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GS Paper: GS3

  • Electricity (Amendment) Bill 2020

    Context

    Most discoms are deep into the red as high aggregate technical and commercial (AT&C) losses are chipping into their revenues. Against this backdrop, the Electricity (Amendment) Bill of 2020 is a game-changing reform.

    Why the Electricity (Amendment) Bill of 2020 is a game-changing reform

    • De-licensing power distribution: This will provide the consumers with an option of choosing the service provider, switch their power supplier and enable the entry of private companies in distribution, thereby resulting in increased competition.
    • In fact, privatisation of discoms in Delhi has reduced AT&C losses significantly from 55% in 2002 to 9% in 2020.
    • Open access for purchasing power: Open access for purchasing power from the open market should be implemented across States and barriers in the form of cross-subsidy surcharge, additional surcharge and electricity duty being applied by States should be reviewed.
    • Issue of tariff revision: The question of tariffs needs to be revisited if the power sector is to be strengthened.
    • Tariffs ought to be reflective of the average cost of supply to begin with and eventually move to customer category-wise cost of supply in a defined time frame.
    • This will facilitate a reduction in cross-subsidies.
    • Inclusion in GST: Electrical energy should be covered under GST, with a lower rate of GST, as this will make it possible for power generator/transmission/distribution utilities to get a refund of input credit, which in turn will reduce the cost of power.
    • Use of smart meters: Technology solutions such as installation of smart meters and smart grids which will reduce AT&C losses and restore financial viability of the sector.
    • The impetus to renewable energy: The impetus to renewable energy, which will help us mitigate the impact of climate change, is much needed.
    • Despite its inherent benefits, the segment has shown relatively slow progress with an estimated installed capacity of 5-6 GW as on date, well short of the 2022 target.
    • The Bill also underpins the importance of green energy by proposing a penalty for non-compliance with the renewable energy purchase obligations which mandate States and power distribution companies to purchase a specified quantity of electricity from renewable and hydro sources
    • Strengthening the regulatory architecture: This will be done by appointing a member with a legal background in every electricity regulatory commission and strengthening the Appellate Tribunal for Electricity.
    • This will ensure faster resolution of long-pending issues and reduce legal hassles.
    • Authority for contractual obligation: Provision in the Bill such as the creation of an Electricity Contract Enforcement Authority to supervise the fulfillment of contractual obligations under power purchase agreement, cost reflective tariffs and provision of subsidy through DBT are commendable.

    Conclusion

    Early passage of the Bill is critical as it will help unleash a path-breaking reform for bringing efficiency and profitability to the distribution sector.

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  • Zeolite Oxygen Concentrators: Chemistry in 3-D

    To meet the demand of oxygen supply in the country during the peak of pandemic, the Defence Research and Development Organisation (DRDO) had chartered the Air India to import ‘Zeolite’ from different countries.

    What are Zeolites?

    • Zeolites are highly porous, 3-dimensional meshes of silica and alumina.
    • In nature, they occur where volcanic outflows have met water.
    • Synthetic zeolites have proven to be a big and low-cost boon.

    Uses in Oxygen Concentrator

    • One biomedical device that has entered our lexicon during the pandemic is the oxygen concentrator.
    • This device has brought down the scale of oxygen purification from industrial-size plants to the volumes needed for a single person.
    • At the heart of this technology are synthetic frameworks of silica and alumina with nanometer-sized pores that are rigid and inflexible.
    • Beads of one such material, zeolite 13X, about a millimeter in diameter, are packed into two cylindrical columns in an oxygen concentrator.

    How does it work?

    • Zeolite performs the chemistry of separating oxygen from nitrogen in air.
    • Being highly porous, zeolite beads have a surface area of about 500 square meters per gram.
    • At high pressures in the column, nitrogen is in a tight embrace, chemically speaking, with the zeolite.
    • Interaction between the negatively charged zeolite and the asymmetric nucleus (quadrupole moment) of nitrogen causes it to be preferentially adsorbed on the surface of the zeolite.
    • Oxygen remains free, and is thus enriched.
    • Once nitrogen is captured, what flows out from the column is 90%-plus oxygen.
    • After this, lowering the pressure in the column releases the nitrogen, which is flushed out, and the cycle is repeated with fresh air.

     

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  • Exercise Yudh Abhyas 2021

    The 17th edition of the India-U.S. bilateral exercise, Yudh Abhyas 2021, got underway in mountainous terrain and cold climate conditions of Alaska, US.

    Yudh Abhyas 2021

    • Exercise Yudh Abhyas is the largest running joint military training and defence cooperation endeavour between India and USA.
    • The exercise aims at enhancing understanding, cooperation and interoperability between the two armies.

    Why it is significant?

    • Interestingly, this is the only India-U.S. service exercise continuing in bilateral format.
    • The India-U.S. Malabar naval exercise became trilateral with the addition of Japan in 2015 and further brought in all the Quad partners together with the inclusion of Australia in 2020.
    • Similarly, Japan joined the India-U.S. bilateral air exercise, Cope India, as an Observer in 2018 and the plan is to make it trilateral in phases.
    • Other than the Malabar, Japan had sent observers for the first time during Cope India 2018 as an Observer in 2018. s

     

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  • PM GatiShakti — National Master Plan

    The PM has inaugurated the GatiShakti — National Master Plan for infrastructure development aimed at boosting multimodal connectivity and driving down logistics costs.

    GatiShakti — National Master Plan

    • PM GatiShakti is a digital platform that connects 16 ministries — including Roads and Highways, Railways, Shipping, Petroleum and Gas, Power, Telecom, Shipping, and Aviation.
    • It aims to ensure holistic planning and execution of infrastructure projects.
    • The objective is to ensure that every department now has visibility of each other’s activities providing critical data while planning and execution of projects.
    • Through this, different departments will be able to prioritize their projects through cross-sectoral interactions.

    Notable features

    • Geospatial data: The portal will offer 200 layers of geospatial data, including on existing infrastructure such as roads, highways, railways, and toll plazas.
    • Protected areas management: It would also geographic information about forests, rivers, and district boundaries to aid in planning and obtaining clearances.
    • Realtime monitoring: The portal will also allow various government departments to track, in real-time and at one centralized place, the progress of various projects.

    Monitoring mechanism

    • The National Master Plan has set targets for all infrastructure ministries.
    • A project monitoring group under the Department for Promotion of Industry and Internal Trade (DPIIT) will monitor the progress of key projects in real-time.
    • It would report any inter-ministerial issues to an empowered group of ministers, who will then aim to resolve these.

    Need for such Project

    • Avoiding poor infrastructure planning: Examples of poor infrastructure planning included newly-built roads being dug up by the water department to lay pipes.
    • Creating a multi-modal network: The government expects the platform to enable various government departments to synchronize their efforts into a multi-modal network.
    • Timely completion of infra projects: It is also expected to help state governments give commitments to investors regarding timeframes for the creation of infrastructure.
    • Inefficient connectivity: Currently, a number of economic zones and industrial parks are not able to reach their full productive potential due to inefficient multi-modal connectivity.
    • Easy clearance: The portal allows stakeholders to apply for these clearances from the relevant authority directly.

    Logistics costs in India

    • Studies estimate that logistics costs in India are about 13-14% of GDP as against about 7-8% of GDP in developed economies.
    • High logistics costs impact cost structures within the economy by making it more expensive for exporters to ship merchandise to buyers.

    Benefits offered by PM-GatiShakti

    • Collaborative planning: It would incorporate infrastructure schemes under various ministries and state governments, including the Bharatmala and inland waterways schemes, and economic zones.
    • Logistics boost: It would boost last-mile connectivity and thus bring down logistics costs with integrated planning and reducing implementation overlaps.

     

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  • [pib] Maharatna status accorded to Power Finance Corporation Ltd (PFC)

    The Centre has accorded ‘Maharatna’ status to the state-owned Power Finance Corporation Ltd (PFC), thus giving PFC greater operational and financial autonomy.

    About PFC Ltd.

    • Power Finance Corporation Ltd. (PFC) is an Indian financial institution under the ownership of Ministry of Power.
    • Established in 1986, it is the financial backbone of Indian Power Sector.
    • PFC is the 8th highest profit making Central Public Sector Enterprise (CPSE) as per the Department of Public Enterprises Survey for FY 2017–18.
    • It is India’s largest NBFC and also India’s largest infrastructure finance company.

    Benefits of Maharatna Status

    • This new status will enable PFC to offer competitive financing for the power sector, which will go a long way in making available affordable & reliable ‘Power For All 24×7’.
    • This will also impart enhanced powers to the PFC Board while taking financial decisions.
    • It can make equity investments to undertake financial joint ventures and wholly-owned subsidiaries and undertake mergers and acquisitions in India and abroad.
    • It can also structure and implement schemes relating to personnel and Human Resource Management and Training.
    • It can also enter into technology Joint Ventures or other strategic alliances among others.

    Back2Basics: Central Public Sector Enterprises

    • The CPSEs are run by the Government under the Department of Public Enterprises of Ministry of Heavy Industries and Public Enterprises.
    • The government grants the status of Navratna, Miniratna and Maharatna to them based upon the profit made by these CPSEs.
    • The Maharatna category has been the most recent one since 2009, other two have been in function since 1997.

     

    Maharatna Navratna Miniratna Category-I Miniratna Category-II
    Eligibility Three years with an average annual net profit of over ₹2,500 crore

    OR

    Average annual Net worth of ₹10,000 crore for 3 years

    OR

    Average annual Turnover of ₹20,000 crore for 3 years

     

    		 A score of 60 (out of 100), based on six parameters which include net profit, net worth, total manpower cost, total cost of production, cost of services, PBDIT (Profit Before Depreciation, Interest and Taxes), capital employed, etc.,

    AND

    A company must first be a Miniratna and have 4 independent directors on its board before it can be made a Navratna

    		 Have made profits continuously for the last three years or earned a net profit of ₹30 crore or more in one of the three years Have made profits continuously for the last three years and should have a positive net worth.
    Benefits for investment ₹1,000 crore – ₹5,000 crore, or free to decide on investments up to 15% of their net worth in a project  

    Up to ₹1,000 crore or 15% of their net worth on a single project or 30% of their net worth in the whole year

    		 Up to ₹500 crore or equal to their net worth, whichever is lower Up to ₹300 crore or up to 50% of their net worth, whichever is lower

     

     

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  • Places in news: Mudumalai Tiger Reserve

    P

    PC: MapsOfIndia

    A tiger believed to have been responsible for the death of two herders in the Mudumalai Tiger Reserve was finally captured.

    Read all the tiger reserves in India through this map. Put more focus on South Indian states and the NE region.

    Mudumalai Tiger Reserve

    • Mudumalai National Park is a national park in the Nilgiri Mountains in Tamil Nadu.
    • It is located in the Nilgiri District and shares boundaries with the states of Karnataka and Kerala.
    • It is part of the Nilgiri Biosphere Reserve and was declared a tiger reserve in 2007.
    • It harbours several endangered and vulnerable species including Bengal tiger, Indian leopard, Indian elephant and gaur.

    Try this PYQ:

    Q. Recently there was a proposal to translocate some of the lions from their natural habitat in Gujarat to which one of the following sites?

    (a) Corbett National Park

    (b) Kuno Palpur Wildlife Sanctuary

    (c) Mudumalai Wildlife Sanctuary

    (d) Sariska National Park

     

    [wpdiscuz-feedback id=”57b43o5jkg” question=”Please leave a feedback on this” opened=”1″]Post your answers here.[/wpdiscuz-feedback]

     

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  • Securing the States

    Context

    The Ministry of Home Affairs recently issued a notification extending the jurisdiction of the Border Security Force from 15 km to a depth of 50 km along the international borders in three states — Punjab, Assam and West Bengal.

    Background of the notification about jurisdiction of BSF

    • The last notification of the MHA (July 3, 2014), which defined the jurisdiction of the BSF, stated that the force could operate in the entire states of Nagaland, Manipur, Mizoram, Tripura and Meghalaya without any restrictions whatsoever.
    • In Gujarat, it had jurisdiction up to a depth of 80 km and in Rajasthan up to 50 km.
    • In Punjab, Assam and West Bengal, the BSF jurisdiction was up to a depth of 15 km only.
    • Under the latest notification issued on October 11, 2021, there is no change in the northeastern states and Rajasthan.
    • In Gujarat, jurisdiction has been reduced from 80 km to 50 km.
    • The controversial change is in Assam, West Bengal and Punjab, where the BSF jurisdiction has been extended from 15 km to 50 km.
    • It is this part of the notification which has generated controversy, though the criticism has been made by leaders of Punjab and West Bengal.

    Why the government of India decided to extend the jurisdiction of BSF?

    • Assam, West Bengal and Punjab have international borders.
    • Changed threat perception: The threat perception from across the international borders has undergone a sea change in the context of recent developments in the Af-Pak region.
    • Efforts to destabilise Punjab: Radical groups of different shades are feeling emboldened and are going to make a determined attempt to destabilise Punjab.
    • Pakistan-sponsored terrorist groups, particularly the Lashkar-e-Toiba and Jaish-e-Muhammad, will almost certainly renew their onslaught in the border states.
    • West Bengal has already undergone a huge demographic change.
    • Assam faces multiple problems of ethnic insurgencies, smuggling, counterfeit currency, drug trafficking, etc.
    • Police need assistance: The police across the country are in a state of atrophy and they need the assistance of central armed police forces even for maintaining normal law and order.
    • As such, their effectiveness against the emerging trans-border threats is suspect.

    Implications for powers of police and federalism

    • The home ministry’s latest notification only seeks to reinforce the capabilities of the state police in securing the states under section 139 of the BSF Act, which empowers the members of the force to discharge certain powers and duties within local limits of the areas specified in the schedule.
    •  The jurisdiction of the state police has neither been curtailed nor its powers reduced in any manner.
    • It is just that the BSF will also be exercising powers of search, seizure and arrest in respect of only the Passport Act 1967, Passport (Entry into India) Act 1920 and specified sections of the Criminal Procedure code.
    • The power to register FIR and investigate the case remains with the state police.
    • The Indian Constitution, no doubt, fulfils some conditions of a federation, but it leans towards a strong Centre.

    Conclusion

    National security is a paramount consideration. It is unfortunate that the BSF is being dragged into political controversy when it would actually be over-stretching itself to strengthen national security.

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  • Taking the lid off illicit financial flows

    Context

    The Pandora Papers, published on October 3, once again expose the illegal activities of the rich and the mighty across the world.

    About the Pandora Papers investigation

    • It is “the world’s largest-ever journalistic collaboration, involving more than 600 journalists from 150 media outlets in 117 countries”.
    • The International Consortium of Investigative Journalists (ICIJ) has researched and analysed the approximately 12 million documents in order to unravel the functioning of the global financial architecture.
    • The Pandora Papers, unlike the previous cases, are not from any one tax haven; they are leaked records from 14 offshore services firms. The data pertains to an estimated 29,000 beneficiaries.
    • The 2.94 terabytes of data have exposed the financial secrets of over 330 politicians and public officials, from more than 90 countries and territories.
    • These include 35 current and former country leaders.

    Role of financial centres and banks

    • A large extent of the illicit financial flows have a link to New York City and London, the biggest financial centres in the world that allow financial institutions such as big banks to operate with ease.
    • The big financial entities operating from these cities have been prosecuted for committing illegalities.
    • In 2012, an investigation into the London Interbank Offered Rate or LIBOR — crucial in calculating interest rates — led to the fining of leading banks such as Barclays, UBS, Rabobank and the Royal Bank of Scotland for manipulation.
    • These banks also operate a large number of subsidiaries in tax havens to help illicit financial flows.

    Modus operandi

    • Tax havens enable the rich to hide the true ownership of assets by using: trusts, shell companies and the process of ‘layering’.
    • Financial firms offer their services to work this out for the rich.
    • They provide ready-made shell companies with directors, create trusts and ‘layer’ the movement of funds.
    • The process of layering involves moving funds from one shell-company in one tax haven to another in another tax haven and liquidating the previous company.
    • This way, money is moved through several tax havens to the ultimate destination.
    • Since the trail is erased at each step, it becomes difficult for authorities to track the flow of funds.
    • It appears that most of the rich in the world use such manipulations to lower their tax liability even if their income is legally earned.

    Why funds are moved to the tax havens?

    • Even citizens of countries with low tax rates use tax havens.
    • Over the three decades, tax havens have enabled capital to become highly mobile, forcing nations to lower tax rates to attract capital.
    • This has led to the ‘race to the bottom’, resulting in a shortage of resources with governments to provide public goods, etc., in turn adversely impacting the poor.
    • Lowering tax liability: It appears that most of the rich in the world use such manipulations to lower their tax liability even if their income is legally earned.
    • Moving funds out of reach of creditors: Revelations suggest that funds are moved out of national jurisdiction to spirit them away from the reach of creditors and not just governments.
    • Many fraudsters are in jail but have not paid their creditors even though they have funds abroad.

    Challenges in checking the illicit financial flows

    • The very powerful who need to be onboard to curb illicit financial flows (as the Organisation for Economic Co-operation and Development, or the OECD is trying) are the beneficiaries of the system and would not want a foolproof system to be put in place to check it.
    • Strictly speaking, not all the activity being exposed by the Pandora Papers may be illegal due to tax evasion or the hiding of proceeds of crime.
    • The authorities will have to prove if the law of the land has been violated.
    • Operators outside the purview of tax authorities: Many Indians have become non-resident Indians or have made some relative into an NRI who can operate shell companies and trusts outside the purview of Indian tax authorities.
    • That is why prosecution has been difficult in the earlier cases of data leakage from tax havens.
    • The Supreme Court of India-monitored Special Investigation Team (SIT) set up in 2014 has not been able to make a dent.
    • Role of organised sector: The Government’s focus on the unorganised sector as the source of black income generation is also misplaced since data indicate that it is the organised sector that has been the real culprit and also spirits out a part of its black incomes.

    Way forward

    • Global minimum tax: Recent development has been the agreement among almost 140 countries to levy a 15% minimum tax rate on corporates.
    • Though it is a long shot, this may dent the international financial architecture.
    • Ending banking secrecy: Other steps needed to tackle the curse of illicit financial flows are ending banking secrecy and a Tobin tax on transactions; neither of which the OECD countries are likely to agree to.

    Consider the question “How illicits financial flows affect the economies of the nations? What are the challenges in curbing it?” 

    Conclusion

    To curb the illicit financial flows, the global community needs to reach a consensus on several issues and tackle the challege collectively.

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  • Explained: BSF powers and jurisdiction

    The Ministry of Home Affairs (MHA) has extended the jurisdiction of the Border Security Force (BSF) up to 50 km inside the international borders in Punjab, West Bengal and Assam.

    Do you know?

    BSF currently stands as the world’s largest border guarding force. It has been termed as the First Line of Defence of Indian Territories.

    About Border Security Force (BSF)

    • The BSF is India’s border guarding organization on its border with Pakistan and Bangladesh.
    • It comes under the Ministry of Home Affairs.
    • It was raised in the wake of the 1965 War on 1 December 1965 for ensuring the security of the borders of India and for matters connected therewith.
    • The BSF has its own cadre of officers but its head, designated as a Director-General (DG), since its raising has been an officer from the Indian Police Service (IPS).

    What are the new modifications?

    • The MHA has exercised the powers under the Border Security Force Act of 1968.
    • It has thus outlined the area of BSF’s jurisdiction.
    • While the places marked here are within 50 km of the respective borders, this is not meant to represent the BSF’s jurisdiction.
    • At the same time, the Ministry has reduced BSF’s area of operation in Gujarat from 80 km from the border, to 50 km.

    Powers exercised by BSF in its jurisdiction

    BSFs jurisdiction has been extended only in respect of the powers it enjoys under:

    1. Criminal Procedure Code (CrPC)
    2. Passport (Entry into India) Act, 1920 and
    3. Passport Act, 1967

    Arrest and search

    • BSF currently has powers to arrest and search under these laws.
    • It also has powers to arrest, search and seize under the NDPS Act, Arms Act, Customs Act and certain other laws.

    Its powers under these will continue to be only up to 15 km inside the border in Punjab, Assam and West Bengal, and will remain as far as 80 km in Gujarat.

    Sanctions behind such powers

    • Scarcely populated borders: At that time, border areas were sparsely populated and there were hardly any police stations for miles.
    • Trans-border crimes: To prevent trans-border crimes, it was felt necessary that BSF is given powers to arrest.
    • Manpower crunch: While police stations have now come up near the border, they continue to be short-staffed.

    Various issues at Borders

    1. Encroachment
    2. Illegal incursion
    3. Drug and cattle smuggling

    Why has the government extended the jurisdiction?

    • The objective of the move is to bring in uniformity and also to increase operational efficiency. Earlier BSF had different jurisdictions in different states.
    • BSF often gets information relating to crime scenes that may be out of their jurisdiction.
    • The move was also necessitated due to increasing instances of drone-dropping of weapons and drugs.

    Impact on State Police jurisdiction

     

    • This move will complement the efforts of the local police. Thus, it is an enabling provision.
    • It’s not that the local police can’t act within the jurisdiction of the BSF.
    • The state police have better knowledge of the ground. Hence BSF and local Police can act in cooperation.

    Criticism of the move

    • At a basic level, the states can argue that law and order is a state subject and enhancing BSF’s jurisdiction infringes upon powers of the state government.
    • In 2012, then Gujarat CM and the present PM had opposed a central government moves to expand BSF’s jurisdiction.

     

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  • How Sensible is it Use Food Grains to Produce Ethanol?

    India is planning to use surplus rice, besides sugarcane, to meet its biofuel target of blending 20% ethanol with petrol.

    Could this impede India’s crop diversification goals or worsen nutritional indicators? Let us see!

    Govt’s plan to promote ethanol

    • India is estimated to achieve about 8.5% blending with petrol by this year, which it plans to increase to a mandatory 20% blending by 2025.

    Sources for ethanol

    The plan is to divert its excess sugar production to produce ethanol, 3.5 million tonnes in 2021-22 and 6 million tonnes the next year, in addition to grains like rice, corn, and barley.

    • Using surplus rice: The government’s food department revealed its plans to divert 17 million tonnes of surplus rice from its food stocks of 90 million tonnes to produce ethanol.
    • Sugarcane: This is in addition to the 2 million tonnes of sugar which is already being diverted to produce ethanol.

    How would this benefit the country?

    • Cost saving: A successful biofuels programme can save India $4 billion or about ₹30,000 crore every year by lowering import of petroleum products.
    • Emission cut: Ethanol is also less polluting and offers equivalent efficiency at a lower cost than petrol.
    • Biofuel’s policy boost: Rising production of grains and sugarcane and feasibility of making vehicles compliant to ethanol-blended fuel makes its biofuels policy a strategic requirement.
    • Early rollout: Towards this, govt has put in place interest subsidies for distilleries to expand capacity while auto firms have agreed to make compatible vehicles.

    What are the unintended effects of the policy?

    • Unsustainability of cash-crops: Increasing reliance on biofuels can push farmers to grow more water-intensive crops like sugarcane and rice.
    • Huge water requirement: Currently use 70% of the available irrigation water, negating some positive impact on the environment of using more ethanol.
    • Food and nutrition security: The move could impact India’s hunger situation by limiting the coverage of the food security schemes.
    • Food inflation: Diversion of mass consumption grains can also push food prices up.

    How will it impact crop diversification?

    • Monotonous crops: Although the biofuels policy stresses on using less water-consuming crops, farmers prefer to grow more sugarcane and rice due to price support schemes.
    • Water stress: Growing more of them can lead to an adverse impact in water-stressed areas in states.

    What about food security?

    • It is unethical to use edible grains to produce ethanol in a country where hunger is rampant.
    • India is already a poor performer in Global Hunger Index.
    • Although about 80 crore people are now receiving subsidized food grains, calculations show that over 10 crore eligible households are still excluded.

     

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