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GS Paper: GS3

  • LIC

    Context

    LIC is now at a transformational moment. Its listing on the bourses should lift LIC to be a part of the elite corporate community in India.

    Insurance sector in India

    • Opening of the insurance sector: A milestone in the history of India’s insurance industry was the opening of the sector for private participation in the year 2000 and this caused widespread concern that LIC will find the competition tough and could very well be marginalised.
    • Today, there are 24 private players in the life insurance space and many of them have foreign collaborations.
    • LIC has steadily grown in the past six decades and today with over 290 million policyholders and an asset value of ₹38 lakh crore ($520 billion), it ranks as one of the largest insurance companies in the world.
    • Yet, LIC remains a colossus capturing 75% of the life insurance business in the country.
    • Its claim settlement at 99.87% is far above the industry average of 84%.

    Role of LIC in skilling and women’s employment

    • LIC created large scale employment for women right from its inception in 1956. 
    • Thousands of women became LIC agents in the 1950s and 60s, when job opportunities were scarce.
    • There was no entry barrier in terms of age or fixed time for work.
    • Education requirement was a mere high school pass.
    • Many of these women were housewives who could earn an extra income by selling LIC policies.
    • This was a period before the arrival of digital technologies and mobile phones.
    • Skill development program: LIC’s training programme with its mix of online education and real-life case studies offer the best model for India’s skill development programmes.
    •  LIC’s relevance comes from its track record of creating vast number of employment opportunities for ordinary Indians, male and female, urban and rural.

    Policies focused on savings

    • In a country of vast poverty and low income, LIC recognised from the beginning that it cannot sell insurance as a risk cover on premature death.
    • It, therefore, devised policies focussing on savings and the need for children’s education and daughter’s marriage which are fundamentals to family values in India.
    • These policies also ensured that a part of the premium paid was returned at regular intervals before the maturity period, providing liquidity for emergencies.
    • They simultaneously covered risk caused by death.
    • People-centric approach: While the private players concentrated on technology-driven marketing, LIC’s approach was significantly people-centric.
    • When Pradhan Mantri Jan Dhan Yojana was launched for financial inclusion of over 300 million of the rural population on August 15, 2014, LIC was already there with its policies covering a rural population of 200 million.

    Conclusion

    The nation must not forget the fact that LIC was built on sweat and tears, pain and sacrifice of ordinary Indians. It is these democratic credentials that remain LIC’s most valuable asset.

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  • India must use markets to decarbonise

    Context

    Climate change is bound to impact human lives and the global economy at an exceptionally high scale in the not-so-distant future. The solution to the problem calls for government intervention.

    Carbon intensive nature of India’s energy ecosystem

    • After China and the United States, India, which releases 2.44 billion tonnes of carbon dioxide annually, is the third-largest emitter of this GHG, making it a key player in emissions reduction.
    •  The International Energy Agency’s (IEA) World Energy Outlook 2017 Report estimates that India will account for nearly one-fourth of the global energy demand by 2040.
    • As per the IEA’s India Energy Outlook 2021 Report, India’s energy system is highly dependent on fossil fuels — coal, oil and bioenergy — that supply about 90 per cent of the country’s demand.
    • Low electrification: About 38 per cent of primary energy is consumed for power generation, implying that the level of electrification is still low in the country.
    • Power generation is highly dependent on coal — about 78 per cent of it comes from this fossil fuel — and, transportation is almost entirely dependent on oil.
    • The Indian energy ecosystem is, thus, highly carbon-intensive.

    Climate change as a feature of market failure

    • Market failure due to climate change: Economic activities by consumers (driving or air-conditioning, for instance) and by producers (such as electricity generation and manufacturing) cause emissions, leading to pollution and global warming.
    • Negative externalities: These negative externalities, causing outcomes that are not efficient, are not reflected in the costs incurred by consumers or producers.
    • The true costs to the consumers, producers and society are not reflected in the market interactions.
    • This leads to an uncontrolled rise in emissions and also breeds apathy towards mitigation efforts.

    Way forward

    • Government intervention: Achieving economic growth sustainably requires a strategy for reducing carbon emissions aggressively while also focusing on efficiency, equity, fairness and behavioural aspects.
    • The solution to the problem of market failure calls for government intervention.
    • Limits of emission: The most natural option of government intervention for reducing emissions is by fixing limits of emissions through regulation, taking into consideration the Nationally Determined Contribution targets set by the country under the Paris Agreement.
    • Experts have shown that the wrongly set emission levels could lead to cost-inefficient outcomes.
    • It makes it difficult for the regulator to obtain the information about each firm’s abatement-cost and damage-cost schedules in advance.
    • Therefore, setting emission targets and regulating emissions through command and control might be good only during the initial phase of the mitigation strategy.
    • Why Carbon tax is a better option? The carbon tax is a better option than regulating the pre-fixed levels of emissions.
    • The marginal cost of abatement rises as the firms keep on reducing the emissions further, and the firm will stop reducing emissions and choose to pay tax at the point when the cost of abatement becomes higher than the rate of tax.
    • This option will lead to near-efficient outcomes.
    •  The trading scheme will bring in higher efficiency as the price of certificates will be determined by allowing firms facing low and high abatement costs to compete in the free market as per their own abatement and damage cost schedules.
    •  The emissions trading scheme will determine the optimal and cost-efficient levels of emissions reduction by providing a choice to the firms to either mitigate or trade — the net effect of this will be a reduction in emissions.
    • The low abatement-cost firms will keep reducing emissions as they would profit by trading the certificates.
    • Equity in energy access: The issue of equity in energy access must be addressed by channelling the revenues generated from carbon pricing to households and firms impacted by the carbon trading and carbon tax — these could be through incentives or lump-sum transfers.

    Conclusion

    The socio-economic impact of decarbonising the economy and the way humans live would be crucial in setting our priorities. We have limited time and our resources are scarce.

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  • PDS has had a spectacular run. That may not last

    Context

    2020-21 was one of Indian agriculture’s finest moments, as memorable as 1967-68 that inaugurated the Green Revolution. Agriculture was the only sector to grow 3.3 per cent in 2020-21, even as the economy overall contracted by 4.8 per cent.

    Increase in grain offtake under PDS

    • NFSA along with PMGKAY has led to a massive jump in grain offtake through the PDS.
    •  More importantly, this increase has largely taken place in the poorer states.
    • UP, Bihar and Jharkhand together accounted for 21.6 per cent of national grain offtake in 2012-13, which was pre-NFSA.
    • Sales of rice and wheat under various government schemes totalled 92.9 million tonnes (mt) in 2020-21 and 105.6 mt in 2021-22.
    • This was as against an average offtake of 62.5 mt during the first seven years after the implementation of the National Food Security Act (NFSA) in 2013-14 and 48.4 mt in the seven years preceding the legislation.

    Provisions under NFSA

    • The NFSA legally entitles up to 75 per cent of India’s rural and 50 per cent of the urban population — translating into some 813.5 million people — to receive 5 kg of grain per person per month at highly subsidised rates of Rs 2/kg for wheat and Rs 3/kg for rice.
    • In the wake of the Covid-induced economic disruptions, a new Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) scheme was launched giving NFSA beneficiaries an extra 5 kg grain per person per month free of cost.
    • PMGKAY was implemented for eight months (April-November) in 2020-21 and 11 months (May-March) of 2021-22.

    PDS reforms in states

    • Only a handful of states — Kerala, Tamil Nadu and Andhra Pradesh — had well-functioning PDS till the early 2000s.
    • In the late-2000s, Chhattisgarh initiated reforms to curb diversion/leakages by entrusting the running of fair price shops to cooperatives and local bodies (as against private licensees), making timely allocation and supplying grain directly to PDS outlets (bypassing middle-level distribution agencies), and using IT to track dispatches right from procurement centres to points of sale.
    • Chhattisgarh’s example was emulated by Odisha, followed by Madhya Pradesh and West Bengal — all by 2015-16.
    • The three poorest states are the latest entrants to the list.
    • The accompanying charts show the offtake of rice and wheat both at the all-India level and for the three poorest states as per the NITI Aayog’s National Multidimensional Poverty Index — Bihar, Jharkhand and Uttar Pradesh (UP).
    • UP particularly has seen its grain offtake soar from 9.5 mt to 17.3 mt in the last two years.
    • Out of the 17.3 mt (10.7 mt wheat and 6.6 mt rice) distributed in 2021-22, 7.8 mt comprised free grains under PMGKAY.
    • The PDS, indeed, turned out to be the only effective social safety net during the pandemic.
    • Some states went beyond rice and wheat.

    Challenges

    •  The expansion of the PDS, especially post-NFSA, was underwritten by the superabundance of rice and wheat in government granaries.
    • Official wheat procurement is likely to halve this time from last year’s record 43.3 mt, because of a poor crop singed by the abnormal spike in March temperatures.
    • Rice stocks are far more comfortable, though the precarious supply situation in fertilisers raises questions about the prospects for the coming kharif season.
    • Looking ahead, the Food Corporation of India’s stocks can probably sustain the pre-2020-21 annual offtake levels of 60-65 mt – enough for NFSA, but certainly not schemes such as PMGKAY.

    Conclusion

    The PDS was originally meant to protect ordinary people from extraordinary price rises. Whether it can do that at a time of renewed global inflation remains to be seen.

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  • Confidentiality ring amendment and its impact on antitrust disputes

    Context

    Amazon (the defendant) decided to take the confidentiality route towards its submissions in an order dated March 7 passed by the DG-CCI on the Amazon dispute.

    About the Confidentiality Ring

    • In 2015, the EU mandated the creation of a data room to respect the confidentiality of certain documents.
    • The EU has to protect this mandate to ensure that the right of defence is not prejudiced. 
    • Articles 101 and 102 of the Treaty of the European Union, which states: “Through confidentiality rings, DG Competition (EU) can safeguard the rights of defence while respecting the legitimate interests in the confidentiality of the information providers.
    • In addition, confidentiality rings remove or reduce the burden of preparing non-confidential versions of documents.”

    Adoption of Confidentiality ring by CCI

    • CCI’s investigation under Sections 3, 4 or 5 of the Competition Act are related to the suo motu powers given to the director-general of the commission, which have now extended toward establishing a confidentiality ring.
    • The CCI has taken an alternative view by vaguely replacing the intent with the regulation.
    • The commission may provide the Confidentiality ring after providing a reasonable opportunity to the informant to represent its case before the Commission.
    • This casts an onus on the informant.
    • Turning to the provider of confidential information, the party seeking confidentiality has to submit reasons and the same must be rebutted by the informant, CCI or any other parties, largely driven by the CCI.

    Issues with the CCI adoption of the Confidentiality Ring

    1] Indiscriminate use of defendant’s reputation ground

    • What would happen if the informant seeks additional documents so that the agency is not prejudiced?
    • By hearing parties out, through redacted information the CCI is bound to be questioned as to the reasons for deciding in a certain manner and worse, could stifle the process at the start.
    • This is likely because the CCI has to hear the objections that the informant may have regarding the reasons for keeping information confidential.
    • The usual ground for seeking this protection is the defendant’s reputation.
    • However, this defence can be used to indiscriminately to subdue any counter that may arise from the informant, who may not possess the intricate details of how a cartel works.

    2] Rejection of informant’s right to know the information

    • The second question is about the relief under Section 35 of the Act that empowers the CCI to establish a confidentiality ring including the parties in dispute to disseminate the information for which the confidentiality clause is invoked.
    • However, this is immediately caveated by Regulation 8 of the “Confidentiality Ring” Amendment of April 8, which states that the informant shall not be part of the ring.
    • This will essentially lead the CCI to gather more information surreptitiously for the determination of the case.
    • Void the informant’s right to know information: It has also effectively rejected the informant’s right to know the information, which would be necessary to establish their claim.
    • Brings secrecy: This not only empowers the CCI to further its cause of suo motu investigation but also brings secrecy to cases of high-value disputes.

    3] It protects the defendant

    • The reason the CCI decided to establish a confidentiality ring is the opposite of the EU directive.
    • The EU would like to protect the information provider, but the CCI seems to want to protect the documents of the defendant.
    • This contradicts the intent in regulation 1 wherein the CCI intends to protect the informant and regulation 2, which gives unfettered rights to “parties” in the dispute to summarily drop the confidentiality card which, according to any reasonable person, includes the defendant.

    Conclusion

    The protection provided to the informants, unfortunately, turns out to be to the advantage of the defendants, who are usually large multi-billion dollar entities. It enables the CCI to ringfence its investigation creating legal immunity for “all” involved.

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  • Why are Electric Vehicles Catching Fire?

    The Union government has constituted an expert panel to probe the recent series of battery explosions in electric vehicles (EVs).

    Why is the world poised to transition to electric vehicles?

    • The growing concern over climate change has led to global efforts to electrify the transportation sector.
    • In parallel, cost of Li-ion (Lithium-ion) battery technology has decreased by a staggering order of magnitude in the past decade.
    • The convergence of these two factors has resulted in a unique time in our history where we are at the cusp of a dramatic transition in the transportation sector.
    • There are multiple trade-offs in this complex ecosystem: engineering higher safety often results in higher costs and lower driving range.
    • In this competitive landscape where companies are vying for market share, a race to the bottom can compromise safety.

    A race to nowhere

    • The world has taken note of this moment with governments providing incentives to usher in the transition and private industry ramping up plans for capturing the market.
    • There is a worldwide race emerging, with vehicle companies, battery manufacturers, and material suppliers vying with each other for market share.
    • However, Li-ion batteries are complex devices requiring a level of sophistication that can takes years to perfect.
    • Hurrying the development of this complex technology without careful safeguards are leading to increasing safety incidents, as evidenced recently on Indian roads.

    What goes into a Li-ion battery?

    • Every Li-ion battery consists of three active components:
    1. Anode: typically graphite
    2. Cathode: based on a nickel, cobalt, and manganese-based oxide; and
    3. Electrolyte: A salt of lithium in an inorganic solvent
    • Battery cells are assembled into modules and then further assembled into packs.
    • Li-ion batteries require tight control on the state of charge and the temperature of operation to enhance safety and increase usable life, achieved by adding multiple sensors.
    • Packs are designed to ensure uniform temperature profile with minimal thermal variation during operation.

    What is the level of precision involved?

    • Battery manufacturing is a complex operation involving forming sheets of the anode and cathode and assembling them into a sandwich structure held apart by a thin separator.
    • Separators, about 15 microns in thickness — about a fifth of the thickness of the human hair — perform the critical function of preventing the anode and cathode from shorting.
    • Accidental shorting of the electrodes is a known cause of fires in Li-ion cells.
    • It is important that the various layers are assembled with high precision with tight tolerances maintained throughout the manufacturing process.
    • Safety features, such as thermal switches that turn off if the battery overheats, are added as the sandwich is packaged into a battery cell.

    What causes battery fires?

    • Battery fires, like other fires, occur due to the convergence of three parts of the “fire triangle”: heat, oxygen, and fuel.
    • If an adverse event such as a short circuit occurs in the battery, the internal temperature can raise as the anode and cathode release their energy through the short.
    • This, in turn, can lead to a series of reactions from the battery materials, especially the cathode, that release heat in an uncontrolled manner, along with oxygen.
    • Such events also rupture the sealed battery further exposing the components to outside air and the second part of the fire triangle, namely, oxygen.
    • The final component of the triangle is the liquid electrolyte, which is highly flammable and serves as a fuel.
    • The combination leads to a catastrophic failure of the battery resulting in smoke, heat, and fire, released instantaneously and explosively.

    What triggers battery fire?

    • The trigger for such events can be a result of internal shorts (like a manufacturing defect that results in sharp objects penetrating the separator).
    • The external events may be accident leading to puncture of the cell and shorting of the electrodes, overcharging the battery.
    • Any of these triggers may cascade into a significant safety incident.

    Are battery fires inevitable?

    • Over the past three decades, Li-ion batteries have proved to be extremely safe, with the industry increasing controls as safety incidents have surfaced.
    • Safety is a must and is an important consideration that battery and vehicle manufacturers can design for at multiple levels from the choice of battery material to designs at the cell, pack, and vehicle level.
    • Protecting the cell with robust thermal management is critical, especially in India where ambient temperatures are high.
    • Finally, battery packs need to be protected from external penetration.
    • Any large-scale manufacturing process inevitably has a certain percentage of defects; therefore, such steps are needed to minimise the number of adverse events.

    Why battery safety matters?

    • Safety remains a concern for Li-ion manufacturers worldwide especially as cell sizes become larger for applications such as solar-connected storage.
    • There is a need to remove the threat of battery fires as the roll out of mass electrification takes place.

     

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  • Recent woes of the jute industry in West Bengal

    Member of Parliament (MP) from Barrackpore constituency in West Bengal met the Union Textile about issues concerning jute farmers, workers and the overall jute industry.

    What is the news?

    • The Barrackpore MP had earlier written to West Bengal CM, seeking her intervention into the “arbitrary decision” of capping the price for procuring raw jute from the mills.
    • He was referring to the Office of the Jute Commissioner (JCO)’s September 30 notification mandating that no entity would be allowed to purchase or sell raw jute at a price exceeding ₹6,500 per quintal.

    What is Jute?

    • Jute is the only crop where earnings begin to trickle in way before the final harvest.
    • The seeds are planted between April and May and harvested between July and August.
    • The leaves can be sold in vegetable markets for nearly two months of the four-month jute crop cycle.
    • The tall, hardy grass shoots up to 2.5 metres and each part of it has several uses.
    • The outer layer of the stem produces the fibre that goes into making jute products.
    • But the leaves can be cooked, the inner woody stems can be used to manufacture paper and the roots, which are left in the ground after harvest, improve the yield of subsequent crops.
    • A ‘Golden Fibre Revolution’ has long been called for by various committees, but the jute industry is in dire need of basic reforms.

    Jute production in India

    • India is the world’s biggest producer of jute , followed by Bangladesh.
    • Jute is primarily grown in West Bengal, Odisha, Assam, Meghalaya, Tripura and Andhra Pradesh.
    • The jute industry in India is 150 years old.
    • There are about 70 jute mills in the country, of which about 60 are in West Bengal along both the banks of river Hooghly.
    • Jute production is a labour-intensive industry. It employs about two lakh workers in the West Bengal alone and 4 lakh workers across the country.

    Significance of Jute

    • Compared to rice, jute requires very little water and fertiliser.
    • It is largely pest-resistant, and its rapid growth spurt ensures that weeds don’t stand a chance.
    • Jute is the second most abundant natural fibre in the world.
    • It has high tensile strength, acoustic and thermal insulation, breathability, low extensibility, ease of blending with both synthetic and natural fibres, and antistatic properties.
    • Jute can be used: for insulation (replacing glass wool), geotextiles, activated carbon powder, wall coverings, flooring, garments, rugs, ropes, gunny bags, handicrafts, curtains, carpet backings, paper, sandals, carry bags, and furniture.

    Why in news now?

    • Mills are now procuring raw jute at prices higher than what they are selling them at after processing.
    • The government has a fixed Minimum Support Price (MSP) for raw jute procurement from farmers, which is ₹4,750 per quintal for the 2022-23 season.
    • However, as the executive stated, this reached his mill at ₹7,200 per quintal, that is, ₹700 more than the ₹6,500 per quintal cap for the final product.
    • Though the Union government has come up with several schemes to prevent de-hoarding, the executive believes the mechanism requires a certain “systematic regulation”.

    What happened to supply?

    • What made the situation particularly worrisome recently was the occurrence of Cyclone Amphan in May 2020 and the subsequent rains in major jute producing States.
    • These events led to lower acreage, which in turn led to lower production and yield compared to previous years.
    • Additionally, as the Commission for Agricultural Costs and Prices (CACP) stated in its report, this led to production of a lower quality of jute fibre in 2020-21 as water-logging in large fields resulted in farmers harvesting the crop prematurely.
    • Acreage issues were accompanied by hoarding at all levels – right from the farmers to the traders.

    Where does India stand in comparison to Bangladesh?

    • As per the Food and Agriculture Organisation (FAO), India is the largest producer of jute followed by Bangladesh and China.
    • However, in terms of acreage and trade, Bangladesh takes the lead accounting for three-fourth of the global jute exports in comparison to India’s 7%.
    • This can be attributed to the fact that India lags behind Bangladesh in producing superior quality jute fibre due to infrastructural constraints and varieties suitable for the country’s agro-climate.
    • Further, as the CACP report stated, Bangladesh provides cash subsidies for varied semi-finished and finished jute products.
    • Hence, the competitiveness emerges as a challenge for India to explore export options in order to compensate for the domestic scenario.

    What is at stake?

    • The jute sector provides direct employment to 3.70 lakh workers in the country.
    • It supports the livelihood of around 40 lakh farm families, closure of the mills is a direct blow to workers and indirectly, to the farmers whose production is used in the mills.
    • West Bengal, Bihar and Assam account for almost 99% of India’s total production.

     

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  • Health Star Rating System of FSSAI for Packaged Food

    The “health star rating” system that the Food Safety Standards Authority of India (FSSAI) plans to adopt in order to help consumers reduce their intake of unhealthy foods has been opposed by close to a dozen consumer and health advocacy groups.

    What is the Health Star Rating System?

    • In February, the FSSAI decided to adopt the “health-star rating system”, which gives a product 1/2 a star to 5 stars, in its draft regulations for front of package labelling (FOPL).
    • The HSR format ranks a packaged food item based on salt, sugar, and fat content and the rating will be printed on the front of the package.
    • The underlying premise of the HSR is that positive ingredients such as fruits and nuts can offset negative nutrients such as calories, saturated fat, total sugar, sodium to calculate the number of stars ascribed to a product.
    • The decision was based on the recommendations of a study by the IIM-Ahmedabad the regulator had commissioned in September 2021.
    • In the same meeting, the regulator decided that FOPL implementation could be made voluntary for a period of four years.

    What is FoPL?

    • In India, packaged food has had back-of-package (BOP) nutrient information in detail but no FoPL.
    • Counter to this, FoPL can nudge people towards healthy consumption of packaged food.
    • It can also influence purchasing habits.
    • The study endorsed the HSR format, which speaks about the proportions of salt, sugar, and fat in food that is most suited for consumers.
    • Countries such as the UK, Mexico, Chile, Peru, Hungary, and Australia have implemented FoPL systems.

    What warranted the HSR rating in India?

    • Visual bluff: A lot of Indian consumers do not read the information available at the back of the packaged food item.
    • Burden of NCDs: Also, India has a huge burden of non-communicable diseases that contributes to around 5.87 million (60%) of all deaths in a year.
    • Healthy dietary choices: HSR will encourage people to make healthy choices and could bring a transformational change in the society.
    • Supreme Court order: A PIL seeking direction to the government to frame guidelines on HSR and impact assessment for food items and beverages was filed in the Supreme Court in June 2021.

    Which category of food item will have HSR?

    • All packaged food items or processed food will have the HSR label.
    • These will include chips, biscuits, namkeen, sweets and chocolates, meat nuggets, and cookies.
    • However, milk and its products such as chenna and ghee are EXEMPTED as per the FSSAI draft notified in 2019.

    Will there be pushback from food industry?

    • Negative warning: Some experts opposed the use of the HSR model in India, suggesting that consumers might tend to take this as an affirmation of the health benefits rather than as a negative warning of ill effects.
    • Lack of awareness: This is significant because there is lack of awareness on star ratings related to consumer products in India.
    • Impact on Sale: Certain organisations fear it might affect the sale of certain food products.

    Arguments against health star rating

    • Experts argue that “warning labels” instead have been most effective in various countries.
    • They said the HSR system adopted in countries like Australia and New Zealand has not resulted in any meaningful behavior change.
    • Even after eight years of their implementation, there is still no evidence of HSRs having a significant impact on the nutritional quality of people’s food and beverage purchases.
    • Also, the HSR system “misrepresents nutrition science”.
    • The algorithm of adding and subtracting nutrients does not fit with our understanding of biology.
    • For example, the presence of fruit in a fruit drink juice does not offset the impacts of added sugar in the body.

     

     

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  • Mother Nature a ‘living being’ with legal entity: Madras HC

    Holding that it is the right time to confer juristic status to ‘Mother Nature’, Justice S. Srimathy of the Madurai Bench of Madras High Court invoked the ‘parens patriae jurisdiction’, and declared ‘Mother Nature’ as a ‘living being’ having the status of a legal entity.

    What is the news?

    • The Madras HC observed that ‘Mother Nature’ was accorded the rights akin to fundamental rights, legal rights, constitutional rights for its survival, safety, sustenance and resurgence in order to maintain its status and also to promote its health and well-being.

    Legal rights for nature: A backgrounder

    • The movement for legal personhood for the environment and animals began in the 1970s.
    • This concept was articulated by Christopher D. Stone in his thesis, Should Trees Have Standing.
    • In this compelling piece, the author makes an argument for the environment to have independent legal rights, much like what was granted by the judgment of the Uttarakhand High Court in 2017.
    • He highlights how the theory of rights has developed over the years and that many inanimate objects have both rights and legal duties. They can sue and be sued.

    What is the case for Madras HC’s personification of nature?

    • The Madras HC has made a personification of nature that focuses on the life-giving and nurturing aspects of nature by embodying it, in the form of the mother.
    • It observed that the court is hereby declaring ‘Mother Nature’ a ‘living being’ having the status of a legal person with all corresponding rights, duties and liabilities of a living person, in order to preserve and conserve it.
    • The State and Central governments are directed to protect ‘Mother Nature’ and take appropriate steps in this regard in all possible ways.

    A different course: Ecological Jurisprudence

    • The onset of climate change and the potential mass extinction of species is accompanied by the gradual closing window of opportunity to take meaningful action.
    • Activists around the world are calling for anthropocentric legal and governance systems to be replaced with ecocentric ones.
    • The last 15 years have seen a dramatic increase in the number of laws based on ecological jurisprudence.
    • Ecological jurisprudence is a philosophy that sees nature not as a set of objects to be exploited but as a community of subjects (humans and non-humans) who are connected through interdependent, reciprocal relationships.

    India’s typical case

    • In 2017, the Uttarakhand HC ruled (in two separate orders) that the Ganga, the Yamuna, their tributaries, and the glaciers and catchments feeding these rivers in Uttarakhand had rights as a “juristic/legal person/living entity”.
    • In 2018, the same HC ruled that the entire animal kingdom had rights similar to that of a living person (Narayan Dutt Bhatt vs Union of India).
    • In March 2020, the Punjab and Haryana High Court passed an order declaring the Sukhna Lake in Chandigarh city a living entity, with rights equivalent to that of a person.

    Beyond Rights

    • Law is a modern human construct. It not only talks in the language of rights and duties that only humans understand but also operationalizes them in a way that can further entrench human-centeredness.
    • In most cases where nature’s rights are recognized in law, they have done so by extending to it the concept of “personhood” in other words, akin to humans and, therefore, having human rights.
    • Hence, any such movement on recognizing the rights of the rest of nature must challenge the fundamental forms of injustices, including capitalism, stateism, anthropocentrism and patriarchy.

    Significance of such status

    • These rights-based laws granting legal personhood for nature aim to shift the legal status of the natural world from being human property to living entities in their own right and subjects of law.
    • This guarantees their right to exist, thrive, evolve and maintain their natural cycles.
    • These rights are not conferred by humans; it is a recognition that these rights have always existed.
    • It lays upon humans the duty to act as guardians for the more-than-human world.

    Issues of implementation

    • Assuming that these rights are recognised, nature or any of its entity cannot represent itself in a court of law.
    • Moreover there is the issue of custodianship.

    What would account for violations?

    • The Uttarakhand court order did not mention what amounted to violation of rights of rivers.
    • In order to be able to truly exercise the rights and implement appropriate redressal, there is a need for a comprehensive definition of the actions that amount to “violation of the rights”.
    • Say, the violation of the rights of rivers may be defined as “any obstruction or impediment that disables the entity from performing its essential ecological functions”.

    Restitution and compensation

    • The New Zealand law has an extensive section lending itself to restitutive, restorative and compensatory action.
    • It acknowledged the government’s decisions and actions for more than a century that resulted in the violation of the health of the Whanganui and the rights, culture and well-being of the indigenous people living along the river.
    • Several specific examples were given, including the dismantling of traditional structures for fishing and river use, a hydroelectric project and mining.
    • Such an acknowledgment is a necessary first step towards seeking appropriate restitutive and compensatory measures.

    Another question: Bioregional Governance

    • Recognizing river ecosystems or other entities of nature as having rights offers the possibility of managing and governing habitats based on the ecological realities of the region.
    • It brings out the bizarre fact that the human-drawn nation state, and political lines on maps in various parts of the world have created conflict situations or disrupted ancient cultural and ecological flows and relations.
    • We need to begin reimagining governance from a bioregional governance point of view.
    • This would also mean bridging the gap between the customary ways of decision making and the current legal frameworks.
    • There is a need for more imaginative lawyers, activists and judges to help move towards an eco-centric and diverse legal framework.

    Way forward

    • There is a need for a comprehensive system to implement and protect their rights.
    • The rights can be safeguarded using the principles of custodianship.
    • The Uttarakhand High Court order named several government functionaries and a couple of independent lawyers as “parents”.
    • An alternative solution is that custodianship or guardianship be given to a body of local communities associated with the river.
    • These communities have traditional or customary rights of the river such as fisherfolk, farmers along the riverbank, and people directly engaged in river-related services.

     

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  • Managing the fiscal shock of the Russia-Ukraine conflict

    Context

    The Union Budget 2022-23 received a great deal of attention even before the financial year began due to the Russia-Ukraine conflict, and the consequent rise in inflation. There has been considerable speculation on whether the fiscal targets will be altered due to the evolving conditions.

    Estimate of GDP

    •  The critical estimate of GDP growth assumed for this year has certainly changed, with the RBI also adjusting its earlier forecast.
    • However, the budget was conservative to begin with, assuming an 11.1 per cent growth estimate on which its revenue collection targets were based.
    • Given that real GDP growth has been scaled down by the RBI to 7.2 per cent, and as inflation has gone up, on balance, the 11.1 per cent assumption looks tenable.
    • Hence, inflation has been a positive for the government in this respect.

    Tax collection

    • Another positive that emerged last year was that overall tax collections were even more buoyant than expected.
    • From the budgeted figure of Rs 22.17 lakh crore, the revised estimates raised the target to Rs 25.16 lakh crore.
    • In comparison, actual collections have turned out to be even higher at Rs 27.07 lakh crore.
    • If this buoyancy is maintained, then the government can expect the 2022-23 target of Rs 27.57 lakh crore to be exceeded by around Rs 2.5 lakh crore (of this, around 30 per cent will go to the states).
    • This additional revenue would ideally flow from enhanced GST collections, corporate tax, and customs.
    • Central to GST collections increasing is private consumption.
    • Today, high inflation erodes the purchasing power of households, which will divert a larger portion of their incomes for necessities that have become expensive.
    • Therefore, there will be uncertainty here. 
    • Corporates did well last year as they did manage to pass on higher input costs to the consumers, especially in the second half of the year.
    • Can they do it for the second time is the question.
    • High growth in trade volumes led to the government raking in higher customs collections. W
    • ith global growth set to slow down in 2022, a similar flow is unlikely.

    Excise collection and challenges

    • The government will be watchful of excise collections as it is possible that rising fuel prices will lead to lower consumption.
    • Also, in case crude oil continues on the current path and remains in the region of $100-120/barrel, a call may have to be taken by the government on the excise duty: Once the prices of diesel and petrol remain at a new threshold, there will be a tendency for freight rates to be increased permanently.
    • This will have a secondary impact on inflation. 

    Disinvestment challenges

    • On the revenue side, the LIC disinvestment that was to happen last year will materialise this year.
    • The disinvestment has been pushed through for May, but would be of a much lower amount (around Rs 21,000 crore) than envisaged earlier.
    • It will be interesting to see if this would be a part of the Rs 65,000 crore target for this year.

    Uncertainty on the expenditure side

    • The biggest concern will be the fertiliser subsidy, which has been a volatile expenditure item.
    • Higher prices of natural gas have meant that fertilisers have been more expensive and so, the budgeted amount of Rs 1.05 lakh crore will have to be revisited.
    • With inflation already high and agriculture expected to be the bright spot again, the government cannot risk ignoring the subsidy element on fertilisers because there can be an impact on farm product prices.
    • The food subsidy will also need to be examined.
    • The present rise in food prices globally has meant that there is a good global market, especially for wheat.
    • Exports for wheat and maize might rise but can distort the procurement process.

    Interest rate and its implications for borrowing

    • The budget had assumed that interest rates would be stable.
    • However, conditions have changed quite quickly with bond yields moving up by almost 50 bps for the 10-year G-secs.
    • This will mean that the entire Rs 15.95 lakh crore of gross borrowing will have to be carried out at a higher cost.
    • This can result in an additional Rs 8,000 crore of interest if the 50 basis points increase holds through the year. There could be an upward bias if rates go up further.

    Conclusion

    The longer the conflict continues the greater will be the impact. While the government has adeptly managed the fiscal numbers in the last couple of years, this year will be particularly challenging considering the nature of the shock.

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  • How to shock-proof India’s power sector

    Context

    The reports of coal-shortage induced power outages across states continue to pour in.

    Reasons for volatility in the power sector

    • Demand-supply mismatch: As economic activity resumed after the Covid-induced lockdowns, the demand-supply mismatch for commodities such as coal widened globally, leading to a surge in prices.
    • Geopolitical factors: Global supply disruptions due to the Russia-Ukraine conflict have sent coal prices touching historical highs.
    • The cost of imported coal in India is expected to be 35 per cent higher in the fiscal year 2022-23 compared to the past year.
    • Sudden rise in energy demand: Even as coal stocks available with state thermal power plants fell, India also witnessed a sudden rise in energy demand in March — the hottest in its recorded history.

    Suggestions to make the power sector resilient

    • The Ministry of Power has taken a host of measures to alleviate the crisis.
    • This includes giving directions to ensure maximum production of coal at captive mines, rationing of coal to non-power sectors, and a price cap of Rs 12 per unit on electricity traded on exchanges.
    • But we need to do more to enhance the sector’s resilience to such disruptions from exogenous factors.

    1] Create an enabling ecosystem to ensure power plants work efficiently

    • India has about 200 GW of coal-based generation capacity which accounts for nearly 70 per cent of the total electricity generated in the country.
    • However, according to a CEEW assessment, a disproportionate share of generation comes from older inefficient plants, while the newer and efficient ones remain idle for want of favourable coal supply contracts or power purchase agreements.
    • Revisiting fuel allocation and supporting the priority dispatch of efficient plants could help India reduce coal demand by up to 6 per cent of our annual requirement, and set aside more coal for the proverbial rainy day.

    2] Smart assessment and management of demand

    •  Enable discoms to undertake smart assessment and management of demand.
    • We have advanced tools for medium- and short-term demand forecasting.
    • However, few discoms have embraced these to inform their procurement decisions.
    • Introducing time-of-day pricing and promoting efficient consumption behaviour would help shave peak demand and avoid panic buying in the market.

    3] Empower electricity regulators to help bring down discom losses

    • Despite two decades of sectoral reforms, the aggregate losses of discoms stand at 21 per cent (2019-20).
    • This is reflective of both operational inefficiency and poor recovery of dues from consumers, including those affiliated with state governments and municipal bodies.
    • These losses are also the reason for discoms not being able to pay the generators on time, resulting in payment delays to Coal India, which, in turn, is reluctant to supply coal on request.
    • Infuse payment discipline: Besides the ongoing initiatives like introducing smart meters and network strengthening, empowering regulators would be critical to infuse payment discipline across the supply chain of the electricity sector and to keep cost recovery as a key metric.

    Conclusion

    Given the country’s development aspirations, India’s power demand is set to rise substantially and become more variable. We need to act now for the long-term resilience of India’s power sector.

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