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GS Paper: GS3

  • [op-ed of the day] Electricity 4.0: The future of power in the age of climate change

    Context

    Significance of electricity in our life

    • Interconnecting economic prosperity: Electrical energy is a juncture that inter-connects economic prosperity.
      • Amplifies social equity.
      • Ushers in a liveable environment for us.
      • No development in its true sense is possible if we leave aside energy and specifically sustainable energy.
      • It is almost indispensable for holistic and sustainable progress of any kind.

    Burning of fossil fuel and climate change

    • Singular reliance on fossil fuel: Ever since the industrial revolution, development has almost singularly relied on the burning of fossil fuels, emitting huge volumes of carbon dioxide into the atmosphere.
      • 41% of electricity from coal: As per data by the World Coal Association, a little over 41% of all electricity generated is produced from coal.
      • Problems with coal: Burning coal for electricity production leads to-
      • High level of hazardous carbon emissions.
      • Rising levels of pollution: water and air pollution during mining and air pollution during burning.
      • Working condition of miners: Added to the disastrous working conditions of miners, coal cannot be regarded as a sustainable source of energy.
    • Global warming and climate change: Despite increasing awareness, not much is being done to mitigate climate change.
      • Rise over 1.5oC and Consequences: IPCC (Intergovernmental Panel on Climate Change) has reiterated that unless global temperature rise is not kept within 1.5 degrees Celsius, natural and human systems will be irreparably damaged.
      • Rise over  2o  C and Consequences: Even a slight increase in atmospheric temperature by 2 degrees Celsius will result in a substantial rise in sea levels.
      • Consequences for human life: The rise in sea level would, in turn, translate into a whopping 10 million more people going homeless and another 50% people facing severe water scarcity.
    • The aim of becoming carbon neutral: To join the efforts, many global public and private stakeholders have pledged their allegiance into becoming net-zero carbon emitters.
      • But we are still far from achieving our objectives, as the IEA (International Energy Agency) recently reported that the Earth’s temperature rise will range between 1.8 degrees Celsius and 2.7 degrees Celsius soon.

    Sustainable energy as a necessity

    • Energy efficiency and energy management: As the world is evolving into an interconnected form of world-of work, life and more-energy efficiency and energy management have slowly come to be a central driving force.
      • Sustainable energy a necessity: In order to power smart homes, industries, hospitals and other mission-critical operations, sustainable energy is no more a matter of choice, but of necessity.
      • IoT to help achieve energy efficiency: Technology adoptions like IoT and connected services can greatly enhance energy efficiencies and many global behemoths are coming to terms with this reality.
      • Demand for an alternative source of energy: Environmental factors, coupled with rising costs and stringent regulatory guidelines, are adding to the demand for alternative sources of energy.
      • Alternate as well as sustainable: The alternate sources are expected not only to satiate the growing consumption needs but are proven to be a sustainable option in the long run.

    Electricity 4.0

    • Electricity 4.0: That is, sustainable methods of energy generation and efficient and cost-effective usage of produced energy.
      • The sustainable energy need of the sustainable future: To lay the foundation stone for a sustainable future, there is a critical need to investigate how we create and consume energy.
      • The answer lies in renewables becoming the dominant source of power, globally.
    • A new form of energy mix: There is a growing need to build a new form of energy mix under Electricity 4.0, with renewable ways of electricity creation, at its very core. A new order where-
      • Electrical internet of things (EIOT).
      • Cloud computing.
      • Artificial intelligence.
      • And the tools of today’s digital era are fully leveraged to maximise energy efficiency.

    Way forward

    • Given that the major cause of global warming is Carbon Dioxide, so the first step to combat it would be-
    • Electrifying the planet: The augmented proliferation of energy-efficient, electricity-based equipments that are prevalent now, such as e-mobility, electrical heating, innovative applications such as electric aviation fleets can be one way to do that.
    • Scale up the production of renewable energy: The immediate need is to scale up the production of renewable electricity and build conducive public-policy frameworks to further this goal.
    • Adoption of digital technology: It is imperative to adopt digital technology in order to optimise the efficiency of our energy consumption and electrical networks. Digital connectivity, software and artificial intelligence can well be dubbed as the fulcrum that will support our transition toward Industry 4.0.
    • Concerted efforts from all stakeholders: To reduce carbon dioxide (CO2) emissions or to promote energy decarbonisation, concerted efforts are required from all stakeholders – the community, regions, government and the private sector.

     

     

     

  •  [op-ed snap] Global warming puts forests, plantations in the country at risk

    Context

    Global warming, drought and El Niño may lead to increased forest fires.

    The success story of India

    • Reduced deforestation: India has succeeded in reducing deforestation to some extent through an effective Forest Conservation Act and large-scale afforestation programme.
      • Comparison with other countries: India performed better when compared with other forest-rich tropical countries such as Brazil, Indonesia and the Democratic Republic of Congo.
      • Without the Forest Conservation Act and its reasonably effective implementation, India would have lost significant extent of forest area.
    • Increased afforestation: India has also been implementing significant scale afforestation, though the rates of afforestation have declined recently.
      • Agro-forestry, involving raising fruit tree plantations contribute to some extent.
      • Commercial plantations of eucalyptus, casuarina, teak, poplar, etc., have been raised by farmers for commercial purposes.
      • The above steps have resulted in potentially reducing the pressure on natural forests.

    Need to measure ‘natural forest’

    • Increase in an area under forest: According to the latest biennial State of Forest Report (SFR) of the Forest Survey of India (FSI), an area under forests has been increasing.
    • Natural forests not specifically measured: It is not clear what percentage of increase in forest area is due to changes in natural forests which are generally rich in biodiversity.
      • The report doesn’t specify what percentage of change in area is due to commercial plantation and what percentage is contributed by horticulture or urban parks.
    • Need to define ‘natural forest’: What will be of most concern to forest and biodiversity conservation is to understand the status of natural forest and biodiversity.
      • India can use the same definition of forests but must estimate and report the area under natural forests and other forest plantation categories.
      • India needs to define ‘natural forests’ first, further, this would involve additional staff time and resources.
    • The resilience of natural forests to forest fires: Tropical forests rich in biodiversity are likely to be more resilient than monoculture dominated plantations or exotics.
      • Vulnerability to forest fires varies from forests to forests: Studies by the Indian Institute of Science (IISc) have shown that degraded forests, fragmented forests and biodiversity-poor forests are more vulnerable to climate change.

    Climate change and its impacts

    • IPCC reports on large scale loss: The United Nations Intergovernmental Panel on Climate Change (IPCC) reports have repeatedly concluded that climate change will lead to large-scale loss of biodiversity, before the end of the current century or even earlier.
    • Modelling studies by IISc.: Preliminary modelling studies by Indian Institute of Science (IISc) have shown that about 20% of forests will be impacted by climate change.
      • No change to adapt: The modelling studies means that existing forest biodiversity and its structure and composition will not be able to adapt to the new climate and there could be mortality or forest dieback.
    • The threat of forest fires: Further, warming, drought and El Niño will lead to increased forest fires, and may even be favourable to forest pests.
      • Unfortunately, the models currently in use for assessing the impact of climate change are not suitable for the complex and highly diverse forest types that exist in India.

    Conclusions

    • Given that global warming will continue, India will have to brace itself to adapt to the impending impacts. In India, there is very limited research on climate change and its impacts on forests, putting our famed biodiversity-rich country status under threat.
    • India needs to realistically assess, monitor and model climate change and its impacts and be prepared to adapt to impending climate change.

  • Thirty Metre Telescope (TMT) in Hawaii

     

    India, a partner in the construction of one of the largest telescopes in the world, TMT, has said it wants the project to be moved out of the proposed site at Mauna Kea, a dormant volcano in Hawaii.

    Thirty Metre Telescope

    • The TMT is a proposed astronomical observatory with an extremely large telescope (ELT) that has become the source of controversy over its planned location on Mauna Kea on the island of Hawaii in the US state of Hawaii.
    • It is being built by an international collaboration of government organisations and educational institutions, at a cost of $1.4 billion.
    • “Thirty Metre” refers to the 30-metre diameter of the mirror, with 492 segments of glass pieced together, which makes it three times as wide as the world’s largest existing visible-light telescope.
    • The larger the mirror, the more light a telescope can collect, which means, in turn, that it can “see” farther, fainter objects.
    • It would be more than 200 times more sensitive than current telescopes and would be able to resolve objects 12 times better than the Hubble Space Telescope.

    Utility of the telescope

    • One of its key uses will be the study of exoplanets, many of which have been detected in the last few years, and whether their atmospheres contain water vapour or methane — the signatures of possible life.
    • For the first time in history, this telescope will be capable of detecting extraterrestrial life.
    • The study of black holes is another objective.
    • While these have been observed in detail within the Milky Way, the next galaxy is 100 times farther away; the TMT will help bring them closer.

  • InvITs and REITs

     

    Markets regulator SEBI has put in place a framework for the rights issue of units by listed REIT and InvITs.

    What are InvITs and REITs?

    Infrastructure Investment Trusts (InvIT)

    • An Infrastructure Investment Trust (InvITs) is like a mutual fund, which enables direct investment of small amounts of money from possible individual/institutional investors in infrastructure to earn a small portion of the income as return.
    • InvITs work like mutual funds or real estate investment trusts (REITs) in features.
    • InvITs can be treated as the modified version of REITs designed to suit the specific circumstances of the infrastructure sector.
    • They are similar to REIT but invest in infrastructure projects such as roads or highways which take some time to generate steady cash flows.

    Real Estate Investment Trusts (REIT)

    • A REIT is roughly like a mutual fund that invests in real estate although the similarity doesn’t go much further.
    • The basic deal on REITs is that you own a share of property, and so an appropriate share of the income from it will come to you, after deducting an appropriate share of expenses.
    • Essentially, it’s like a group of people pooling their money together and buying real estate except that it’s on a large scale and is regulated.
    • The obvious pitch for a REIT is that it enables individuals to generate income and capital appreciation with money that is a small fraction of what would be required to buy an entire property.
    • However, the resemblance to either mutual funds or to owning property ends there.
    • According to Indian regulation on REITs, these are meant to primarily own finished and rented out commercial properties –– 80 per cent of the investments must be in such assets. That excludes a real estate that is under development.

    Why need InvITs and REITs?

    • Infrastructure and real estate are the two most critical sectors in any developing economy.
    • A well-developed infrastructural set-up propels the overall development of a country.
    • It also facilitates a steady inflow of private and foreign investments, and thereby augments the capital base available for the growth of key sectors in an economy, as well as its own growth, in a sustained manner.
    • Given the importance of these two sectors in the country, and the paucity of public funds available to stimulate their growth, it is imperative that additional channels of financing are put in place.

    What did SEBI rule?

    • SEBI said the issuer will have to disclose objects of the issue, related-party transactions, valuation, financial details, review of credit rating and grievance redressal mechanism in the placement document.
    • The SEBI had first notified REITs and InvIT Regulations in 2014, allowing setting up and listing of such trusts which are popular in some advanced markets.

  • Corona Virus

     

    Chinese scientists have confirmed can spread between human beings.

    Corona Virus

    • Corona viruses are large family of viruses, which cause illnesses to people and also circulate in animals including camels, cats and bats.
    • They cause illness ranging from the common cold to more severe diseases such as Middle East Respiratory Syndrome and Severe Acute Respiratory Syndrome.
    • 2019-nCoV is a new strain that has not been previously identified in humans.
    • Much remains to be understood about the new coronavirus, which was first identified in China earlier this month.
    • Not enough is known about 2019-nCoV to draw definitive conclusions about how it is transmitted, clinical features of disease, or the extent to which it has spread. The source also remains unknown.

    Why is it called the Wuhan Virus?

    • The first cases emerged in Wuhan in central China’s Hubei province.
    • On December 31 last year, authorities confirmed that a large number of patients with unexplained pneumonia were admitted in hospitals in the city.

    Symptoms of infection

    • According to the WHO, common signs include fever, cough, and shortness of breath. Serious infections can lead to pneumonia, kidney failure, and death.
    • Although human-to-human transmission has now been confirmed, the WHO says animals are the outbreak’s likely primary source. It is not known yet which animals are responsible.
    • To prevent the spread of all respiratory infections, the WHO in general asks people to cover their mouths and noses when coughing or sneezing, and to frequently wash their hands.
    • Direct contact with farm or wild animals should be avoided — similar outbreaks in the past, like the Severe Acute Respiratory Syndrome (SARS) emerged from markets where people were in contact with live animals.

    Why is there concern around the world?

    • People see a similarity with the SARS outbreak that infected over 8,000 people and killed around 775 in more than 35 countries worldwide in 2002-03.
    • SARS too, was caused by a mystery coronavirus, and started in China.
    • The source of the virus remained unknown for 15 years, until Chinese scientists in 2017 traced it back to a colony of horseshoe bats living in remote cave in Yunnan province.
    • The virus was carried by civet cats which are sold in markets in China.
    • Fears that SARS could reappear and memories of China misleading the rest of the world on the extent and seriousness of the outbreak have not gone away.

  • [pib] National Startup Advisory Council

    The Union Government has notified the structure of the National Startup Advisory Council to advice on measures needed to build a strong ecosystem for nurturing innovation and startups in the country.

    National Startup Advisory Council

    • The Council will be chaired by Minster for Commerce & Industry.
    • It will consist of the non-official members, to be nominated by Central Government, from various categories like founders of successful startups, veterans and persons capable of representing interests of incubators and accelerators etc.
    • The term of the non-official members of the Startup Advisory Council will be for a period of two years.
    • The nominees of the concerned Ministries/Departments/Organisations, not below the rank of Joint Secretary to the Government of India, will be ex-officio members of the Council.
    • Joint Secretary, Department for Promotion of Industry and Internal Trade will be the Convener of the Council.

    Various functions

    • The Council will suggest measures to foster a culture of innovation amongst citizens and students in particular, promote innovation in all sectors of economy across the country
    • It will also suggest measures to facilitate public organizations to assimilate innovation with a view to improving public service delivery, promote creation, protection and commercialization of intellectual property rights.
    • It would suggest making it easier to start, operate, grow and exit businesses by reducing regulatory compliances and costs, promote ease of access to capital for startups, and incentivize domestic capital for investments into startups.
    • It would also mobilize global capital for investments in Indian startups, keep control of startups with original promoters and provide access to global markets for Indian startups.

  • [op-ed of the day] Delhi-Davos disconnect-India must find ways to take advantage of new opportunities

    Context

    Given its increased heft in the global economic order, India ought to be at the leading edge of the current debate of the future of capitalism.

    The emergence of “stakeholder capitalism”

    • Interests of all shareholder: Klaus Schwab, who founded the World Economic Forum 50 years ago, wants capitalists to look beyond their shareholders and consider the interests of all the stakeholders.
      • Long overdue debate: Some hope that the debate on stakeholder capitalism is a long-overdue recognition of the capitalist excesses of recent decades.
    • Generating value for customers: Last August, the Business Roundtable in the US, which brings together some of the top American corporates, said American companies must now generate value for customers.
      • Invest in their employees.
      • Deal fairly with suppliers and support the communities in which they operate even as they service their shareholders.
    • Scepticism over “interests of all shareholders”: Sceptics say that this is a nice way of saying the right things, repackaging old ideas on corporate social responsibility and creating illusions about reforming capitalism.
      • Cynics insist that it will be business as usual for the world’s capitalists.
      • Reflection of deeper crisis: Beyond this divide between optimists and pessimists, the discourse on “stakeholder capitalism” is a reflection of the deeper crisis afflicting the global economy today.

    Three major challenges according to WEF

    • In its annual survey on global risks, the WEF has identified many challenges. Three of them stand out.
    • First Challenge: Polarised politics
      • In the US Trump is unlikely to be defensive.
      • While the dominant sentiments see Trump as the very embodiment of nationalism and populism that are polarising politics around the world.
      • Others point to the structural conditions that have bred these forces.
      • America’s working-class whose wages haven’t risen in decades, whose jobs are less secure than ever rallied behind Trump.
      • Politics in the US: Much the same happened in the British elections last year.
      • Tory leader Boris Johnson won a sweeping mandate by breaking into the working-class strongholds of the Labour Party.
    • Second Challenge: Trade war
      • Trump had a long record of denouncing free trade.
      • Many had hoped that Trump will moderate his anti-globalist rhetoric once in office.
      • Attack on a core principle of globalisation: Trump has taken a pickaxe to the core principles of the globalised economic order – free trade, open borders and multilateralism.
      • Renegotiating the treaties: The US has renegotiated a 25-year old trade agreement with America’s neighbours, Canada and Mexico.
      • The threat of all-out-trade war with China: Trump’s threat of an all-out trade war with China over the last couple of years has led to an interim agreement.
      • The agreement commits Beijing to reduce its trade surplus with the US by importing more.
      • The trade deficit of the US with EU: At Davos, Trump is expected to turn his ire on the EU, which has a near $200 billion trade surplus with the US.
    • Third challenge: Technology
      • War in technology domain: The trade wars among the world’s major capitalist centres is accentuated by the technological revolution, especially in the digital domain.
      • Need for coordination: The Davos report on global risks argues that the realisation of the full potential of new technologies depends on unprecedented coordination among all stakeholders.
      • Digital fragmentation: What is emerging instead is “digital fragmentation” marked by the extension of geopolitical and geo-economic rivalries into the new domain.
      • Digital issues have come to the front and centre of American arguments with Europe.

    Conclusion

    • India must find ways to take advantage of the new opportunities from the unfolding rearrangement of the global capitalist system.

     

  • [op-ed snap] Redesigning India’s ailing data system

    Context

    As official statistics is a public good, giving information about the state of the economy and success of governance, it needs to be independent to be impartial.

    GDP calculation and its significance

    • What is GDP:
      • Assigning a value to products and services: In effect, it adds apples and oranges, tractors and sickles, trade, transport, storage and communication, real estate, banking and government services through the mechanism of value.
      • GDP covers all productive activity for producing goods and services, without duplication.
      • The System of National Accounting (SNA): It is designed to measure production, consumption, and accumulation of income and wealth for assessing the performance of the economy.
    • What is the significance of GDP data?
      • Influence the market: GDP data influence markets, signalling investment sentiments, the flow of funds and balance of payments.
      • The input-output relations impact productivity and allocation of resources.
      • Demand and supply influences prices, exchange rates, wage rates, employment and standard of living, affecting all walks of life.
    • Issues over the present series of GDP:
      • Nominal GDP: The data on GDP are initially estimated at a current price known as nominal GDP.
      • Real GDP: Nominal GDP minus the inflation effect is real GDP.
      • Price Index: There is a way of adjusting inflation effect through an appropriate price index.
      • Pricing series issue with the service sector: The present series encountered serious problems for the price adjustment, specifically for the services sector contributing about 60% of GDP.
      • Absence of price index: There is an absence of appropriate price indices for most service sectors.
      • What the absence of series means: The deflators used in the new series could not effectively separate out price effect from the current value to arrive at a real volume estimate at a constant price.
      • Methodical issue: Replacing Annual Survey of Industries (ASI) with the Ministry of Corporate Affairs MCA21 posed serious data and methodological issues.

    Need for the change in the approach of data collection

    • The approach for the collection of data remains largely the same for long.
      • Price and production indices are constructed using a fixed base Laspeyres Index.
      • The yield rate for paddy is estimated by crop cutting experiments.
      • The organisation of field surveys for collection of data on employment-unemployment, consumer expenditure, industrial output, assets and liabilities continue.
    • Why data collection for yields need to change?
      • Productivity and remunerative price of output are major concerns for agriculture.
      • Data collection from diverse factors: It is necessary to collect data on factors such as soil conditions, moisture, temperature, water and fertilizer use determining yield, the impact of intermediary and forward trade on farm gate price and so on.
      • Israel collects these data for analysis to support productivity.
      • Need to leverage the e-governance: The initiative under e-governance enabled the capturing of huge data, which need to be collated for their meaningful use for the production of official statistics.

    Data Logistics

    • Need of data from the other areas: Along with GDP, we need data to assess-
      • Inclusive growth.
      • Fourth-generation Industrial Revolution riding on the Internet of things.
      • Robotics-influencing employment and productivity.
      • Environmental protection.
      • Sustainable development and social welfare.
    • How to deal with the data inconsistency
      • We need systems which have the capability to sift through a huge volume of data seamlessly to look for reliability, validity, consistency and coherence.
      • Such a system is possible through a versatile data warehouse as a component of big–data technology.
      • Rangarajan Committee recommendation: Setting up of such system has been wanting as thoughtful and well-meaning key recommendations of the Rangarajan Commission and subsequent recommendations from 2006 onwards by successive National Statistical Commissions.

    Way forward

    • The need for a new system: The present national accounting and analytical framework miss out on many important dimensions of the economy.
      • We need a new framework for analysis for such a complex system and evolutionary process.
      • The system needs to take into account automation, robotisation and other labour-replacing technologies affecting profitability, structural change and general welfare.
    • Need to find alternative avenues for the unemployed and jobs lost: In order to inject efficiency and stability, there is a need to have detailed data on how: markets clear, prices are formed, risks build-up, institutions function and, in turn, influence the lifestyle of various sections of the people.
    • Knowing market microstructure: It is also needed to know in greater detail about market microstructure and optimality therein, the role of technology and advanced research, changing demand on human skills, and enterprise and organising ability.
    • Monopoly must be contained:  The loss caused to the economy through monopoly power, inefficient input-output mix, dumping, obsolete technology and product mix must be contained.
    • Ensure distribution of wealth: The consensus macroeconomic framework of analysis assumes symmetric income distribution and does not get into the depth of structural issues.
      • In the changed situation of availability of microdata, there is a need to build a system to integrate the micro with the macro, maintaining distributional characteristics.

    Conclusion

    Data is the new oil in the modern networked economy in pursuit of socio-economic development. The economics now is deeply rooted in data, measuring and impacting competitiveness, risks, opportunities and social welfare in an integrated manner, going much beyond macroeconomics. There is a need for commitment to producing these statistics transparently.

     

     

  • Steppe Eagle

     

    A lone endangered steppe eagle (Aquila nipalensis) has been sighted by a group of birdwatchers in a paddy field near Vijayawada.

    Steppe Eagle

    • The Steppe Eagle is a migratory raptor which has undergone extremely rapid population declines within all its range.
    • It breeds in Russia, Kazakhstan, and Mongolia during the winter season.
    • Steppe eagle is the second-largest migratory eagle species to India.
    • IUCN Status: It has moved from ‘Least Concern’ to ‘Endangered’

  • Xenobot

    Scientists in the US have created the world’s first “living machines” — tiny robots built from the cells of the African clawed frog that can move around on their own.

    Xenobot

    • Scientists have developed living robots from frogs stem cells.
    • They have named this millimetre-wide robots “xenobots” — after the species of aquatic frog found across sub-Saharan Africa from Nigeria and Sudan to South Africa, Xenopus laevis.
    • Scientists have repurposed living cells scraped from frog embryos and assembled them into entirely new life-forms.
    • The xenobots can move toward a target, perhaps pick up a payload (like a medicine that needs to be carried to a specific place inside a patient) — and heal themselves after being cut.