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GS Paper: GS3

  • How to improve the financial picture of the DisComs

    The article analyses the factors responsible for financial difficulties faced by the DisComs and suggests the ways to deal with the issues.

    Important role of the DisComs

    • Distribution Companies (DisComs) are the utilities that typically buy power from generators and retail these to consumers.
    • For all of India’s global leadership for growth of renewable energy, or ambitions of smart energy, the buck stops with the DisComs.
    • The days of scarcity of power are over.
    • The physical supply situation has mostly improved.
    • But the financial picture has not brightened much.

    Analysing the data on liabilities of the DisComs

    •  ₹90,000 crore (later upgraded to  ₹1,25,000 crore) was earmarked for DisComs in ₹20-lakh crore package announced in the wake of Covid-19’s economic shock.
    • The Power Finance Corporation (PFC)’s Report on Utility Workings for 2018-19 showed dues to generators were ₹2,27,000 crore, and this is well before COVID-19.
    • It also showed similar Other Current Liabilities.
    • DisComs have delayed their payments upstream (not just to generators but others as well) — in essence, treating payables like an informal loan.

    But why do DisComs not pay on time?

    • Ideally, DisComs should not incur losses as they enjoy a regulated rate of return.
    • While AT&C losses can explain part of any gap. Major reasons are as discussed below:

    1) Regulatory issue and cash-flow gap due to it

    • The first problem starts at the regulatory level where even if DisComs performed as targeted, across India, they would face a considerable cash flow gap.
    • This cash flow gap was ₹60,000-plus crore in FY18-19 compared to their then annual cost structure of ₹7.23-lakh crore.

    2) Payabeles issue: Due from consumers, state and regulatory gap

    •  These dues are of three types.
    • First, regulators themselves have failed to fix cost-reflective tariffs thus creating Regulatory Assets,which are to be recovered through future tariff hikes.
    • Second, about a seventh of DisCom cost structures is meant to be covered through explicit subsidies by State governments.
    • Third, consumers owed DisComs over ₹1.8 lakh crore in FY 2018-19, booked as trade receivables.
    • State governments are the biggest defaulters, responsible for an estimated a third of trade receivables, besides not paying subsidies in full or on time.

    3) Challenge of renewable energy

    • The rise of renewable energy means that premium customers will leave the system partly first by reducing their daytime usage.
    • And as battery technologies mature, their dependence on DisComs may wane entirely.
    • Even without batteries, regulations permitting, they may want to find third party suppliers under competitive models.

    Impact of Covid pandemic

    • COVID-19 has completely shattered incoming cash flows to utilities.
    •  The revenue implications were far worse since the lockdown disproportionately impacted revenues from so-termed paying customers, commercial and industrial segments.
    • Reduced demand for electricity did not save as much because a large fraction of DisCom cost structures are locked in through Power Purchase Agreements (PPAs) that obligate capital cost payments, leaving only fuel savings with lower offtake.

    Way forward

    • We will probably need a much larger liquidity infusion than has been announced thus far, but it also must go hand-in-hand with credible plans to pay down growing debt.
    • We need a complete overhaul of the regulation of electricity companies and their deliverables.
    • We need to apply common sense metrics of lifeline electricity supply instead of the political doleout of free electricity even for those who may not deserve such support.
    • For the rest, regulators must allow cost-covering tariffs.

    Consider the question “Examine the factor responsible for making the DisComs financial unviable? Sugget the pathways to deal with the issues faced by the DisComs”

    Conclusion

    The financial problems of DisComs have been brewing for many yearsHowever, if business as usual was not even good enough before COVID-19, it will not be workable for the current national needs of quality, affordable, and sustainable power.

  • Unlawful Activities Prevention Act (UAPA)

    The Centre has designated 18 key operatives and leaders of extremists groups as individual terrorists under the recently-amended Unlawful Activities Prevention Act (UAPA).

    Try this question for mains:

    Q.“Anti-terror laws should not be used as a tool to silence the critics of the government.” Discuss in context to the recent amendments to the Unlawful Activities Prevention Act (UAPA).

    About UAPA

    • The UAPA is aimed at effective prevention of unlawful activities associations in India.
    • Its main objective was to make powers available for dealing with activities directed against the integrity and sovereignty of India
    • It is an upgrade on the Terrorist and Disruptive Activities (Prevention) Act TADA, which was allowed to lapse in 1995 and the Prevention of Terrorism Act (POTA) was repealed in 2004.
    • It was originally passed in 1967 under the then Congress government led by former Prime Minister Indira Gandhi.
    • Till 2004, “unlawful” activities referred to actions related to secession and cession of territory. Following the 2004 amendment, “terrorist act” was added to the list of offences.

    Recent amendments

    • The Centre had amended UAPA, 1967, in August 2019 to include the provision of designating an individual as a terrorist.
    • Before this amendment, only organisations could be designated as terrorist outfits.

  • Water on the Moon

    The Moon has water at places where none had been detected before and has potentially more water than previously believed in regions where it was already understood to exist.

    Try this MCQ:

    Q.NASA’s VIPER mission sometimes seen in news is related to the study of-

    a)Moon

    b)Venus

    c)Sun

    d)None of these

    Water on the moon

    • In two separate studies in Nature Astronomy, scientists have reported findings with potentially huge implications for sustaining humans on the Moon in the future.
    • One study reports the detection of water on the Moon’s sunlit surface for the first time.
    • The other estimates that the Moon’s dark, shadowy regions, which potentially contain ice, are more widespread than thought.

    Why is the discovery of water important?

    • Apart from being a marker of potential life, water is a precious resource in deep space.
    • For astronauts landing on the Moon, water is necessary not only to sustain life but also for purposes such as generating rocket fuel.
    • NASA’s Artemis programme plans to send the first woman and the next man to the Moon in 2024 and hopes to establish a “sustainable human presence” there by the end of the decade.

    What was known about water on the Moon?

    • Previous Moon studies, including by the ISRO Chandrayaan-1 mission, have provided evidence for the existence of water.
    • In 2009, the Moon Mineralogy Mapper (M3) instrument aboard Chandrayaan-1 found water molecules in the Polar Regions.

    What is different in the new discovery?

    • This time, it is confirmed H20 molecules, discovered in Clavius Crater in the Moon’s southern hemisphere.
    • And it is the first time water has been detected on the sunlit side, showing it is not restricted to the shadowy regions.
    • SOFIA, which is a modified Boeing 747SP jetliner that flies at altitudes up to 45,000 feet, has an infrared camera that picked up the wavelength unique to water molecules.
    • The data showed water in concentrations of 100-412 parts per million trapped in 1 cubic metre of soil.

    How could the water have formed?

    • Space rocks carrying small amounts of water could have bombarded the Moon.
    • Alternatively, the Sun’s solar wind could have carried hydrogen, which then reacted with minerals in the lunar soil to create hydroxyl, which later transformed into water.
    • The sunlit surface retaining the water presents a puzzle since the Moon does not have a thick atmosphere.
    • One possibility is that the water gets trapped into tiny bead-like structures that were created in the soil by impacts from space rocks.
    • Alternatively, the water could be hidden between grains of lunar soil and sheltered from the sunlight, NASA said.

    So, how widespread is water on the Moon?

    • On the sunlit side, it is not yet known whether the water SOFIA found is easily accessible.
    • On the other hand, the hidden, shadowy pockets on the lunar surface called “cold traps” are spread across a combined 40,000 sq km, the other study has reported.
    • The cold traps have gone without sunlight for potentially billions of years. If they do contain ice, it means water is going to be more accessible than previously assumed.

    What next?

    • SOFIA will look for water in additional sunlit locations to learn more about how the water is produced, stored, and moved across the Moon.
    • Meanwhile, NASA’s Volatiles Investigating Polar Exploration Rover (VIPER) will carry out a mission to create the first water resource maps of the Moon.

  • Natural gas to come under GST

    Officials have indicated that the government is considering bringing natural gas under the ambit of the GST regime.

    Try this question from CSP 2018:

    Q.Consider the following items:

    1. Cereal grains hulled
    2. Chicken eggs cooked
    3. Fish processed and canned
    4. Newspapers containing advertising material

    Which of the above items is/are exempt under GST (Goods and Services Tax)?

    (a) 1 only

    (b) 2 and 3 only

    (c) 1, 2 and 4 only

    (d) 1, 2, 3 and 4

    Why such demands?

    • Global energy MNCs have called on the government to bring natural gas under the GST regime.
    • Currently petrol, diesel, aviation turbine fuel, natural gas and crude oil fall outside India’s Goods and Services Tax (GST) regime.

    Why is it important to bring natural gas under the GST regime?

    • Bringing natural gas under the GST would lead to a reduction in the cascading impact of taxes on industries such as power and steel, which used natural gas as an input.
    • This would do away with the central excise duty and different value-added taxes imposed by states.
    • This would lead to an increase in the adoption of natural gas in line with the government’s stated goal to increase the share of natural gas in the country’s energy basket from 6.3% to 15%.

    Back2Basics: GST

    • GST launched in India on 1 July 2017 is a comprehensive indirect tax for the entire country.
    • It is charged at the time of supply and depends on the destination of consumption.
    • For instance, if a good is manufactured in state A but consumed in state B, then the revenue generated through GST collection is credited to the state of consumption (state B) and not to the state of production (state A).

    Must read:

    Goods and Services Tax

  • Debate over Plasma Therapy’s efficacy

    Recently published findings on convalescent plasma therapy on Covid-19 patients have triggered a debate over its efficacy.

    Plasma Therapy

    • Plasma is the liquid part of the blood. Convalescent plasma, extracted from the blood of patients recovering from an infection, is a source of antibodies against the infection.
    • The therapy involves using their plasma to help others recover. For Covid-19, this has been one of the treatment options.
    • The donor would have to be a documented case of Covid-19 and healthy for 28 days since the last symptoms.

    How is it done?

    • The process to infuse plasma in a patient can be completed quickly.
    • It only requires standard blood collection practices, and extraction of plasma.
    • If whole blood is donated (350-450 ml), a blood fractionation process is used to separate the plasma.
    • Otherwise, a special machine called aphaeresis machine can be used to extract the plasma directly from the donor.
    • While blood is indeed extracted from the donor, the aphaeresis machine separates and extracts the plasma using a plasma kit, and the remaining blood components are returned into the donor’s body.

    WHO’s guidelines

    • WHO guidelines in 2014 mandate a donor’s permission before extracting plasma.
    • Plasma from only recovered patients must be taken, and donation must be done from people not infected with HIV, hepatitis, syphilis, or any infectious disease.
    • If whole blood is collected, the plasma is separated by sedimentation or centrifugation, then injected in the patient.
    • If plasma needs to be collected again from the same person, it must be done after 12 weeks of the first donation for males and 16 weeks for females, the WHO guidelines state.

    What has happened to spark the debate?

    • An ICMR study has found convalescent plasma was not associated with a reduction in progression to severe Covid-19 or all-cause mortality.
    • While the use of this therapy seemed to improve the resolution of shortness of breath and fatigue in patients with moderate Covid-19, this did not translate into a reduction in 28-day mortality or progression to severe disease.
    • Progression to severe disease or death at 28 days after enrolment occurred in 44 (19%) of the participants in the intervention arm as compared to 41 (18%) in the control arm.

    What happens if ICMR does remove the therapy from its guidelines?

    • The authorisation of convalescent plasma as a treatment for Covid-19 in India has led to questionable practices such as calls for donors on social media, and the sale of convalescent plasma on the black market.
    • The ICMR has been cautious because of the trial findings.
    • However, those guidelines are not necessarily binding and it is too early to dismiss convalescent plasma therapy. But there are other issues.
    • The therapy involves resource-intensive processes such as plasmapheresis, plasma storage, and measurement of neutralizing antibodies.

    Way ahead

    • This is a new virus, and around the world, the evidence is still emerging on the best therapeutic options.
    • Covid care is individualized care. Use of the right medication on the right patient does work.
    • Some of the therapies can be continued on compassionate grounds.
    • However, the potential harms of the non-immune components of convalescent plasma should be rigorously investigated.
    • Only donor plasma with detectable titers of neutralizing antibodies should be given to trial participants, to ensure that the potential for benefit exists for all intervention arm patients.

    Try this question:

    Q.What is convalescent plasma therapy? Discuss its efficacy and limitations for COVID-19 treatment.

  • Species in news: Echinops Sahyadricus

    Researchers have discovered a new species of Echinops Sahyadricus (Sahyadri Globe Thistle) from the Rajgad Fort in the Sahyadri Mountains.

    Echinops Sahyadricus

    • Echinops is a genus of about 130 species of flowering plants found in tropical and North Africa, the Mediterranean basin and West Asia, extending eastwards to China and Japan.
    • The highest number of taxa (76) is concentrated in the Iranian plateau. Five species are found in India including two in Maharashtra.
    • The new species is unique because of the size of its composite inflorescence which measures up to 9 cm in diameter that is relatively large compared to other Echinops species found around the world.
    • It grows vegetative on open grassy slopes of mountains in four months of monsoon and blooms in November. Fruiting can be seen in December.

  • Reform land ceiling laws

    Land ceiling laws, enacted to deal with the problems of a bygone era, remains unchanged even in most of the States. This has given rise to different problems. The article suggests the relaxation of the ceiling acts to deal with the problem of land degradation and water depletion.

    Background of the ceiling laws

    •  India implemented land ceiling laws to deal with the ‘zamindars’ and impose landowning limits based on total production value of land—irrigated, grove, orchard, dry, etc.
    • Landholdings were scrutinised at individual and family level, and large farms were discouraged.
    • For most states, the ceiling ratio of dry-to-irrigated land is 3:1.

    Issues with the ceiling laws

    • In 2020, State land laws remain unchanged, trapping farm families in a negative ownership trap.
    • As with each generation, the average landholding of individuals reduces.
    • Dropping farm incomes, higher inputs costs, low sale price, soil degradation and water depletion erode production and farm value.
    • A progressive farmer hits production saturation due to limited land.
    • Contract farming has been no consolation either.
    • The result is that the Indian farm size is very small, 86% under two hectares, and is decreasing as the average size of operational holding has declined to 1.08 hectares in 2015-16 versus 1.15 in 2010-11 (Agricultural Census 2015-16).
    • The government is reticent on the Economic Survey’s recommendations to increase land ceiling limits.
    • Recently, Karnataka rescinded land limit reforms.

    How to deal with soil degradation and water depletion

    • 30% of India’s land is degraded, bad agri-practices threaten soil health, and water-guzzling crops like paddy, sugarcane, etc, have resulted in a water crisis in many places.
    • States must study soil conservation program of the US, which paid farmers subsidies for soil conservation or allowing land to be fallow.
    • States should incentivise farmers for agro-ecological plantations and agro-forestry by relaxing land ceiling limits for them.
    • State Acts may include organic plantations under exempt categories similar to tea/rubber plantations.
    • Native biodiversity based mixed orchards, from mahua to moringa, can be encouraged and exempted by state governments.
    • Policy change will have benefits—soil and water rejuvenation, increase in farmers’ incomes and new products for the free market.
    • The return of organic matter and biodiversity will sustain farmland productivity.
    • Plus APEDA predicts a $50 billion organic export 2030, but the cherry would be additional carbon credits.
    • If 10% of arable land converts to organic grove land, India will mitigate climate change and pollution.
    • Each hectare with 0.01% humus can store 80,000 litres of water. We need a central policy to bolster this drive.
    • Farmers may take over waste or degraded land, beyond land ceiling limits, and restore land as a carbon sink and produce more nutrition per acre.
    • As farmers will care for these lands, the government’s financial burden to restore wastelands will lessen.

    Consider the question “Land degradation threatens India’s future if not dealt with in time. In light of this, examine the reasons for soil degradation and suggest the ways to deal with it” 

    Conclusion

    As a nation, we have a choice to steer the bigger farms towards agro-ecology or allow industrial farms to take over rural India. The government needs to bring out a fourth Ordinance to free the land for healing the Earth.

    Source:-

    https://www.financialexpress.com/opinion/reform-land-ceiling-laws-incentivise-farmers-for-agro-ecological-plantations-and-agro-forestry/2113635/

     

     

  • Politics and economics of farm bills

    Reforms in agriculture have been overdue. But the passage of farm bills by the Parliament has evoked opposition from several stakeholders. However, the passage of bills by the Punjab Assembly is the first from any State Assembly. The article explains how politics dominates agriculture reforms and its implications for economic growth.

    States trying the negate the farm bill passed by Parliament

    • By passing its farm bills, Punjab has become the first state to legislate to negate impact of legislation enacted by Parliament last month.
    • Other states like Rajasthan and Chhattisgarh, could follow suit soon.
    • Notwithstanding whether President Ram Nath Kovind gives his assent to the state bills that undermine the central ones, the important issue is to determine how much of this conflict is about economics aimed at helping farmers and how much sheer politics.

    Issues with Punjab’s farm bills

    • Punjab’s farm bills prohibit private players from buying wheat and paddy below the MSP even outside the APMC markets.
    • It doesn’t apply to other crops, say maize, cotton, pulses and oilseeds that are under the ambit of the central MSP system.
    • The point is that this pertains only to wheat and paddy.
    • The bill could even have been extended to milk and vegetables by declaring local MSPs for them, but it didn’t do that.
    • Because the state government knows full well that it will create a fiasco in agri-markets, which might boomerang on it politically.
    • Law for wheat and paddy will not help farmers as the Centre already buys more than 95 per cent of Punjab’s wheat and paddy at MSP through the Food Corporation of India (FCI) and state procurement agencies.

    Economic roots of politics over MSP: Lessons from the past

    • Demand that MSP be made a legal instrument (rather than indicative) actually exhibit deep distrust of the private sector and markets.
    • In1972 government announced that the wholesale trade in wheat and rice (paddy) will be taken over by the government as traders were being unscrupulous in not giving farmers their due MSP and manipulating prices.
    • The first marketing season of the government takeover of wholesale wheat trade, in 1973-74, saw a major fiasco.
    • Market arrivals dropped, and wheat prices shot up by more than 50 per cent. It was a bitter lesson.

    Long overdue reforms in agriculture

    • Economic reforms in 1991 took some time to yield results, but, by the 2000s, India was taking 7 per cent.
    • But even the 1991 economic reforms bypassed agriculture marketing reforms.
    • It was only in 2003, a model act on agri-marketing was circulated to the states.
    • But that model act did not go far enough.
    • From 2004 to 2014 government did not pursue any major agri-marketing reforms.
    • In food government enacted the National Food Security Act in 2013, giving 5 kg wheat or rice to 67 per cent of the population at Rs 2/kg and Rs 3/kg.
    • A high-level committee (HLC) under Shanta Kumar was formed in 2014 to restructure the grain management system.
    • The committee suggested major changes, including cash transfers in the public distribution system, and overhauling the FCI’s operations and free markets to make the system more efficient.
    • But the government could not undertake bold reforms, except some marginal tinkering of labour rules in the FCI.

    Conclusion

    The COVID-19 crisis opened a window of opportunity to reform the agri-marketing system. The government grabbed it — this is somewhat akin to the crisis of 1991 leading to de-licensing of industry. Patience and professionalism will bring rich rewards in due course, not noisy politics.

  • Kisan Suryodaya Yojana

    PM has launched the ‘Kisan Suryodaya Yojana’ aimed at providing day-time electricity to farmers in the State of Gujarat for irrigation and farming purposes.

    Try this question from CSP 2017:

    Q. The term ‘Domestic Content Requirement’ is sometimes seen in the news with reference to-

    (a) Developing solar power production in our country

    (b) Granting licences to foreign T.V. channels in our country

    (c) Exporting our food products to other countries

    (d) Permitting foreign educational institutions to set up their campuses in our country

    Kisan Suryodaya Yojana

    • Under the scheme, farmers will be able to avail power supply from 5am to 9pm for irrigation purposes.
    • Around 234 transmission lines are to be installed under the scheme. Each line is to carry the power of 66 KW. They are to be erected to a total length of 3,490 km.
    • Dahod, Patan, Mahisagar, Panchmahal, Chhota Udepur, Kheda, Tapi, Valsad, Anand and Gir-Somnath have been included under the Scheme for 2020-21.
    • The remaining districts will be covered in a phase-wise manner by 2022-23.

  • Room Temperature Superconductivity

    A study has shown that a new material superconducts at 15 degrees Celsius but at extremely high pressure.

    In India, we often get to hear about the transmission losses in DISCOMS. Such losses can be zeroed with the application of superconducting cables (which is practically impossible unless we find a normal working one). The phenomena, superconductivity, however, is not new to us, UPSC may end up asking some tricky statements in the prelims regarding it.

    What is Superconductivity?

    • A superconductor is a material, such as a pure metal like aluminium or lead, that when cooled to ultra-low temperatures allows electricity to move through it with absolutely zero resistance.
    • Kamerlingh Onnes was the first scientist who figured out exactly how superconductor works in 1911.
    • Simply put, superconductivity occurs when two electrons bind together at low temperatures.
    • They form the building block of superconductors, the Cooper pair.
    • This holds true even for a potential superconductor like lead when it is above a certain temperature.

    What is the new material?

    • A new material composed of carbon, hydrogen and sulphur superconducts at 15 degrees Celsius.
    • However, it needs ultrahigh pressure of about 2 million atmospheres to achieve this transition, putting off any thoughts of application to the future.
    • The pressure they needed was 267 Gigapascals (GPa), or 2.6 million atmospheres.
    • The pressure at the centre of the Earth is 360 GPa, so it is 75% of the pressure at the centre of the Earth.

    What are Superconductors?

    • Superconductors are materials that address this problem by allowing energy to flow efficiently through them without generating unwanted heat.
    • They have great potential and many cost-effective applications.
    • They operate magnetically levitated trains, generate magnetic fields for MRI machines and recently have been used to build quantum computers, though a fully operating one does not yet exist.

    Issues with superconductors

    • They have an essential problem when it comes to other practical applications: They operate at ultra-low temperatures.
    • There are no room-temperature superconductors. That “room-temperature” part is what scientists have been working on for more than a century.
    • The amount of energy needed to cool a material down to its superconducting state is too expensive for daily applications.