💥Join UPSC 2027,2028 Mentorship (July Batch) + XFactor Notes & Microthemes PDF
Talk to Mentor

Civilsdaily

Login

GS Paper: GS3

  • India’s Crude Oil Imports from OPEC

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

    India’s crude oil imports from OPEC

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

    What is OPEC?

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

    What is OPEC+?

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

    Why OPEC plus came into existence?

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

    Try this PYQ:

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

    (a) Crude oil

    (b) Bullion

    (c) Rare earth elements

    (d) Uranium

     

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

     

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • Cryptos and a CBDC are not the same thing

    Context

    Cryptocurrency will be discouraged via taxation and capital gains provisions. This was the message from the Finance Minister during the Budget discussion in Parliament.

    Growing worry about the cryptocurrencies

    • The Governor of the Reserve Bank of India, in February, highlighted two things.
    • First, “private cryptocurrencies are a big threat to our financial and macroeconomic stability”.
    • Second, “these cryptocurrencies have no underlying (asset).
    • Clearly, statements from the RBI indicate a growing worry since the proliferation of cryptos threatens the RBI’s place in the economy’s financial system.
    • This threat emerges from the decentralised character of cryptos based on blockchain technology which central banks cannot regulate and which enables enterprising private entities to float cryptos which can function as assets and money.
    • The total valuation of cryptos recently was upward of $2 trillion — more than the value of gold held globally.
    • Challenges in banning it: Cryptos which operate via the net can be banned only if all nations come together.
    • Even then, tax havens may allow cryptos to function, defying the global agreement.

    Crypto as currency

    • A currency is a token used in market transactions. 
    • Historically, commodities (such as copper coins) have been used as tokens since they themselves are valuable.
    • But paper currency is useless till the government declares it to be a fiat currency.
    • Paper currency derives its value from state backing.
    • Cryptos are a string of numbers in a computer programme. And, there is no state backing. 
    • Their acceptability to the well-off enables them to act as money.
    • So, cryptos acquire value and can be transacted via the net.
    • This enables them to function as money.
    • Solving the problem of double spending:  Fiat currency has the property that once spent, it cannot be spent again except through forgery, because it is no more with the spender.
    • But, software on a computer can be used repeatedly.
    • Blockchain and encryption have solved the problem by devising protocols such as ‘proof of work’ and ‘proof of stake’. 

    Why CBDC is not a solution

    • A Central Bank Digital Currency (CBDC) will not solve the RBI’s problem since it can only be a fiat currency and not a crypto.
    • Blockchain enables decentralisation.But, central banks would not want that.
    • Further, central bank would want a fiat currency to be exclusively issued and controlled by them.
    • But, theoretically everyone can ‘mine’ and create crypto.
    • So, for the CBDC to be in central control, solving the ‘double spending’ problem and being a crypto (not just a digital version of currency) seems impossible.
    • Validating transaction: A centralised CBDC will require the RBI to validate each transaction — something it does not do presently.
    • Once a currency note is issued, the RBI does not keep track of its use in transactions.
    • Keeping track will be horrendously complex which could make a crypto such as the CBDC unusable unless new secure protocols are designed.

    Conclusion

    CBDCs at present cannot be a substitute for cryptos that will soon begin to be used as money. This will impact the functioning of central banks and commercial banks.

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • RERA

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

    What is RERA, 2016?

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

    Objectives of this Act

    It has the following objectives:

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

    Key Provisions of RERA Act

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

    Which projects can get RERA approval?

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

    Benefits offered by the RERA Act

    Industry

    Developer

    Buyer

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

     

     

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • The Process of Cartelisation

    This newscard is an excerpt from the original article published in TH.

    What is a Cartel?

    • According to CCI, a “Cartel includes an association of producers, sellers, distributors, traders or service providers who, by agreement amongst themselves, limit, control or attempt to control the production, distribution, sale or price of, or, trade in goods or provision of services”.
    • The three common components of a cartel are:
    1. an agreement
    2. between competitors
    3. to restrict competition

    What is Cartelization?

    • Cartelization is when enterprises collude to fix prices, indulge in bid-rigging, or share customers, etc. But when prices are controlled by the government under law, that is not cartelization.
    • The Competition Act contains strong provisions against cartels.
    • It also has the leniency provision to incentivize a party to a cartel to break away and report to the Commission, and thereby expect total or partial leniency.
    • This has proved a highly effective tool against cartels worldwide.

    Philosophy behind

    • Cartels, which involve a group of businesses colluding to keep prices high, have been viewed by economists as a significant threat to the market economy.
    • When businesses cooperate with each other rather than compete against each other, there could be many adverse consequences to consumers.
    • For one, consumers will have to pay higher prices for goods and services.
    • It should be noted that the way cartels keep prices high is by limiting the supply of their output. Further, in the absence of any threat from competition, cartels also have very little reason to innovate or cater to consumers in better ways.
    • In other words, they essentially act like a monopoly.
    • The Organization of the Petroleum Exporting Countries (OPEC) is the most well-known international cartel that influences the price of oil globally through coordinated efforts to limit supply.

    How do they work?

    • Four categories of conduct are commonly identified across jurisdictions (countries). These are: price-fixing, output restrictions, market allocation and, bid-rigging
    • In sum, participants in hard-core cartels agree to insulate themselves from the rigors of a competitive marketplace, substituting cooperation for competition.

    How do cartels hurt?

    • They not only directly hurt the consumers but also, indirectly, undermine overall economic efficiency and innovations.
    • A successful cartel raises the price above the competitive level and reduces output.
    • Consumers choose either not to pay the higher price for some or all of the cartelized product that they desire, thus forgoing the product, or they pay the cartel price and thereby unknowingly transfer wealth to the cartel operators.

    Are there provisions in the Competition Act against monopolistic prices?

    • There are provisions in the Competition Act against abuse of dominance.
    • One of the abuses is when a dominant enterprise “directly or indirectly imposes unfair or discriminatory prices” in the purchase or sale of goods or services.
    • Thus, excessive pricing by a dominant enterprise could, in certain conditions, be regarded as abuse and, therefore, subject to investigation by the Competition Commission if it were fully functional.
    • However, where pricing is a result of normal supply and demand, the Competition Commission may have no role.

    What is the penalty for cartelization?

    • The Competition Act calls for a penalty on each member of the cartel, which is up to three times its profit for each year of anti-competitive behavior, or 10% of turnover for each year of its continuance, whichever is higher.
    • However, in case of a leniency petition, CCI can waive the penalty depending on the timing and usefulness of the disclosure  and  full cooperation  in  the  probe.

    How might cartels be worse than monopolies?

    • Monopolies are bad for both individual consumer interests as well as society at large.
    • Monopolist completely dominates the concerned market and, more often than not, abuse this dominance either in the form of charging higher than warranted prices or by providing lower than the warranted quality of the good or service in question.

    How to stop the spread of cartelization?

    • Strong deterrence to those cartels that are found guilty of being one.
    • Typically this takes the form of a monetary penalty that exceeds the gains amassed by the cartel and it is not always easy to ascertain the exact gains from cartelization.
    • The threat of stringent penalties can be used in conjunction with providing leniency — as was done in the beer case.

    Back2Basics: Competition Commission of India (CCI)

    • The CCI is the chief national competition regulator in India.
    • It is a statutory body within the Ministry of Corporate Affairs.
    • It is responsible for enforcing The Competition Act, 2002 in order to promote competition and prevent activities that have an appreciable adverse effect on competition in India.

     

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • WHO & Traditional Medicine

    PM Modi, along with World Health Organization (WHO) Director-General Dr Tedros Ghebreyesus, will perform the groundbreaking ceremony for the first-of-its-kind WHO Global Centre for Traditional Medicine (GCTM) in Jamnagar, Gujarat.

    What is Traditional Medicine?

    • The WHO describes traditional medicine as the total sum of the “knowledge, skills and practices indigenous and different cultures have used over time to maintain health and prevent, diagnose and treat physical and mental illness”.
    • Its reach encompasses ancient practices such as acupuncture, ayurvedic medicine and herbal mixtures as well as modern medicines.
    • According to WHO estimates, 80% of the world’s population uses traditional medicine.

    Traditional medicine in India

    • It is often defined as including practices and therapies — such as Yoga, Ayurveda, Siddha — that have been part of Indian tradition historically, as well as others — such as homeopathy — that became part of Indian tradition over the years.
    • Ayurveda and yoga are practised widely across the country.
    • The Siddha system is followed predominantly in Tamil Nadu and Kerala.
    • The Sowa-Rigpa System is practised mainly in Leh-Ladakh and Himalayan regions such as Sikkim, Arunachal Pradesh, Darjeeling, Lahaul & Spiti.

    What will the GCTM be about?

    • The GCTM will aim to focus on evidence-based research, innovation, and data analysis to optimise the contribution of traditional medicine to global health.
    • Its main focus will to develop norms, standards and guidelines in technical areas relating to traditional medicine.
    • It will seek to set policies and standards on traditional medicine products and help countries create a comprehensive, safe, and high-quality health system.
    • The GCTM will support efforts to implement the WHO’s Traditional Medicine Strategy (2014-23).
    • It will serve as the hub, and focus on building a “solid evidence base” for policies and “help countries integrate it as appropriate into their health systems”.

    Why has the WHO felt the need to advance knowledge of traditional medicine?

    • Almost all WHO members have reported widespread use of traditional medicine.
    • These member states have asked for its support in creating a body of reliable evidence and data on traditional medicine practices and products.
    • The WHO has found that the national health systems and strategies do not yet fully integrate traditional medicine workers, accredited courses and health facilities.
    • It has stressed the need to conserve biodiversity and sustainability as about 40% of approved pharmaceutical products today derive from natural substances.
    • It has referred to modernization of the ways traditional medicine is being studied. Artificial intelligence is now used to map evidence and trends in traditional medicine.

     

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • Status of India’s National Cyber Security Strategy

    Recently, Chinese state-sponsored hackers targeted Indian electricity distribution centres near Ladakh.

    Amid a surge in cyberattacks on India’s networks, the Centre is yet to implement the National Cyber Security Strategy which has been in the works since 2020.

    Recent trends of Cyber-attacks in India

    • As per American cybersecurity firm Palo Alto Networks’ 2021 report, Maharashtra was the most targeted State in India — facing 42% of all ransomware attacks.
    • India is among the more economically profitable regions for hacker groups and hence these hackers ask Indian firms to pay a ransom, usually using cryptocurrencies, in order to regain access to the data.
    • One in four Indian organisations suffered a ransomware attack in 2021.
    • Indian organisations witnessed a 218% increase in ransomware — higher than the global average of 21%.
    • Software and services (26%), capital goods (14%) and the public sector (9%) were among the most targeted sectors.

    Increase in such attacks has brought to light the urgent need for strengthening India’s cybersecurity.

    What is the National Cyber Security Strategy?

    Conceptualised by the Data Security Council of India (DSCI), the report focuses on 21 areas to ensure a safe, secure, trusted, resilient, and vibrant cyberspace for India.

    The main sectors of focus of the report are:

    • Large scale digitisation of public services: There needs to be a focus on security in the early stages of design in all digitisation initiatives and for developing institutional capability for assessment, evaluation, certification, and rating of core devices.
    • Supply chain security: There should be robust monitoring and mapping of the supply chain of the Integrated circuits (ICT) and electronics products. Product testing and certification needs to be scaled up, and the country’s semiconductor design capabilities must be leveraged globally.
    • Critical information infrastructure protection: The supervisory control and data acquisition (SCADA) security should be integrated with enterprise security. A repository of vulnerabilities should also be maintained.
    • Digital payments: There should be mapping and modelling of devices and platform deployed, transacting entities, payment flows, interfaces and data exchange as well as threat research and sharing of threat intelligence.
    • State-level cyber security: State-level cybersecurity policies and guidelines for security architecture, operations, and governance need to be developed.

    What steps does the report suggest?

    To implement cybersecurity in the above-listed focus areas, the report lists the following recommendations:

    • Budgetary provisions: A minimum allocation of 0.25% of the annual budget, which can be raised up to 1% has been recommended to be set aside for cyber security.
    • Ministry-wise allocation: In terms of separate ministries and agencies, 15-20% of the IT/technology expenditure should be earmarked for cybersecurity.
    • Setting up a Fund of Funds: The report also suggests setting up a Fund of Funds for cybersecurity and to provide central funding to States to build capabilities in the same field.
    • R&D, skill-building and technology development: The report suggests investing in modernisation and digitisation of ICTs, setting up a short and long term agenda for cyber security via outcome-based programs and providing investments in deep-tech cyber security innovation.
    • National framework for certifications: Furthermore, a national framework should be devised in collaboration with institutions like the National Skill Development Corporation (NSDC) and ISEA (Information Security Education and Awareness) to provide global professional certifications in security.
    • Creating a ‘cyber security services’: The DSCI further recommends creating a ‘cyber security services’ with cadre chosen from the Indian Engineering Services.
    • Crisis management: For adequate preparation to handle crisis, the DSCI recommends holding cybersecurity drills which include real-life scenarios with their ramifications. In critical sectors, simulation exercises for cross-border scenarios must be held on an inter-country basis.
    • Cyber insurance: Cyber insurance being a yet to be researched field, must have an actuarial science to address cybersecurity risks in business and technology scenarios as well as calculate threat exposures.
    • Cyber diplomacy: Cyber diplomacy plays a huge role in shaping India’s global relations. To further better diplomacy, the government should promote brand India as a responsible player in cyber security and also create ‘cyber envoys’ for the key countries/regions.
    • Cybercrime investigation: It also suggests charting a five-year roadmap factoring possible technology transformation, setting up exclusive courts to deal with cybercrimes and remove backlog of cybercrimes by increasing centres providing opinion related to digital evidence under section 79A of the IT act.
    • Advanced forensic training: Moreover, the DSCI suggests advanced forensic training for agencies to keep up in the age of AI/ML, blockchain, IoT, cloud, automation.
    • Cooperation among agencies: Law enforcement and other agencies should partner with their counterparts abroad to seek information of service providers overseas.

    Progress in its implementation

    • The Centre has formulated a draft National Cyber Security Strategy 2021 which holistically looks at addressing the issues of security of national cyberspace.
    • Without mentioning a deadline for its implementation, the Centre added that it had no plans as of yet to coordinate with other countries to develop a global legal framework on cyber terrorism.

    Way forward

    • India has to contend with the importance and necessity of cyber offence as much as cyber defence.
    • As of today, India’s primary or possibly only response measures appear to be defensive.
    • India has to also invest in more offensive cyber means as a response.

     

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • What is Parboiled Rice, and why Centre wants to stop purchasing it?

    Recently, Telangana CM and members of his Cabinet staged a protest demanding a uniform paddy procurement policy. The protest came after the Centre said it was stopping the purchase of excess parboiled rice, of which Telangana is a major producer.

    What is Parboiled Rice?

    • The dictionary meaning of ‘parboil’ is ‘partly cooked by boiling’.
    • Thus, the expression parboiled rice refers to rice that has been partially boiled at the paddy stage, before milling.
    • Parboiling of rice is not a new practice, and has been followed in India since ancient times.
    • However, there is no specific definition of parboiled rice of the Food Corporation of India or the Food Ministry.

    How is it prepared?

    • There are several processes for parboiling rice.
    • The Central Food Technological Research Institute (CFTRI), Mysuru, uses a method in which the paddy is soaked in hot water for three hours, in contrast to the more common method in which paddy is soaked for 8 hours.
    • The water is then drained and the paddy steamed for 20 minutes.
    • Also, the paddy is dried in the shade in the method used by the CFTRI, but is sun-dried in the common method.
    • The Paddy Processing Research Centre (PPRC), Thanjavur follows a method known as the chromate soaking process.
    • It uses chromate, a family of salt in which the anion contains both chromium and oxygen, which removes the odour from the wet rice.
    • All processes generally involve three stages—soaking, steaming and drying. After passing through these stages, the paddy goes for milling.

    Are all rice varieties suitable for parboiling?

    • Generally, all varieties can be processed into parboiled rice, but it is ideal to use long slender varieties to prevent breakage during milling.
    • However, aromatic varieties should not be parboiled because the process can make it can lose its aroma.

    What are the benefits?

    • Parboiling makes rice tougher. This reduces the chances of the rice kernel breaking during milling.
    • It also increases the nutrient value of the rice.
    • It has a higher resistance to insects and fungi.

    Certain disadvantages

    • The rice becomes darker and may smell unpleasant due to prolonged soaking.
    • Besides, setting up a parboiling rice milling unit requires a higher investment than a raw rice milling unit.

    How much is the stock of parboiled rice in the country?

    • According to the Food Ministry, the total stock of parboiled rice is 40.58 lakh metric tonnes (LMT) as on April 1, 2022.
    • Out of this, the highest stock is in Telangana at 16.52 LMT, followed by Tamil Nadu (12.09 LMT) and Kerala (3 LMT).
    • The stock was in the range 0.04–2.92 LMT in 10 other states —Andhra Pradesh, Chhattisgarh, Odisha, Jharkhand, West Bengal, Karnataka, Bihar, Punjab and Haryana.
    • From the other 10 rice-producing states, including Telangana, the Ministry has no plan to procure parboiled rice.
    • In the coming days, the total parboiled rice stock will increase to 47.76 LMT.

    How high is the demand?

    • The Food Ministry pegs the parboiled rice demand at 20 LMT per annum for distribution under the National Food Security Act, 2013.
    • According to the Ministry, the demand for parboiled rice has come down in recent years.
    • In the last few years, production in parboiled rice-consuming states such as Jharkhand, Kerala and Tamil Nadu has increased, resulting in less movement to the deficit states.
    • Earlier, the Food Corporation of India (FCI) used to procure parboiled rice from states such as Telangana to supply to these states.
    • But in recent years, parboiled rice production has increased in these states.
    • The current stock is sufficient to meet the demand for the next two years.

     

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • Places in news: Gulf of Gabes

    A Fuel Ship with 750 tons of diesel sinks off the Gulf Of Gabes in Tunisia.

    Gulf of Gabes

    • The Gulf of Gabes also known as Lesser Syrtis contrasting with the Greater Syrtis in Libya, is a gulf on Tunisia’s east coast in the Mediterranean Sea, off North Africa.
    • The gulf roughly spans the coast from Sfax to Djerba.
    • At the head of the gulf is the city of Gabès (Ghannouche) where the tides have a large range of up to 2.1 m at spring tides.
    • Both Gabès and Sfax are major ports on the gulf, supporting sponge and tuna fisheries, with Gabès being the economic and administrative centre.
    • It is 60 miles (100 km) long and 60 miles wide and is bounded by the Qarqannah (Kerkena) Islands on the northeast and by Jarbah (Djerba) Island on the southeast.

    Regional economy of the gulf

    • Except for the Strait of Gibraltar and the Gulf of Venice, it is the only part of the Mediterranean with a substantial tidal range, causing the uncovering of extensive sandbanks at low water.
    • Sponge and tuna fisheries are located at the main ports of Qābis (Gabès) and ᚢafāqis (Sfax).
    • Oil and natural-gas deposits have been found in the gulf, east of ᚢafāqis.

     

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • What are Oil Bonds?

    Over the last one year, as retail prices of petrol, diesel and other petroleum products have surged, the government has attracted criticism.

    Finance Minister has sought to counter such criticism by claiming that the current government cannot bring down taxes (and, as a consequence, prices) because it has to pay for the oil bonds issued by the previous regime.

    What are oil bonds?

    • An oil bond is an IOU (I owe you), or a promissory note issued by the government to the OMCs, in lieu of cash that the government would have given them so that these companies don’t charge the public the full price of fuel.
    • An oil bond says the government will pay the oil marketing company the sum of, say, Rs 1,000 crore in 10 years.
    • And to compensate the OMC for not having this money straightaway, the government will pay it, say, 8% (or Rs 80 crore) each year until the bond matures.
    • Thus, by issuing such oil bonds, the government of the day is able to protect/ subsidise the consumers without either ruining the profitability of the OMC or running a huge budget deficit itself.

    Why were they issued?

    • When fuel prices were too high for domestic consumers, governments in the past often asked oil marketing companies (OMCs) to avoid charging consumers the full price.
    • But if oil companies don’t get paid, they would become unprofitable.
    • To address this, the government said it would pay the difference.
    • But again, if the government paid that amount in cash, it would have been pointless, because then the government would have had to tax the same people to collect the money to pay the OMCs.
    • This is where oil bonds come in.

    How much of fuel prices is tax?

    • There are two components to the domestic retail price — the price of crude oil itself, and the taxes levied on this basic price.
    • Together they make up the retail price.
    • The taxes vary from one product to another. For instance, as of now, taxes account for 50% of the total retail price for a litre of petrol, and 44% for a litre of diesel.

    How much of the UPA-era oil bonds has the NDA government paid back?

    • There are two components of oil bonds that need to be paid off: the annual interest payment, and the final payment at the end of the bond’s tenure.
    • By issuing such bonds, a government can defer the full payment by 5 or 10 or 20 years, and in the interim just pay the interest costs.
    • Table 1 shows that between 2015 and 2021, the NDA government has fully paid off four sets of oil bonds — a total of Rs 13,500 crore.
    • Each year, the BJP government had also had to pay the interest rate on all bonds that have not matured. Chart 1 shows the amount paid towards interest payment each year.
    • Between 2014 and 2022, the government has had to spend a total of Rs 93,686 crore towards interest as well as the principal.

    Still, isn’t it a bad idea to issue such bonds?

    • Former PM Manmohan Singh was correct in noting that issuing bonds just pushed the liability to a future generation.
    • But to a great extent, most of the government’s borrowing is in the form of bonds.
    • This is why each year the fiscal deficit (which is essentially the level of government’s borrowing from the market) is so keenly tracked.
    • Further, in a relatively country like India, all governments are forced to resort to the use of bonds of some kind.
    • Take the current NDA government itself, which has issued bonds worth Rs 2.79 lakh crore (twice the amount of oil bonds) to recapitalise public sector banks.
    • These bonds will be paid by governments till 2036.

     

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • Inter-State collaboration to deal with air pollution

    Context

    With the Aam Aadmi Party (AAP) governing both Delhi and Punjab, collaboration for clean air should be the mantra for both State governments.

    Impact of air pollution on Delhi and Punjab

    • Punjab is home to nine of the 132 most polluted cities in the country identified by the Central Pollution Control Board.
    • In 2019, Delhi and Punjab together faced economic losses estimated to be approximately ₹18,000 crore due to worsening air pollution.
    • Therefore, by collaborating for clean air, both States can ensure improvements in citizen well-being and labour productivity.

     How can the two States collaborate?

    1] Arrive at a common understanding of sources

    • Those in charge of the two States must talk.
    • Setting aside their disagreements on the contribution of stubble burning to Delhi’s air pollution, the States should arrive at a common understanding of sources polluting the region.

    2] Create platforms for knowledge exchange

    • Cross-learning on possible solutions: A common knowledge centre should be set up to facilitate cross-learning on possible solutions to developmental challenges in both States.
    • Such a centre would especially benefit Punjab given the host of measures that the Delhi government has already taken to improve air quality in Delhi.
    • Information on air quality levels and source assessment studies are critical in developing long-term strategies for pollution mitigation.

    3] Collaborate to execute proven solutions

    • Co-design solutions: The two States could co-design solutions that would improve air quality.
    • Institutionalise a task force: They could jointly institutionalise a task force comprising experts from State-run institutions to pilot these solutions and assess their impact.
    • This would ensure wider acceptance of the proposed solution, which has not been the case in the past.
    • For instance, the PUSA bio-decomposer (developed by the Indian Agricultural Research Institute), has received mixed reviews from farmers.
    • The decomposer only makes sense for early maturing varieties of paddy, as even with the decomposer, stubble would take between 25 to 30 days to decompose.
    • Therefore, it is of little use in high burn districts such as Sangrur, Punjab, where late-maturing paddy varieties are dominant.

    4] Create a market for diversified crop products

    • Moving away from paddy-wheat cycle: Shifting away from the ‘paddy-wheat cycle’ through crop diversification is a sure shot solution to stubble burning.
    • But, the lack of an assured market for agricultural products, other than wheat and paddy, has acted as a deterrent.
    • For years now, the Delhi government has toyed with the idea of introducing ‘Aam Aadmi kitchens’ in Delhi.
    • These community kitchens could potentially incorporate crops other than wheat and paddy in meals offered.

    5] Extending inter-State cooperation to other States in Indo-Gangetic plains

    • Both State governments should assert the need for extending inter-State cooperation to other States in the Indo-Gangetic plains in different inter-State forums.
    • One such forum is the Northern Zonal Council which has representation from Chandigarh, Delhi, Punjab, Haryana, Rajasthan, Himachal Pradesh, Jammu and Kashmir and Ladakh.
    • Both Delhi and Punjab must use this platform to highlight the need for coordination with neighbouring States to alleviate the pollution crisis.

    Conclusion

    With a collaborative plan of action, we can be optimistic about cleaner air in the years to come.

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)