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GS Paper: GS3

  • Sugarcane Pricing in India

    Earlier this month, the Supreme Court issued notices to States and major sugar producers to develop a mechanism to ensure that farmers are paid on time.

    Who determines Sugarcane prices?

    Sugarcane prices are determined by the Centre as well as States.

    1. The Centre announces Fair and Remunerative Prices which are determined on the recommendation of the Commission for Agricultural Costs and Prices (CACP) and are announced by the Cabinet Committee on Economic Affairs, which is chaired by Prime Minister.
    2. The State Advised Prices (SAP) are announced by key sugarcane producing states which are generally higher than FRP.

    Minimum Selling Price (MSP) for Sugar

    • The price of sugar is market-driven & depends on the demand & supply of sugar.
    • However, with a view to protecting the interests of farmers, the concept of MSP of sugar has been introduced since 2018.
    • MSP of sugar has been fixed taking into account the components of Fair & Remunerative Price (FRP) of sugarcane and minimum conversion cost of the most efficient mills.

    Basis of price determination

    • With the amendment of the Sugarcane (Control) Order, 1966, the concept of Statutory Minimum Price (SMP) of sugarcane was replaced with the Fair and Remunerative Price (FRP)’ of sugarcane in 2009-10.
    • The cane price announced by the Central Government is decided on the basis of the recommendations of the Commission for Agricultural Costs and Prices (CACP).
    • This is done in consultation with the State Governments and after taking feedback from associations of the sugar industry.

    Try this PYQ:

    Q.The Fair and Remunerative Price (FRP) of sugarcane is approved by the:

    (a) Cabinet Committee on Economic Affairs

    (b) Commission for Agricultural Costs and Prices

    (c) Directorate of Marketing and Inspection, Ministry of Agriculture

    (d) Agricultural Produce Market Committee

     

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    What is FRP?

    • FRP is fixed under a sugarcane control order, 1966.
    • It is the minimum price that sugar mills are supposed to pay to the farmers.
    • However, states determine their own State Agreed Price (SAP) which is generally higher than the FRP.

    Factors considered for FRP:

    • The amended provisions of the Sugarcane (Control) Order, 1966 provides for fixation of FRP of sugarcane having regard to the following factors:

    a) cost of production of sugarcane;

    b) return to the growers from alternative crops and the general trend of prices of agricultural commodities;

    c) availability of sugar to consumers at a fair price;

    d) price at which sugar produced from sugarcane is sold by sugar producers;

    e) recovery of sugar from sugarcane;

    f) the realization made from the sale of by-products viz. molasses, bagasse, and press mud or their imputed value;

    g) reasonable margins for the growers of sugarcane on account of risk and profits.

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  • Places in news: Cattle Island on Hirakud Reservoir

    The Odisha Forest and Environment Department is all set to begin ‘Island Odyssey’ and ‘Hirakud Cruise’ ecotourism packages for tourists to islands inside the reservoir.

    Cattle Island

    • ‘Cattle island’, one of three islands in the Hirakud reservoir, has been selected as a sight-seeing destination.
    • When large numbers of people were displaced from their villages when the Hirakud dam was constructed on the Mahanadi river in 1950s, villagers could not take their cattle with them.
    • They left their cattle behind in deserted villages.
    • As the area started to submerge following the dam’s construction, the cattle moved up to Bhujapahad, an elevated place in the Telia Panchayat under Lakhanpur block of Jharsuguda district.
    • Subsequently named ‘Cattle island’, it’s surrounded by a vast sheet of water.

    Other islands

    • Then there is an “island of bats”, also within the reservoir, just 1 km away from the Debrigarh ecotourism project.
    • It is the habitat of hundreds of bats.
    • Tourists also get a magnificent view of the sunset from the reservoir. ‘Sunset island’ is one of the three stops on the unique boat ride.

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  • Emergency award

    Context

    The judgment delivered by the Supreme Court in the legal tussle between Amazon and the Future Group has laid the foundation for recognition and enforcement of emergency awards under the Indian arbitration law.

    What is an emergency award?

    • It is an award rendered by an emergency arbitrator, appointed prior to the formal constitution of an arbitral tribunal by an arbitral institution.
    • It is a recent mechanism introduced by arbitral institutions to encourage parties to seek urgent interim relief from an arbitral institution rather than from a court.
    • Many leading arbitral institutions such as SIAC, ICC, and LCIA have provisions for the appointment of an emergency arbitrator.
    • As far as India is concerned, the 246th Law Commission Report had recommended an amendment in the Arbitration and Conciliation Act, 1996 (‘Indian Arbitration Act’) to grant statutory recognition to an emergency award.
    • Some of the indigenous arbitral institutions though, such as the Delhi International Arbitration Centre, have made provisions for emergency arbitration.

    What is the tussle between Amazon and Future Group about?

    • In August 2020, Biyani Group and the Reliance Industries Group decided to amalgamate Future Retail Ltd. (FRL) with Reliance Industries and complete disposal of its retail assets in favor of the Group.
    • However, prior to the said transaction, Amazon had invested an amount of Rs 1,431 crores in Future Coupons Pvt. Ltd. (FCPL) based on rights granted to FCPL with regard to FRL.
    • So, Amazon initiated arbitration against the Biyani Group, including FRL, under Singapore International Arbitration Centre (SIAC) Rules.
    • Amazon made an application seeking urgent interim reliefs under SIAC rules and the appointment of an emergency arbitrator.
    • The emergency arbitrator appointed, made an award in favor of Amazon in October 2020, restricting the Biyani Group from proceeding ahead with the disputed transaction.
    • However, the Biyani Group proceeded with the disputed transaction, construing the emergency award as a nullity.

    Issue of enforcement of the emergency award in India

    • Amazon filed an application before the Delhi High Court for enforcement of the award.
    • The court had the task of answering two novel legal questions —
    • 1) Whether the emergency award is an interim order under section 17(1) of the Indian Arbitration Act,
    • 2) Whether it can be enforced under section 17(2).
    • The Delhi High Court gave judgment in March 2021 against the Biyani Group.
    • The case eventually reached the Supreme Court.
    • Party autonomy: The Supreme Court judgment emphasized party autonomy in arbitration, which includes the right of the parties to choose institutional rules as the governing rules of arbitration.
    • Once chosen, the parties are bound by such rules.
    • The Supreme Court also held that the Indian Arbitration Act does not prohibit the parties from agreeing to a provision providing for an emergency arbitrator.
    • The Supreme Court also held that the term “during the arbitral proceedings” is wide enough to encompass emergency arbitration proceedings.
    • The Court ultimately held the emergency award to be an interim order under section 17(1) of the Indian Arbitration Act and enforceable under section 17(2).

    Significance of the judgment for arbitration in India

    • This judgment has contributed to the development of Indian arbitration law.
    • In the broader scheme of things, it is a victory for Indian arbitration and a sigh of relief for arbitral institutions.

    Conclusion

    The judgment is a reaffirmation of the fact that India is gradually stepping towards being an “arbitration-friendly” jurisdiction.

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  • Getting the perfect haircut from the IBC

    Understanding the role of IBC 2016

    • For reasons sometimes a company may experience stress, that is, is unable to repay the debt in time — implying that it has assets less than claims against it.
    • So, when a company has inadequate assets, the claim of an individual creditor may be consistent with its assets while claims of all creditors put together may not.
    • In such a situation, creditors may rush to recover their claims before others do, triggering a run on the company’s assets.
    • The IBC provides for reorganisation that prevents a value-reducing run on the company.
    • It aims to rescue the company if its business is viable or close it if its business is unviable, through a market process.
    • Restructuring: The claims of creditors are restructured, which may be paid to them immediately or over time.
    •  In case of closure, the assets of the company are sold, and proceeds are distributed to creditors immediately as per the priority rule.
    • Reorganisation by financial creditor: The IBC entrusts the responsibility of reorganisation to financial creditors as they have the capability and the willingness to restructure their claims.

    Why so much variation in haircut?

    • Where the company does not have adequate assets, realisation for financial creditors, through a rescue, may fall short of their claims known as haircut.
    • The IBC process yields a zero haircut (100% recovery of claimed amount) in one case and 100 per cent haircut (i.e. 0% recovery) in another.
    • Factors: It depends on several factors, including the nature of business, business cycles, market sentiments, and marketing effort.
    • It critically depends on at what stage of stress, the company enters the IBC process.
    • If the company has been sick for years, and its assets have depleted significantly, the IBC process may yield a huge haircut or even liquidation.
    • A haircut is typically the total claims minus the amount of realisation/amount of the claims.
    • But this formulation may not tell the complete story.
    • The realisation often does not include the amount that would be realised from equity holding post-resolution, and through the reversal of avoidance transactions and the insolvency resolution of guarantors — personal and corporate.
    • It also does not include realisations made in other accounts.
    • The amount of claim often includes NPA, which may be completely written off, and the interest on such NPA.
    • These understate the numerator and overstate the denominator, projecting a higher haircut.

    Significance of IBC

    • A haircut should be seen in relation to the assets available and not in relation to the claims of creditors.
    • The market offers a value in relation to what a company brings on the table, not what it owes to creditors.
    • Value maximisation: So, the IBC maximises the value of existing assets, not of assets that probably existed earlier.
    • Market determined value: The IBC enables and facilitates market forces to resolve stress as a going concern.
    • Resolution applicants, who have many options for investment, including in stressed companies, compete to offer the best value.
    • If the best value offered by the market is not acceptable to creditors, the company is liquidated.
    • Maximum realisation: In addition to rescuing the company, the IBC realises, of the available options for creditors, the highest in percentage terms.

    Conclusion

    It is a tool in the hands of stakeholders to be used at the right time, in the right case, in the right manner.

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    Back2Basics: Avoidable Transactions in IBC 2016

    • The UNCITRAL Legislative Guide on Law of Insolvency defines avoidance proceedings as “provisions of the insolvency law that permit transactions for the transfer of assets or the undertaking of obligations prior to insolvency proceedings to be cancelled or otherwise rendered ineffective and any assets transferred, or their value, to be recovered in the collective interest of creditors.”
    • It is very important for the Resolution Professional (RP) or the liquidator to identify such transaction and file applications to avoid it so that creditors can collect their claims.
    • The Insolvency and Bankruptcy Code, 2016 (IBC) contains four types of avoidable transactions- preferential, undervalued, defrauding creditors and extortionate transactions.
    • Usually, the avoidable transactions should be made within the prescribed relevant time or look back period.
    • Look back period is the relevant time up to which an RP or a liquidator can go back to scrutinize an expected avoidable transaction.

  • Government Securities Acquisition Programme (GSAP 2.0)

    The Reserve Bank of India (RBI) has announced that it will conduct an open market purchase of government securities of â‚č25,000 crore under the G-sec Acquisition Programme (G-SAP 2.0).

    Answer this PYQ in the comment box:

    Q.Consider the following statements:

    1. The Reserve Bank of India manages and services the Government of India Securities but not any State Government Securities.
    2. Treasury bills are issued by the Government of India and there are no treasury bills issued by the State Governments.
    3. Treasury bills offer are issued at a discount from the par value.

    Which of the statements given above is/are correct?

    (a) 1 and 2 only

    (b) 3 Only

    (c) 2 and 3 only

    (d) 1, 2 and 3

     

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    What are Government Securities?

    • These are debt instruments issued by the government to borrow money.
    • The two key categories are:
    1. Treasury bills (T-Bills) – short-term instruments which mature in 91 days, 182 days, or 364 days, and
    2. Dated securities – long-term instruments, which mature anywhere between 5 years and 40 years

    Note: T-Bills are issued only by the central government, and the interest on them is determined by market forces.

    Why G-Secs?

    • Like bank fixed deposits, g-secs are not tax-free.
    • They are generally considered the safest form of investment because they are backed by the government. So, the risk of default is almost nil.
    • However, they are not completely risk-free, since they are subject to fluctuations in interest rates.
    • Bank fixed deposits, on the other hand, are guaranteed only to the extent of Rs 5 lakh by the Deposit Insurance and Credit Guarantee Corporation (DICGC).

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  • Nuclear Fusion and the recent breakthrough

    California based researchers have announced that their experiment has made a breakthrough in nuclear fusion research.

    What exactly is Nuclear Fusion?

    • Nuclear fusion is defined as the combining of several small nuclei into one large nucleus with the subsequent release of huge amounts of energy.
    • The difference in mass between the reactants and products is manifested as either the release or the absorption of energy.
    • Nuclear fusion powers our sun and harnessing this fusion energy could provide an unlimited amount of renewable energy.
    • An example of nuclear fusion is the process of four hydrogens coming together to form helium.

    What was the experiment?

    • In the experiment, lasers were used to heat a small target or fuel pellets.
    • These pellets containing deuterium and tritium fused and produced more energy.
    • The team noted that they were able to achieve a yield of more than 1.3 megajoules of heat energy.
    • This megajoule of energy released in the experiment is indeed impressive in fusion terms.

    How was the new breakthrough achieved?

    • The team used new diagnostics, improved laser precision, and even made changes to the design.
    • They applied laser energy on fuel pellets to heat and pressurize them at conditions similar to that at the center of our Sun. This triggered the fusion reactions.
    • These reactions released positively charged particles called alpha particles, which in turn heated the surrounding plasma.
    • At high temperatures, electrons are ripped from an atom’s nuclei and become a plasma or an ionized state of matter. Plasma is also known as the fourth state of matter.
    • The heated plasma also released alpha particles and a self-sustaining reaction called ignition took place.

    Future prospects: Benefits

    • It is expected that fusion could meet humanity’s energy needs for millions of years.
    • Fusion fuel is plentiful and easily accessible: deuterium can be extracted inexpensively from seawater, and tritium can be produced from naturally abundant lithium.
    • Future fusion reactors will not produce high activity, long-lived nuclear waste, and a meltdown at a fusion reactor is practically impossible.
    • Importantly, nuclear fusion does not emit carbon dioxide or other greenhouse gases into the atmosphere, and so along with nuclear fission could play a future climate change mitigating role as a low carbon energy source.

  • [pib] International Bullion Exchange

    The International Financial Services Centres Authority (IFSCA) has inaugurated the pilot run/soft launch of the International Bullion Exchange scheduled to go live on October 1, 2021.

    What is Bullion?

    • Bullion is gold and silver that is officially recognized as being at least 99.5% and 99.9% pure and is in the form of bars or ingots.
    • Bullion is often kept as a reserve asset by governments and central banks.
    • To create bullion, gold first must be discovered by mining companies and removed from the earth in the form of gold ore, a combination of gold and mineralized rock.
    • The gold is then extracted from the ore with the use of chemicals or extreme heat.
    • The resulting pure bullion is also called “parted bullion.” Bullion that contains more than one type of metal, is called “unparted bullion.”

    The Bullion Market

    • Bullion can sometimes be considered legal tender, most often held in reserves by central banks or used by institutional investors to hedge against inflationary effects on their portfolios.
    • Approximately 20% of mined gold is held by central banks worldwide.
    • This gold is held as bullions in reserves, which the bank uses to settle the international debt or stimulate the economy through gold lending.
    • The central bank lends gold from their bullion reserves to bullion banks at a rate of approximately 1% to help raise money.
    • Bullion banks are involved in one activity or another in the precious metals markets.
    • Some of these activities include clearing, risk management, hedging, trading, vaulting, and acting as intermediaries between lenders and borrowers.

    What is International Bullion Exchange?

    • This shall be the “Gateway for Bullion Imports into India”, wherein all the bullion imports for domestic consumption shall be channelized through the exchange.
    • The exchange ecosystem is expected to bring all the market participants to a common transparent platform for bullion trading.
    • It would provide efficient price discovery, assurance in the quality of gold, enable greater integration with other segments of financial markets and help establish India’s position as a dominant trading hub in the World.

    Answer this PYQ:

    What is/are the purpose/purposes of the Government’s ‘Sovereign Gold Bond Scheme’ and ‘Gold Monetization Scheme’?

    1. To bring the idle gold lying with India households into the economy
    2. To promote FDI in the gold and jewellery sector
    3. To reduce India’s dependence on gold imports

    Select the correct answer using the code given below:

    (a) 1 only

    (b) 2 and 3 only

    (c) 1 and 3 only

    (d) 1, 2 and 3

     

    [wpdiscuz-feedback id=”5rcyrnbgpy” question=”Please leave a feedback on this” opened=”1″]Post your answers here.[/wpdiscuz-feedback]

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  • Celebrating Einstein’s century

    Context

    In 1921, the Nobel Prize Committee concluded that Einstein would have to wait and the Committee decided not to award the Prize to anyone in 1921. Opinions changed in a year and when Einstein did receive the 1921 Prize in 1922.

    Background

    • Noble Prize was not awarded for his theories of relativity but for “his services to Theoretical Physics, and especially for his discovery of the law of the photoelectric effect”.
    • The citation harked back to the revolutionary theories that Einstein had established in 1905. ‘Annus Mirabilis’, or the Year of Miracles, is how 1905 is remembered by physicists because Einstein, only 26 then, published four remarkable papers that year.
    • One of them explained that light was made of photons and when the light shone on metal, each photon’s energy correlated to the electron’s speed on the metal’s surface.
    • This theory redefined the composition of light and Einstein himself dubbed it revolutionary.
    • It was for this that he received the Nobel Prize.

    Special theory of relativity

    • The special theory of relativity was published in 1905.
    • James Maxwell had established that light was an electromagnetic wave and the value of its speed was calculated. Building on this,
    • Speed of light remains constant for all observers: Einstein understood that while moving from one frame of reference to another, which is moving at a different speed, the speed of light remains a constant.
    • He gave a physical interpretation to the equations governing the transformation from one frame to another based on this fact.
    • Time slows down when measured from the rest: Einstein’s theory establishes that time moves slower within a moving body when measured from a point at rest (but moves normally within the moving body itself).
    • Length reduces: The length of the moving body contracts when measured from an outside point at rest.
    • When a moving body emits light, the length contraction and time slowdown of the moving body are just exactly what are needed to restore the speed of light to its constant value.
    • Einstein’s insight was that there was no absolute time because time was measured by the simultaneity of two events and this simultaneity would be observed differently.
    • As lagniappe to the scientific community, Einstein published his famous mass-energy equivalence E=mc2 in late 1905.
    • A mundane example of the application of the special theory of relativity is the use of GPS on our phones.

    General theory of relativity

    • The theory is general enough to apply to all forms of motion, including those where gravity does not appear.
    • Einstein worked out equations using tensors, the mathematical implement to describe the transformation of different dimensions.
    • In November 1915, Einstein completed the general theory of relativity.
    • As per this theory, space and time form a continuum, like a fabric, and every object in the universe distorts this fabric, much like how dropping a large ball distorts a taut trampoline sheet.
    • This distortion is gravity. It produces two effects.
    • One, the fabric causes any other object in the vicinity to move towards the heavier object and this is why gravity causes an object to pull things towards it.
    • Two, it bends light in the process of attracting it.

    Conclusion

    In just two decades, Einstein led physics out of its traditional moorings, laid the entablature of modern physics on Newtonian and Maxwellian pillars of classical physics and opened it up to newer questions.

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  • Sub-Mission on Fodder and Feed

    Context

    The government recently announced a Sub-Mission on Fodder and Feed.

    Why availability of good and affordable quality feed and fodder matters

    • A study by the Indian Grassland and Fodder Research Institute has observed that for every 100 kg of feed required, India is short of 23.4 kg of dry fodder, 11.24 kg of green fodder, and 28.9 kg of concentrate feed.
    • Low milk productivity: The lack of good quality feed and fodder impacts the productivity levels of cattle.
    • This is one of the chief reasons why Indian livestock’s milk productivity is 20%-60% lower than the global average.
    • High input cost: If we break down the input costs, we find that feed constitutes 60%-70% of milk production costs.
    • When the National Livestock Mission was launched in 2014, it focused on supporting farmers in producing fodder from non-forest wasteland/grassland, and cultivation of coarse grains.
    • However, this model could not sustain fodder availability due to a lack of backward and forward linkages in the value chain.

    Why Sub-Mission on Fodder and Feed is significant

    • As about 200 million Indians are involved in dairy and livestock farming, the scheme is important from the perspective of poverty alleviation.
    • The Sub-Mission on Fodder and Feed intends to create a network of entrepreneurs who will make silage (the hub) and sell them directly to the farmers (the spoke).
    • Bringing down the input cost: The large-scale production of silage will bring down the input cost for farmers since silage is much cheaper than concentrate feed.
    • Objective: The revised scheme has been designed with the objectives of increasing productivity, reducing input costs, and doing away with middlemen (who usually take a huge cut).
    • Since India has a livestock population of 535.78 million, effective implementation of this scheme will play a major role in increasing the return on investment for our farmers.

    About the Sub-Mission on Fodder and Feed

    • The scheme will provide 50% capital subsidy up to â‚č50 lakh towards project cost to the beneficiary for infrastructure development and for procuring machinery for value addition in feed such as hay/silage/total mixed ration.
    • Private entrepreneurs, self-help groups, farmer producer organizations, dairy cooperative societies, and Section 8 companies (NGOs) can avail themselves of the benefits under this scheme.
    • The scheme can be used for covering the cost of infrastructure/machinery such as bailing units, harvester, chaff cutter, sheds, etc.

    Challenges and solution

    • Seasonal availability: A major challenge in the feed sector emanates from the fact that good-quality green fodder is only available for about three months during the year.
    • Fermenting green fodder: Ideal solution would be to ferment green fodder and convert it into silage.
    • Hence, under the fodder entrepreneurship program, farmers will receive subsidies and incentives to create a consistent supply chain of feed throughout the year.

    Conclusion

    The mission will help marginal farmers reduce their input costs and help them in increasing the return on capital employed.

  • What are Oil Bonds?

    The Centre has argued that it cannot reduce taxes on petrol and diesel as it has to bear the burden of payments in lieu of oil bonds issued by the previous UPA government to subsidize fuel prices.

    What are Oil Bonds?

    • Oil bonds are special securities issued by the government to oil marketing companies in lieu of cash subsidy.
    • These bonds are typical of a long-term tenure like 15-20 years and oil companies are paid interest.
    • Before the complete deregulation of petrol and diesel prices, oil marketing companies were faced with a huge financial burden as the selling price of petrol and diesel in India was lower than the international market price.
    • This ‘under-recovery is typically compensated through fuel subsidies allocated in the Union budget.
    • However, between 2005 and 2010, the UPA government issued oil bonds to the companies amounting to Rs 1.4 lakh crore to compensate them for these losses.

    Why do governments issue such bonds?

    • Compensation to companies through issuance of such bonds is typically used when the government is trying to delay the fiscal burden of such a payout to future years.
    • Governments resort to such instruments when they are in danger of breaching the fiscal deficit target due to unforeseen circumstances that lead to a collapse in revenues or a surge in expenditure.
    • These types of bonds are considered to be ‘below the line’ expenditure in the Union budget and do not have a bearing on that year’s fiscal deficit, but they do increase the government’s overall debt.
    • However, interest payments and repayment of these bonds become a part of the fiscal deficit calculations in future years.

    Backgrounder: Deregulation of fuel prices

    • Fuel price decontrol has been a step-by-step exercise, with the government freeing up prices of aviation turbine fuel in 2002, petrol in 2010, and diesel in 2014.
    • Prior to that, the government would intervene in fixing the price at which retailers were to sell diesel or petrol.
    • This led to under-recoveries for oil marketing companies, which the government had to compensate for.
    • The prices were deregulated to make them market-linked, unburden the government from subsidizing prices, and allow consumers to benefit from lower rates when global crude oil prices tumble.
    • Price decontrol essentially offers fuel retailers such as Indian Oil, HPCL or BPCL the freedom to fix prices based on calculations of their own cost and profits.
    • However, the key beneficiary in this policy reform of price decontrol is the government.

    Impact: Loss of consumers

    • While oil price deregulation was meant to be linked to global crude prices, Indian consumers have not benefited from a fall in global prices.
    • The central, as well as state governments, impose fresh taxes and levies to raise extra revenues.
    • This forces the consumer to either pay what she’s already paying, or even more.

    Why are the Oil Bonds in news?

    • As prices of petrol and diesel climb steeply, the Centre has been under pressure to cut the high taxes on fuel.
    • Taxes account for 58 per cent of the retail selling price of petrol and 52 per cent of the retail selling price of diesel.
    • However, the government has so far been reluctant to cut taxes as excise duties on petrol and diesel are a major source of revenue, especially at a time the pandemic has adversely impacted other taxes such as corporate tax.
    • The government is estimated to have collected more than Rs 3 lakh crore from tax on petrol and diesel in the 2020-21 fiscal year.

    The blame game

    • The present government has blamed the UPA regime for its inability to cut taxes.
    • It pointed out that the bonds issued by the Manmohan Singh government have weakened the financial position of the oil marketing companies and added to the government’s fiscal burden now.
    • It is an argument that has been often repeated since 2018.

    What budget documents show

    • Budget documents show that such bonds will be up for redemption over the next few years — beginning with two to be redeemed in the current fiscal year — till 2026.
    • The government has to repay a principal amount of Rs 10,000 crore this year, according to these documents.
    • The government has paid around Rs 10,000 crore annually as interest over the last decade.
    • The government is likely to pay a similar amount of interest for the current fiscal as well.

    Is the issuance of such special securities restricted to the UPA era?

    • Besides oil bonds, the UPA era also saw the issuance of fertilizer bonds from 2007 to compensate fertilizer companies for their losses due to the difference in the cost price and selling price.
    • However, the issuance of such special securities is not limited to the UPA regime.
    • Over the years, the Modi government has issued bank recapitalization bonds to specific public sector banks (PSBs) as it looked to meet the large capital requirements of these PSBs without allocating money from the budget.

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