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  • Needed, a policy framework in step with technology

    The changing realm of technology requires a change in the policy framework. The article discusses the issue of the impact of technology and the required changes in the policy framework.

    Adoption of information-based technologies

    • The expansion of computing power has driven the pace of information gathering and analysis.
    • The new currency drives processes and decision-making across a wide array of products and services, making them more efficient and value accretive for consumers.
    • These information-based technologies have been widely adopted across a broad range of industries and products that traditionally have not been perceived as electronic or software based.
    •  A modern automobile has 40% of its component value from electronic-based products.
    • This is a paradigm shift as the amount of “value add” from intangible technology services as opposed to physical objects, even in traditional goods, is being transformed by information.
    • Information and electronics are becoming all-pervasive, ensuring that we set boundaries to control quality or the uptime of the equipment.
    • Information availability drives efficiency and creates value for customers by providing greater control over the product
    • There is increasing digitisation and electronification of industrial activities, products and services, influencing the evolving skill sets in industry.

    Need for holistic views in policies

    • To address the needs of various stakeholders, governments have tended to build specialised departments and designed policies that govern those areas.
    • Over time, as each of these departments grew, they have tended to operate in silos.
    • The recent developments in technology have, however, blurred standard boundaries that dictate policy framework in most governments.
    • As technology is driving an increasing share of the value add coming from digitisation and data analytics, there needs to be a way of encouraging capital formation by way of intangibles in traditionally tangible industries.
    • There is a need to have a holistic view of policies for economic development as technology is becoming a significant enabler in most industries.
    • A change in policy framework regarding economic development that enables various ministries to work together is essential.

    Way forward

    • A nourishing ecosystem for industry, including the hard infrastructure and softer areas such as education, skilling, technical institutions, laboratories, testing centres, etc., has to be cultivated.
    • The creation of clusters of companies in adjacent but complementary areas could constitute such an ecosystem that encourages multi and cross-disciplinary learning and spur innovation and economic development.
    • Moreover, this type of ecosphere could also attract investment and capital formation.
    • There is also the larger issue of a shift of value between manufacturing and services as technology changes.
    • The policy, by and large, promotes and gives incentives for manufacturing, whereas the share of intangibles are not adequately covered in industrial policies.
    • It is important to include these to encourage innovation and technological development.
    • It is important that there is close cooperation and alignment between the Centre and State to ensure effective implementation on the ground.

    Conclusion

    Some of these thoughts could help us navigate through an ecosystem that is changing with technology.

  • Economic implications of India opting out of RCEP

    Even as India opted to stay out after walking out of discussions last year, the new trading bloc has made it clear that the door will remain open for India to return to the negotiating table.

    Must read:

    China-led RCEP takes off without India

    Try answering this also:

    Q.Signing the Regional Comprehensive Economic Partnership (RCEP) agreement would have given more substance to India’s Act East policy. Analyse.

    Why did India walk out?

    • India decided to exit RCEP negotiations over “significant outstanding issues”.
    • Its decision was to safeguard the interests of industries like agriculture and dairy and to give an advantage to the country’s services sector.
    • The current structure of RCEP still does not address these issues and concerns.

    How far is China’s presence a factor?

    (1) Escalated tensions

    • Escalated tension with China is considered to be a major reason for India’s decision.
    • Major issues that were unresolved during RCEP negotiations were related to the exposure that India would have to China.

    (2) Surge in imports

    • This included India’s fears that there was “inadequate” protection against surges in imports.
    • It felt there could also be a possible circumvention of rules of origin— the criteria used to determine the national source of a product.
    • In the absence of this, other partner countries could dump their products by routing them through other countries that enjoyed lower tariffs.

    (3) Inability for countermeasures

    • India was unable to ensure countermeasures like an auto-trigger mechanism to raise tariffs on products when their imports crossed a certain threshold.
    • It also wanted RCEP to exclude most-favoured-nation (MFN) obligations from the investment, especially to countries with which it has border disputes.

    (4) No assurance of market access to India

    • RCEP also lacked clear assurance over market access issues in countries such as China and non-tariff barriers on Indian companies.
    • The agreement would have forced India to extend benefits given to other countries for sensitive sectors like defence to all RCEP members.

    (5) Trade balances paradox

    • India’s stance on the deal also comes as a result of learnings from unfavourable trade balances that it has with several RCEP members, with some of which it even has Free Trade Agreements.
    • India has trade deficits with 11 of the 15 RCEP countries, and some experts feel that India has been unable to leverage its existing FTAs with several RCEP members to increase exports.

    What can the decision cost India?

    • There are concerns that India’s decision would impact its bilateral trade ties with RCEP member nations, as they may be more inclined to focus on bolstering economic ties within the bloc.
    • The move could potentially leave India with less scope to tap the large market that RCEP presents —the size of the deal is mammoth, as the countries involved account for over 2 billion of the world’s population.
    • Given attempts by countries like Japan to get India back into the deal, there are also worries that India’s decision could impact the Australia-India-Japan network in the Indo-Pacific.

    What are India’s options now?

    • India, as an original negotiating participant of RCEP, has the option of joining the agreement without having to wait 18 months as stipulated for new members in the terms of the pact.
    • RCEP signatory states said they plan to commence negotiations with India once it submits a request of its intention to join and it may participate in meetings as an observer prior to its accession.
    • A possible alternative for India is to review its existing bilateral FTAs with some of these RCEP members as well as newer agreements with potential for Indian exports.
    • There is also a growing view that it would serve India’s interest to invest strongly in negotiating bilateral agreements with the US and the EU, both currently a work in progress.

    Conclusion

    • A country can never get into FTAs merely to provide its market to the partner countries.
    • When we accommodate our partner countries, our objective is also to increase the presence of our products in the markets of partners, and India hasn’t been able to achieve the latter objective.

  • What is mRNA vaccine?

    The Moderna and Pfizer vaccines which recently announced their success use the same technology, based on messenger RNA, or mRNA.

    Try this PYQ first:

    Q.‘RNA interference (RNAi)’ technology has gained popularity in the last few years. Why?

    1. It is used in developing gene silencing therapies.
    2. It can be used in developing therapies for the treatment of cancer.
    3. It can be used to develop hormone replacement therapies.
    4. It can be used to produce crop plants that are resistant to viral pathogens.

    Select the correct answer using the code given below:

    (a) 1, 2 and 4

    (b) 2 and 3

    (c) 1 and 3

    (d) 1 and 4 only

    What is mRNA?

    • Messenger RNA (mRNA) is a single-stranded RNA (Ribo Nucleic Acid) molecule that is complementary to one of the DNA strands of a gene.
    • The mRNA is an RNA version of the gene that leaves the cell nucleus and moves to the cytoplasm where proteins are made.
    • During protein synthesis, an organelle called a ribosome moves along the mRNA, reads its base sequence, and uses the genetic code to translate each three-base triplet, or codon, into its corresponding amino acid.

    What is the mRNA vaccine?

    • Such vaccines make use of the messenger RNA molecules that tell the body’s cells what proteins to build.
    • The mRNA, in this case, is coded to tell the cells to recreate the spike protein of the coronavirus SARS-CoV-2, which causes Covid-19.
    • It is the spike protein — which appears as spikes on the surface of the coronavirus — that initiates the process of infection; it allows the virus to penetrate cells, after which it goes on to replicate.
    • A coronavirus vaccine based on mRNA, once injected into the body, will instruct the body’s cells to create copies of the spike protein.
    • In turn, this is expected to prompt the immune cells to create antibodies to fight it.
    • These antibodies will remain in the blood and fight the real virus if and when it infects the human body.

    Back2Basics: Ribo Nucleic Acid (RNA)

    • RNA is an important biological macromolecule that is present in all biological cells.
    • It is principally involved in the synthesis of proteins, carrying the messenger instructions from DNA, which itself contains the genetic instructions required for the development and maintenance of life.
    • In some viruses, RNA, rather than DNA, carries genetic information.
    • The type of RNA dictates the function that this molecule will have within the cell.
    • Aside from the coding region of messenger RNA (mRNA) molecules that will be translated into proteins, other cellular RNA elements are involved in different processes.

  • Lonar Lake, Sur Sarovar declared as Ramsar sites

    The Lonar Lake in Maharashtra and Sur Sarovar, also known as Keetham lake, in Agra, have been added to the list of recognised Ramsar sites.

    Make a note of all freshwater and saltwater lakes in India.

    Lonar Lake

    • Lonar Lake, also known as Lonar crater, is a notified National Geo-heritage Monument, saline (pH of 10.5), Soda Lake, located at Lonar in Buldhana district, Maharashtra.
    • It was created by an asteroid collision with earth impact during the Pleistocene Epoch.
    • It is one of the four known, hyper-velocity, impact craters in basaltic rock anywhere on Earth.
    • It sits inside the Deccan Plateau—a massive plain of volcanic basalt rock created by eruptions some 65 million years ago.

    Sur Sarovar

    • It is a scenic lake just outside Agra on the Agra – Delhi highway (NH 2) and a declared bird sanctuary.
    • The riverine belt of River Yamuna surrounds the area of Sur-Sarovar.
    • It is today home to more than 165 species of migratory and resident birds.
    • It is the same place that inspired the famed poet Soordas to compose the “Bhakti Kavya” one of the finest pieces of devotional poetry.

    Two amongst many

    • India now has 41 wetlands, the highest in South Asia, with two more added to the list of recognised sites of international importance under the treaty of Ramsar Convention.
    • Recently, Kabartal in Bihar’s Begusarai district was recognised as a wetland of international importance, the first such wetland in the State, under the Ramsar Convention.
    • The Asan Conservation Reserve in Dehradun, the first wetland from Uttarakhand to be recognised by Ramsar convention, was added to the list in October this year.

    Back2Basics: Wetlands

    • A wetland is a distinct ecosystem that is flooded by water, either permanently or seasonally, where oxygen-free processes prevail.
    • The primary factor that distinguishes wetlands from other landforms or water bodies is the characteristic vegetation of aquatic plants, adapted to the unique hydric soil.
    • Wetlands provide a wide range of important resources and ecosystem services such as food, water, fibre, groundwater recharge, water purification, flood moderation, erosion control and climate regulation.

    What is the Ramsar Convention?

    • The Ramsar Convention on Wetlands of International Importance Especially as Waterfowl Habitat is a treaty for the conservation and sustainable use of such sites.
    • The convention, signed in 1971 in the Iranian city of Ramsar, is one of the oldest inter-governmental accords for preserving the ecological character of wetlands.
    • Also known as the Convention on Wetlands, it aims to develop a global network of wetlands for the conservation of biological diversity and for sustaining human life.
    • Over 170 countries are party to the Ramsar Convention and over 2,000 designated sites covering over 20 crore hectares have been recognised under it.

  • PLI Scheme extended to 10 key Sectors

    Manufacturing holds key to the economic prosperity of the country. The article examines the significance of Production Linked Incentive Scheme to boost manufacturing in India.

    Need for increasing manufacturing capabilities

    • The world of manufacturing is now more interconnected than ever before with all major industries—automobile, electronics, pharmaceuticals, textiles, etc—operating as a global value-chain.
    • In order to integrate India as a pivotal part of this modern economy, there is a strong need to step up our manufacturing capabilities in sectors of high growth, including the cutting edge technology sectors.
    • A strong and dynamic manufacturing sector will fuel India’s economic growth by allowing companies producing in India to penetrate effectively into the global supply chains across various sectors.
    • Apart from enhancing exports, it will also reduce our import dependencies and spur domestic consumption.
    • ‘Atmanirbhar Bharat’ has brought manufacturing to the centre stage and emphasised its significance in driving India’s growth.

    Factors favouring India

    • India offers an attractive domestic market, with a large population in the educated and earning segment.
    • It also has a strong institutional framework which allows for a smooth functioning of the industry.
    • A concerted effort towards attracting substantial investments for the creation of large manufacturing facilities, combined efficiency and economies of scale, can help Indian companies globally competitive and integrate with the global markets.

    How Production Linked Scheme (PLI) will help achieve these objectives

    • The Production Linked Incentive (PLI) Scheme is designed to incentivise incremental production for a limited number of eligible anchor entities in each of the selected sectors.
    • These selected entities will invest in technology, plant & machinery, as well as in R&D.
    • The scheme will also have beneficial spillover effects by the creation of a widespread supplier base for the anchor units established under the scheme.
    • Along with the anchor unit, these supplier units will also help to generate massive primary and secondary employment opportunities.
    • The sectors for PLI have been shortlisted on the basis of their potential for economic growth, extent of benefit to the rural economy, revenue and employment generation.
    • A key benefit of the PLI Scheme is that it can be implemented in a very targeted manner to attract investments in areas of strength and to strategically enter certain segments of global value chains (GVCs).
    • This will help bring scale and size in key sectors and create and nurture global champions.
    • The scheme incentivises upcoming technologies that represent the biggest economic opportunities of the 21st century.
    • The scheme intends to generate large-scale employment by incentivising the development of traditional, labour intensive sectors like Food Processing and Textiles.
    • The current basket of Indian manufacturing constitutes of large volume of low-value products.
    • The scheme aims to correct this by encouraging large manufacturers to bring technology and to build capabilities for high-value output thereby providing higher returns to the upstream producers.
    • It will also enable an increase in exports.
    • The scheme envisages globally-integrated manufacturing in sectors such as automobile and auto components, pharmaceuticals, telecommunications, white goods and steel.
    • These are crucial sectors in terms of their strategic importance, contribution to the GDP and employment-generation potential.

    Conclusion

    Given the scale of incentives, which is around Rs 1,96,000 crore, the manufacturing sector of the country is set to transform in the next few years. Its contribution to the GDP will significantly improve, leading to unprecedented investment and job creation.

    Source:-

    https://www.financialexpress.com/opinion/pli-scheme-will-help-india-nurture-manufacturing-giants/2128992/

  • Air pollution in India

    Despite efforts from several levels, air pollution is getting worse day by day. The article suggests the strategy to deal with the issue of air pollution.

    Solvable problem

    • Pollution is very much a solvable problem but it cannot be solved on an emergency basis.
    • It has to be dealt with firmly and gradually.
    • Why gradually? Because there are many sources of pollution and it would be prohibitively costly to stop them or even significantly reduce them all at once.

    Replacing existing technologies with existing technology

    • The biggest sources air polltion nationally are cooking fires, coal-fired power plants, various industries, crop residue burning, and construction and road dust. Vehicles are further down on the list.
    • Dealing with all these sources will require a gradual replacement of existing technologies with new technologies.
    • Cooking fires must be replaced with LPG, induction stoves, and other electric cooking appliances.
    • Old coal power plants must be closed and replaced with wind and solar power and batteries while newer plants must install new pollution control equipment.
    • No new coal-fired power plants should be built — with renewables being cheaper, coal is obsolete for power generation.
    • Other industries that use coal will have to gradually switch over to cleaner fuel sources such as gas or hydrogen while becoming more energy-efficient at the same time.
    • Farmers will have to switch crops or adopt alternative methods of residue management.
    • Diesel and petrol vehicles must gradually be replaced by electric or hydrogen fuel cell vehicles running on power generated from renewables.

    Legal measures and issues

    • Governments can make clean investments more profitable and dirty investments less profitable by taxing polluting activities and subsidising clean investments.
    • The judiciary is more powerful but has far less scientific and technical competence.
    • It tends to act only during crises and focus on past mistakes rather than planning to prevent new ones.

    Reforms in regulatory agency

    • Our existing laws do not allow the central and state pollution boards to levy pollution fee or cess based on pollution emissions.
    • Since closing down an industry is a drastic step, it almost never happens.
    • We need a regulatory agency that can levy pollution fee or cess, is that the regulatory decision need not be an all-or-nothing decision.
    • Pollution fees can start small, and the EPA can announce that they will rise by a certain percentage every year.
    • The regulatory agency should be given some independence,like
    • 1) a head appointed for a five-year term removable only by impeachment.
    • 2) a guaranteed budget funded by a small percentage tax on all industries.
    • 3) autonomy to hire staff and to set pollution fees after justification through scientific studies.
    • Three advantages of the regulator with such powers would be-
    • 1) Politicians in power can pass on the blame for decisions on pollution fees to the EPA.
    • 2) Pollution fees raise revenue for the government.
    • 3) If the law establishing an independent EPA is written to require that changes to pollution fees and regulations must be published in advance, and cannot involve abrupt changes, then surprises are avoided.
    • Industry opposition will be muted, especially if industry gets a piece of the revenue to invest in new technologies.

    Conclusion

    Our pollution problem has taken decades to grow into the monster that it is. It can’t be killed in a day. We need the scientific and technical capacity that only a securely funded independent EPA can bring to shrink pollution down to nothing.

  • Places in news: Tristan da Cunha

    The isolated UK Overseas Territory of Tristan da Cunha, the world’s most remote human settlement, has been declared the largest fully protected marine reserves in the Atlantic Ocean at 687,000 square kilometres.

    Note the location of Tristan da Cunha Islands in the Atlantic.

    Tristan da Cunha

    • Tristan da Cunha, which is inhabited by less than 300 humans is a small chain of islands over 6,000 miles from London in the South Atlantic and the water around the islands are considered to be the richest in the world.
    • The mountainous archipelago is home to tens of millions of seabirds and several unique land birds that are comparable to the Galapagos island finches.
    • The island group is also home to the World Heritage Site of Gough and Inaccessible Islands, which is one of the most important seabird islands in the world.

    Significance of protection

    • After joining the UK’s Blue Belt Programme, it will become the largest no-take zone in the Atlantic and the fourth largest on the planet.
    • This will close over 90 per cent of their waters to harmful activities such as bottom-trawling fishing, sand extraction and deep-sea mining.
    • The almost 700,000 square kilometres of the Marine Protection Zone (MPZ) is almost three times the size of the UK and will safeguard the future of sevengill sharks, Yellow-nosed albatrosses and rockhopper penguins.
    • MPZs involve the management of certain natural areas for biodiversity conservation or species protection and are created by delineating zones with permitted and non-permitted areas within that zone.

  • Power sector reforms: UK lessons for India

    Reforms in power sector in the UK were extensive and offers some important lessons for India. This article elaborates on the issue of reforms the challenges in introducing such reforms in India.

    Background of the power sector reforms in UK

    • After living with vertically integrated utilities till 1989, they unbundled.
    • Unbundling created markets both at generation and retail end.
    • Today, they are back to a situation where 70% of the power generated is sold outside the wholesale market.
    • The Electricity Act, 1989, which paved the way for the appointment of a regulator and thereafter, leading to unbundling, both vertical and horizontal.
    • Twelve distribution utilities were set up (called RECs) along with three-generation companies and also a national wires company (called NGC).
    • All of them were privatised barring Nuclear Electricity.
    • Retail competition was introduced in 1990 and was extended to all consumers in 1998.
    • A wholesale market was set up for generators.
    • The next major step was to fragment the generators because the regulator felt that they were colluding.
    • NETA in 2001 was primarily a tie-up between gencos and their consumers with long-term power purchase agreements.
    • The Energy Act, 2012, was enacted, which envisaged further changes.

    Issues with Power sector reform in India

    • The Electricity Act, 2003 is a very cautious and timid exercise compared to what has been done in the UK.
    • Through the Act, we have merely unbundled and ring-fenced our utilities so that there is transparency in the accounts; this itself took us several years.
    • There has been no attempt to create a wholesale market or a full-fledged retail market where the consumer chooses the supplier.
    • Large consumers, having loads in excess of 1 MW, however, have the option of open-access where they can opt to receive supply from some other entity, instead of his incumbent utility.
    • The road to open access though has been bumpy, and discoms have opposed it tooth and nail.
    • Besides what was possible in the UK may not be possible in India.
    • The UK did not have a regime of cross-subsidies where the commercial and industrial sectors subsidise agriculture and low-end domestic consumers and also did not have high commercial loss levels.
    • Moreover, in the UK, all consumers were metered, unlike India.
    • There is yet another factor: ‘Power’ falls in the Concurrent List.
    • The Centre and states rarely see eye-to-eye on several issues concerning the sector, especially on matters relating to distribution.
    • Consequently, any major change does not get accepted.

    Issues in introducing reform in India

    • The CERC floated a discussion paper in December 2018 about the creation of a wholesale market in India.
    • This amounts to retrofitting, and retrofitting in an existing architecture has its limitations.
    • But the issue is whether India should attempt creating a wholesale market or for that matter a full-fledged retail market in India, especially after the experience of the UK.
    • The UK is almost back to the era of vertically integrated utilities, and consumers barely switch their retailer.

    Way forward

    • We need to privatise our distribution sector by creating joint ventures with the government.
    • the government will have to undertake initial hand-holding till such time commercial losses are wiped out.
    • This is the model which was followed in the case of Delhi and has proven successful.
    • Commercial losses have come down from 50% to single-digit figures within a span of 10 to 12 years.
    • Once we reach that stage, we can think of creating a full-fledged retail market where a consumer can choose her supplier.

    Consider the question “Despite several reforms in the power sector, India still lacks full-fledged retail. What are the challenges in the creation of such a market. Suggest the ways to deal with the challenges.”

    Conclusion

    The Indian consumer is only interested in good quality power supply at a reasonable price. We only need to take policy measures so that the incumbent utilities can provide this, since, this will be the least costly path.

    Source:-

    https://www.financialexpress.com/opinion/power-reforms-uk-lessons-for-india/2127560/

  • How to improve the income and Productivity of Indian labour?

     

    Slowdown in demand

    • The bigger medium-term problem facing Indian economy is the slowdown of aggregate demand — private final consumption expenditure (PFCE), investment and exports.
    • The largest component of GDP, PFCE, has declined as a share of GDP 68 per cent in 1990 to 56 per cent of GDP in 2019 .
    • The consumption of the top socio-economic deciles (top 10%) has stagnated.
    • Also the consumption demand of the rest of the demography ( 90%) — mostly in agriculture, small-scale manufacturing and self-employed — is not increasing due to low income growth.

    How to increase income and productivity

    • Atmanirbhar Bharat depends on improving the income and productivity of a majority of the labour force.
    • First, incentivise the farming community to shift from grain-based farming to cash crops, horticulture and livestock products.
    • Second, shift the labour force from agriculture to manufacturing.
    • India can only become self-reliant if it uses its 900 million people in the working-age population with an average age of 27 and appropriates its demographic dividend as China did.
    • That is possible if labour-intensive manufacturing takes place in a big way, creating employment opportunities for labour force with low or little skills, generating income and demand.
    • India is in a unique position at a time when all other manufacturing giants are ageing sequentially — Japan, EU, the US, and even South Korea and China.
    • Most of these countries have moved out of low-end labour-intensive manufacturing, and that space is being taken by countries like Bangladesh, Vietnam, Mexico, etc.
    • India offers the best opportunity in terms of a huge domestic market and factor endowments.

    Way forward

    • We need Indian firms to be part of the global value chain by attracting multinational enterprises and foreign investors in labour-intensive manufacturing, which will facilitate R&D, branding, exports, etc.
    • There is a need to aggressively reduce both tariffs and non-tariff barriers on imports of inputs and intermediate products.
    • Removing these barriers create a competitive manufacturing sector for Make in India, and “Assembly in India”.
    • Apart from trade reforms, further factor market reforms are required, such as rationalising punitive land acquisition clauses and rationalising labour laws, both at the Centre and state level.
    • We also have to go for large-scale vocational training from the secondary-school level, like China and other east and south-east Asian countries.

    Consider the question “Key to faster economic progress of India lies in income growth and productivity of its labour force. Suggest the ways to achieve these.”

    Conclusion

    The COVID-triggered economic crisis should lead us to create a development model that leads to opportunities for the people at the bottom of the pyramid. A competitive and open economy can ensure Atmanirbhar Bharat.

  • Atmanirbhar Bharat Abhiyan 3.0 Package

    Finance Minister has announced a fresh set of relief and stimulus measures for the economy worth ₹1.19 lakh crore, including a scheme to boost re-employment chances of formal sector employees who lost their jobs amidst the COVID-19 pandemic.

    Assist this newscard with:

    [Burning Issues] Atmanirbhar Abhiyan Package

    Atmanirbhar Bharat

    • Atmanirbhar Bharat, which translates to ‘self-reliant India’ or ‘self-sufficient India’, is the vision of our PM of making India a bigger and more important part of the global economy.
    • It doesn’t mean “self-containment”, “isolating away from the world” or being “protectionist”.
    • It calls for pursuing policies that are efficient, competitive and resilient, and being self-sustaining and self-generating.
    • The five pillars of ‘Atmanirbhar Bharat’ are stated as economy, infrastructure, technology-driven systems, vibrant demography and demand.

    Highlights of the Package 3.0