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GS Paper: GS3

  • The message from the government’s wheat export ban

    Context

    The ban on the export of wheat was not unexpected. The rather ambivalent approach to agriculture comes out clearly with this move.

    Understanding how this ban has come about

    • We are not comfortable with market forces operating in agriculture.
    • Nor are we quite sure whether we want the farmer to get a better price or the consumer to pay less.
    • Governments spend a lot of money in the form of subsidies to ensure farmers are enthused to produce more wheat.
    • The Centre keeps increasing the MSP for this purpose and states often pay a bonus for procurement.
    • There are political reasons too as the farmer lobby needs to be placated.
    •  There are political reasons too as the farmer lobby needs to be placated.
    • We have been taking credit for the production of wheat and every year we set a new record.
    • This year, the Ministry announced that wheat production will touch a record of 111 million tonnes, which has recently been revised downwards.
    • With the war, conditions have changed. Russia and Ukraine are large producers of wheat and their supply to world markets has been cut off due to sanctions and supply chain disruptions.
    • With supplies interrupted, there is an opportunity for other surplus nations to step in.
    • But the disruption has caused world prices to rise significantly.

    Opportunity for India

    • The World Bank data indicates that the price of US (soft red winter) wheat has gone up from $328/tonne in December to $672/tonne while US (hard red winter) wheat is up from $377 to $496/tonne.
    • Countries that produce abundant wheat now have a chance to leverage this opportunity to export.
    • However, in case of India it does appear that production will be lower than expected.
    • Low wheat stock: The government has also not been able to procure wheat as farmers are no longer selling at MSP (which is at Rs 2,015/quintal) as they are getting higher prices in mandis.
    • As of May 10, procurement was just 18 million tonnes against 43 million tonnes last year.
    • This is a significant fall.
    • But stocks with the Centre and other state agencies are 30.3 million tonnes, way above the buffer norms of 27.6 million tonnes.
    • The ban on wheat exports is because of this.

    Two constraints on the wheat economy

    • In 2007 and again in 2021, the government banned futures trading in wheat on grounds that it led to speculative pressure on prices even though the quantity traded and the open interest were minuscule.
    • At that time, it was a decline in expected output which triggered this action.
    • It does look like the wheat economy will continue to operate within two constraints that have become barriers to commercialisation.
    • MSP and government procurement: The first is MSP and government procurement, which feeds into the public distribution system.
    • Arhatiya system: The second is the arhatiya system of trading where middlemen have come in the way of any reform.

    Suggestions

    • Abolish MSP and procurement system: The MSP and procurement system needs to be dismantled.
    • Cash transfers: As the government has successfully expanded both the Aadhaar and Jan Dhan programmes, there should be simple cash transfers to beneficiaries.
    • Buffer stocks can be held to ease distress during a crisis, but government involvement should stop there.
    • Procuring unlimited quantities of wheat and keeping huge stocks has distorted the wheat matrix.
    • The mandi system too needs to be revisited and alternatives have to be made available so that farmers can choose the point of sale.

    Conclusion

    We have been talking about being a part of global supply chains to augment value addition and accelerate growth. But when it comes to agriculture it is a blow-hot blow-cold approach. This not only affects our credibility but also sends confusing signals to producers as to what is the best way out for them.

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  • FDI inflow ‘highest ever’ at $83.57 bn

    The foreign direct investment (FDI) in the financial year 2021-22 has touched a “highest-ever” figure of $83.57 billion.

    Get aware with the recently updated FDI norms. Key facts mentioned in this newscard can make a direct statement based MCQ in the prelims.

    Ex. FDI source in decreasing order: Singapore – Mauritius – Netherland – Ceyman Islands – Japan – France

    What is Foreign Direct Investment (FDI)?

    • An FDI is an investment in the form of a controlling ownership in a business in one country by an entity based in another country.
    • It is thus distinguished from a foreign portfolio investment by a notion of direct control.
    • FDI may be made either “inorganically” by buying a company in the target country or “organically” by expanding the operations of an existing business in that country.
    • Broadly, FDI includes “mergers and acquisitions, building new facilities, reinvesting profits earned from overseas operations, and intra company loans”.
    • In a narrow sense, it refers just to building a new facility, and lasting management interest.

    FDI in India

    • Foreign investment was introduced in 1991 under Foreign Exchange Management Act (FEMA), driven by then FM Manmohan Singh.
    • There are two routes by which India gets FDI.

    1) Automatic route: By this route, FDI is allowed without prior approval by Government or RBI.

    2) Government route: Prior approval by the government is needed via this route. The application needs to be made through Foreign Investment Facilitation Portal, which will facilitate the single-window clearance of FDI application under Approval Route.

    • India imposes a cap on equity holding by foreign investors in various sectors, current FDI in aviation and insurance sectors is limited to a maximum of 49%.
    • In 2015 India overtook China and the US as the top destination for the Foreign Direct Investment.

    Features of FDI

    • Any investment from an individual or firm that is located in a foreign country into a country is FDI.
    • Generally, FDI is when a foreign entity acquires ownership or controlling stake in the shares of a company in one country, or establishes businesses there.
    • It is different from foreign portfolio investment where the foreign entity merely buys equity shares of a company.
    • In FDI, the foreign entity has a say in the day-to-day operations of the company.
    • FDI is not just the inflow of money, but also the inflow of technology, knowledge, skills and expertise.
    • It is a major source of non-debt financial resources for the economic development of a country.

    Significance of rising FDI

    • This is a testament of India’s status among global investors.

    Recent amendments in 2020

    • The govt. has amended para 3.1.1 of extant FDI policy as contained in Consolidated FDI Policy, 2017.
    • In the event of the transfer of ownership of any existing or future FDI in an entity in India, directly or indirectly, resulting in the beneficial ownership, such subsequent change in beneficial ownership will also require Government approval.

    The present position and revised position in the matters will be as under:

    Present Position

    • A non-resident entity can invest in India, subject to the FDI Policy except in those sectors/activities which are prohibited.
    • However, a citizen of Bangladesh or an entity incorporated in Bangladesh can invest only under the Government route.
    • Further, a citizen of Pakistan or an entity incorporated in Pakistan can invest, only under the Government route, in sectors/activities other than defence, space, atomic energy and sectors/activities prohibited for foreign investment.

    Revised Position

    • A non-resident entity can invest in India, subject to the FDI Policy except in those sectors/activities which are prohibited.

    [spot the difference]

    • However, an entity of a country, which shares a land border with India or where the beneficial owner of investment into India is situated in or is a citizen of any such country, can invest only under the Government route.
    • Further, a citizen of Pakistan or an entity incorporated in Pakistan can invest, only under the Government route, in sectors/activities other than defence, space, atomic energy and sectors/activities prohibited for foreign investment.

    In response to China

    • China accused that India’s recently adopted policy goes against the principles of the World Trade Organisation (WTO).
    • It tends to violate WTO’s principle of non-discrimination, and go against the general trend of liberalisation and facilitation of trade and investment.

     

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  • Norms eased for GM Crop Research

    The Department of Biotechnology (DBT) has issued guidelines easing norms for research into genetically modified (GM) crops and circumventing challenges of using foreign genes to change crops profile.

    Guidelines for Safety Assessment of Genome Edited Plants, 2022: Key Highlights

    • It exempt researchers who use gene-editing technology to modify the genome of the plant from seeking approvals from the Genetic Engineering Appraisal Committee (GEAC).
    • The environment ministry in March 2022 exempted SDN 1 and SDN 2 genomes from Rules 7-11 of the Environment Protection Act.
    • Conventional breeding technique takes 8- 10 years for development of new crop varieties; genome-editing can do this faster.
    • The Environment Ministry too has sanctioned this exemption.

    What are the SDNs?

    The genome edited plants derived from the use of genome editing techniques employing site- directed nucleases (SDNs) such ZFNs, TALENs, CRISPR and other nucleases with similar functions are generally classified under three categories as

    1. Site-Directed Nuclease (SDN)-1, a site-directed mutagenesis without using a DNA sequence template;
    2. SDN-2, a site-directed mutagenesis using a DNA sequence template; and
    3. SDN-3, site-directed insertion of gene/large DNA sequence using a DNA sequence template.

    What are GM crops?

    • The GM plants involve transgenic technology or introducing a gene from a different species into a plant, for instance BT-cotton, where a gene from soil bacterium is used to protect a plant from pest attack.
    • The worry around this method is that these genes may spread to neighboring plants, where such effects are not intended and so their applications have been controversial.
    • Genome editing involves the use of technologies that allow genetic material to be added, removed, or altered at particular locations in the genome. Several approaches to genome editing have been developed.
    • A well-known one is called CRISPR-Cas9, which is short for clustered regularly interspaced short palindromic repeats and CRISPR-associated protein 9.

    Try this PYQ:

    Q.The Genetic Engineering Appraisal Committee is constituted under the:

    (a) Food Safety and Standards Act, 2006

    (b) Geographical Indications of Goods (Registration and Protection) Act, 1999

    (c) Environment (Protection) Act, 1986

    (d) Wildlife (Protection) Act, 1972

     

    [wpdiscuz-feedback id=”af42wsrckz” question=”Please leave a feedback on this” opened=”1″]Post your answers here.[/wpdiscuz-feedback]

    About Genetic Engineering Appraisal Committee (GEAC)

    • The Genetic Engineering Appraisal Committee (GEAC) is a statutory body conotified under the Environment (Protection) Act, 1986.
    • It was formed as the Genetic Engineering Approval Committee and was renamed to its current name in 2010.
    • It functions under the Ministry of Environment, Forests & Climate Change.
    • The body regulates the use, manufacture, storage, import and export of hazardous microorganisms or genetically-engineered organisms and cells in India.

     

     

  • What is Pravaig Field Pack?

    A Bengaluru-based venture has produced a rugged tactical battery that it is now planning to sell to the North Atlantic Treaty Organisation (NATO) forces in Europe.

    Pravaig Field Pack

    • It is a heavy-duty power bank that is portable and weighs 14 kilograms.
    • It is of great utility to the digitally connected modern military and Special Forces personnel who have to operate in high-risk zones while using gadgets that require constant power back-up.
    • These batteries are designed, engineered and made in India.
    • The field pack can be used to charge a MacBook 60 times.

    Significance of Pravaig

    • This supply marks a major shift in the defense landscape of India — a tipping point in the reversal of India’s high technology defense industry, from users to developers, from importers to exporters.
    • The field pack can be used to energize a military person’s field duties and it can be used to deploy remote sensors.
    • A powerful tactical battery can be used even to operate larger military equipment such as drones and it can even help coordinate tactical operations which involve multiple weapons systems.

     

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  • Devastation in Dima Hasao and its after-effects

    Disaster struck Dima Hasao, central Assam’s hill district, in mid-May after incessant heavy rainfall.

    Impacts of the disaster

    • The 170 km railway line connecting Lumding in the Brahmaputra Valley’s Hojai district and Badarpur in the Barak Valley’s Karimganj district was severely affected.
    • The Assam government and Railway Ministry’s assessments said the district suffered a loss of more than ₹1,000 crore, but ecologists say the damage could be irreversibly higher.

    How severe has the rain been in Assam?

    • Assam is used to floods, sometimes even four times a year, resultant landslides and erosion.
    • But the pre-monsoon showers this year have been particularly severe on Dima Hasao, one of three hill districts in the State.
    • Landslips have claimed four lives and damaged roads.
    • The impact has been most severe on the arterial railway, which was breached at 58 locations leaving the track hanging in several places.
    • The disruption of train services, unlikely to be restored soon, has cut off the flood-hit Barak Valley, parts of Manipur, Mizoram and Tripura.

    Why is the railway in focus post-disaster?

    • Dima Hasao straddles the Barail, a tertiary mountain range between the Brahmaputra and Barak River basins.
    • The district is on the Dauki fault (the prone-to-earthquakes geological fractures between two blocks of rocks) straddling Bangladesh and parts of the northeast.
    • British engineers were said to have factored in the fragility of the hills to build the railway line over 16 years by 1899.
    • The end result was an engineering marvel 221 km long over several bridges and through 37 tunnels, laid along the safer sections of the hills.

    A faulty experiment

    • A project to convert the metre gauge track to broad gauge was undertaken in 1996 but the work was completed only by March 2015 because of geotechnical constraints and extremist groups.
    • The broad-gauge track was realigned to be straighter, but a 2009-10 audit report revealed that the project had been undertaken without proper planning and visualisation of the soil strata behaviour.
    • The report gave the example of the disaster-prone Tunnel 10 on the realigned track that was pegged 8 meters below the bed of a nearby stream.

    Is only the railway at fault?

    • There is a general consensus that other factors have contributed to the situation Dima Hasao is in today.
    • Roads in the district, specifically the four-lane Saurashtra-Silchar (largest Barak Valley town) East-West Corridor, have been realigned or deviated from the old ones that were planned around rivers and largely weathered the conditions.
    • The arterial roads build over the past 20 years often cave in and get washed away by floods or blocked by landslides.
    • Shortened cycles of jhum or shifting cultivation on the hill slopes and unregulated mining have accentuated the “man-made disaster”.
    • Massive extraction of river stone, illegal mining of coal and smuggling of forest timbe has led to the disaster.
    • These activities have increased water current besides weakening either side of riverbanks.

    How vital are the rail and highway through Dima Hasao?

    • Meghalaya aside, Dima Hasao is the geographical link to a vast region comprising southern Assam’s Barak Valley, parts of Manipur, Mizoram and Tripura.
    • Moreover, this track is vital for India’s Look East policy that envisages shipping goods to and from Bangladesh’s Chittagong port via Tripura’s border points at Akhaura and Sabroom.
    • These are the last railway station near the Feni River that serves as the India-Bangladesh border.

     

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  • Government lacking a coherent policy of food security

    Context

    The Government of India announced a sudden ban on export of wheat on May 13, 2022, a few days after Prime Minister Narendra Modi had stated that “at a time when the world is facing a shortage of wheat, the farmers of India have stepped forward to feed the world”.

    What led to the sudden wheat export ban?

    • Low public procurement: The sudden turnaround in the export policy appears to be on account of fears that low public procurement would affect domestic food security.
    • This summer, procurement of wheat by the Food Corporation of India (FCI) has been very low.
    • Last year, the FCI and other agencies procured 43.34 million tonnes of wheat.
    • For the current season, procurement has only been 17.8 million tonnes, as of May 10, 2022.
    • Given the low levels of procurement, the Government has reduced the procurement target for the current season from 44.4 to 19.5 million tonnes.
    • Low production: While wheat production this year has been lower than estimated on account of high heat and other factors in March, there is not a big shortfall in production relative to previous years.
    • Wheat production was 103.6 million tonnes in 2018-19, 107.8 million tonnes in 2019-20, and 109.5 million tonnes in 2020-21.
    • The most recent estimate of production for 2021-22, revised downwards from the earlier estimate, is 105.

    Public procurement in India

    • The system of public procurement has been in place since the mid-1960s, and has been the backbone of food policy in India.
    • As part of the liberalisation policy, many other economists suggested that food stocks be run down in India and that needs of food security be met through world trade and the Chicago futures market.

    Need for effective PDS

    • Higher than buffer stock norm: Stocks of wheat in the central pool as of April 30, 2022 were 30.3 million tonnes, much lower than the 52.5 million tonnes of last year, but comfortably higher than buffer stock norms.
    • While the Government procurement in this marketing season has been lower than the previous two years, the stock position so far is similar to 2019, when we had 35.8 million tonnes of stock in April.
    • An important role in pandemic: In the two COVID-19 years (2020-21 and 2021-22), the Public Distribution System (PDS) played a stellar role, and, its role showed the wisdom of not dismantling it.
    • Total offtake of rice and wheat was 102.3 million tonnes in 2021-22 when distribution through the PDS and other welfare schemes is combined.
    • It is essential that the PDS and open market operations be used to cool down food price inflation.
    •  While most States have high inflation rates, States with better PDS, such as Kerala and Tamil Nadu, have low inflation rates.

    Way forward

    • Provide remunerative prices: To promote production, a key aspect of food policy in India has been to provide remunerative prices to farmers.
    • As is well known, after the reports of the National Commission on Farmers, the announced minimum support price (MSP) for wheat has often been inadequate to cover costs of cultivation for several regions and classes of farmers, especially if comprehensive costs (or Cost C2) are taken as the base. 
    • Over the last two years, costs of production have risen sharply, one important component being the spiralling price of fuel.

    Conclusion

    India’s flip-flop on the export of wheat is an example of the Government lacking a coherent policy of food security.

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  • Agri-exports

    Context

    In the fiscal year 2021-22 (FY22), agri-exports scaled an all-time high of $50.3 billion, registering a growth of 20 per cent over the preceding year.

    What are the contributing factors?

    • The all time high agri-export was made possible largely by rising global commodity prices, but also by the favourable and aggressive export policy of the Ministry of Commerce and its various export promotion agencies like APEDA, MPEDA, and commodity boards.
    • Sustainability issue: From a strategic point of view, an important question that arises is how sustainable is this growth in agri-exports, given India’s resource endowments and the country’s domestic needs?
    • To answer this question rationally, let us first look at the composition of agri-exports.

    Composition of agri-exports

    • Among the several agri-commodities exported in FY22, rice ranks first with exports of $9.6 billion in value (with 21.2 million metric tonnes (MMT) in quantity).
    • It is followed by marine products worth $7.7 billion (1.4 MMT), sugar worth $4.6 billion (10.4 MMT), spices worth $3.9 billion (1.4 MMT) and bovine (buffalo) meat worth $3.3 billion (1.18 MMT) (see figure).
    • Concerns with Rice and Sugar: Of these, two commodities, rice and sugar, are water guzzlers and serious thought should be given to their global competitiveness and environmental sustainability.

    Competitiveness and environmental sustainability concerns with Sugar and Rice cultivation

    • India’s exports of 21 MMT constituted 41 per cent of a global rice market of 51.3 MMT.
    • Low export price: When most of the other commodity prices were surging in global markets, the price of rice (Thailand supplies 25 per cent) collapsed by about 13 per cent from $484/tonne in April 2021 to $429/tonne in April 2022, largely due to India’s massive exports.
    • This means that India had to export a greater quantity of rice to get the same amount of dollars.
    • In trade theory, it is a classic case for levying the optimal export tax of 5 to 10 per cent.
    • Optimal export: India should optimally not go beyond 12 to 15 MMT of rice exports, else the marginal revenue from exports will keep falling.
    • Subsidised water: Taking an average of about 4,000 litres of water per kg of rice, and assuming that half of this percolates into groundwater, exporting 21MMT of rice would mean the virtual export of 42 billion cubic meters (m3) of water.
    • Sugar is another water guzzler, whose exports touched 10.4 MMT in FY22.
    • Subsidies crossing WTO limits: It was backed partly by subsidies (including export subsidy) that crossed the 10 per cent limit mandated by the World Trade Organisation, bringing India into a dispute with other sugar exporting countries at the WTO.
    • However, from a sustainability point of view, we must note that exporting one kg of sugar amounts to roughly exporting 2,000 litres of virtual water.
    • That means in FY22, India exported at least 20 billion m3 of water through sugar exports.
    • So, by exporting 21 MMT of rice and 10 MMT of sugar in FY22, India exported at least 62 billion cubic meters of virtual water.
    • Much of this water is extracted from groundwater — as is being done in much of the Punjab and Haryana belt (for rice), where the water table is receding by 9.2 metres and 7 metres over the last two decades (2000-19), and in Maharashtra and Uttar Pradesh for sugar.
    • This can lead to a water disaster. 
    • Anthropogenic methane emission: Rice production systems are among the most important sources of anthropogenic methane emissions, contributing to 17.5 per cent of GHG emissions generated from agriculture (2021).
    •  This is all because of the distortionary policies of free power and highly-subsidised fertilisers, especially urea.

    Way forward: Support farmers smartly

    • AWD and DSR: Innovative farming practices such as alternate wetting drying (AWD), direct seeded rice (DSR) that can save up to 25-30 per cent water and micro-irrigation that can save up to 50 per cent irrigation water, could be game-changing technologies in reducing the crop’s carbon footprint.
    • Switching to other crops: The real solution lies in incentivising the farmers to switch some of the area under rice and sugar cultivation to other, less water-guzzling crops.
    • Haryana has come up with two schemes, Mera Pani, Meri Virasat and Kheti Khaali, Fir Bhi Khushali.
    • A closer evaluation of non-basmati rice exports brings out another interesting fact.
    • The unit value of these exports was just $354/tonne, which is below the MSP of rice ($390/tonne).
    • One possibility is that a substantial part of the supplies through the PDS and PM Garib Kalyan Anna Yojana (PMGKAY) are leaking out and swelling rice exports.
    • Introduce the option of direct cash transfer: From a policy angle, it may be high time to introduce the option of direct cash transfers in lieu of almost free grains under the PDS and PMGKAY.
    • This will help plug leakages as well as save costs.

    Conclusion

    The best way to tackle this upcoming environmental disaster would be to support farmers smartly, by giving them aggregate input subsidy support on a per hectare basis and freeing up the input prices of fertilisers and power to be determined by market forces and their costs of production.

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  • Hyper-accumulator Plants for Soil Detox

    A study published in the JNKVV (Jawaharlal Nehru Krishi Vishwavidyalaya) research journal concluded that heavy metal pollution of soil is “emerging at a speedy rate” in India due to industrialisation.

    How does soil get contaminated?

    • Soil contamination can happen due to a variety of reasons, including manufacturing, mineral extraction, accidental spills, illegal dumping, leaking underground storage tanks, pesticide and fertiliser use etc.
    • These toxic heavy metals are then absorbed by food crops and other plants before they eventually make their way into our food chain, directly affecting human life along with ecology.

    Detoxing the soil

    • Many technologies have emerged to remediate this soil pollution.
    • But these methods have been deemed lacking in terms of sustainability as they come with a large cost and have adverse effects themselves.

    Novel technique: Hyperaccumulators

    • Turning toward more sustainable and eco-friendly technologies, scientists have developed methods of “Phytoremediation”.
    • It is a remediation method that uses living organisms like plants, microalgae, and seaweeds.
    • One particular way to remove toxic heavy metals from the soil includes the use of “hyperaccumulator” plants that absorb these substances from the soil.

    What are hyperaccumulator plants?

    • Phytoremediation refers to the usage of “hyperaccumulator” plants to absorb the toxic materials present in the soil and accumulate in their living tissue.
    • Most plants do sometimes accumulate toxic substances.
    • Hyperaccumulators have the unusual ability to absorb hundreds or thousands of times greater amounts of these substances than is normal for most plants.
    • Most discovered hyperaccumulator plants typically accumulate nickel and occur on soils that are rich in nickel, cobalt and in some cases, manganese.

    Where are they found?

    • These hyperaccumulator species have been discovered in many parts of the world.
    • They include the Mediterranean region (mainly plants of the genus Alyssum), tropical outcrops in Brazi, Cuba, New Caledonia (French territory) and Southeast Asia (mainly plants of the genus Phyllanthus).

    How can they be used to remove toxic metals from the soil?

    • Suitable plant species can be used to ‘pick up’ the pollutants from the soil through their roots and transport them to their stem, leaves and other parts.
    • After this, these plants can be harvested and either disposed or even used to extract these toxic metals from the plant.
    • This process can be used to remove metals like silver, cadmium, cobalt, chromium, copper, mercury, manganese, molybdenum, nickel, lead and zinc; metalloids such as arsenic and selenium; some radionuclides; and non-metallic components such as boron.
    • But it cannot be used to remove organic pollutants from the ground due to metabolic breakdown.

    Advantages of phytoremediation with hyperaccumulators

    • One of the primary advantages of phytoremediation is the fact that it is quite cost-effective in comparison with other remediation methods.
    • The only major costs attached are related to crop management (planting, weed control, watering, fertilisation, pruning, fencing, harvesting etc.).
    • This method is also relatively simple and doesn’t require any new kinds of specialised technology.
    • Also, no external energy source is required since the plants grow with the help of sunlight.
    • Another important advantage of this method is that it enriches the soil with organic substances and microorganisms which can protect its chemical and biological qualities.
    • Also, while the plants are growing and accumulating toxic heavy metals, they protect the soil from erosion due to wind and water.

    Limitations of hyperaccumulators

    • For all its advantages, this kind of phytoremediation with hyperaccumulators has a big drawback: it is a very slow and time-consuming process.
    • The restoration of an area with this process can take up to 10 years or more.
    • This comes with a large economic cost, proportional to the size of the area under rehabilitation.
    • The plants to conduct this rehabilitation must be carefully selected based on a large number of characteristics or they could act as an invasive species.
    • They could grow out of control and upsetting the delicate ecological balance of not just the area under rehabilitation, but also the entire region it is part of.

    What can be done for their better utilization?

    • Due to this reason, scientists only propose using species that are native to the region where the phytoremediation project is undertaken.
    • This also has other benefits: these plants will already be acclimatised to the region and there will be no legal problems concerning the procurement, transport and use of seeds.

     

     

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  • What are Artificial Intelligence (AI) Chips?

    Market leader Nvidia recently announced its H100 GPU (graphics processing unit), which is said to be one of the world’s largest and most powerful Artificial Intelligence (AI) accelerators, packed with 80 billion transistors.

    What are AI chips?

    • AI chips are built with specific architecture and have integrated AI acceleration to support deep learning-based applications.
    • These chips, with their hardware architectures and complementary packaging, memory, storage and interconnect technologies, make it possible to infuse AI into a broad spectrum of applications.
    • There are different types of AI chips such as application-specific integrated circuits (ASICs), field-programmable gate arrays (FPGAs), central processing units (CPUs) and GPUs, designed for diverse AI applications.

    What is Deep Learning?

    • Deep learning, more commonly known as active neural network (ANN) or deep neural network (DNN), is a subset of machine learning and comes under the broader umbrella of AI.
    • It combines a series of computer commands or algorithms that stimulate activity and brain structure.
    • DNNs go through a training phase, learning new capabilities from existing data.
    • DNNs can then inference, by applying these capabilities learned during deep learning training to make predictions against previously unseen data.
    • Deep learning can make the process of collecting, analysing, and interpreting enormous amounts of data faster and easier.

    Utility of AI chips

    • The adoption of Artificial Intelligence (AI) chips has risen, with chipmakers designing different types of these chips to power AI applications such as:
    1. Natural language processing (NLP)
    2. Computer vision
    3. Robotics, and
    4. Network security across a wide variety of sectors, including automotive, IT, healthcare, and retail

    Are they different from traditional chips?

    • When traditional chips, containing processor cores and memory, perform computational tasks, they continuously move commands and data between the two hardware components.
    • These chips, however, are not ideal for AI applications as they would not be able to handle higher computational necessities of AI workloads which have huge volumes of data.
    • Although, some of the higher-end traditional chips may be able to process certain AI applications.
    • In comparison, AI chips generally contain processor cores as well as several AI-optimised cores that are designed to work in harmony when performing computational tasks.
    • The AI cores are optimised for the demands of heterogeneous enterprise-class AI workloads with low-latency inferencing, due to close integration with the other processor cores.

    What are their applications?

    • Use of AI chips for NLP applications has increased due to the rise in demand for chatbots and online channels such as Messenger, Slack, and others
    • They use NLP to analyse user messages and conversational logic.
    • Then there are chipmakers who have built AI processors designed to help customers achieve business insights at scale across banking, finance, trading, insurance applications and customer interactions.

    What firms are making these chips?

    • Nvidia Corporation, Intel Corporation, IBM Corporation, Samsung Electronics Co., Ltd, Qualcomm Technologies, Inc., and Apple Inc. are some of the key players in the AI chip market.

    Major breakthroughs

    • Nvidia, which dominates the market, offers a wide portfolio of AI chips including Grace CPU, H100 and its predecessor A100 GPUs.
    • It is capable of handling some of the largest AI models with billions of parameters.
    • The company claims that twenty H100 GPUs can sustain the equivalent of the entire world’s internet traffic.
    • IBM’s new AI chip, announced last year, can support financial services workloads like fraud detection, loan processing, clearing and settlement of trades, anti-money laundering and risk analysis.

    Scale of global market

    • The Worldwide AI chip industry accounted for $8.02 billion in 2020.
    • It is expected to reach $194.9 billion by 2030, growing at a compound annual growth rate (CAGR) of 37.4% from 2021 to 2030.

    What can be expected in the future?

    • AI company Cerebras Systems set a new standard with its brain-scale AI solution, paving the way for more advanced solutions in the future.
    • Its CS-2, powered by the Wafer Scale Engine (WSE-2) is a single wafer-scale chip with 2.6 trillion transistors and 8,50,000 AI optimised cores.
    • The human brain contains on the order of 100 trillion synapses, the firm said, adding that a single CS-2 accelerator can support models of over 120 trillion parameters (synapse equivalents) in size.
    • Another AI chip design approach, neuromorphic computing, utilises an engineering method based on the activity of the biological brain.
    • An increase in the adoption of neuromorphic chips in the automotive industry is expected in the next few years.

     

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  • What is ‘Storage Gain’ in Wheat?

    Punjab’s state procurement agencies (SPAs) are seeking a waiver of ‘storage gain’.

    What is ‘storage gain’ in wheat?

    • Wheat, considered a ‘living grain’, tends to gain some weight during storage.
    • This is known as ‘storage gain’ and it mostly happens due to absorption of moisture.
    • There are three parts of the grain — bran (outer layer rich in fibre), germ (inner layer rich in nutrients) and endosperm (bulk of the kernel which contains minerals and vitamins).
    • The moisture is mostly absorbed by the endosperm.

    Who compensates whom for ‘storage gain’?

    • State procurement agencies, which purchase and store wheat at their facilities, are required to give one kg wheat extra per quintal to the Food Corporation of India (FCI).
    • While 20% of wheat, procured by the FCI and the SPAs, is moved immediately after procurement.
    • It is usually on the remaining 80%, which is moved out after July 1 every year that storage gain has to be accounted for due to longer storage duration.

     

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