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GS Paper: GS3

  • Biological Diversity Amendment Bill, 2021

    The government has introduced the Biological Diversity (Amendment) Bill, 2021 which seeks to facilitate access to biological resources and traditional knowledge by the Indian traditional medicine sector.

    Biological Diversity Act, 2002: A quick recap

    • The BDA, 2002 was enacted for the conservation of biological diversity and fair, equitable sharing of the monetary benefits from the commercial use of biological resources and traditional knowledge.
    • The main intent of this legislation is to protect India’s rich biodiversity and associated knowledge against their use by foreign individuals.
    • It seeks to check biopiracy, protect biological diversity and local growers through a three-tier structure of central and state boards and local committees.
    • The Act provides for setting up of a National Biodiversity Authority (NBA), State Biodiversity Boards (SBBs) and Biodiversity Management Committees (BMCs) in local bodies.
    • The NBA will enjoy the power of a civil court.

    What are the proposed Amendments?

    The bill seeks to reduce the pressure on wild medicinal plants by encouraging the cultivation of medicinal plants. The bill:

    • Biological resources sharing: Exempts Ayush practitioners from intimating biodiversity boards for accessing biological resources or knowledge (Vaids and Hakims)
    • Research promotion: Facilitates fast-tracking of research, simplify the patent application process
    • Decriminalization: Decriminalises certain offences
    • Bring in foreign investment: Seeks to bring more foreign investments in biological resources, research, patent and commercial utilisation, without compromising the national interest

    Need for the Amendment

    • Simplifying process: Concerns were raised by Ayush medicine, seed, industry and research sectors urging the government to simplify, streamline the profession.
    • Easing compliance: They urged govt to reduce the compliance burden to provide for a conducive environment for collaborative research and investments.
    • Access and Benefit-sharing: It also sought to simplify the patent application process, widen the scope of access and benefit-sharing with local communities.
    • Exemptions: Ayush practitioners have been exempted from the ambit of the Act, a huge move because the Ayush industry benefits greatly from biological resources in India.
    • Certain offences: Violations of the law related to benefit-sharing with communities, which are currently treated as criminal offences and are non-bailable, have been proposed to be made civil offences.
    • Imbibing Nagoya Protocol: This bill provides to reconcile the domestic law with free prior informed consent requirements of the 2010 Nayogya Protocol on ABS.

    Criticisms of the bill

    • No consultation: The bill has been introduced without seeking public comments as required under the pre-legislative consultative policy.
    • No profit-sharing: There are ambiguous provisions in the proposed amendment to protect, conserve or increase the stake of local communities in the sustainable use and conservation of biodiversity.
    • Commercialization: Activists say that the amendments were done to “solely benefit” the AYUSH Ministry.
    • Loopholes to Biopiracy: The Bill would mean AYUSH manufacturing companies would no longer need to take approvals.
    • Ignoring Bio-utilization: The bill has excluded the term Bio-utilization which is an important element in the Act.  Leaving out bio utilization would leave out an array of activities like characterization, incentivisation and bioassay which are undertaken with commercial motive.
    • Exotic plants cultivation: The bill also exempts cultivated medicinal plants from the purview of the Act but it is practically impossible to detect which plants are cultivated and which are from the wild.
    • De-licensing: This provision could allow large companies to evade the requirement for prior approval or share the benefit with local communities.

    Back2Basics: Access and Benefit-Sharing

    • India is a party to the Convention of Biological Diversity, and the Nagoya Protocol on Access and Benefit Sharing.
    • It is mandated that benefits derived from the use of biological resources are shared in a fair and equitable manner among the indigenous and local communities.
    • When an Indian or foreign company or individual accesses biological resources such as medicinal plants and associated knowledge, it has to take prior consent from the national biodiversity board.
    • The board can impose a benefit-sharing fee or royalty or impose conditions so that the company shares the monetary benefit from commercial utilisation of these resources with local people who are conserving biodiversity in the region.

     

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  • Govt brings Bill to amend Wildlife Protection Act

    Forests Minister has introduced in Lok Sabha the Wildlife Protection (Amendment) Bill to ensure that the original 1972 Act complies with the requirements of the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES).

    What the Amendment brings in?

    [1] Standing Committee of State Board for Wildlife

    • The Bill proposes reducing the number of schedules and establishing a Standing Committee of State Board for Wildlife.
    • These committees will function like the National Board for Wildlife which is responsible for monitoring protected areas in the country and awarding or denying permission to projects in light of its threat to wildlife.
    • Officials say that in most states, State Wildlife Boards fall under the responsibility of Chief Ministers, and are therefore neglected due to the paucity of time.
    • The state Standing Committees will be able to take decisions on wildlife management and permissions granted for projects, without having to refer most projects to the NBWL.

    [2] Seized Species

    • There is also the insertion of a new section 42A about surrender of wild animals and products.
    • Any article or animal surrendered under this Section shall become property of the State Government and the provisions of Section 39 shall be applicable to it.

    [3] Reducing number of Schedules

    • The Ministry has also rationalized Schedules for Wildlife under the Act, bringing it down from 6 to 4 major schedules.
    • A schedule is a categorization of wildlife depending on how critically endangered they are.
    • A schedule I category of wildlife (such as Tigers) are the highest protected under the Act.

    [4] Wildlife Management Plans

    • The Ministry has mandated that Wildlife Management Plans which are developed for sanctuaries and national parks across the country, will now become a part of the WPA.
    • They will have to be approved by the Chief Wildlife Warden of the state.
    • This will ensure far stricter protection to these protected areas. Earlier they would be protected through executive orders which did not have as much teeth.

    Need for the Amendment

    Ans. Blacklisting by CITES would affect trade in important plant species

    • CITES aims to regulate the international trade of animals and plants so that it does not threaten their survival.
    • This has been a long-standing demand from CITES for the past 25 years.
    • India has been blacklisted by CITES once before, and if a second blacklisting were to happen — then India will no longer be able to trade in important plant specimens.
    • This would affect the livelihood of a large section of Indian society that relies heavily on this trade.

    About CITES

    • CITES stands for the Convention on International Trade in Endangered Species of Wild Fauna and Flora.
    • It is as an international agreement aimed at ensuring “that international trade in specimens of wild animals and plants does not threaten their survival”.
    • It was drafted after a resolution was adopted at a meeting of the members of the International Union for Conservation of Nature (IUCN) in 1963.
    • It entered into force on July 1, 1975, and now has 183 parties.
    • The Convention is legally binding on the Parties in the sense that they are committed to implementing it; however, it does not take the place of national laws.
    • India is a signatory to and has also ratified CITES convention in 1976.

    CITES Appendices

    • CITES works by subjecting international trade in specimens of selected species to certain controls.
    • All import, export, re-exports and introduction from the sea of species covered by the convention has to be authorized through a licensing system.

    It has three appendices:

    • Appendix I includes species threatened with extinction. Trade-in specimens of these species are permitted only in exceptional circumstances.
    • Appendix II provides a lower level of protection.
    • Appendix III contains species that are protected in at least one country, which has asked other CITES Parties for assistance in controlling trade.

    Back2Basics:  Wildlife (Protection) Act, 1972

    • WPA provides for the protection of the country’s wild animals, birds and plant species, in order to ensure environmental and ecological security.
    • It provides for the protection of a listed species of animals, birds and plants, and also for the establishment of a network of ecologically-important protected areas in the country.
    • It provides for various types of protected areas such as Wildlife Sanctuaries, National Parks etc.

    There are six schedules provided in the WPA for protection of wildlife species which can be concisely summarized as under:

    Schedule I: These species need rigorous protection and therefore, the harshest penalties for violation of the law are for species under this Schedule.
    Schedule II: Animals under this list are accorded high protection. They cannot be hunted except under threat to human life.
    Schedule III & IV: This list is for species that are not endangered. This includes protected species but the penalty for any violation is less compared to the first two schedules.
    Schedule V: This schedule contains animals which can be hunted.
    Schedule VI: This list contains plants that are forbidden from cultivation.

     

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  • The WTO’s challenge to MSP

    Context

    Amid the demand for legal backing to MSP, the question remains about whether India can provide a legal guarantee violating its international law obligations enshrined in the Agreement on Agriculture (AoA) of the World Trade Organization (WTO)?

    Classification of subsidies under AoA: Trade distorting and non-trade distorting

    • The objective of AoA: One of the central objectives of the AoA is to cut trade-distorting domestic support.
    • Three categories: In this regard, the domestic subsidies are divided into three categories: ‘green box’, ‘blue box’ and ‘amber box’ measures.
    • Non-trade distorting: ‘Green box’ subsidies (like income support to farmers de-coupled from production) and ‘blue box’ subsidies (like direct payments under production limiting programmes subject to certain conditions) are considered non-trade distorting.
    • Countries can provide unlimited subsidies under these two categories.
    • Trade-distorting subsidies: Price support provided in the form of procurement of crops at MSP is classified as a trade-distorting subsidy and falls under the ‘amber box’ measures, which are subject to certain limits.

    So, how do countries measure ‘amber box’ support?

    • Compute AMS: To measure ‘amber box’ support, WTO member countries are required to compute Aggregate Measurement of Support (AMS).
    • AMS is the total of product-specific support (price support to a particular crop) and non-product-specific support (fertilizer subsidy).

    Understanding the  de minimis limit

    • Under Article 6.4(b) of the AoA, developing countries such as India are allowed to provide a de minimis level of product and non-product domestic subsidy.
    • This de minimis limit is capped at 10% of the total value of production of the product, in case of a product-specific subsidy; and at 10% of the total value of a country’s agricultural production, in case of non-product subsidy.
    • Subsidies breaching the de minimis cap are trade-distorting.

    Possibility of India overshooting the de minimis limit

    • Relation between MSP and AMS: The procurement at MSP, after comparing it with the fixed external reference price (ERP) — an average price based on the base years 1986-88 — has to be included in AMS.
    • Widening gap between ERP and MSP: Since the fixed ERP has not been revised in the last several decades at the WTO, the difference between the MSP and fixed ERP has widened enormously due to inflation.
    • According to the Centre for WTO Studies, India’s ERP for rice, in 1986-88, was $262.51/tonne and the MSP was less than this.
    • However, India’s applied administered price for rice in 2015-16 stood at $323.06/tonne, much more than the 1986-88 ERP.
    • Procuring all the 23 crops at MSP, as against the current practice of procuring largely rice and wheat, will result in India breaching the de minimis limit making it vulnerable to a legal challenge at the WTO.
    • Even if the Government does not procure directly but mandates private parties to acquire at a price determined by the Government, as it happens in the case of sugarcane, the de minimis limit of 10% applies.

    Way forward

    • Peace clause: Although a permanent solution is nowhere in sight, the countries have agreed to a peace clause.
    • The peace clause forbids bringing legal challenges against price support-based procurement for food security purposes even if it breaches the limit on domestic support.
    • The peace clause is applicable only for programmes that were existing as of the date of the decision and are consistent with other requirements.
    • India’s procurement for rice and wheat, even if it violates the de minimis limit, will enjoy legal immunity.
    • However, India will not be able to employ the peace clause to defend procuring those crops that are not part of the food security programme (such as cotton, groundnut, sunflower seed).
    • Move from MSP to income-based support: Arguably, India can move away from price-based support in the form of MSP to income-based support, which will not be trade-distorting under the AoA provided the income support is not linked to production.
    • Supplement price-based support with income-based support: Alternatively, one can supplement price-based support (keeping the de minimis limit in mind) with an income-based support policy.

    Conclusion

    The Government needs to engage with the farmers and create an affable environment to convince them of other effective policy interventions, beyond MSP, that are fiscally prudent and WTO compatible.

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  • Growth of India’s Defence Exports

    India’s defense exports have increased manifold from ₹1,521 crore in 2016-17 to ₹8,434.84 crore in 2020-21.

    Note: This newscard provides substantial data about India’s defense exports and imports, which is highly relevant for mains and interview. Kindly bookmark this article.

    India’s defense exports

    • India has the strength of low-cost, high-quality production.
    • The Government has set an ambitious target to achieve exports of about ₹35,000 crore ($5 billion) in aerospace and defense goods and services by 2025.
    • The Defense Ministry has clarified that the names of the major defense items exported cannot be disclosed due to strategic reasons.
    • To boost indigenous manufacturing, the govt had issued two “positive indigenization lists” consisting of 209 items that cannot be imported and can only be procured from domestic industry.

    A significant achievement

    • According to the latest report of the Swedish think tank Stockholm International Peace Research Institute (SIPRI), three Indian companies figure among the top 100 defence companies in the 2020 rankings.
    • These include Hindustan Aeronautics Limited (HAL), Ordnance Factory Board and Bharat Electronics Ltd (BEL).

    Yet India is a top importer

    • While India remained among the top importers, it was also included in the Top 25 defence exporters.
    • There was an overall drop in India’s arms imports between 2011-15 and 2016-20, according to another SIPRI report of 2020.

    Items that India export

    • India has supplied different types of missile systems, LCA/helicopters, multi-purpose light transport aircraft, warships and patrol vessels etc.
    • It is also willing to export artillery gun systems, tanks, radars, military vehicles, electronic warfare systems and other weapons systems to IOR nations.

    Major partners: South Asian Countries

    • Vietnam is procuring 12 Fast Attack Craft under a $100 million credit line announced by India.
    • It is also interested in Advanced Light Helicopters and Akash surface-to-air missiles.
    • HAL has pitched its helicopters and the Tejas LCA to several Southeast Asian and West Asian nations and is in the race to supply the LCA to Malaysia.
    • Discussions on the sale of BrahMos supersonic cruise missiles, jointly developed by India and Russia, are at an advanced stage with some Southeast Asian nations.

    Steps taken by the Centre to boost defence production

    • Licensing relaxation: Measures announced to boost exports since 2014 include simplified defence industrial licensing, relaxation of export controls and grant of no-objection certificates.
    • Lines of Credit: Specific incentives were introduced under the foreign trade policy and the Ministry of External Affairs has facilitated Lines of Credit for countries to import defence product.
    • Policy boost: The Defence Ministry has also issued a draft Defence Production & Export Promotion Policy 2020.
    • Indigenization lists: On the domestic front, to boost indigenous manufacturing, the Government had issued two “positive indigenization lists” consisting of 209 items that cannot be imported.
    • Budgetary allocation: In addition, a percentage of the capital outlay of the defence budget has been reserved for procurement from domestic industry.

    Issues retarding defence exports

    • Excess reliance on Public Sector: India has four companies (Indian ordnance factories, Hindustan Aeronautics Limited (HAL), Bharat Electronics Limited (BEL) and Bharat Dynamics Limited (BDL)) among the top 100 biggest arms producers of the world.
    • Policy delays: In the past few years, the government has approved over 200 defence acquisition worth Rs 4 trillion, but most are still in relatively early stages of processing.
    • Lack of Critical Technologies: Poor design capability in critical technologies, inadequate investment in R&D and the inability to manufacture major subsystems and components hamper the indigenous manufacturing.
    • Long gestation: The creation of a manufacturing base is capital and technology-intensive and has a long gestation period. By that time newer technologies make products outdated.
    • ‘Unease’ in doing business: An issue related to stringent labour laws, compliance burden and lack of skills, affects the development of indigenous manufacturing in defence.
    • Multiple jurisdictions: Overlapping jurisdiction of the Ministry of Defence and Ministry of Industrial Promotion impair India’s capability of defence manufacturing.
    • Lack of quality: The higher indigenization in few cases is largely attributed to the low-end technology.
    • FDI Policy: The earlier FDI limit of 49% was not enough to enthuse global manufacturing houses to set up bases in India.
    • R&D Lacunae: A lip service to technology funding by making token allocations is an adequate commentary on our lack of seriousness in the area of Research and Development.
    • Lack of skills: There is a lack of engineering and research capability in our institutions. It again leads us back to the need for a stronger industry-academia interface.

    Way forward

    • Reducing import dependence: India was the world’s second-largest arms importer from 2014-18, ceding the long-held tag as the largest importer to Saudi Arabia, says 2019 SIPRI report.
    • Security Imperative: Indigenization in defence is critical to national security also. It keeps intact the technological expertise and encourages spin-off technologies and innovation that often stem from it.
    • Economic boost: Indigenization in defence can help create a large industry which also includes small manufacturers.
    • Employment generation: Defence manufacturing will lead to the generation of satellites industries that in turn will pave the way for a generation of employment opportunities.

     

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  • Extension for PM Krishi Sinchai Yojana

    The Cabinet has given its approval to extend its umbrella scheme Pradhan Mantri Krishi Sinchayee Yojana for irrigation, water supply, groundwater and watershed development projects for another five years till 2026.

    PM Krishi Sinchai Yojana

    • The PMKSY was launched on 1st July, 2015 with the motto of “Har Khet Ko Paani”.
    • It is being implemented to expand cultivated area with assured irrigation, reduce wastage of water and improve water use efficiency.

    The scheme has basically combined three active projects under various ministries which is as follows:

    1. Accelerated Irrigation Benefit Program (Ministry of Water Resources)
    2. Integrated Watershed Management Program (Ministry of Rural Development)
    3. Farm Water Management Project of the National Mission on Sustainable Agriculture

    Components of PMKSY

    PMKSY seeks to provide a complete solution to farm level irrigation and assured irrigation for every farm

    • It aims to integrate irrigation with the latest technological practices and cover more cultivable areas under assured irrigation
    • Increase the implementation of water-saving technologies and precision irrigation which in other words can be said as More Crop Per Drop.
    • PMKSY also targets the promotion of micro-irrigation in the form of sprinklers, rain-guns, drips, etc.

    Advantages of Micro Irrigation

    • Higher Profits
    • Water Saving & Water Use Efficiency (WUE)
    • Less Energy Costs
    • Higher fertilizer-use efficiency (FUE)
    • Reduced Labour Costs
    • Reduce Soli Loss
    • Marginal Solis & Water
    • Efficient & Flexible
    • Improved Crop Quality
    • Higher Yields

    Implementation of PMKSY

    • Everything from planning and execution of plans is regionalized in PMKSY.
    • District Irrigation Plans (DIPs) will identify the areas that require improved facilities in irrigation at block levels and district levels.
    • State Irrigation Plan consolidates all the DIPs and it oversees the agricultural plans developed under the Rashtriya Krishi Vikas Yojana.

    Funding pattern

    • Funds will be allocated by the centre only if the state has prepared the district irrigation plans and the state irrigation plans.
    • The state government’s share under PMKSY is 25% and rest is borne by the centre, with an exception for north-eastern states where contribution by the state government is 10%.

     

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  • The price of food must figure in the policy

    Context

    The essential challenge of public policy for agriculture- the high price of food remains unsolved.

    Implications of high food prices

    • Increases poverty: A higher price of food increases poverty, especially as the rice and wheat supplied through the PDS constitute only a part of the total expenditure on food of the average Indian household.
    • Reduces the expenditure on other item: For the household, a high price of food crowds out expenditure on other items ranging from health and education to non-agricultural goods.
    • This prevents the market for non-agricultural goods from expanding.
    • This was one of the first discoveries in economics, made by the English economist David Ricardo about two centuries ago.

    Rising food prices in India

    • An indication of the elevation of the price of food in an economy is the share of food in a household’s budget.
    • In a global comparison we would find that this share is very large for India.
    • Data from the U.S. Department of Agriculture (2016) show that this share ranges from over 30% for India to less than 10% for the U.S. and the U.K.
    • This is in line with Ricardo’s understanding of how economies progress i.e., as food gets cheaper, growth in the non-agricultural economy is stimulated.
    • Agricultural policy in India has remained quite unaccountable in the face of a rising relative price of food.
    • Impact on manufacturing sector: Arguably, the high price of food has been a factor in the disappointing lack of expansion of the manufacturing sector in India despite repeated efforts to bring it about.

    Changes needed in agricultural policy

    • Both from the point of view of food security for low-income households and the dynamism of the non-agricultural sector, agricultural policy cannot ignore the price at which food is produced.
    • Focus on improving the yield: The fact of low agricultural yield in India by comparison with the rest of the world has been known for long, and little is done about it.
    • Management of soil nutrients and moisture: A superior management of soil nutrients and moisture, assured water supply and knowledge inputs made available via an extension service would be crucial.
    • Raising yields will ensure profitability without raising producer prices, which will inflate the food subsidy bill.

    How government intervention created problems

    • Given the importance of food for our survival, this justifies public intervention in agriculture.
    • The issue is the design and scale of this intervention.
    • In the mid-sixties, when India was facing food shortage that could not be solved through trade, a concerted effort was made to raise domestic agricultural production.
    • Profitability through MSP: It introduced the strategy of ensuring farm profitability though favourable prices assured by the state.
    • Further, it entrenched the belief that it is the farmer’s right to have the state purchase as much grain as the farmer wishes to sell to the state agency.
    • Created grain stockpile: This has resulted in grain stockpiles far greater than the officially announced buffer-stocking norm.
    • These stocks have often rotted, resulting in deadweight loss, paid for by the public though taxes or public borrowing.
    • Supply more than demand: Finally, with all costs of production reimbursable and all of output finding an assured outlet, supply has outstripped demand. 
    • Damage to natural environment: This has led to unimaginable pressure on the natural environment, especially water supply.

    Consider the question “India faces the challenge of high food prices. Examine the ways in which high food prices affects the overall economy. How far is the India’s agriculture policy responsible for the problem?”

    Conclusion

    India needs an agricultural policy that ensures that farming is profitable but this cannot be at the cost of a high price of food. The ‘food problem’ should no longer be seen only in terms of the availability of food from domestic sources.

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  • Zero Budget Natural Farming

    Zero budget natural farming (ZBNF) is back on top of the Government’s agricultural agenda, with PM set to highlight it at a national conclave.

    Zero Budget Natural Farming (ZBNF)

    • ZBNF is a set of farming methods, and also a grassroots peasant movement, which has spread to various states in India.
    • Subhash Palekar perfected it during the 1990s at his farm in Amravati district in Maharashtra’s drought-prone Vidarbha region.
    • According to the “zero budget” concept, farmers won’t have to spend any money on fertilisers and other agricultural inputs.
    • Over 98% of the nutrients that crops require — carbon dioxide, nitrogen, water, solar energy — are already present in nature.
    • The remaining 1.5-2% are taken from the soil, after microorganisms convert them from “non-

    Four Wheels of ZBNF

    The “four wheels” of ZBNF are ‘Jiwamrita’, ‘Bijamrita’, ‘Mulching’ and ‘Waaphasa’.

    • Jiwamrita is a fermented mixture of cow dung and urine (of desi breeds), jaggery, pulses flour, water and soil from the farm bund.
    • This isn’t a fertilizer, but just a source of some 500 crore micro-organisms that can convert all the necessary “non-available” nutrients into “available” form.
    • Bijamrita is a mix of desi cow dung and urine, water, bund soil and lime that is used as a seed treatment solution prior to sowing.
    • Mulching, or covering the plants with a layer of dried straw or fallen leaves, is meant to conserve soil moisture and keep the temperature around the roots at 25-32 degrees Celsius, which allows the microorganisms to do their job.
    • Waaphasa, or providing water to maintain the required moisture-air balance, also achieves the same objective.

    Astra’s of ZBNF against pest attacks

    • ZBNF advocates the use of special ‘Agniastra’, ‘Bramhastra’, and ‘Neemastra’ concoctions.
    • They are based on cow urine and dung, plus pulp from leaves of neem, white datura, papaya, guava, and pomegranates — for controlling pest and disease attacks.

    Is it organic farming?

    • ZBNF uses farmyard manure or vermicompost.

    Issues with ZBNF

    • Cost of labor: The cost of labor for the collection of dung and urine, apart from the other inputs used in the preparation of Jiwamrita, Neemastra or Bramhastra is quit higher.
    • Bovine cost: Keeping cows is also a cost that has to be accounted for. Farmers cannot afford to keep desi cows that yield very little milk.
    • Vulnerability to pest attacks:  ZBNF is scarcely practiced.  The crop grown would be vulnerable to attacks by insects and pests have already become pest-immune.

     

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  • Program for Development of Semiconductors and Display Manufacturing Ecosystem in India

    The Union Cabinet has approved a ₹76,000 crore scheme to boost semiconductor and display manufacturing in the country.

    About the Program

    • The scheme would provide financial support of up to 50% of the project cost for setting up semiconductor and display fabrication units.
    • The scheme was aimed at making India a global hub of electronic system design and manufacturing, the statement noted.
    • In addition, the Centre would work with the States to set up high-tech clusters with the necessary infrastructure such as land and semiconductor-grade water.

    Components of the mission

    [1] Semiconductor Fabs and Display Fabs

    • This shall extend fiscal support of up to 50% of project cost to eligible applicants.
    • The govt will work closely with the states establish High-Tech Clusters with requisite infrastructure in terms of land, semiconductor grade water, high quality power, logistics and research.

    [2] Semi-conductor Laboratory (SCL):

    • The Ministry of Electronics and Information Technology will take requisite steps for the modernization and commercialization of the Semi-conductor Laboratory (SCL).
    • MeitY will explore the possibility for the Joint Venture of SCL with a commercial fab partner to modernize the brownfield fab facility.

    [3] Semiconductor Design Companies:

    • The Design Linked Incentive (DLI) Scheme shall extend product design linked incentive of up to 50% of eligible expenditure and product deployment linked incentive of 6% – 4% on net sales for five years.
    • Support will be provided to 100 domestic companies of semiconductor design for Integrated Circuits (ICs), Chipsets, System on Chips (SoCs), Systems & IP Cores.

    [4] India Semiconductor Mission:

    • In order to drive the long-term strategies for developing sustainable semiconductors and display ecosystem, a specialized and independent ISM will be set up.
    • The ISM will be led by global experts in the semiconductor and display industry.
    • It will act as the nodal agency for efficient and smooth implementation of the schemes on Semiconductors and Display ecosystem.

    [5] Chips to start-ups Program

    • This program would develop 85,000 well-trained engineers, he claimed. Semiconductor designers would be given the opportunity to launch start-ups.
    • The government would bear 50% of the expense under the design-linked incentive scheme.
    • The entire programme would lead to 35,000 high-quality direct jobs and 1 lakh indirect employment.

    Significance of the scheme

    • In the current geopolitical scenario, trusted sources of semiconductors and displays hold strategic importance and are key to the security of critical information infrastructure.
    • The approved program will propel innovation and build domestic capacities to ensure the digital sovereignty of India.
    • It will also create highly skilled employment opportunities to harness the demographic dividend of the country.
    • Development of semiconductor and display ecosystem will have a multiplier effect across different sectors of the economy with deeper integration to the global value chain.

     

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  • The NMP is hardly the panacea for growth in India

    Context

    As the government seeks to monetise core assets through National Monetisation Pipeline (NMP), it needs to investigate the key reasons and processes which led to once profit-making public sector assets becoming inefficient and sick businesses.

    Background of the MNP

    • The National Monetisation Pipeline (NMP) envisages an aggregate monetisation potential of ₹6-lakh crore through the leasing of core assets of the Central government.
    • These assets are in sectors such as roads, railways, power, oil and gas pipelines, telecom, civil aviation, shipping ports and waterways, mining, food and public distribution, coal, housing and urban affairs etc. over a four-year period (FY2022 to FY2025).
    • Strategic objective of NMP: According to NITI Aayog, the strategic objective of the asset monetisation programme is to unlock the value of investments in public sector assets by tapping private sector capital and efficiencies.
    • Unlocking idle capital: The NMP policy advocates unlocking idle capital from non-strategic/underperforming government owned assets
    • Contribution of core sectors: Eight core industrial sectors that support infrastructures such as coal, crude oil, natural gas, refinery products, fertilizers, steel, cement, and electricity have a total weight of nearly 40% in the Index of Industrial Production (IIP).

    Reasons for the decline of PSU and why the government should introspect the decline

    • Cost overruns, inter alia, is one of the major reasons.
    • Exceeding project completion time: In some cases, project completion time is exceeded, leading to elevated project cost so much so that either the project itself becomes unviable at the time of its launching or delays its break even point.
    • Lack of optimum input-output ratio: Optimum input-output ratio is seldom observed in a majority of government infrastructural projects leading to their overcapitalisation.
    • A reluctance to implement labour reforms, a lack of inter-ministerial/departmental coordination, poor decision-making, ineffective governance and excessive government control are other reasons for the failure of public infrastructural assets.
    • Need for introspection: It is quite likely that the nation may find itself in a vicious cycle of creating new assets and then monetising the same when they become liabilities for the Government at a later stage.

    Importance of public sector enterprises

    • Going by the annual report (2020-2021) of the Department of Public Enterprises there are 256 operationally-run central public sector undertakings (CPSUs), employing about one million people.
    • They posted a net profit of ₹93,294 crore (FY 2019-20).
    • Ratna Status: Out of these, 96 have been conferred the Ratna status (72, 14, and 10 are Miniratnas, Navaratnas, and Maharatna companies, respectively).
    • As India needs to invest about $1.5 trillion on infrastructure development in order to aspire to become $5 trillion economy by the year 2024-25, according to the Economic Survey 2019-20, public enterprises should be in focus.

    Steps to strengthen public sector businesses

    • Gati Shakti National Master Plan: Recently, the “Pradhan Mantri Gati Shakti National Master Plan” for multi-modal connectivity was launched.
    • It is essentially a digital platform for information sharing among different Ministries and departments at the Union and State levels.
    • Seamless planning and coordinated execution: The plan aims ‘to synchronise the operations of different departments of 16 Ministries including railways and roadways.
    •  Revamping corporate governance structure of PSUs: As enunciated in the Economic Survey 2020-21, an important step for the Government to take to strengthen public sector businesses would be to completely revamp their corporate governance structure in order to enhance operational autonomy augmented with strong governance practices including listing on stock exchange for greater transparency and accountability.
    • Initiative to boost domestic production of steel: The Economic Survey also highlights the Government’s initiatives as part of the Atmanirbhar Abhiyaan in order to boost domestic production in the steel sector.
    • Under it, four different types of steel are included for incentives under the production linked incentive (PLI) scheme; selling steel to Micro, Small and Medium Enterprises (MSMEs), affiliated to Engineering Export Promotion Council of India at export parity price under the duty drawback scheme of the Directorate General of Foreign Trade (DGFT);
    • It also include measures to provide preference to domestically produced iron and steel in government procurement, where aggregate estimate of iron and steel products exceeds ₹25 crore;
    • Protection of domestic industry from unfair trade practices: Protecting industry from unfair trade through appropriate remedial measures including imposition of anti-dumping duty and countervailing duty on the products on which unfair trade practices were adopted by the other countries.

    Conclusion

    More such out-of-the-box policy initiatives are needed to rule out public asset monetisation schemes such as the NMP in future.

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  • The stepping stones in the post-pandemic world

    Context

    The COVID-19 pandemic has profoundly impacted lives and livelihoods across the world. Governments, global institutions, industry, academia and non-profit organisations around the world have joined hands to tackle the global challenge and help countries rebuild their economies.

    Criticality of international cooperation and role for India

    • The novel coronavirus pandemic has once again highlighted the criticality of international cooperation in combating current and future challenges.
    • Areas of cooperation: Key among these include economic growth, building competitiveness of the investment climate, ensuring sustainable development paths and adapting to technology acceleration.
    • Strengthening global partnership: Building resilience to cope with the threats posed by pandemics and other man-made and natural disasters has necessitated strengthening global partnerships now more than ever.
    • Global partnerships help in building mutual trust and understanding by agreeing upon common rules and standards and sharing of best practices.

    Areas to focus on

    [1] Challenge of long term sustainability of growth process

    • While the world economy is rebounding strongly, the long-term sustainability of the growth process needs to be strengthened.
    • Exit from the massive stimulus packages itself may pose risks of economic and financial instability.

    [2] Challenges of supply chain management:

    • The pandemic severely disrupted global supply chains and set the global trade trajectory on a downward path.
    • Even as the world emerges from the pandemic, facilitating medical supplies and essentials will continue to remain a top priority and for this, supply chains will need to be kept flowing.
    • For this year, the United Nations Conference on Trade and Development (UNCTAD) indicates an increase of 22.4% in the value of global merchandise trade compared with 2020.
    • World trade is expected to stand about 15% higher than before the COVID-19.
    • FDI flows in developing economies also increased significantly, totalling $427 billion in the first half of 2021.
    •  Cooperation on trade facilitation for enhancing open and transparent markets, technical assistance and reduction of complex process and arrangements must be promoted.

    [3] Increasing competitiveness

    • Competitiveness will be key in facilitating growth and inclusive development.
    • New opportunities and avenues across potential high growth sectors such as manufacturing and start-ups must be leveraged.
    • An ecosystem of entrepreneurship and innovation with targeted policies and interventions will contribute to enhancing productivity and generating employment.

    [4] Structural changes with the emergence of digital economy

    • Certain structural changes are likely to become permanent in the future and this is especially true of the digital economy
    • Equitable adaptation: The rise of telemedicine, remote work and e-learning, delivery services, etc. necessitates equitable adaptation to advanced technologies and tools, building robust infrastructure, and occupational transitions.
    • Skill development and worker training, investments in education and vocational training, and capacity building would be some key areas of focus for filling technology gaps and nurturing new and existing talent.
    • Investment in innovation: At the same time, investments in innovation will be crucial, especially during a crisis.

    [5] Climate change

    • Matter of urgency: Climate change has now acquired urgency from policymakers around the world, as seen in the recent COP26 at Glasgow.
    • International alliances and cooperation on building sustainable solutions, green technology, resource efficiency, sustainable finance, etc., must be promoted to fast-track meeting the sustainable development goals and for ensuring all-round development.

    Opportunities for India

    • Attaining faster growth path: India’s recent reforms, role in combating the pandemic, and startup vibrancy, among other factors, have attracted global attention and can help it attain a faster growth path, provided its integration with the world economy and trade gains strategic intensity.
    • Reliable and trusted player: With multiple strategic shifts, India’s role as a reliable and trusted player in the comity of nations stands enhanced.

    Way forward

    • In the post-pandemic world, it will be critical for India to improve on its investment climate and systematically target its export capabilities across sectors and regions.
    • Ease of doing business and new free trade agreement with major markets will help it integrate closely with the world through trade and investment partnerships.

    Conclusion

    The time for India is here and it must leverage international partnerships for ensuring a robust and sustained economic growth path.

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