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GS Paper: GS3

  • [pib] Operation Greens Scheme

    The Union Minister of Food Processing Industries has provided useful information regarding the Op Greens Scheme.

    Operation Greens Scheme

    • Ministry of Food Processing Industries launched the Operation Greens scheme in November, 2018.
    • The scheme aims for integrated development of the Tomato, Onion, and Potato (TOP) value chain.
    • It aims to promote Farmer Producers Organizations (FPOs), agri-logistics, processing facilities and value addition etc. in identified production clusters.
    • Under the scheme, state-wise funds are not allocated as the scheme is demand-driven and projects are approved as per scheme guidelines on the basis of applications received for setting up of projects in eligible production clusters.

    Objectives:

    • To enhance value realization of TOP farmers
    • Reduction in post-harvest losses
    • Price stabilization for producers and consumers and
    • Increase in food processing capacities and value addition etc.

    Key provisions

    • Short term intervention by way of providing transportation and storage subsidy @ 50% and
    • long term intervention through value addition projects in identified production clusters with Grant-in-aid @ 35% to 70% of eligible project cost subject to maximum of Rs. 50 crore per project

  • No fossil fuels as usual

    Context

    The spread and speed of the destruction caused by climate change in recent weeks present our new Minister of Petroleum and Natural Gas with a policy dilemma. The article offers five policy suggestions to deal with the dilemma.

    Energy dilemma facing India

    • The events of the past month all over the world have caught even the most alarmist of climate scientists by surprise.
    • These events brought into sharp relief the reality that there was no option of denying the consequential implications of the use of fossil fuels.
    • However, the dilemma India faces lies in the fact that the Indian economy is heavily dependent on fossil fuels and there is no end in sight to this dependence.
    • Further, India imports approximately 85 percent of its crude oil requirements and is exposed to the volatility of the international oil market.

    Five policy changes needed

    1) Reduce emphasis on domestic exploration

    • Not easy to locate and difficult to develop: A review of the public sector’s exploration and production (EP) track record suggests that whilst India may well be sitting on substantial hydrocarbon reserves, these reserves are not easy to locate and, even when located, difficult to develop and produce on a commercial basis.
    • The government has often compounded this economic challenge by placing administrative limits on marketing by companies and their pricing freedom.
    • High risk and structural softness in the market: The fundamental point is that EP in India is a high-risk activity, and this risk is even greater today because of the longer-term structural softness of the petroleum market.
    • The resources earmarked for exploration can be deployed more productively elsewhere.

    2) Increase productivity of producing fields

    • The ONGC needs to allocate increasing resources to improving the productivity of its producing fields.
    • Low oil recovery rate: The average oil recovery rate in India was around 28 percent that is, for every 100 molecules discovered, only 28 were monetized.
    • This number did not compare well with the global average of around 45 percent for fields of comparable geology.
    • Use technology: The application of enhanced oil recovery (EOR) technology offers a relatively low-risk avenue for increasing domestic production.

    3) Increase strategic reserves

    • We hold currently strategic reserves equivalent to 12 days of imports.
    • The government has approved plans to increase this buffer to 25 days.
    • By comparison, China, the EU, South Korea, and Japan hold between 70-100 days of reserves.
    • A significant portion of our oil imports came from the Middle East, predominantly Saudi Arabia, Iraq, and Iran.
    • This region faces deep political and social fault lines and there is no knowing when our supply lines might get ruptured.
    • We would, therefore, be well-advised to build contingency safeguards.

    4) Restructure and reorganize public sector petroleum companies

    • Consolidate upstream assets: In the first instance, the upstream assets should be consolidated under ONGC (the upstream assets of BPCL, IOC, HPCL, and GAIL should pass onto ONGC) and GAIL should be unbundled into a public utility gas pipeline company
    • Diversify: Thereafter, these companies should be encouraged to look beyond hydrocarbons to build an “energy” enterprise.
    • The restructuring will help cut back the “avoidable” costs of intra public sector competition.
    • It will also reduce the inefficiencies of “sub-scale” operations.
    • It will provide a focused platform for balancing the shorter-term need to provide secure and affordable hydrocarbons with the medium and longer-term imperative of developing clean energy.

    5) Avoid siloed thinking

    • The petroleum minister should not see his responsibility through the siloed prism of oil and natural gas.
    • He should broaden the aperture and become the progenitor of the energy transition.

    Conclusion

    The dilemma referred to in the opening sentence will be easier to resolve our priorities are set within the framework of clean energy.

  • A circular economy for plastic

    Context

    The India Plastics Pact, the first in Asia, will be launched in September at the CII Annual Sustainability Summit.

    Issue of plastic waste

    • A 2019 report by the Center for International Environmental Law suggests that by 2050, greenhouse gas emissions from plastic could reach over 56 gigatonnes, 10-13% of the remaining carbon budget.
    • Connection with livelihood: Viewed from the angle of livelihoods, post-consumer segregation, collection and disposal of plastics make up about half of the income of 1.5- 4 million waste-pickers in India.
    • For India, the solution must be multi-pronged, systemic, and large scale, to create a visible impact. The Plastics Pacts model offers such a solution.

    About Plastics Pacts model

    • Business-led initiative: The Plastics Pacts are business-led initiatives and transform the plastics packaging value chain for all formats and products.
    • The Pacts bring together everyone from across the plastics value chain to implement practical solutions.
    • Integral to the Pact’s framework is the involvement of the informal waste sector crucial to post-consumer segregation, collection and processing of plastic waste. 
    • All Pacts unite behind four targets:
    • 1) To eliminate unnecessary and problematic plastic packaging through redesign and innovation.
    • 2) To ensure all plastic packaging is reusable or recyclable.
    • 3) To increase the reuse, collection, and recycling of plastic packaging.
    • 4) To increase recycled content in plastic packaging.
    • It is active in a number of countries including the U.K., South Africa, and Australia.
    • The first Plastics Pact was launched in the U.K. in 2018, by WRAP, a global NGO based in the U.K.
    • It is now being brought to India by CII and WWF India.

    Advantages

    • Economic advantage: It can be expected to boost demand for recycled content, investments in recycling infrastructure, jobs in the waste sector, and beyond.
    • Support EPR framework: The Pact will support the Extended Producer Responsibility framework of the government and improve solid waste management as envisioned in the Swachh Bharat Abhiyan.
    • The India Plastics Pact focuses on solutions and innovation.
    • Plastic production and management development: The Pact will encourage the development and maturing of the entire plastics production and management ecosystem.
    • Drive circulatory of plastic: Apart from benefits to society and economy, delivering the targets will drive the circularity of plastics and help tackle pollution.

    Conclusion

    The India Plastics Pact will benefit society, the economy and the environment.

  • The sovereign right to tax is not absolute

    Context

    A bill introduced in Parliament last week aims to nullify the 2012 amendment in the Income Tax Act which made the income tax law retroactively applicable on indirect transfer of Indian assets.

    Issue of taxation as a sovereign right of the state

    • Several  Investor-State Dispute Settlement (ISDS) tribunals have recognised the fundamental principle that taxation is an intrinsic element of the state’s sovereign power. 
    • The ISDS tribunals have also held that whenever a foreign investor challenges states’ taxation measures, there is a presumption that the taxation measures are valid and legal.
    • For instance, an ISDS tribunal in Renta 4 v. Russia said that when it comes to examining taxation measures for BIT breaches, the starting point should be that the taxation measures are a bona fide exercise of the state’s public powers.

    What are the limits on the taxation rights of a Country under BITs

    • The two most used BIT provisions to challenge a state’s taxation measures are expropriation and the fair and equitable treatment provision.
    • 1) Expropriation: In the context of expropriation, one of the key ISDS cases that explained the limits on the state’s right to tax is Burlington v. Ecuador.
    • In this case, the tribunal held that under customary international law, there are two limits on the state’s right to tax.
    • First, the tax should not be discriminatory.
    • Second, it should not be confiscatory.
    • 2) Fair and equitable treatment: In the context of the fair and equitable treatment provision, foreign investors have often challenged taxation measures as breaching legal certainty, which is an element of the fair and equitable treatment provision.
    • Although legal certainty does not mean immutability of legal framework, states are under an obligation to carry out legal changes such as amending their tax laws in a reasonable and proportionate manner.

    So, what happened in Cairn Energy v. India case?

    • The tribunal in Cairn Energy v. India said that taxing indirect transfers is India’s sovereign power and the tribunal would not comment on it.
    • Legal certainty: The tribunal said that India’s right to tax in the public interest should be balanced with the investor’s interest of legal certainty.
    • The tribunal held that the public purpose that justifies the application of law prospectively will usually be insufficient to justify the retroactive application of the law.
    • India argued that the 2012 amendment was to ensure that foreign corporations who use tax havens for the indirect transfers of underlying Indian assets pay taxes.
    • However, the tribunal held that this objective could be achieved by amending the income tax law prospectively, not retroactively.
    • The tribunal did not rule against retroactivity of tax laws per se but against the retroactive application that lacked public policy justification.

    Way forward

    • Carving out taxation from BITs: India in its 2016 Model BIT carved out taxation measures completely from the scope of the investment treaty.
    • Nonetheless, carving out taxation measures from the scope of the BIT does not mean that states are free to do as they please.
    • India should exercise its right to regulate while being mindful of its international law obligations, acting in good faith and in a proportionate manner.
    • ISDS tribunals do not interfere with such regulatory measures.

    Conclusion

    In sum, the debate never was whether India has a sovereign right to tax, but whether this sovereign right is subject to certain limitations. The answer is an emphatic ‘yes’ because under international law the sovereign right to tax is not absolute.

    Back2Basics:  Investor-State Dispute Settlement (ISDS) tribunal

    • ISDS is a mechanism included in many trade and investment agreements to settle disputes.
    • Settling these investor disputes relies on arbitration rather than public courts.
    • Under agreements which include ISDS mechanisms, a company from one signatory state investing in another signatory state can argue that new laws or regulations could negatively affect its expected profits or investment potential, and seek compensation in a binding arbitration tribunal.
    • The system only provides for foreign companies to sue states, not the other way around.

  • Retiring Old Coal Power Plants

    Context

    As part of the Union Budget address for 2020-21, the Finance Minister, Nirmala Sitharaman, said that the shutting down of old coal power plants, which are major contributors to emissions, will aid the achievement of India’s Nationally Determined Contributions.

    Advantages of shutting down old coal power plants

    • The availability of under-utilized newer and presumably more efficient coal-based capacity means that shutting down older inefficient plants would lead to improved efficiencies, reduced coal usage, and hence, cost savings.
    • It would be uneconomical for old plants to install pollution control equipment required to meet the emission standards announced by the Environment Ministry, and hence it would be better to retire them.

    Why the decision needs finer scrutiny?

    • Some old plants are cost-effective: There are also several old plants, which generate at lower costs, such as plants at Rihand, Singrauli, and Vidhyanchal (Madhya Pradesh).
    • Locational advantage: This may be due to locational advantage rather than efficiency, as older plants are likely to be located closer to the coal source, reducing coal transport costs.
    • Not cost-effective: Savings in generation cost from shutting down plants older than 25 years would be less than ₹5,000 crore annually, which is just 2% of the total power generation cost.
    • Not effective in reducing coal consumption: Savings in coal consumption by replacing generation from plants older than 25 years with newer coal plants are also likely to be only in the 1%-2% range.
    • Economical even after installing pollution control equipment: There are some old plants that may continue to be economically viable even if they install pollution control equipment as their current fixed costs are very low.

    Important roles played by old thermal power plants

    • A significant part of power supply: Plants older than 25 years makeup around 20% of the total installed thermal capacity in the country and play a significant role in the country’s power supply.
    • Supporting renewable: To support the growing intermittent renewable generation in the sector, there is an increasing need for capacity that can provide flexibility, balancing, and ancillary services.
    • Old thermal capacity, with lower fixed costs, is a prime candidate to play this role until other technologies (such as storage) can replace them at scale.
    • Political economy risk: There is also a political economy risk, as aggressive early retirement of coal-based capacity, without detailed analyses, could result in real or perceived electricity shortage in some States, leading to calls for investments in coal-based base-load capacity by State-owned entities.

    Way forward

    • Nuanced analysis needed: Instead of using age as the only criteria, a more disaggregated and nuanced analysis needs to be used.
    • Constraint related to renewable and increasing demand: We also need to take into account aspects such as intermittency of renewables, growing demand, and the need to meet emission norms, to make retirement-related decisions.

    Conclusion

    It may be prudent to let old capacity fade away in due course while focusing on such detailed analysis and weeding out the needless capacity in the pipeline, to derive long-term economic and environmental benefits.

  • CHAPEA Mission by NASA

    NASA is seeking applications for its new mission called the Crew Health and Performance Exploration Analog (CHAPEA), which is related to Mars.

    CHAPEA

    • The mission is set to begin in 2022 and will give four successful applicants the chance to live and work in a 1,700 square-foot module that is created by a 3D printer and is called the Mars Dune Alpha.
    • The simulated quarters include a kitchen, areas for medical, recreation, fitness, work, crop growth, a technical work area and two bathrooms.
    • This habitat will simulate what it feels like to carry out missions on Mars including resource limitations, equipment failure, communication delays and any other environmental stressors.
    • The crew will be expected to perform simulated spacewalks, scientific research and use virtual reality and robotic controls and exchange communications.

    What is the purpose of this mission?

    • The habitat in which the crew members will stay will be as Mars-realistic as possible.
    • The results from this analog mission will provide scientific data that will help in validating the systems that will be used for actual missions to Mars and also help in solving problems for spaceflight research.
    • CHAPEA is not the only analog mission, there are others including Aquarius/NEEMO, Concordia, Desert RATS, and HESTIA.
    • Analog missions are required because not all experiments can be carried out in space because resources and money are limited.

  • What is Absorption Spectroscopy?

    Researchers from IIT Madras and IISER Kolkata have developed a method to detect minute quantities of chemicals in solution using Absorption Spectroscopy.

    Note: These days there has been a rise in questions from biology (rather cell biology in particular).

    Absorption Spectroscopy

    • Absorption spectroscopy is a tool to detect the presence of elements in a medium.
    • Light is shone on the sample, and after it passes through the sample is examined using a spectroscope.
    • Dark lines are seen in the observed spectrum of the light passed through the substance, which correspond to the wavelengths of light absorbed by the intervening substance and are characteristic of the elements present in it.
    • In usual methods, about a cubic centimeter of the sample is needed to do this experiment.
    • In the method developed here, minute amounts of dissolved substances can be detected easily.
    • Usually in absorption spectroscopy, the principle used is that light because of its wavelike nature, shows diffraction patterns, that is, dark and light fringes, when it scatters off any object.

    Studying small objects

    • A related concept called the Abbe criterion sets a natural limit on the size of the object being studied.
    • According to this criterion, the size of the observed object has to be at least of the order of the wavelength of the light being shone on it.
    • If one wants to perform absorption spectroscopy using visible light, namely, blue, green and red, the wavelengths [of these colours] are about 400 nm, 500 nm and 600 nm, respectively.

    What has Indian researchers achieved?

    • In the method used by the researchers here, tiny, nano-sized particles that can absorb light being shone on them and re-emit red, blue and green light were employed.
    • The particles emit electric fields that are analogous to how a tiny magnet would give off magnetic lines of force – this is called a dipole, and the particle is like a tiny mobile phone’s antenna.
    • This dipole generates an electromagnetic field depending upon the quantum properties of the erbium dopants in the glass.
    • The absorption leaves a gap in the reflected light, which is what is observed and used to analyse the nature of the absorbing material.

    Applications of this technology

    • There are many potential applications.
    • Small molecules almost ten-millionth of an mm in diameter can be detected while these pass the emission region of the glass particle.
    • The future is to use it to measure individual molecules, see absorption spectroscopy of a single DNA or protein molecule.

    Try this

    Q.Which of the following statements are correct regarding the general difference between plant and animal cells?

    1. Plant cells have cellulose cell walls whilst animal cells do not.
    2. Plant cells do not have plasma membranes unlike animal cells which do.
    3. Mature plant cell has one large vacuole whilst an animal cell has many small vacuoles.

    Select the correct answer using the code given below:

    (a) 1 and 2 only

    (b) 2 and 3 only

    (c) 1 and 3 only

    (d) 1, 2 and 3

    [wpdiscuz-feedback id=”zkyreycvm5″ question=”Please leave a feedback on this” opened=”1″]Answer this PYQ here: [/wpdiscuz-feedback]

  • Taxation Laws (Amendment) Bill

    Context

    With the government proposing to repeal the ‘retrospective tax’ amendment introduced in the Union Budget 2012-13, a 14-year-story has come to an end.

    Background of retrospective tax

    • In 2007 Vodafone acquired Hutchison Essar, the telecom company, for $11 billion. But the deal did not take place in India.
    • Yet, Vodafone was slapped with a huge income tax demand in India.
    • The Supreme Court rule in favour of Vodafone and said that the Indian authorities could not tax a deal executed in Cayman Islands.
    • This verdict led to the 2012 amendment in the Income Tax Act, to the effect that if an Indian asset was held by a foreign company and an acquirer bought this holding company, such a transaction was deemed to be taxable in India because the underlying asset was located in India.
    • More importantly, this change was made retrospectively from 1962.
    • Now, the government has introduced The Taxation Laws (Amendment) Bill, 2021 to undo this insidious provision from the Finance Bill, 2012.
    • The government will not raise tax demands in any such case if the transaction occurred before 28 May 2012.
    • The tax on the indirect sale of assets located in India still stays on the statute books, but it is fully visible to and understood by any parties looking to enter into such a transaction.

    Why repeal of retrospective taxation is a good move?

    • Resolution of case the cases: This will potentially help resolve 17 cases in which income tax demand had been raised, including two high profile cases—Cairn and Vodafone.
    • Visibility and stability: The government is putting to rest the concept of retrospective taxation and is also creating visibility and stability for the future.
    • Predictability: The most important aspect of any tax regime is its predictability and this decision helps bring that.
    • Honouring the rule of law: It also reiterates India’s commitment to honour the rule of law and treaties.
    • Build confidence: Apart from the various reform measures and incentives being offered, the sanctity of contracts is a key factor that any investing entity will look at when deciding on expanding business operations in India.
    • The government’s move would help build confidence and provide a fillip to Atmanirbhar Bharat.

    Conclusion

    As the post-covid recovery picks up, focus needs to be on the future rather than keeping a sword of uncertainty for the past dangling on potential investors. Such a decision needs political capital and ownership, which comes through strongly in this case.

     

  • Advocating for sustained focus on the maritime domain

    Context

    In an innovative departure from normal practice, Prime Minister Narendra Modi will preside (in virtual mode) over the UN Security Council, on Monday (August 9) when India holds the President’s chair for one month. The subject of debate is maritime security.

    Issues with global maritime security

    • FON issue: There is  tension in the South China Sea over freedom of navigation (FON) rights in international waters and how China has laid claim to “territoriality” based on artificial structures (not natural islands).
    • This formulation has not been accepted by the US that has exercised transit rights in these waters.
    • Many ASEAN nations and Quad members such as Japan, Australia and India subscribe to the principle of FON and do not accept the Chinese interpretation of the “nine-dash-line”.
    • Traditional challenges: Piracy and non-traditional challenges at sea such as gun-running and smuggling are old chestnuts.
    • Maritime pollution: Accidents in the oceans have added to the anxiety about marine pollution and its downstream consequences for the health of the oceans.
    • Global warming: A UN report has come up with grim statistics about the impact of global warming on the chemistry of oceans.
    • This study notes that oceans have become more acidic as sea water absorbs more carbon dioxide.
    • Furthermore, the upper layers of the open ocean have lost between 0.5 per cent and 3.3 per cent of their oxygen since 1970 as temperatures have risen.

    Way forward for India at UNCS: Security and equitable growth

    • The subject to be deliberated upon by the UNSC members is “Enhancing maritime security: A case for international cooperation”.
    • This would be an extension of India’s advocacy of SAGAR (security and growth for all in the region) in relation to the Indian Ocean region (IOR).
    •  At the UNSC strategic and security issues such as the South China Sea and FON would find little consensus as China is a permanent member and would stall any meaningful debate.
    • Focus on global goods: What may find support for a useful debate at the UNSC would be those areas that could be brought under the rubric of the “global good”.
    • For instance, the welfare of seafarers who are the sinews of the global merchant marine, has received scant attention in this Covid-scarred period and the IMO (International Maritime Organisation) has been unable to effectively address such issues.
    • Correlation with globalisation: India can also advocate for sustained focus on the maritime domain and the correlation with globalisation, the blue economy, the health of the ocean and the overall impact on human security.

    Conclusion

    Security and equitable growth for all by husbanding the global ocean for future generations is a laudable goal and encouraging the UNSC to prioritise this issue is a worthy cause.

  • South Asia’s emerging digital transformation

    Context

    COVID-19 has forced South Asia to take a quantum leap in digitalisation, which will help shape its future prosperity.

    Spike in digitisation due to Covid

    • In India, COVID-19 accelerated the launch of the National Digital Health Mission, enhancing the accessibility and the efficiency of health-care services by creating a unique health ID for every citizen.
    • Pandemic accelerated South Asia’s embrace of e-commerce, boosted by digital payment systems.
    • Bangladesh alone witnessed an increase of 70-80% in online sales in 2020, generating $708.46 million in revenues.
    • Even smaller nations such as Nepal recording almost an 11% increase in broadband Internet users.

    The dangers of a digital divide

    • A wide digital divide persists in access and affordability, between and within the countries of South Asia.
    • Despite having the world’s second-largest online market, 50% of India’s population are without Internet with 59% for Bangladesh and 65% for Pakistan.
    • This divide could permanently put children out of school, place girls at risk of early marriage, and push poor children into child labour costing economies billions of dollars in future earnings.
    • Businesses too have paid a heavy price for the gap in digital solutions, whereby many South Asian firms failing to embrace e-commerce or other cloud-based technologies to survive the financial chaos of the novel coronavirus pandemic.

    Asian digitalisation

    • Digital transformation is a global imperative with the adoption of advanced technologies.
    • At the forefront of Asian digitalisation are countries such as Singapore, Japan, and South Korea recognised as global technological hubs.
    • The digital boom in the Association of Southeast Asian Nations (ASEAN) economies is pushing a “common market” initiative, fostering regional economic integration and enhancing global competitiveness.
    • South Asia has also made significant strides in the adoption of digital technologies such as the Digital Bangladesh Vision 2021.

    How digitalisation can help South Asia?

    • The region still has a long way to go.
    • Jobs in e-commerce: E-commerce could drive the post-pandemic growth in South Asia, providing new business opportunities and access to larger markets.
    • In India, e-commerce could create a million jobs by 2030 and be worth $200 billion by 2026.
    • Growth driven by Fintech: Fintech could drive significant growth and reduce poverty by building financial inclusion.
    • Increase in productivity: A timely, inclusive, and sustainable digital transformation can not only bolster productivity and growth but also serve as a panacea for some of the region’s socio-economic divides.

    Steps need to be taken

    • To reap the dividends of digital transformation, South Asia needs to address legal, regulatory and policy gaps as well as boost digital skills.
    • Digital infrastructure: A robust digital infrastructure is a sine qua non and there exists a huge financing gap.
    • India alone needs an annual investment of $35 billion to be in the top five global digital economy.
    • Private-public partnership: Public-private partnership needs to be leveraged for the region’s digital infrastructure financing.
    • Regulatory roadblocks need to be addressed as e-commerce regulations are weak in South Asia.
    • Digital literacy: There would be no digital revolution without universal digital literacy.
    • Governments and businesses need to come together to revamp the education system to meet the demand for digital skills and online platforms.
    • Cybersecurity measures: The crossflow of data and personal information calls for stringent cybersecurity measures as many have experienced painful lessons in data privacy during the pandemic.
    • Digital Single Market Proposal: By addressing issues such as regulatory barriers on currency flows inhibiting online payment to transport-related constraints for cross-border e-commerce activities, South Asia can emulate the European Union’s Digital Single Market Proposal.
    • Collaboration: Concerted collaboration at all levels is needed to push South Asia out of stagnancy and towards a digital future of shared prosperity.
    • Partnership for digital revolution: During the pandemic, South Asian nations joined hands to collectively battle the crises by contributing towards a COVID-19 emergency fund, exchanging data and information on health surveillance, sharing research findings, and developing an online learning platform for health workers.
    • If the eight nations (Afghanistan, Bangladesh, Bhutan, India, Nepal, Maldives, Pakistan and Sri Lanka) can start walking the talk, partnership for a successful digital revolution is plausible.

    Conclusion

    A shared “digital vision” could place the region on the right track towards the Fourth Industrial Revolution.