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

Civilsdaily

Login

GS Paper: GS3

  • Electricity (Amendment) Bill

    The government has tabled the Electricity (Amendment) Bill 2022 in the Lok Sabha. This has drawn huge protests across the country, in states like Tamil Nadu, Telangana, Rajasthan, and others.

    Electricity (Amendment) Bill

    • This Bill amends the Electricity Act, 2003. The Act regulates the electricity sector in India.
    • It sets up the Central and State Electricity Regulatory Commissions (CERC and SERCs) to regulate inter-state and intra-state matters, respectively.

    Key provisions under the Bill are:

    • Multiple discoms in the same area:  The Act provides for multiple distribution licensees (discoms) to operate in the same area of supply. The Bill removes this requirement.  It adds that a discom must provide non-discriminatory open access to its network to all other discoms operating in the same area, on payment of certain charges.
    • Power procurement and tariff:  Upon grant of multiple licenses for the same area, the power and associated costs as per the existing power purchase agreements (PPAs) of the existing discoms will be shared between all discoms.
    • Cross-subsidy Balancing Fund:  The Bill adds that upon grant of multiple licenses for the same area, the state government will set up a Cross-subsidy Balancing Fund.  Cross-subsidy refers to the arrangement of one consumer category subsidising the consumption of another consumer category.  Any surplus with a distribution licensee on account of cross-subsidy will be deposited into the fund.
    • Rules of Centre: The Bill specifies that the above matters related to the operation of multiple discoms in the same area will be regulated in accordance with the rules made by the central government under the Act.
    • License for distribution in multiple states:  As per the Bill, the CERC will grant licenses for distribution of electricity in more than one state.
    • Payment security:  The Bill provides that electricity will not be scheduled or despatched if adequate payment security is not provided by the discom.   The central government may prescribe rules regarding payment security.
    • Contract enforcement:  The Bill empowers the CERC and SERCs to adjudicate disputes related to the performance of contracts.  These refer to contracts related to the sale, purchase, or transmission of electricity.  Further, the Commissions will have powers of a Civil Court.
    • Renewable purchase obligation:  The Act empowers SERCs to specify renewable purchase obligations (RPO) for discoms.  RPO refers to the mandate to procure a certain percentage of electricity from renewable sources.  The Bill adds that RPO should not be below a minimum percentage prescribed by the central government.  Failure to meet RPO will be punishable with a penalty between 25 paise and 50 paise per kilowatt of the shortfall.
    • Selection committee for SERCs:  Under the Act, the Chairperson of the Central Electricity Authority or the Chairperson of the CERC is one of the members of the selection committee to recommend appointments to the SERCs.  Under the Bill, instead of this person, the central government will nominate a member to the selection committee.  The nominee should not be below the rank of Additional Secretary to the central government.

    Other key provisions

    • Tariff Ceilings: The Bill makes provision for “mandatory” fixing of minimum as well as maximum tariff ceilings by the “appropriate commission” to avoid predatory pricing by power distribution companies and to protect consumers.
    • Tariff revisions: The amendment has several provisions to ensure graded and timely tariff revisions that will help provide state power utilities enough cash to be able to make timely payments to power producers. This move is aimed at addressing the recurrent problem of default by distribution companies in payment to generation companies.
    • Payment security mechanism: The bill through amendments in Section 166 of the Act also seeks to strengthen payment security mechanisms and give more powers to regulators. It has become necessary to strengthen the regulatory mechanism, adjudicatory mechanism in the Act and to bring administrative reforms through improved corporate governance of distribution licensees.

    Why is it being opposed?

    • Provisions of the Bill are being opposed by a number of opposition-ruled states.
    • It is being termed anti-federal in spirit.
    • Power as a subject comes under the Concurrent List and it was the “the bounden duty or the mandatory obligation” of the Centre to consult the states.

    Criticisms

    • If passed in its current form it will lead to a major loss for government distribution companies, eventually helping to establish the monopoly of a few private companies in the country’s power sector.
    • By bringing in more retailers or distribution licensees, the quality of service or price is not going to be any different.

    How will these amendments help?

    • Power freebie: The Bill comes at a time when there is a debate around freebies being offered by political parties.
    • Discom crisis: Various state power distribution companies (Discoms) have not been able to raise enough resources to make timely payments to power generating companies.
    • Empowering discoms: Empowering the regulator to be able to take calls on tariff revision and ensuring that the government freebies, even on electricity, should be through direct benefit transfer.

     

    UPSC 2023 countdown has begun! Get your personal guidance plan now! (Click here)

  • How to stop illegal mining of minor minerals

    Context

    While laws and monitoring have been made stringent for the mining of major minerals consequent to the unearthing of several related scams across the country, the fact is that rampant and illegal mining of minor minerals continues unabated.

    What are minor minerals?

    •  “Minor minerals” means building stones, gravel, ordinary clay, ordinary sand other than sand used for prescribed purposes, and any other mineral which the Central Government may, by notification in the Official Gazette, declare to be a minor mineral;
    • Regulation exclusively by States: Unlike major minerals, the regulatory and administrative powers to frame rules, prescribe rates of royalty, mineral concessions, enforcement, etc. are entrusted exclusively to the State governments.
    • The Environment Impact Assessment (EIA) Notifications of 1994 and 2006 made environmental clearance compulsory for mining in areas more than or equal to five hectares.
    • The EIA was amended in 2016 which made environmental clearance mandatory for mining in areas less than five hectares, including minor minerals.
    • The amendment also provided for the setting up of a District Environment Impact Assessment Authority (EIAA) and a District Expert Appraisal Committee (EAC).

    The problem of illegal mining of minor minerals

    • The United Nations Environment Programme, in 2019, ranked India and China as the top two countries where illegal sand mining has led to sweeping environmental degradation.
    • No comprehensive assessment: Despite this, there is no comprehensive assessment available to evaluate the scale of sand mining in India.
    • Damage to the environment: Regional studies such as those by the Centre for Science and Environment of the Yamuna riverbed in Uttar Pradesh have observed that increasing demand for soil has severely affected soil formation and the soil holding ability of the land, leading to a loss in marine life, an increase in flood frequency, droughts, and also degradation of water quality.
    • Loss to exchequer: It is not just damage to the environment. Illegal mining causes copious losses to the state exchequer.
    • A State-wide review of the reasons behind non-compliance suggests a malfunction of governance due to weak institutions, a scarcity of state resources to ensure enforcement, poorly drafted regulatory provisions, inadequate monitoring and evaluation mechanisms, and excessive litigation that dampens state administrative capacity.

    Way forward: Use of technology

    • Use of satellite imagery: Satellite imagery can be used to monitor the volume of extraction and also check the mining process.
    • Recently, the NGT directed some States to use satellite imagery to monitor the volume of sand extraction and transportation from the riverbeds.
    • Drones, IoT and blockchain: Additionally, drones, the internet of things (IoT) and blockchain technology can be leveraged to monitor mechanisms by using Global Positioning System, radar and Radio Frequency (RF) Locator.
    • State governments such as Gujarat and judicial directions such as the High Court of Madras have employed some of these technologies to check illegal sand mining.

    Conclusion

    Protecting minor minerals requires investment in production and consumption measurement and also monitoring and planning tools. To this end, technology has to be used to provide a sustainable solution.

    UPSC 2023 countdown has begun! Get your personal guidance plan now! (Click here)

  • Small Satellite Launch Vehicle (SSLV) launched into wrong Orbit

    The Indian Space Research Organisation (ISRO) has said that the satellite onboard its’ maiden Small Satellite Launch Vehicle “are no longer usable” after the SSLV-D1 placed them in an elliptical orbit instead of a circular one.

    What is SSLV?

    • The SSLV is a small-lift launch vehicle being developed by the ISRO with payload capacity to deliver:
    1. 600 kg to Low Earth Orbit (500 km) or
    2. 300 kg to Sun-synchronous Orbit (500 km)
    • It would help launching small satellites, with the capability to support multiple orbital drop-offs.
    • In future a dedicated launch pad in Sriharikota called Small Satellite Launch Complex (SSLC) will be set up.
    • A new spaceport, under development, near Kulasekharapatnam in Tamil Nadu will handle SSLV launches when complete.
    • After entering the operational phase, the vehicle’s production and launch operations will be done by a consortium of Indian firms along with NewSpace India Limited (NSIL).

    Vehicle details

    (A) Dimensions

    • Height: 34 meters
    • Diameter: 2 meters
    • Mass: 120 tonnes

    (B) Propulsion

    • It will be a four stage launching vehicle.
    • The first three stages will use Hydroxyl-terminated polybutadiene (HTPB) based solid propellant, with a fourth terminal stage being a Velocity-Trimming Module (VTM).

    SSLV vs. PSLV: A comparison

    • The SSLV was developed with the aim of launching small satellites commercially at drastically reduced price and higher launch rate as compared to Polar SLV (PSLV).
    • The projected high launch rate relies on largely autonomous launch operation and on overall simple logistics.
    • To compare, a PSLV launch involves 600 officials while SSLV launch operations would be managed by a small team of about six people.
    • The launch readiness period of the SSLV is expected to be less than a week instead of months.
    • The SSLV can carry satellites weighing up to 500 kg to a low earth orbit while the tried and tested PSLV can launch satellites weighing in the range of 1000 kg.
    • The entire job will be done in a very short time and the cost will be only around Rs 30 crore for SSLV.

    Significance of SSLV

    • SSLV is perfectly suited for launching multiple microsatellites at a time and supports multiple orbital drop-offs.
    • The development and manufacture of the SSLV are expected to create greater synergy between the space sector and private Indian industries – a key aim of the space ministry.

    Back2Basics: Various Orbits of Satellites

    [1] Geostationary orbit (GEO)

    • Satellites in geostationary orbit (GEO) circle Earth above the equator from west to east following Earth’s rotation – taking 23 hours 56 minutes and 4 seconds – by travelling at exactly the same rate as Earth.
    • This makes satellites in GEO appear to be ‘stationary’ over a fixed position.
    • In order to perfectly match Earth’s rotation, the speed of GEO satellites should be about 3 km per second at an altitude of 35 786 km.
    • This is much farther from Earth’s surface compared to many satellites.
    • GEO is used by satellites that need to stay constantly above one particular place over Earth, such as telecommunication satellites.
    • Satellites in GEO cover a large range of Earth so as few as three equally-spaced satellites can provide near-global coverage.

    [2] Low Earth orbit (LEO)

    • A low Earth orbit (LEO) is, as the name suggests, an orbit that is relatively close to Earth’s surface.
    • It is normally at an altitude of less than 1000 km but could be as low as 160 km above Earth – which is low compared to other orbits, but still very far above Earth’s surface.
    • Unlike satellites in GEO that must always orbit along Earth’s equator, LEO satellites do not always have to follow a particular path around Earth in the same way – their plane can be tilted.
    • This means there are more available routes for satellites in LEO, which is one of the reasons why LEO is a very commonly used orbit.
    • It is most commonly used for satellite imaging, as being near the surface allows it to take images of higher resolution.
    • Satellites in this orbit travel at a speed of around 7.8 km per second; at this speed, a satellite takes approximately 90 minutes to circle Earth.

    [3] Medium Earth orbit (MEO)

    • Medium Earth orbit comprises a wide range of orbits anywhere between LEO and GEO.
    • It is similar to LEO in that it also does not need to take specific paths around Earth, and it is used by a variety of satellites with many different applications.
    • It is very commonly used by navigation satellites, like the European Galileo system of Europe.
    • It uses a constellation of multiple satellites to provide coverage across large parts of the world all at once.

    [4] Polar Orbit

    • Satellites in polar orbits usually travel past Earth from north to south rather than from west to east, passing roughly over Earth’s poles.
    • Satellites in a polar orbit do not have to pass the North and South Pole precisely; even a deviation within 20 to 30 degrees is still classed as a polar orbit.
    • Polar orbits are a type of low Earth orbit, as they are at low altitudes between 200 to 1000 km.

    [5] Sun-synchronous orbit (SSO)

    • SSO is a particular kind of polar orbit. Satellites in SSO, travelling over the polar regions, are synchronous with the Sun.
    • This means they are synchronised to always be in the same ‘fixed’ position relative to the Sun.
    • This means that the satellite always visits the same spot at the same local time.
    • Often, satellites in SSO are synchronised so that they are in constant dawn or dusk – this is because by constantly riding a sunset or sunrise, they will never have the Sun at an angle where the Earth shadows them.
    • A satellite in a Sun-synchronous orbit would usually be at an altitude of between 600 to 800 km. At 800 km, it will be travelling at a speed of approximately 7.5 km per second.

    [6] Transfer orbits and geostationary transfer orbit (GTO)

    • Transfer orbits are a special kind of orbit used to get from one orbit to another.
    • Often, the satellites are instead placed on a transfer orbit: an orbit where, by using relatively little energy from built-in motors, the satellite or spacecraft can move from one orbit to another.
    • This allows a satellite to reach, for example, a high-altitude orbit like GEO without actually needing the launch vehicle.
    • Reaching GEO in this way is an example of one of the most common transfer orbits, called the geostationary transfer orbit (GTO).

     

    UPSC 2023 countdown has begun! Get your personal guidance plan now! (Click here)

  • Indian Virtual Herbarium, biggest database of country’s flora, is a global hit

    With details of about one lakh plant specimens, the Indian Virtual Herbarium, the biggest virtual database of flora in the country, is generating a lot of interest and turning out to be an eye-catching endeavour.

    Indian Virtual Herbarium

    • A herbarium specimen is consists of dried plant parts with labelled information on Scientific name and collection data.
    • It has immense use in plant identification, systematics studies and ecological studies.
    • The Botanical Survey of India has more than 30,00,000 herbarium specimens persevered in different herbaria located in different parts of the country.
    • Developed by scientists of the Botanical Survey of India (BSI), the herbarium was inaugurated by Union Minister of Environment Forest and Climate Change in Kolkata last month.

    Why in news?

    • Since launch, the portal ivh.bsi.gov.in has had nearly two lakh hits from 55 countries.
    • The portal includes about one lakh images of herbarium specimens.
    • Each record in the digital herbarium includes an image of the preserved plant specimen, scientific name, collection locality, and collection date, collector name, and barcode number.
    • The digital herbarium includes features to extract the data State-wise, and users can search plants of their own States, which will help them identify regional plants and in building regional checklists.

    Significance of the herbaria

    • Scientists say that there are approximately three million plant specimens in the country which are with different herbaria located at zonal centres of the BSI.
    • About 52% of our type specimens are from foreign nations and collected from 82 countries of the world during the British-era.
    • The herbarium is also deeply linked with the botanical history of the country.
    • The portal provides most valuable historical collections of botanists like William Roxburgh, Nathaniel Wallich and Joseph Dalton Hooker, considered the founding fathers of botany in India.
    • The digital herbarium has some of the oldest botanical specimens dating as early as 1696.

     

    UPSC 2023 countdown has begun! Get your personal guidance plan now! (Click here)

  • What is Genome Sequencing?

    Researchers from across the world have made available over 650 complete genome sequences of monkeypox isolates to date in public domain databases including GISAID and GenBank.

    What is Genome Sequencing?

    • Genome sequence is the unique code of genetic material of any organism, and determines the characteristic of any organism.
    • Whole genome sequencing is the process of determining the complete DNA sequence of an organism’s genome at a single time.
    • The gene composition of novel coronavirus, for instance, is different from that of the influenza virus. Every organism has a unique genome sequence.
    • Laboratories in various countries have been isolating and sharing the genome sequences of the virus on an international platform.

    Why are so many genome sequences being isolated?

    • When viruses multiply, or reproduce, there is a copying mechanism that transfers the gene information to the next generation.
    • However, no copying mechanism is perfect. When the virus multiplies, there will be small changes, which are called mutations.
    • These mutations accumulate over time, and after prolonged periods, are responsible for evolution into new organisms.
    • Within a single reproduction, the changes are extremely minor. More than 95 per cent of the gene structure remains the same.

    How does it help scientists?

    • However, the small changes that occur are crucial to understanding the nature and behaviour of the organism.
    • In this case, for example, the small changes could provide scientists with information about the origin, transmission, and impact of the virus on the patient.
    • It could also hold clues to the differing effects the virus could have on patients with different health parameters.

    Accelerated evolution of Monkeypox

    • The monkeypox virus has a DNA genome of around 2,00,000 base pairs, roughly six times larger than that of SARS-CoV-2.
    • Like other viruses, the monkeypox virus evolves by the accumulation of genetic errors, or mutations, in its genome when it replicates inside a host.
    • Being a DNA virus, the monkeypox virus like other poxviruses was believed to have a small rate of accumulating genetic changes compared to viruses with an RNA genome like SARS-CoV-2, which have a much larger rate of mutations.
    • For poxviruses, this rate is estimated to be as low as a couple of genetic changes every year.
    • A recent study, however, revealed that the observed rate of genetic changes in the virus was higher than expected — average of around 50 genetic changes.

    Key findings

    Ans. APOBEC3 protein

    • The study also suggests that several mutations that have been identified in the new sequences of the monkeypox virus.
    • This may have emerged due to interaction between the virus genome and an important family of proteins coded by the human genome known as the Apolipoprotein B Editing Complex (or APOBEC3).
    • These proteins offer protection against certain viral infections by editing the genome sequence of the virus while it replicates in the cell.
    • Some researchers suggest that many of the genetic mutations in the monkeypox genomes from the current outbreak are relics of the effect of APOBEC3.

    Conclusion

    • Genomic surveillance of pathogens provides interesting insights by following a molecular approach for contact tracing and understanding the transmission of the virus across the world.
    • As cases of monkeypox continue to rise, it is therefore important to strengthen the genomic surveillance for the monkeypox virus.
    • Since data from the present outbreak suggest a sustained human-to-human transmission, continuous genomic surveillance is important to understand the evolution and adaptation of the virus, apart from providing useful data to epidemiologists.
    • With COVID-19 continuing unabated and monkeypox around the corner, the time has never been better, and the need never more acute, to build a sustainable system for genomic surveillance in India.

     

    UPSC 2023 countdown has begun! Get your personal guidance plan now! (Click here)

     

  • States holding up results of Economic Census: Centre

    The Centre has blamed the States for a prolonged delay in releasing the findings of the Seventh Economic Census, a critical compendium of formal and informal non-farm enterprises operating across the country, in a submission to the Parliament.

    What is National Economic Census?

    • In 1976, GoI launched a planning scheme called Economic Census and Surveys.
    • It is the census of the Indian economy through counting all entrepreneurial units in the country which involved in any economic activities of either agricultural or non-agricultural sector which are engaged in production and/or distribution of goods and/or services not for the sole purpose of own consumption.
    • It provides detailed information on operational and other characteristics such as number of establishments, number of persons employed, source of finance, type of ownership etc.
    • This information used for micro level/ decentralized planning and to assess contribution of various sectors of the economy in the GDP.

    Censuses till date

    • Total Six Economic Censuses (EC) has been conducted till date.
    • In 1977 CSO conducted First economic census in collaboration with the Directorate of Economics & Statistics (DES) in the States/UTs.
    • The Second EC was carried out in 1980 followed by the Third EC in 1990. The fourth edition took place in 1998 while the fifth EC was held in 2005.
    • The Sixth edition of the Economic Census was conducted in 2013.

     

    UPSC 2023 countdown has begun! Get your personal guidance plan now! (Click here)

  • What is Taiwan’s ‘Porcupine Strategy’ to protect itself if China attacks?

    As the long-range, live-fire drills began with China’s Eastern Theatre Command firing several ballistic missiles, Taiwan said that it was “preparing for war without seeking war”. What is Taiwan’s strategy to fight back in case China attempts to occupy it by force?

    What is a Military Doctrine?

    • Military doctrine is the expression of how military forces contribute to campaigns, major operations, battles, and engagements.
    • It is a guide to action, rather than being hard and fast rules. Doctrine provides a common frame of reference across the military.

    Why do need such a doctrine?

    • It helps standardize operations, facilitating readiness by establishing common ways of accomplishing military tasks.
    • It decides what you buy, produce, or prioritize, all of which flows from deciding your best fighting foot.

    What is the ‘Porcupine Doctrine’?

    • This doctrine was proposed in 2008 by US Naval War College research professor William S Murray.
    • It is a strategy of asymmetric warfare focused on fortifying a weak state’s defences to exploit the enemy’s weaknesses rather than taking on its strengths.
    • It is about building defences that would ensure that Taiwan could be attacked and damaged but not defeated, at least without unacceptably high costs and risks.

    How does this work?

    It identifies three defensive layers in the porcupine approach.

    1. The outer layer is about intelligence and reconnaissance to ensure defence forces are fully prepared. Behind this come plans for guerrilla warfare at sea with aerial support from sophisticated aircraft provided by the US.
    2. The innermost layer relies on the geography and demography of the island.
    3. While the outer surveillance layer would work to prevent a surprise attack, the second one would make it difficult for China to land its troops on the island in the face of a guerrilla campaign at sea using “agile, missile-armed small ships, supported by helicopters and missile launchers”.

    Another tactic: Asymmetric systems of defence

    • Asymmetric systems are ones that are small, numerous, smart, stealthy, mobile and hard to be detected and countered and associated with innovative tactics and employments.
    • These asymmetric capabilities will be aimed at striking the operational centre of gravity and key nodes of the enemy.
    • The geographic advantages of the Taiwan Strait shall be tapped to shape favourable conditions to disrupt the operational tempo of the enemy, frustrate its attempts and moves of invasion.
    • Taiwan underlined its shift to an asymmetric approach by adopting the Overall Defence Concept (ODC) in 2018.

    Do you know?

    Indian armed forces follow the Cold Start Doctrine that involves joint operations between India’s three services and integrated battle groups for offensive operations. A key component is the preparation of India’s forces to be able to quickly mobilize and take offensive actions without crossing the enemy’s nuclear-use threshold.

    Need for such a strategy

    • China enjoys overwhelming military superiority over Taiwan.
    • Over the past decade, Beijing has developed far more accurate and precise weapon systems to target Taiwan.
    • China has been more vocal about its intention to “reunite” the island with the mainland, by force or coercion if needed.
    • The PLA has already achieved the capabilities needed to conduct an air and naval blockade, cyberattacks, and missile strikes against Taiwan.
    • PLA leaders now likely assess they have, or will soon have, the initial capability needed to conduct a high-risk invasion of Taiwan (following Russia’s path).

    How easy will it be for China?

    • Missile strikes, cyberattacks, air and naval blockade aside, undertaking a full-scale invasion across the Taiwan Strait, with attendant risks of anti-ship and anti-air attacks, could present challenges for China.
    • The PLA is estimated to have air and naval resources to carry out an initial landing of 25,000 or more troops, which could increase if it deploys civilian ships to meet its military objectives.
    • However, it will have to first select and secure a suitable beachhead from among the handful that is available.
    • Also, with small and agile weapons systems, Taiwan can turn its coastline into a kill zone that would deny China a walkover.
    • Beijing would have to rely on cyberattacks, missile strikes on Taiwan’s air bases and runways, and a blockade to choke it into surrendering.

     

    UPSC 2023 countdown has begun! Get your personal guidance plan now! (Click here)

  • India’s banking sector shows progress

    Context

    The RBI’s latest Financial Stability Report (FSR) has given the banking system a reasonably clean bill of health. It’s a significant achievement, considering the stress of the previous decade, the shock of the pandemic and the associated slowdown of the economy.

    Two indicators of banking system’s progress

    • 1] Reduced NPAs: Successive waves of recapitalisation have given banks enough resources to write off most of their bad loans.
    • As a result, they have been able to bring down their gross NPAs (non-performing loans) from 11 per cent of total advances in 2017-18 to 5.9 per cent in 2021-22.
    • Even after these large write-offs, most banks retain comfortable levels of capital.
    • 2] Credit growth doubled: During the decade when banks were under stress, non-food bank credit growth had been declining, reaching just 6 per cent in 2020, its lowest point in six decades.
    • Since then, credit growth has nearly doubled.

    Concerns

    • Role of credit in supporting GDP growth: The problem is that very little of this credit is going to large-scale industry or for financing investment.
    • Reluctance of banks to provide credit to industry: Over the last decade, banks have increasingly shifted away from providing credit to industry, favouring instead lending to consumers.
    • This trend is continuing — in the year ending March 2022, consumer loans grew at 13 per cent, whereas loans to industry grew at just 8 per cent.
    • Banks favoring MSMEs in industry loans: Bulk of the industry loans has been extended to the smaller firms (MSMEs), which benefitted from the credit guarantee scheme offered by the government in the wake of the pandemic.
    • Reduced lending to private sector investment: A related problem is that there has been little lending for private sector investment.
    • Over the last one year, bank lending to infrastructure has grown by 9 per cent, up from 3 per cent in 2020, but this was fuelled mainly by public sector capital expenditure.

    Why is there so little lending for investment by large firms?

    • Demand side reason: On the demand side, private sector investment has been sluggish for nearly a decade.
    • The boom-and-bust of the mid-2000s had saddled firms with excess capacity, giving them little reason to expand their production facilities.
    • In addition, the global financial crisis had shown the dangers of ambitious expansion supported by excessive borrowing, leading firms to conclude that it would be prudent to scale back their plans and instead focus on reducing their debts.
    • Supply side reason: On the supply side, banks have learned similar lessons.
    • During the period 2004-2009, rapid GDP growth in the Indian economy was fuelled by an unprecedented lending boom.
    •  Subsequently, many of those loans turned bad, leading to high levels of NPAs on bank balance sheets.
    •  As a result of these financial problems, banks for a decade were unable to extend much in the way of credit.

    Challenges

    • On the positive side, firms seem to have finally used up much of their spare capacity.
    • Fundamental problems not resolved: But on the negative side, the fundamental problems that led to the difficulties of the past decade still have not been resolved.
    • No framework for risk reduction: There is still no framework that will reduce the risk of private sector investment in infrastructure, certainly not in the critical and highly troubled power sector.
    • Nor is there any reassurance for the banks that if problems do develop, they can be resolved expeditiously, since the Insolvency and Bankruptcy Code has been plagued by delays and other problems.

    Way forward

    • We need deep structural reforms — to the infrastructure framework, the resolution process, and indeed, in the risk management processes at the banks themselves.
    • In the event that these reforms do not materialise, there may continue to be shortfalls in credit, investment, and ultimately in economic recovery and growth.

    Conclusion

    A healthy balance sheet of the banking sector is a necessary but not a sufficient condition for economic growth. The important question is whether banks and firms will once again be willing to take on the risk of investment in industry and infrastructure.

    UPSC 2023 countdown has begun! Get your personal guidance plan now! (Click here)

  • Ocean Thermal Energy Conversion Plant in Lakshadweep

    The National Institute of Ocean Technology is establishing an Ocean Thermal Energy Conversion (OTEC) plant with a capacity of 65 kilowatts (kW) in Kavaratti, the capital of Lakshadweep.

    What is OTEC Plant?

    • Ocean thermal energy conversion (OTEC) is a process or technology for producing energy by harnessing the temperature differences (thermal gradients) between ocean surface waters and deep ocean waters.
    • Energy from the sun heats the surface water of the ocean.
    • In tropical regions, surface water can be much warmer than deep water.
    • This temperature difference can be used to produce electricity and to desalinate ocean water.

    How do they work?

    • The OTEC technology uses the temperature difference between the cold water in the deep sea (5°C) and the warm surface seawater (25°C) to generate clean, renewable electricity.
    • The technology requires a minimum of 20°C difference between the surface and deep ocean temperatures.
    • Warm surface water is pumped through an evaporator containing a working fluid. The vaporized fluid drives a turbine/generator.
    • The vaporized fluid is turned back to a liquid in a condenser cooled with cold ocean water pumped from deeper in the ocean.
    • OTEC systems using seawater as the working fluid can use the condensed water to produce desalinated water.

     

    UPSC 2023 countdown has begun! Get your personal guidance plan now! (Click here)

  • Demographic dividend

    Context

    The UN report, World Population Prospects 2022, forecasts that the world’s population will touch eight billion this year and rise to 9.8 billion in 2050. What is of immediate interest to India is that its population will surpass China’s by 2023 and continue to surge.

    India’s potential workforce and growth as projected by consulting firms

    •  Deloitte’s Deloitte Insights (September 2017) expects “India’s potential workforce to rise from 885 million to “1.08 billion people over the next two decades from today”, and “remain above a billion people for half a century,” betting that “these new workers will be much better trained and educated,” than their existing counterparts.
    • McKinsey & Company’s report, ‘India at Turning Point’ (August 2020), believes the “trends such as digitisation and automation, shifting supply chains, urbanisation, rising incomes and demographic shifts, and a greater focus on sustainability, health, and safety are accelerating” to “create $2.5 trillion of economic value in 2030 and support 112 million jobs, or about 30% of the non-farm workforce in 2030.”
    • Four pillarsIn its May 14, 2022 issue, The Economist had this to say about India, “As the pandemic recedes, four pillars are clearly visible that will support growth in the next decade. The four pillars are:
    • 1) The forging of a single national market.
    • 2) An expansion of industry owing to the renewable-energy shift and a move in supply chains away from China,
    • 3) Continued pre-eminence in IT.
    •  4) High-tech welfare safety-net for the hundreds of millions left behind by all this.
    • The Financial Times in an article, ‘Demographics: Indian workers are not ready to seize the baton’, believes that India’s bad infrastructure and poorly skilled workforce will impede its growth.

    Comparing India’s preparedness with China’s in 1970s

    • China is enduring an ongoing population implosion, which by 2050, will leave it with only 1.3 billion people, of whom 500 million will be past the age of 60.
    • India’s population, by contrast, would have peaked at 1.7 billion, of whom only 330 million will be 60 years or older.
    • Simply put, India is getting a demographic dividend that will last nearly 30 years.
    • There is so much going on for India today compared to China, the only country it can be reasonably compared to.
    • It is still a young country and in a much better position to transform itself compared to China of the 1970s.
    • It is still an open society where mass protest matters and produces results.
    • Indians have not been traumatised as Chinese were at the time of Mao Zedong’s death.
    • IT backbone: The IT technologies now available in India, and most importantly the Internet they run on have matured exponentially.
    • Many things right from video conferencing to instantaneous payments and satellite imaging are getting better and cheaper by the day.
    • Better administrative system: Creaky and inadequate as they are, India’s administrative systems manage to deliver and its infrastructure is in far better shape today than it was for China at the start of its reforms.
    • No rural urban divide: India does not have a Hukou system which in China tethers rural folk to rural parts creating a deep divide between a small and prosperous urban China and a much larger, very deprived rural China.

    Way forward for India

    • To wring the best out of its demographic dividend, India needs to invest massively in quality school and higher education as well as healthcare across India on an unprecedented scale, literally in trillions of rupees between now and 2050 when it would have reached the apogee of its population growth.

    Conclusion

    India must seize the moment and not be incremental in its approach. Given the will it can initiate and see through a transformation that will stun the world, even more than China’s has so far.