

    • Record wheat export: For the first time in the history of Indian agriculture, cereal exports have already crossed a record high of 31 million metric tonnes (MMT) at $13 billion (FY22), and the same cereal wonder may be repeated this fiscal (FY23).
    • Among cereals, wheat exports have witnessed an unprecedented growth of more than 273 per cent, jumping nearly fourfold from $0.56 billion (or 2 MMT) in FY21 to $2.1 billion (or 7.8 MMT) in FY22.
    • Rice exports have crossed 20 MMT in FY22 in a global market of 50 MMT.
    • Some of the concerns on the wheat front are genuine, and we need to realise that climate change is already knocking on our doors.
    • With every one degree Celsius rise in temperatures, wheat yields are likely to suffer by about 5 MMT, as per earlier IPCC reports.
    • This calls for massive investments in agri-R&D to find heat-resistant varieties of wheat and also create models for “climate-smart” agriculture. We are way behind the curve on this.

    Need for rationalising food subsidy

    • India distribute free food to 800 million Indians, with a food subsidy bill that is likely to cross Rs 2.8 lakh crore this fiscal out of the Centre’s net tax revenue of about Rs 20 lakh crore in FY23.
    • Reducing coverage: What needs to be done targeting only those below the poverty line for free or subsidised food and charging a reasonable price, say 90 per cent of MSP, from those who are above the poverty line.
    • Giving an option to beneficiaries to receive cash in their Jan Dhan accounts (equivalent to MSP plus 20 per cent) in lieu of grains can be considered.
    • This is permitted under NFSA and by doing so, he can save on the burgeoning food subsidy bill.

    Conclusion

    Indian farmers need access to global markets to augment their incomes, and the government must facilitate Indian farmers to develop more efficient export value chains by minimising marketing costs and investing in efficient logistics for exports.

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