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GS Paper: GS3

The evergreen debate of Food versus Fuel
The article discusses the recent decision of the government to make alcohol from rice. The move was bound to trigger the debate over food security of the country with a population ravaged by hunger and poverty. While the 2009 biofuel policy had stressed the use of non-food resources, the 2018 updated policy allowed using excess grains. We all want to make a shift towards a green economy but is this the right time? Let’s find out.

What decisions did the government take?
- The National Biofuel Coordination Committee (NBCC) chaired by the Union Minister of Petroleum and Natural Gas decided to use “surplus” rice available with the Food Corporation of India (FCI) for conversion to ethanol.
- The objective is to make alcohol-based hand-sanitisers and for the blending of ethanol with petrol.
- This decision is not only audacious but also an affront to the millions of people who are deeply affected by food insecurity.
The food question
- In 2009, the National Policy on Biofuels stressed on the use of non-food resources to avoid a possible conflict between food and fuel.
- Take the US’s example: In 2018-19, an astounding 37.6 per cent of the corn produced in the US is used for making ethanol.
- In addition to cereals, oilseed crops like rapeseed, soybean and sunflower were used for biofuel production.
- Rise in food prices: Such diversion of food crops to produce biofuel was considered one of the reasons for the rise in food prices globally.
What should be India’s strategy in this debate?
- There is rampant poverty, hunger, and malnutrition in India.
- India’s position in the Global Hunger Index has slipped nine places, ranking 102 among the 117 countries in 2019.
- The National Family Health Survey (NFHS-4) 2015-16, found that 38.4 per cent of children under five years are “stunted” (height for age) and 21 per cent are “wasted” (low weight for height).
- In fact, over a period of 10 years, wasting has increased from 19.8 per cent in NFHS-3 to 21 per cent in NFHS-4.
The dictums of 2018 Policy
- The 2018 National Policy on Biofuels had a target of 20 per cent blending of ethanol in petrol and 5 per cent blending of biodiesel in diesel by 2030.
- This was to be achieved by increasing production using second-generation bio-refineries and developing new feedstock for biofuels.
- It allowed the production of ethanol from damaged food grains like wheat and broken rice, which are unfit for human consumption.
- The new policy allowed the use of excess food grain for ethanol in a bounty crop year, if endorsed by the Union Ministry of Agriculture.
Possible dangers
- The quantity of rice from which ethanol will be produced has not been announced, nor do we know the price at which such rice will be sold by the FCI.
- About 85 per cent of rice is Kharif crop, heavily dependent on monsoon.
- Despite the prediction of a normal monsoon, What happens if the monsoon predictions go wrong? Will we be able to import grain?
- Less damaged grains: Despite the commonly held belief of a lakh of tonnes of rotting grains, the FCI’s storage practices are actually quite good.
- Damaged grains as a percentage of total quantity issued by the FCI has been just about 0.01 per cent to 0.04 per cent in the last five years.
- Hardly any ethanol can be made from such a small amount of damaged grains.
- Making ethanol from sound quality grains deprives food to humans as well as livestock.
- At the time when uncertainties are looming large, it is imperative that food security and food price stability be given the highest priority.
Way forward
- Ethanol can be produced from other ingredients such as B and C heavy molasses, sugar, sugar syrup, and sugarcane juice.
- Ethanol has also been blessed with a low GST and enjoys relaxed conditions for inter-state movement if used for blending with petrol.
- Since the economy faces a bleak prospect due to the impact of COVID-19, the government should first use the food grains to meet the requirement of about 10 to 20 crore people without ration cards.
The UPSC could ask a question on the following lines “Diverting food grains for making fuels has always been a contentious issue from the food security angle. At the same time reducing India’s dependence on import for fuels is as much a serious concern. The National Policy on Biofuels-2018 sought to strike the balance between the two. Critically analyse the various provisions of National Policy on Biofuels-2018 which were different from 2009 policy.”

Conclusion

The government must ensure the food safety of the country first and if it still has surplus rice, it must facilitate export to friendly countries which are suffering an adverse impact of COVID-19 on their economies.

Back2Basics: Generations of biofuels
- There are three types of biofuels: 1st, 2nd and 3rd generation biofuels.
- They are characterized by their sources of biomass, their limitations as a renewable source of energy, and their technological progress.
- The main drawback of 1st generation biofuels is that they come from biomass that is also a food source.
- This presents a problem when there is not enough food to feed everyone.
- 2nd generation biofuels come from non-food biomass, but still compete with food production for land use.
- Finally, 3rd generation biofuels present the best possibility for alternative fuel because they don’t compete with food.
- However, there are still some challenges in making them economically feasible.
Important Provision of ‘National Policy on Biofuels, 2018
- The government aims at increasing the utilization of biofuels in the energy and transportation sectors of the country by promoting the production of biofuels from domestic feedstock in the coming decade through this policy.
- Larger goals such as the adoption of green fuels, national energy security, fighting climate change, generating employment, etc. would be facilitated through this policy. Along with that, technological advancements in the field of biofuels will also be encouraged.
- MNRE has set an indicative target of 20% blending of ethanol in petrol and 5% blending of biodiesel in diesel to be achieved by 2030.
- The percentage of the same currently stands at around 2% for petrol and less than 0.1% for diesel.
May 6, 2020
What makes MSMEs, most vulnerable to Covid-19 disruptions?
- The Covid-19 pandemic has left its impact on all sectors of the economy but nowhere is the hurt as much as the Medium, Small and Micro Enterprises (MSMEs) of India.
- All anecdotal evidence available, such as the hundreds of thousands of stranded migrant workers across the country, suggests that MSMEs have been the worst casualty of lockdown.
- A closer look at the anatomy of the MSME sector explains why MSMEs are so vulnerable to economic stress.
Possible mains question:

Q. Discuss how the nationwide lockdown to control the coronavirus outbreak has led to the resurfacing of inherent bottlenecks in India’s MSME Sector.

What are MSMEs? How are they defined?
- Formally, MSMEs are defined in terms of investment in plant and machinery.
- But this criterion for the definition was long criticised because credible and precise details of investments were not easily available by authorities.
- That is why in February 2018, the Union Cabinet decided to change the criterion to “annual turnover”, which was more in line with the imposition of GST.
- According to the proposed definition, which is yet to be formally accepted, a micro-enterprise will be one with an annual turnover less than Rs 5 crore; a small enterprise with turnover between Rs 5 crore and Rs 75 crore; and a medium enterprise with turnover less than Rs 250 crore.
How many MSMEs does India have, who owns them, and where are they situated?
- According to the latest available (2018-19) Annual Report of Department of MSMEs, there are 6.34 crore MSMEs in the country.
- Around 51 per cent of these are situated in rural India.
- Together, they employ a little over 11 crore people (Chart 3) but 55 per cent of the employment happens in the urban MSMEs.
- These numbers suggest that, on average, less than two people are employed per MSME.
- At one level that gives a picture of how small these really are. But a breakup of all MSMEs into micro, small and medium categories is even more revealing.
Distributions of MSMEs
- In terms of geographical distribution, seven Indian states alone account for 50 per cent of all MSMEs.
- These are Uttar Pradesh (14%), West Bengal (14%), Tamil Nadu (8%), Maharashtra (8%), Karnataka (6%), Bihar (5%) and Andhra Pradesh (5%).
- This breakup provides a sense of where the pain of the MSME crisis would be felt the most.
- Chart 4 shows, 99.5 per cent of all MSMEs fall in the micro category.
- The medium and small enterprises — that is, the remaining 0.5% of all MSMEs — employ the remaining 5 crore-odd employees.
- While micro-enterprises are equally distributed over rural and urban India, small and medium ones are predominantly in urban India.
What kind of problems do MSMEs in India face?
- No/Low Formal registration: To begin with, most of them are not registered anywhere. A big reason for this is that they are just too small. But, as it is clear in a time of crisis, it also constrains a government’s ability to help them.
- Away from Tax norms: GST has its threshold and most micro enterprises do not qualify. Being out of the formal network, they do not have to maintain accounts, pay taxes or adhere to regulatory norms etc. This brings down their costs.
- Lack of Financial buffer: According to a 2018 report by the International Finance Corporation (part of the World Bank), the formal banking system supplies less than one-third (or about Rs 11 lakh crore) of the credit MSME credit need that it can potentially fund (Chart 5). They don’t have the buffers of the bigger firms or access to cheap capital to help them tide over this period.
- Bad credit history: The other big issue plaguing the sector is the delays in payments to MSMEs — be it from their buyers or things likes GST refunds etc. A key reason why banks dither from extending loans to MSMEs is the high ratio of bad loans (Chart 6).
How has Covid-19 made things worse?
- The MSMEs were already struggling — in terms of declining revenues and capacity utilization — in the lead-up to the Covid-19 crisis.
- The total lockdown has raised a question mark on workers payment primarily because these firms mostly transact on cash. That explains the job losses.
- According to a recent survey he did for “small and medium” firms in manufacturing, only 7% said they will be able to survive for more than three months with their cash in hand if their business remains closed.
- A big hurdle to restarting now is the lack of labour availability.
What can be done?
- The RBI has been trying to pump money into the MSME sector but given the structural constraints, it has had limited impact.
- There are no easy answers for the MSMEs’ sufferings.
- However, the government can provide tax relief (GST and corporate tax), give swifter refunds, and provide liquidity to rural India (say, through PM-Kisan) to boost demand for MSME products.
What about credit guarantees?
- Loans to MSMEs are mostly given against property (as collateral) — because often there isn’t a robust cash flow analysis available — but in times of crisis, property values fall and that inhibits the extension of new loans.
- A credit guarantee by the government helps as it assures the bank that its loan will be repaid by the government in case the MSME falters.
- To the extent such defaults happen, credit guarantees are shown as a departmental expense in the Budget.
Urgent attention required
- Governments across the world have announced various measures ranging from wage support to direct subsidies to help these businesses tide over these difficult times.
- But, in India, more than a month after the national lockdown was announced; there is still no blueprint of how the government intends to support these businesses during this period.
Way forward
- There is a strong case for urgent government intervention — the costs of intervening early on will be much less than the price of delayed action.
- To begin with, all dues owned by governments and public sector undertakings to MSMEs can be immediately cleared. This will help ease their immediate cash flow woes.
- Second, with banks turning risk-averse, credit flow to MSMEs is likely to be depressed as solvency concerns will dominate.
- In such a situation, the government could step in. It could set up a credit guarantee fund that backstops loans to MSMEs.
May 6, 2020
Vande Bharat and Samudra Setu Missions to repatriate Indian nationals
India is all geared to operate flights and naval vessels to repatriate Indian nationals stranded abroad.

The name Samudra Setu typically sound like a combatant naval exercise whereas Vande Bharat reminds us of Train-18. Both ideas have opposite context and meaning. One must keep this in mind.

What is the ‘Vande Bharat Mission’ mission about?
- ‘Vande Bharat Mission’ will see the operation of 64 flights from May 7 to May 13 to bring back around 15,000 Indian nationals stranded abroad.
- Once completed, it may turn out to be the largest evacuation operation ever since the 1990 airlift of 1.7 lakh people from Kuwait.
- Approximately, 2,000 people from abroad will fly back to India daily.
What is Indian Navy’s ‘Operation Samudra Setu’?
- The Indian Navy launched ‘Operation Samudra Setu’ (Sea Bridge) as a part of national effort to repatriate Indian citizens from overseas.
- Indian Naval Ships Jalashwa and Magar are presently enroute to the port of Malè, Republic of Maldives to commence evacuation operations from 08 May 2020 as part of Phase-1.
- INS Jalashwa is the largest amphibious platform in the Navy and is based at the Eastern Naval Command headquarters in Visakhapatnam.
- It can normally accommodate 1,000 people but will take about 800.
May 6, 2020
‘The Long March 5B’ rocket
China has successfully launched a new rocket and prototype spacecraft in a major test of the country’s ambitions to operate a permanent space station and send astronauts to the Moon.

Can you recall the historical link between the name “The Long March” and China’s History.

The Long March 5B
- Long March 5 or Chang Zheng 5 is a Chinese heavy-lift launch system developed by the China Academy of Launch Vehicle Technology (CALT).
- It is the first Chinese launch vehicle designed from the ground up to focus on non-hypergolic liquid rocket propellants.
- The maximum payload capacities of the base variant are ~25,000 kilograms to Low Earth Orbit and ~14,000 kilograms to Geosynchronous Transfer Orbit.
- The spaceship is expected to transport astronauts to a space station that China plans to complete by 2022 — and eventually to the Moon. It will have a capacity for a crew of six.
Back2Basics: Geosynchronous Transfer Orbit
- About 35,786 kilometers above the Earth’s surface, satellites are in geostationary orbit. From the center of the Earth, this is approximately 42,164 kilometers. This distance puts it in the high Earth orbit category.
- At any inclination, a geosynchronous orbit synchronizes with the rotation of the Earth.
- While geosynchronous satellites can have any inclination, the key difference to geostationary orbit is the fact that they lie on the same plane as the equator.
- GTO is a an elliptical orbit used to transfer between two circular orbits of different radiuses in the same plane—used to reach geosynchronous or geostationary orbit using high-thrust chemical engines.
May 6, 2020
Environmental regulations: go or no go?
As the world struggles to restart the economic activities amid the pandemic, various strategies are being advised to salvage the damaged economies. One amongst them is to cut down on the environmental standards to spur the economic activities. This article explains why India should not be short-sighted to lower the environmental standards.

What is this fuss about environment and lockdown?
- The lockdown exit strategies are focused on saving livelihoods.
- But the lockdown is causing fiscal pressures on governments which further motivates it to lower the environmental standards, suspend environmental monitoring requirements and reduce environmental enforcement. (Well to save some bucks.)
- And also in the belief that this is necessary to secure economic growth.
- But it would be a mistake to assume that there is a trade-off between saving livelihoods and protecting the environment.
- The crisis of COVID-19 has highlighted that improving the quality of air in our country is not a matter of choice but an emergency.
How countries around the world are reacting?
- The US announced a significant reduction in fuel efficiency standards for new cars.
- This move could result in increased gasoline consumption by 80 billion tonnes, pumping increased carbon emissions into the atmosphere.
- The US Environmental Protection Agency has announced that it will not be enforcing compliance with routine monitoring and reporting obligations of environmental protection, for an indefinite period.
- 13 European ministers have been outspoken about resisting the temptations of short-term solutions in response to the present crisis- need to maintain and strengthen EU’s effective regulatory tools to stick to its 2030 climate goals.
5 Arguments that Indian authorities that look into viz a viz environmental standards

1. Pollution increases risk to COVID-19
- People living in areas with higher levels of air pollution face increased risk of premature death from COVID-19.
- New Delhi was the world’s most polluted capital city for the second straight year in 2019.
- And India was also home to 21 of the world’s 30 most polluted cities, Swiss-based group IQ AirVisual said in a recent study.
- The State of Global Air 2019 Report finds air pollution responsible for over 1.2 million deaths in China and India each, based on 2017 data.
2. The poor are the most affected by air pollution
- There is enormous inequality in the impact of the COVID-19 fallout.
- Those who suffer the most from air pollution are the millions who live and toil in the open, who cannot afford air-purifiers or other mitigating measures, as also the elderly and children.
3. Risk of future pandemics
- There is good evidence that three-quarters of the emerging infectious diseases migrate from wild or domesticated animals into humans.
- This includes Ebola, SARS, MERS and now COVID-19.
- Deforestation, industrial agriculture, illegal wildlife trade, climate change and other types of environmental degradation increase the risk of future pandemics.
4. Public support for environment protection
- From Delhi to Sao Paulo, Bangkok to Bogota, the dramatic improvement in the quality of air and water in the most polluted cities around the world has been transmitted by social media.
- This may well result in a groundswell of public support for measures to protect the environment.
5. The environment will get the value it deserves
- The corona pandemic will jolt the markets into giving a clean, healthy and sustainable environment the economic value it deserves.
- There’s a possibility that the gulf between what markets value, and what people value, will close.
Environment conservation as a silver lining in this Pandemic
- We have never treated air pollution as a national emergency, failing to coordinate between the Centre and state governments.
- The COVID pandemic has been declared a national disaster in India, under the National Disaster Management Act, 2005.
- This legislation mandates the disaster authorities coordinate among themselves and take measures for the prevention and mitigation of the pandemic.
- Preventing and mitigating the risks of COVID-19, therefore, means the mandate for the disaster authorities is also to tackle air and other forms of pollution head-on.
Questions based on disasters have been a recurring theme in the UPSC. In 2014, a question was asked with respect to drought, the same could be asked about air pollution. In 2017 again a question based on role of NDMA and tsunami was aksed. In 2018, a question based on Sendai Framework was asked.

Conclusion

The NDMA is a platform which should be used to combat air pollution as an emergency, similar coordination will be required at an international level to continue to work towards reduced emissions under the Paris Agreement. It is a great pity that it takes a pandemic to bring the realisation that economic growth versus clean air is a false dichotomy.

Back2Basics: NDMA
- On 23 December 2005, the Government of India enacted the Disaster Management Act, which envisaged the creation of the National Disaster Management Authority (NDMA).
- It is headed by the Prime Minister, and State Disaster Management Authorities (SDMAs) headed by respective Chief Ministers.
- It aims to spearhead and implement a holistic and integrated approach to Disaster Management in India.
May 5, 2020
FCI to the rescue
FCI, indeed, has remained a crucial topic from the examination viewpoint. Mostly it is highlighted for its issues, corruption and wastages in the godowns. Be it MS Swaminathan or the latest Shanta Kumar committee all focus on how to revamp this giant institution. This article, however, points to the relevance of the FCI in the times of pandemic and suggests areas where there is scope for improvement in fulfilling its role. Stay tuned to find out what are the major concerns with FCI which needs consideration by the government.

A background check on FCI
- The FCI was set up under the Food Corporations Act 1964.
- In its first decade, FCI was at the forefront of India’s quest of self-sufficiency in rice and wheat following the Green Revolution.
- Its functions involved managing procurement and stocking grain that supported a vast Public Distribution System (PDS).
- Over time it became a behemoth that had long outlived its purpose and Its operations were regarded as expensive and inefficient.
- Even in the 1970s and 1980s, poor storage conditions meant a lot of grain was lost to pests, mainly rats; diversion of grain was widespread.
What role can FCI play amid Covid-19?
- The FCI has consistently maintained the PDS, a lifeline for vulnerable millions across the country.
- In the middle of the COVID-19 pandemic, it can play a major role in avoiding hunger and starvation.
- Before the lockdown, with 77 million tonnes of grains in its godowns, the FCI was facing a serious storage problem.
- This was worrying not just because of a shortage of modern storage facilities but also because the FCI lacked a “pro-active liquidation policy” for excess stocks.
- Post-COVID: FCI has opened up the godowns to release food stocks to those affected by the lockdown.
- The FCI has also enabled purchases by States and non-governmental organisations directly from FCI depots, doing away with e-auctions typically conducted for the Open Market Sale Scheme (OMSS).
- With rabi procurement underway in many States, it seems that the country will secure ample food supplies to cope with the current crisis.
- Given the extended lockdown, the FCI is uniquely positioned to move grain across State borders where private sector players continue to face formidable challenges of transport.
5 suggestions for the FCI to perform better

1. Using roads along with rails:
- The FCI is overwhelmingly reliant on rail, which has several advantages over road transport.
- In 2019-2020 (until February) only 24% of the grain moved was by road.
- The FCI has long recognised that road movement is often better suited for emergencies and for remote areas.
- Containerised movement too, which is not the dominant way of transporting grain, is more cost-effective and efficient.
- Now, more than ever, it is imperative to move grain quickly and with the least cost and effort, to areas where the need is greatest.
2. Store grain near demand hotspot
- The FCI already has a decentralised network of godowns.
- In the current context, it would be useful for the State government and the FCI to maintain stocks at block headquarters or panchayats in food insecure or remote areas.
- This would allow State governments to respond rapidly.
- It will also provide a sense of assurance and psychological comfort to vulnerable communities.
- This is especially relevant for regions that are chronically underserved by markets or where markets have been severely disrupted.
3. Release stocks over and above existing allocation
- The central government need to look beyond the PDS and the Pradhan Mantri Garib Kalyan Yojana and release stocks over and above existing allocations.
- This would provide flexibility to local governments to access grains for appropriate interventions at short notice and to sell grain locally at pre-specified prices until supply is restored.
- This would allow the state government to engage in feeding programmes, free distribution to vulnerable and marginalised sections, those who are excluded from the PDS, etc.
- In many States, there is a vibrant network of self-help groups formed under the National Rural Livelihoods Mission (NRLM) which can be tasked with last mile distribution of food aid other than the PDS.
- Consultative committees presumably exist already in each State to coordinate with the FCI on such arrangements.
4. Suspend FIFO principle
- Typically, the FCI’s guidelines follow a first in, first out principle (FIFO).
- FIFO mandates that grain that has been procured earlier needs to be distributed first to ensure that older stocks are liquidated, both across years and even within a particular year.
- It is time for the FCI to suspend this strategy, that enables movement that costs least time, money and effort.
5. Support the farmers trying to reach out to consumers directly
- In many places, farmer producer organisations (FPOs) have been at the forefront of rebuilding these broken supply chains.
- The FCI along with the National Agricultural Cooperative Marketing Federation of India Ltd. (NAFED), is well placed to rope in expertise to manage the logistics to support these efforts.
- NAFED has already taken the initiative to procure and transport horticultural crops.
- The FCI should similarly consider expanding its role to support FPOs and farmer groups, to move a wider range of commodities including agricultural inputs such as seeds and fertilizers, packing materials and so on.
Major concerns regarding FCI’s role
- Cost of food subsidy: The first is a long-term concern regarding the costs of food subsidy.
- An analysis of FCI costs spanning 2001-16 suggests that on average about 60% of the costs of acquisition, procurement, distribution and carrying stocks are in fact transfers to farmers.
- Not all of what is counted as subsidy therefore represents a waste of resources.
- The government needs to address the FCI’s mounting debts — an estimated ₹2.55 lakh crore in March 2020 in the form of National Small Saving Funds Loan alone.
- Depressing food prices: A second concern is that extended food distribution of subsidised grain is akin to dumping and depresses food prices locally.
- The depressed prices, in turn, affect farmers.
The Covid-19 pandemic has brought into sharp focus the relevance of the FCI. This makes PDS and Food security in prelims as well as in mains examination focus area. So, questions based on the topic are likely to be asked by the UPSC, for ex- “The FCI’s role in providing succour has been proved many times in the past and it lived up to its reputation amid Covid-19 pandemic as well. In the light of the above statement, discuss the relevance of the FCI and suggest the ways to improve its performance in the times of disasters”

Also consider a question asked by the UPSC in 2019, “What are the reformative steps taken by the Government to make the food grain distribution system more effective?”

Conclusion

In 2015, the Shanta Kumar report recommended repurposing the organisation as an “agency for innovations in Food Management System” and advocated shedding its dominant role in the procurement and distribution of grain. There is no doubt that the FCI needs to overhaul its operations and modernise its storage. At the same time, the relevance of an organisation such as the FCI or of public stockholding, common to most Asian countries, has never been more strongly established than now.
May 5, 2020
Why liquor sale matters to states?
Following the ease of restrictions in the third phase of the nationwide lockdown, some of the most striking images showed long queues outside liquor stores around the country. The Delhi government announced a 70% hike in the price of liquor across categories in the capital.

Aspirants must note:

1. Purview of Excise duty (i.e. Petroleum and Liquor)

2. Excise duty before and after GST regime

3. Sources of state revenue etc.

4. Argument relating to inclusion of Liquor in GST

Why liquor matters?
- Delhi’s “special corona fee” on alcohol underlines the importance of liquor to the economy of the states.
- Manufacture and sale of liquor is one of the major sources of their revenue, and the reopening comes at a time when the states have been struggling to fill their coffers amid the disruption on account of the lockdown.
How do states earn from liquor?
- Liquor contributes a considerable amount to the exchequers of all states and UTs except Gujarat and Bihar, both of which have enforced prohibition.
- Generally, states levy excise duty on manufacture and sale of liquor.
- Some states, for example, Tamil Nadu, also impose VAT (value-added tax).
- States also charge special fees on imported foreign liquor; transport fee; and label & brand registration charges.
- A few states, such as UP, have imposed a “special duty on liquor” to collect funds for special purposes, such as maintenance of stray cattle.
Share in revenue
- A report published by the RBI last year shows that state excise duty on alcohol accounts for around 10-15 per cent of Own Tax Revenue of a majority of states.
- In fact, the state excise duty on liquor is the second or third largest contributor to the category State’s Own Tax revenue; sales tax (now GST) is the largest.
- This is the reason states have always wanted liquor kept out of the purview of GST.
What exactly is State Excise?
- Excise duty on alcohol, alcoholic preparations, and narcotic substances is collected by the State Government and is called “State Excise” duty.
- For most of the states, excise duty is the second largest tax revenue after sales taxes (state VAT).
- Besides, a substantial amount comes from licences, fines and confiscation of alcohol products.
What has changed with the State Excise after the GST regime?
- At the central level, excise duty earlier used to be levied as Central Excise Duty, Additional Excise Duty, etc.
- However, the Goods and Services Tax (GST), introduction in July 2017, subsumed many types of excise duty. Today, excise duty applies only on petroleum and liquor.
- Excise duty was levied on manufactured goods and levied at the time of removal of goods, while GST is levied on the supply of goods and services.
- Alcohol does not come under the purview of GST as exclusion mandated by constitutional provision.
- States levy taxes on alcohol according to the same practice as was prevalent before the rollout of GST.
- After GST was introduced, central excise duty was replaced by Central GST because excise was levied by the central government. The revenue generated from CGST goes to the central government.
What are the other sources of revenue for the states?
- The states’ revenues comprise broadly two categories — Tax Revenue and Non-Tax Revenue.
- Tax revenue is divided into two further categories: State’s Own Tax Revenue, and Share in Central Taxes.
- Again, Own Tax Revenue comprises three principal sources:
1) Taxes on Income (agricultural income tax and taxes on professions, trades, callings and employment);

2) Taxes on Property and Capital Transactions (land revenue, stamps and registration fees, urban immovable property tax); and

3) Taxes on Commodities and Services (sales tax, state sales tax/VAT, central sales tax, a surcharge on sales tax, receipts of turnover tax, other receipts, state excise, taxes on vehicles, taxes on goods and passengers, taxes and duties on electricity, entertainment tax, state GST, and “other taxes and duties”).

Back2Basics: What is Excise Duty?
- Excise duty is a form of tax imposed on goods for their production, licensing and sale.
- It is the opposite of Customs duty in sense that it applies to goods manufactured domestically in the country, while Customs is levied on those coming from outside of the country.
- At the central level, excise duty earlier used to be levied as Central Excise Duty, Additional Excise Duty, etc.
- Excise duty was levied on manufactured goods and levied at the time of removal of goods, while GST is levied on the supply of goods and services.
Purview of excise duty
- The GST introduction in July 2017 subsumed many types of excise duty.
- Today, excise duty applies only on petroleum and liquor.
- Alcohol does not come under the purview of GST as exclusion mandated by constitutional provision.
- States levy taxes on alcohol according to the same practice as was prevalent before the rollout of GST.
- After GST was introduced, excise duty was replaced by central GST because excise was levied by the central government. The revenue generated from CGST goes to the central government.
Types of excise duty in India

Before GST kicked in, there were three kinds of excise duties in India.

1) Basic Excise Duty
- Basic excise duty is also known as the Central Value Added Tax (CENVAT). This category of excise duty was levied on goods that were classified under the first schedule of the Central Excise Tariff Act, 1985.
- This duty was levied under Section 3 (1) (a) of the Central Excise Act, 1944. This duty applied on all goods except salt.
2) Additional Excise Duty
- Additional excise duty was levied on goods of high importance, under the Additional Excise under Additional Duties of Excise (Goods of Special Importance) Act, 1957.
- This duty was levied on some special category of goods.
3) Special Excise Duty
- This type of excise duty was levied on special goods classified under the Second Schedule to the Central Excise Tariff Act, 1985.
- Presently the central excise duty comprises of a Basic Excise Duty, Special Additional Excise Duty and Additional Excise Duty (Road and Infrastructure Cess) on auto fuels.
May 5, 2020
How Remdesivir tricks coronavirus?
A new research has found how Remdesivir treats coronavirus and described the exact mechanism of interaction between the virus and the drug. Remdesivir is an experimental antiviral made by American pharmaceutical firm Gilead Sciences that was first developed to treat Ebola.

DNA/RNA related terminologies, Genes and Genomes, etc. always find their way in UPSC Prelims. Most recent one was-

With reference to the recent developments in science, which one of the following statements is not correct? (CSP 2019)

(a) Functional chromosomes can be created by joining segments of DNA taken from cells of different species.

(b) Pieces of artificial functional DNA can be created in Iaboratories.

(c) A piece of DNA taken out from an animal cell can be made to replicate outside a living cell in a laboratory.

(d) Cells taken out from plants and animals can be made to undergo cell division in laboratory petri dishes.

How Remdesivir kills coronavirus?
- Remdesivir is designed to obstruct the stage of replication, when the virus creates copies of itself, followed endlessly by the copies creating copies of themselves.
How does replication take place?
- Once the virus enters the human cell, it releases its genetic material, which is then copied using the body’s existing mechanism.
- At every stage of infection, various human proteins, virus proteins, and their interactions come into play.
- At the replication stage, the key viral protein at play is an enzyme called RdRp (an enzyme is a kind of protein that speeds up chemical reactions within a cell).
- It is RdRp that makes the copies, by processing components of the RNA of the virus.
- University of Alberta researchers called it the “engine” of the virus in a paper last week, in which they described the action of Remdesivir against this “engine”.
- In scientific literature, such an enzyme is called a polymerase (the p is RdRp stands for polymerase) or a replica.
- In any case, this is the enzyme that is targeted by Remdesivir.
And how exactly does Remdesivir target this enzyme?
- In order to replicate, the virus processes raw material from the virus RNA, broken down by another enzyme with that specific function.
- When a patient is given Remdesivir — the inhibitor — it mimics some of this material and gets incorporated in the replication site.
- With Remdesivir replacing the material it needs, the virus fails to replicate further.
- These coronavirus polymerases are sloppy and they get fooled, so the inhibitor gets incorporated many times and the virus can no longer replicate.
May 5, 2020
‘BharatMarket’: An e-commerce platform for retail traders
Traders’ body Confederation of All India Traders (CAIT) said that it will soon launch a national e-commerce marketplace ‘BharatMarket’ for all retail traders in collaboration with several technology partners.

A prelims question with tricky options to throw you off track-

The BharatMarket initiative recently seen in news is-

A. Trade of Bharat-22 Exchange Traded Fund (ETF)

B. Platform for farmer to sell their produce

C. Initiative in power sector

D. e-commerce platform

Here you have to play safe…..

BharatMarket
- The marketplace will integrate the capabilities of various technology companies to provide end-to-end services in the logistics and supply chains from manufacturers to end consumers, including deliveries at home.
- It will include nationwide participation by retailers and aims to bring 95 per cent of retail traders onboard the platform, who would exclusively run the portal.
- It has been already started as a pilot project, initially with a limited number of essential commodities, in six cities — Prayagraj, Gorakhpur, Varanasi, Lucknow, Kanpur and Bengaluru.
- This will be an effective way to get essential commodities to consumers during the lockdown period and within containment zones.
May 5, 2020
[pib] UV Blaster: A UV Disinfection Tower
The DRDO has developed an Ultra Violet (UV) Disinfection Tower for rapid and chemical-free disinfection of high infection-prone areas.

GYAN:

We have a UV filter in our home based water filter. Ever wondered, how do UV rays kill viruses/bacteria?

UV Blaster
- The UV blaster is a UV based area sanitizer designed and developed by Laser Science & Technology Centre (LASTEC), the Delhi based premier laboratory of DRDO.
- It is useful for high tech surfaces like electronic equipment, computers and other gadgets in laboratories and offices that are not suitable for disinfection with chemical methods.
- The product is also effective for areas with a large flow of people such as airports, shopping malls, metros, hotels, factories, offices, etc.
How does it work?
- The UV based area sanitizer may be used by remote operation through laptop/mobile phone using wifi link.
- The equipment has six lamps each with 43 watts of UV-C power at 254 nm wavelength for 360-degree illumination.
- For a room of about 12 x 12 feet dimension, the disinfection time is about 10 minutes and 30 minutes for 400 square feet area by positioning the equipment at different places within the room.
- This sanitizer switches off on the accidental opening of a room or human intervention.
Back2Basics: UV germicidal irradiation
- UV irradiation is a disinfection method that uses short-wavelength ultraviolet rays to kill or inactivate microorganisms by destroying nucleic acids and disrupting their DNA, leaving them unable to perform vital cellular functions.
- UVGI is used in a variety of applications, such as food, air, and water purification.
- UVGI devices can produce strong enough UVC light in circulating air or water systems to make them inhospitable environments to microorganisms such as bacteria, viruses, moulds, and other pathogens.
- UVGI can be coupled with a filtration system to sanitize air and water.
- It has been used primarily in medical sanitation and sterile work facilities.
- Increasingly, it has been employed to sterilize drinking and wastewater since the holding facilities are enclosed and can be circulated to ensure a higher exposure to the UV.
May 5, 2020