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GS Paper: GS3

  • [pib] SFURTI Scheme

    Union Minister for MSME has inaugurated 50 artisan-based SFURTI clusters, spread over 18 States.

    SFURTI is an off-track scheme compared to other HRD schemes with Hindi acronyms. Similar is the SPARSH scheme for philately.

    SFURTI Scheme

    • Scheme of Fund for Regeneration of Traditional Industries (SFURTI) is an initiative by the Ministry of MSME to promote Cluster development.
    • Khadi and Village Industries Commission (KVIC) is the Nodal Agency for the promotion of Cluster development for Khadi.
    • Under the Scheme, the MSME Ministry supports various interventions including the setting up of infrastructure through Common Facility Centers (CFCs), procurement of new machinery, design intervention, improved packaging and marketing etc.

    Types of clusters

    • SFURTI clusters are of two types i.e., Regular Cluster (500 artisans) with Government assistance of up to Rs.2.5 crore and Major Cluster (more than 500 artisans) with Government assistance up to Rs.5 crore.
    • The scheme focuses on strengthening the cluster governance systems with the active participation of the stakeholders so that they are able to gauge the emerging challenges and opportunities and respond to them.

  • PSBs should operate like proper banks if they can’t be privatized

    The article deals with the stark differences in the performance of the public sector banks (PSBs) and private banks and suggests ways to deal with the issues.

    Comparing PSBs with private banks

    • The performance of PSBs over the years hasn’t been worth the money that the government has invested in them.
    • As the Economic Survey of 2019-20 pointed out that over ₹4.3 trillion of taxpayer money is invested as government’s equity in PSBs.
    • In 2019, every rupee of taxpayer money invested in PSBs, on average, lost 23 paise.
    • In contrast, every rupee of investor money invested in New Private Banks—banks licensed after India’s 1991 liberalization—on average gained 9.6 paise.
    • The combined market value of HDFC Bank’s shares is ₹8.56 trillion (as of 18 February), whereas the market capitalization of all PSBs is around ₹6.41 trillion (excluding IDBI Bank, which is now categorized as a private bank).
    • Of course, if we add up the assets of PSBs, they are a lot bigger than HDFC Bank’s.

    Dual regulation

    • The private banks are regulated by the Reserve Bank of India (RBI).
    • PSBs are regulated both by RBI and the department of financial services under the finance ministry.
    • The P.J. Nayak Committee report of May 2014 had pointed out this issue of dual regulation.
    • This is primarily because PSBs are used by the government to fulfil its social obligations and pump-prime the economy when it’s not doing well.
    • The stock market discounts these factors while valuing them.

    Way forward

    • The policies for regulating and promoting industrial growth do not have any social content in them.
    • Hence, PSBs should be run as proper banks irrespective of whether they are privatized or not.
    • If they are not privatized, the government’s stake in these banks needs to come down to 33%, something which would help them raise more capital.
    • Once investors see PSBs being run as proper banks their market capitalization will start to go up.
    • Once PSBs are properly valued by the stock market, the government can sell some of its stake in them every year, and use that money to fund its social objectives.
    • It can also use some of that money to incentivize all banks, not just PSBs, to deliver some of its social objectives.

    Conclusion

    The government should take these steps to let the PSBs realise their potential. At the end of the day, nothing improves service delivery more than some good competition.

  • A year of cautious optimism on economic front

    The article argues that we are less likely to witness high growth next year rather it is going to be the year of consolidation.

    Year of consolidation

    • The Economic Survey, the Union budget, and the RBI credit policy attest that the economy is on the recovery path.
    • The fourth quarter will register a positive growth rate, and as a consequence, the contraction for the full year will be between 7.5-8 per cent.
    • The contraction sets the pace for growth in 2021-22 which is now going to be critical as it is the foundation for the fructification of the budget revenue targets.
    • But consider this: GDP in 2019-20 was Rs 146 lakh crore, which has come down to Rs 134 lakh crore in 2020-21.
    • Hence, a 10 per cent growth will take the Indian economy to Rs 147 lakh crore — when compared to Rs 145 lakh crore, this reflects modest growth.
    • Therefore, expectations should be tempered when we talk of growth next year.
    • There will be a revival in economic activity on all ends which will probably bear fruit in 2022-23 — FY 2021-22 will be a year of consolidation.

    Policy architecture

    • The government has brought in a cogent policy framework right from the time of the Atmanirbhar announcements, culminating in the budget.
    • There is a focus on infrastructure as well as providing incentives to investment through the Production Linked Incentive (PLI) scheme.
    • Real estate, power and construction saw several policy reforms last year.
    • There is a strong capex push by the government and there will more action taken here.

    RBI policies

    • The RBI has promised to continue accommodative policies, which sends a signal of managing liquidity considering the large borrowing programme of the government of Rs 12.8 lakh crore.
    • RBI will carry out more open market operations, and long-term repo operations during the year to ensure that interest rates remain stable.
    • However, there will be concern around state government borrowings too, which will exert pressure on the availability of funds.
    • Hence, there will be more central bank intervention in the market to ensure that funds are available.

    Inflation concerns

    • Inflation is a concern as global commodity prices have already started going up and this has led to core inflation rising.
    • Given that the monsoon has been good in the last four years, there is a possibility of an adverse season this time which can affect food prices. 
    • In India, too, we have seen that the price of petrol and diesel is rising sharply.
    • Add to this rising manufactured goods inflation witnessed of late, and there is a possibility of inflation rising above the MPC’s tolerance levels.

    Lack of consumption growth

    • For growth to take place, consumption growth has to be real and rapid.
    • Consumption growth has been affected by the absence of commensurate job creation.
    • Consumption growth is unlikely too soon as consumption is dependent on job creation.
    • Jobs get created when growth is high and hence there is circular reasoning here.
    • Income has been affected in 2020 due to the pandemic which has led to job losses as well as salary cuts.
    • This has affected the sustainability of the pent-up demand seen in October and November.

    Falling investment

    • Investment has lagged with gross fixed capital formation falling to a low of 24.2 per cent in 2019-20 from 34.3 per cent in 2011-12.
    • Reversing this decline will be challenging because the demand for such projects has slowed down and banks have been wary of lending for infrastructure.
    • There is also surplus capacity in industry with the capacity utilisation rate being 63.3 per cent in the second quarter of 2020-21.
    • Therefore, private investment will rise only gradually and the onus is on governments to manage their targets.
    • Private investment will follow, but at a slower pace and realistically speaking, will fire more in 2022-23 rather than 2021-22.

    Consider the question “Growth has to be driven by two engines- consumption and investment. India has been facing challenges on both fronts. In light of this, suggest the measures India needs to adopt to move forward on both fronts.

    Conclusion

    The year 2021-22 will be one of cautious optimism. Growth will trend upwards, but it has to be interpreted with caution, keeping a check on the consumption while pushing the investment while arresting the inflation.

  • Regulate but do no ban Bitcoin

    The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 seeks to ban cryptocurrencies. Banning cryptocurrencies would have several implications for India. This article deals with this issue.

    Soaring value of Bitcoin

    • Recently, Tesla announced that it will soon accept cryptocurrency as legitimate payment for its cars.
    • Mastercard followed by announcing that it will incorporate ‘select cryptocurrencies’ on its global payment network.
    • BNY Mellon, incidentally the US’s oldest bank, announced holding and transferring digital currencies for asset management clients.
    • JP Morgan and Goldman Sachs announced executive positions to look at cryptocurrencies.
    • All of this resulted in a soaring value of Bitcoin, and its younger sibling, Ethereum.

    India’s governments stand on cryptocurrencies

    • India’s government sought to ban cryptocurrency through a proposed legislation, the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021.
    • The Bill also provides to also set up a legal structure for an “official digital currency”.
    • The Bill promises to “allow for certain exceptions to promote the underlying technology of cryptocurrency (blockchain) and its uses.”
    • The way the technology is built, an ownerless, consensus-driven, distributed ledger like a blockchain needs cryptocurrency to grease its wheels.
    • India tried to ban cryptocurrency once before, in 2018, before it was reversed by the Supreme Court.

    Implications of banning cryptocurrencies

    • The banning will kill innovation.
    • India has more than 30,000 blockchain innovators and practitioners.
    • These innovators will now be looking at moving out to friendlier regimes like the US, Switzerland, Singapore and Estonia.
    • International tech companies will freeze blockchain and crypto-exchange investments in India and the step will undermine India’s reputation as a technology hub.
    • India is the second-largest Bitcoin trading nation in Asia, and all those trades will move to overseas exchanges.
    • China has large crypto trading and mining operations, and an Indian ban on Bitcoin will leave that space open for it.

    Consider the question “What is cryptocurrency? What would be the implications of banning it?”

    Conclusion

    No doubt, there are many problems with cryptocurrency—it is volatile, sucks energy, and is often abused by criminals. But the answer is not to ban it, but regulate it.

     

  • Australia vs Facebook Row

    The social media giant Facebook is locked in a battle with Australia over legislation that would require FB, Google to pay for news outlets.

    Row over the news on social media

    • Australia had proposed a law called the News Media and Digital Platforms Mandatory Bargaining Code Bill 2020.
    • It seeks to mandate a bargaining code that aims to force Google and Facebook to compensate media companies for using their content.

    Imagine if the case arises in India where tons of news channels and impulsive journalists are dying off hard to gather TRPs!

    Response from the ‘giants’

    • Google had threatened to make its search engine unavailable in Australia in response to the legislation, which would create a panel to make pricing decisions on the news.
    • Facebook responded by blocking users from accessing and sharing Australian news.

    Why countries are bringing such legislation?

    • Australia has launched a global diplomatic offensive to support its proposed law to force Internet giants Facebook and Google to pay media companies.
    • Google accounts for 53% of Australian online advertising revenue and Facebook for 23%.
    • The legislation sets a precedent in regulating social media across geographies and is being closely watched the world over.

    What is happening in other countries?

    • Australia’s proposed law would be the first of its kind, but other governments also are pressuring Google, Facebook and other internet companies to pay news outlets and other publishers for the material.
    • In Europe, Google had to negotiate with French publishers after a court last year upheld an order saying such agreements were required by a 2019 EU copyright directive.
    • France is the first government to enforce the rules, but the decision suggests Google, Facebook and other companies will face similar requirements in other parts of the 27-nation trade bloc.

    The ‘doubted’ reluctance

    • Last year, Facebook announced it would pay US news organizations including The Wall Street Journal, The Washington Post and USA Today for headlines.
    • In Spain, Google shut down its news website after a 2014 law required it to pay publishers.

    Why does this matter?

    • Developments in Australia and Europe suggest the financial balance between multibillion-dollar internet companies and news organizations might be shifting.
    • Australia is responding to complaints by news reports, magazine articles and other content that appears on their websites or is shared by users.
    • The government acted after its competition regulator tried and failed to negotiate a voluntary payment plan with Google.
    • The proposed law would create a panel to make binding decisions on the price of news reports to help give individual publishers more negotiating leverage with global internet companies.

    Not losing out revenue gain

    • Google’s agreement means a new revenue stream for news outfits, but whether that translates into more coverage for readers, viewers and listeners is unclear.
    • The union for Australian journalists is calling on media companies to make sure online revenue goes into newsgathering.

  • Life deep beneath Antarctica’s ice shelves

    Researchers have accidentally discovered living under the ice shelves of the Antarctic — in extremely cold and harsh conditions.

    Life beneath the Antarctic

    • Scientists have discovered sessile sponges — a pore bearing multicellular organism and other alien species — attached to the sides of rock beneath the ice sheets.
    • The unidentified species are estimated to be related to sponges, ascidians (sea squirts), hydroids, barnacles, cnidarian or polychaete. All of these look like bristle worms.
    • Scientists are yet to discover how these organisms access food.
    • They would use Environment Deoxyribonucleic acid (e-DNA) technology in future to identify the organisms.

    Organisms discovered

    Sponges

    • Sponges are the members of the phylum Porifera.
    • They are multicellular organisms that have bodies full of pores and channels allowing water to circulate through them, consisting of jelly-like mesohyl sandwiched between two thin layers of cells.

    Ascidians

    • Ascidians, or sea squirts, are invertebrate chordates that belong to the earliest branch in the chordate phylum.
    • Ascidians are found all over the world, usually in shallow water with salinities over 2.5%.

    Hydroids

    • Hydroids are a life stage for most animals of the class Hydrozoa, small predators related to jellyfish.
    • Some hydroids such as the freshwater Hydra are solitary, with the polyp attached directly to the substrate.

    Barnacles 

    • Barnacles are a highly specialized group of crustaceans.
    • A barnacle is a type of arthropod related to crabs and lobsters.

    Cnidarians

    • Cnidarians, also called coelenterate, any member of the phylum Cnidaria (Coelenterata), a group made up of more than 9,000 living species.
    • Mostly marine animals, the cnidarians include the corals, hydras, jellyfish, Portuguese men-of-war, sea anemones, sea pens, sea whips, and sea fans.

    Now take this chance to revise your biology basics on various phyla. It will be beneficial for state PSC exams. UPSC has also begun puzzling us on core biology questions.

    Defying old theories

    • The discovery has left many of them baffled for it contradicts earlier theories of non-survival of life in such extreme conditions.
    • Until now, scientists believed that sea life decreased with an increase in the depth of the Antarctic ice floor.

  • India Inc must follow global example, take affirmative action on climate change

    The article explains the global trend in investors and lendors are demanding companies to recognise their impact on environment and act on it.

    Accountability on climate change: global trend

    • There is a wave of investors pushing large corporations from across sectors, to recognise their carbon footprint and take affirmative action.
    • Aviva, the British insurance company announced it would divest stock and bond holdings in 30 of the biggest corporate emitters of carbon, if their boards failed to take affirmative action over climate change.
    • MPs in the United Kingdom called on the Bank of England to ratchet up environment standards in its pandemic stabilising, corporate bond programme.
    • Swedbank AB, Sweden’s biggest mortgage bank, has taken a decision not to provide fresh loans to new oil and gas projects.

    Companies realising social and environmental impacts

    • Several large and growing companies, especially in Europe, are realising their social and environmental impacts and making it a boardroom agenda even without investor guns on their heads.
    • Schneider Electric, the energy management and automation company, has embedded environmental, social and governance (ESG) considerations into every facet of its activities.
    •  The company climbed from 29th to number 1 rank in the 2021 Global 100 ranking in the Corporate Knights index of the world’s most sustainable companies.
    • Only one company from India, Tech Mahindra, has made it to the world’s 100 most sustainable list.

    Indian scenario

    • Indian institutional lenders and investors are simply not demanding enough on sustainability.
    • A majority of Indian companies are only meeting compliance norms set out by various state or city authorities.
    • Rarely do they go beyond rule-based compliances and implement environment, social and governance or ESG goals with purpose and passion like their European counterparts.

    Way forward

    • SEBI is putting the final touches on the Business Responsibility and Environment Reporting (BRSR) guidelines.
    • The new ESG reporting norm will apply to the top 1,000 listed companies on Indian exchanges.
    • Under BRSR reporting guidelines, companies will have to declare their R&D spends on improving environmental and social outcomes. 
    • They will have to disclose energy and water consumed to turnover ratios, and the percentage of recycled or reused input materials, among many other social and governance disclosures such as CSR, employee skilling and gender diversity.
    • It’s time for lending institutions and investors to align with SEBI and use their muscle to drive a deeper change.

    Consider the question “Indian institutional lenders and investors are  not demanding enough on sustainability from the companies. Rarely do they go beyond rule-based compliances and implement environment, social and governance or ESG goals with purpose and passion like their European counterparts. In light of this, suggest the measures to nudge the businesseses to act on their environmental responsibilities.” 

    Conclusion

    Stepping up green standards to meet Paris Climate Agreement goals cannot be the government’s responsibility alone. Businesses must be part of the movement, or the target of containing global warming to less than 1.5 degrees of pre-industrial levels, will remain elusive.

  • NASA’s Perseverance rover makes historic Mars landing

    NASA’s rover Perseverance, the most advanced astrobiology laboratory ever sent to another world has landed safely on the floor of Jezero Crater on Mars.

    Last week, separate probes launched by the UAE (Hope Mission) and China (Tianwen-1) reached Martian orbit. NASA has three Mars satellites still in orbit, along with two from the European Space Agency.

    Perseverance Rover

    • The Perseverance rover weighs less than 2,300 pounds and is managed by NASA’s Jet Propulsion Lab.
    • It is a part of the mission named ‘Mars 2020’.
    • The rover’s mission will be to search for signs of past microbial life. It will also collect samples of Martian rocks and dust, according to the release.
    • All of NASA’s previous Mars rovers — including the Sojourner (1997), Spirit and Opportunity (2004) and Curiosity (exploring Mars since 2012) — were named in this way.

    Objectives of the mission

    • Looking for habitability: identify past environments capable of supporting microbial life.
    • Seeking bio-signatures: seek signs of possible past microbial life in those habitable environments, particularly in special rocks known to preserve signs over time.
    • Caching samples: collect core rock and regolith (“soil”) samples and store them on the Martian surface.
    • Preparing for humans: test oxygen production from the Martian atmosphere.

    Major components

    (a) Looking for underground water

    • Perseverance will carry the Radar Imager for Mars’ Subsurface Experiment (RIMFAX).
    • The instrument will look for subsurface water on Mars – which, if found, will greatly help the case for a human mission or the cause of a human settlement on Mars.

    (b) Testing a helicopter

    • The Mars Helicopter is a small drone. It is a technology demonstration experiment: to test whether the helicopter can fly in the sparse atmosphere on Mars.
    • The low density of the Martian atmosphere makes the odds of actually flying a helicopter or an aircraft on Mars very low.

    (c) Producing oxygen on Mars

    • Perseverance will have an instrument – MOXIE, or Mars Oxygen In-Situ Resource Utilization Experiment – that will use 300 watts of power to produce about 10 grams of oxygen using atmospheric carbon dioxide.
    • Should this experiment be successful, MOXIE can be scaled up by a factor of 100 to provide the two very critical needs of humans: oxygen for breathing, and rocket fuel for the trip back to Earth.

  • India Energy Outlook Report, 2021

    The International Energy Agency (IEA) has recently released the India Energy Outlook 2021 report.

    Try this MCQ:

    Q.The Global Energy Transition Index recently seen in news is released by:

    a) International Energy Agency (IEA)

    b) World Economic Forum (WEF)

    c) International Renewable Energy Agency (IRENA)

    d) International Solar Alliance

    Highlights of the India Energy Outlook Report

    (1) Energy consumption

    • India at present is the fourth-largest global energy consumer behind China, the United States and the European Union.
    • It will overtake the European Union as the world’s third-largest energy consumer by 2030.
    • It will account for the biggest share of energy demand growth over the next two decades.

    (2) Energy demand

    • India accounts for nearly one-quarter of global energy demand growth from 2019-40 — the largest for any country.
    • Its share in the growth in renewable energy is the second-largest in the world, after China.
    • A five-fold increase in per capita car ownership will result in India leading the oil demand growth in the world.
    • Also, it will become the fastest-growing market for natural gas, with demand more than tripling by 2040.

    (3) Industrial consumption

    • By 2040, India is set to account for almost 20 per cent of global growth in industrial value-added, and to lead global growth in industrial final energy consumption, especially in steelmaking.
    • The nation accounts for nearly one-third of global industrial energy demand growth to 2040.

    (4) Dependence on fossil fuels

    • To meet its energy needs, India will be more reliant on fossil fuel imports as its domestic oil and gas production stagnates.
    • India’s oil demand is seen rising by rising by 74 per cent to 8.7 million barrels per day by 2040 under the existing policies scenario.
    • The natural gas requirement is projected to more than triple to 201 billion cubic meters and coal demand is seen rising to 772 million tonnes in 2040 from the current 590.

    (5) Coal trade

    • India currently accounts for 16 per cent of the global coal trade.
    • Many global coal suppliers were counting on growth in India to underpin planned export-oriented mining investments.

    (6) Per-capita emission

    • On a per-capita basis, India’s energy use and emissions are less than half the world average, as are other key indicators such as vehicle ownership, steel and cement output.
    • India will soon become the world’s most populous country, adding the equivalent of a city the size of Los Angeles to its urban population each year.

    About International Energy Agency

    • The IEA is a Paris-based autonomous intergovernmental organization established in the framework of the Organisation for Economic Co-operation and Development (OECD) in 1974 in the wake of the 1973 oil crisis.
    • It was initially dedicated to responding to physical disruptions in the supply of oil, as well as serving as an information source on statistics about the international oil market and other energy sectors.
    • At the end of July 2009, IEA member countries held a combined stockpile of almost 4.3 billion barrels of oil.
    • They are required to maintain total oil stock levels equivalent to at least 90 days of the previous year’s net imports.
    • The IEA acts as a policy adviser to its member states but also works with non-member countries, especially China, India, and Russia.
    • The Agency’s mandate has broadened to focus on the “3Es” of effectual energy policy: energy security, economic development, and environmental protection.

  • 54,000 lives lost in Delhi due to air pollution

    Air pollution claimed approximately 54,000 lives in Delhi in 2020, according to a Greenpeace Southeast Asia analysis of the cost to the economy due to air pollution.

    Try this question from CS Mains 2015:

    Q.Mumbai, Delhi and Kolkata are the three megacities of the country but the air pollution is a much more serious problem in Delhi as compared to the other two. Why is this so?

    Deaths due to Air Pollution

    • Globally, approximately 1,60,000 deaths have been attributed to PM 2.5 air pollution in the five most populous cities — Delhi, Mexico City, Sao Paulo, Shanghai and Tokyo.
    • Six Indian cities — Delhi, Mumbai, Bengaluru, Chennai, Hyderabad and Lucknow — feature in the global analysis.
    • An estimated 25,000 avoidable deaths in Mumbai in 2020 have been attributed to air pollution.
    • Bengaluru, Chennai and Hyderabad estimated an approximate 12,000, 11,000, and 11,000 avoidable deaths respectively due to polluted air.

    The ‘Cost Estimator’

    • The ‘Cost Estimator’, an online tool that estimates the real-time health impact and economic cost from fine particulate matter (PM 2.5) air pollution in major world cities.
    • It was deployed in collaboration between Greenpeace Southeast Asia, IQAir and the Centre for Research on Energy and Clean Air (CREA).
    • Using real-time ground-level PM 2.5 measurements collated in IQAir’s database, the algorithm applies scientific risk models in combination with population and public health data.

    Computing the “Lost Years”

    • To show the impact of air pollution-related deaths on the economy, the approach used by Greenpeace is called ‘willingness-to-pay.
    • It refers to a lost life year or a year lived with a disability is converted to money by the amount that people are willing to pay in order to avoid this negative outcome.
    • The cost estimator also sustained the estimated air pollution-related economic losses of ₹1,23,65,15,40,000.

    Greenpeace recommends-

    • Despite a temporary reprieve in air quality owing to the lockdown, the latest figures from the report underscore the need to act immediately.
    • The need of the hour is to rapidly scale up renewable energy, bring an end to fossil fuel emissions and boost sustainable and accessible transport systems.