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GS Paper: GS3

  • Celebrating the contributors to agriculture

    This article introduces us to the Indian winners of the prize that is considered as the Nobel for research in food. Their contribution has benefited agriculture immensely.Here, we’ll get a brief idea about their work.

    Word Food Prize

    • The World Food Prize is often described as the Nobel for research in food.
    • It was set up by Ñorman Borlaug.
    • Borlaug won the Nobel Peace Prize in 1972 for his work on hybridisation of wheat and rice.
    • His work led to the Green Revolution in the mid-1960s.

    Indian winners of the award

    • The awards to eight Indians of the total of 50 given so far are a tribute to the country’s agricultural university education and research system.
    • The country should celebrate their achievements unabashedly when 7-10 million new productive jobs need to be created annually.
    • And when it accounts for a third of global undernourished.
    • The COVID-19 pandemic has made job creation and improved nutrition and health more urgent than ever.

    Let’s look at the contributions made by these personalities

     Rattan Lal

    • Rattan Lal was awarded for developing and mainstreaming a soil-centric approach to increasing food production.
    • This approach also restores and conserves natural resources and mitigates climate change.
    • His research has shown that growing crops on healthy soils produces more food from less land area, less use of agrochemicals, less tillage, less water, and less energy.

    M S Swaminathan

    • Swaminathan’s vision transformed India from a “begging bowl” to a “breadbasket” almost overnight.
    • His work helped bringing the total crop yield of wheat from 12 million tonnes to 23 million tonnes in four crop seasons.
    • Which helped in ending India’s dependence on grain imports.

    Verghese Kurien

    • Kurien, received the prize in 1989 for India’s white revolution.
    • Under his leadership, milk production increased from 23.3 million tonnes (1968-69) to 100.9 million tonnes (2006-07).
    • And now it is projected to reach 187 million tonnes for 2019-20.
    • This helped in bringing millions of small and marginal farmers, including women into the marketplace.

     Ramlal Barwale

    • Barwale, a small farmer and entrepreneur, received the award in 1996.
    • He made selling seeds of okra and sorghum “hip” and founded the Maharashtra Hybrid Seeds Company.
    • The Crop Science Society of America has called him father of the seed industry in India.
    • He introduced hybrid rice from China to India.

    Surinder Vasal

    • Vasal was given the prize in 2000 for developing quality protein maize (QPM).
    • Integrating cereal chemistry and plant breeding techniques, Vasal and Villegas of Mexico collaborated to work on “opaque-2” maize variety using molecular biology techniques.
    • In the mid-1980s, they produced a QPM germplasm with hard kernel characteristics and taste like that of the traditional grain.
    • But it has much higher quality levels of lysine and tryptophan, thereby enhancing the nutrition value.

    Mododugu Gupta

    • Gupta received the award in 2005 for starting a blue revolution.
    • He developed two exceptional approaches for increasing fish harvests among the very poor.
    • This helped in increasing the protein and mineral content in the diets of over one million of the world’s most impoverished families.
    •  Gupta’s aquaculture technologies boosted Bangladesh’s fish yields from 304 kg per hectare to over 2,500 kg per hectare in less than a year — including 1,000 kg per hectare harvests in the dry season.

    Sanjaya Rajaram

    • Rajaram, who won the prize in 2014.
    • He succeeded Borlaug in leading CIMMYT’s wheat breeding programme.
    • There he went on to develop an astounding 480 varieties that have been widely adopted by both small and large-scale farmers.
    • Rajaram was born near a small farming village in Uttar Pradesh and received his master’s degree from IARI.

    Decreasing government support

    • The awardees all come from the time of the green and rainbow revolutions (of dairy and aqua-culture).
    • It was also the time when India invested heavily in agricultural science education and research and Indian scientists shone brightly in the global galaxy of science.
    • Government support for state agricultural universities, and research conducted by the ICAR and the departments of science and technology and biotechnology has slipped in recent years.
    • Today, not a single Indian university is counted among the top 100 in the world.
    Consider the question asked by the UPSC in 2019 “How was India benefitted from the contributions of Sir M.Visvesvaraya and Dr M. S. Swaminathan in the fields of water engineering and agricultural science respectively?”

    Conclusion

    Students and faculty at ICAR and state agricultural universities can follow in their footsteps and achieve scientific excellence, if they receive the resources and their work is supported with incentives.
  • Why high-altitude warfare is challenging, how soldiers are trained

    The violent standoff between Indian and Chinese troops in Galwan Valley of Ladakh region has thrown the spotlight on high-altitude warfare and the challenges that troops face, particularly when advantageous positions on the heights are occupied by the other side.

    In the clouds of war, one may recall the huge amount of casualties faced by the Indian Army compared to the Pakistani side (being at advantageous positions) during the Kargil War.

    Try this question for mains:

    Q. Discuss why high-altitude warfare is challenging. Also discuss about India’s preparedness for a long-term war.

    How is high-altitude warfare fought?

    • High-altitude warfare is fought keeping the terrain and weather in mind.
    • The kind of infrastructure and training that the troops require for high-altitude warfare are key factors.
    • The evolution of such warfare goes back a long way: European countries had mountain brigades in view of the kind of terrain prevalent in those countries.
    • The harshness of the terrain calls for a specialised kind of training to prepare soldiers in terms of mindset and acclimatization.

    How is India equipped in such warfare?

    • Generally, India is considered a hub of mountain warfare skills since most of the country’s north and northeast requires such skills.
    • Ladakh Scouts are considered the best in this kind of warfare.
    • Mountain chop, a tactic involved in such warfare, evolved in India where the mountainous terrain is very difficult to scale.
    • To begin with, the troops are imparted training in basic and advance training in mountaineering to make them equipped for mountain warfare.

    Actual tactics involved

    • The mindsets of the enemy sitting above are assessed. Taking stock of the entire situation, one needs to find out the easiest approaches.
    • Especially when there are vertical cliffs, it is generally perceived that the enemy that has taken defensive positions will be less guarded from the side of difficult approaches.
    • Basically, the most difficult approaches where the enemy is likely to give the least resistance need to be used efficiently.

    What are the challenges involved in warfare in a high-altitude place like Galwan Valley?

    • A big factor is who has taken defensive positions and who is sitting on higher ground.
    • Once troops are sitting on high ground, it becomes very difficult to dislodge them from there.
    • In a place like Galwan Valley, which is absolutely barren, there is not much hiding place.
    • The soldier on high ground is absolutely stationary, which makes those on lower terrain easy targets; the enemy can pick them up one by one.
    • Normally in mountain warfare, troops on lower ground use a combat ratio of 1:6, but in circumstances as in Galwan, it may go up to 1:10.

    How to approach such situations?

    • Generally, mountain warfare is fought using the period of darkness to reach the opposing army, engage and overpower them before the first light of day.
    • In case troops do not have the capabilities, fitness or strategies to do so before dawn, then it is a lost cause.
    • But without adequate trained troops who are well-versed with the terrain and are properly acclimatized, it is not an easy game.

    What are the other challenges faced by soldiers in high altitudes?

    • The first major factor is acclimatization since the oxygen supply reduces drastically.
    • Next, the load-carrying capacity of individuals reduces drastically.
    • Things move very slowly in the mountains and mobilization of troops consumes time.
    • Thus, time and place need to be kept on top priority when deciding where the troops have to be stationed and how they have to be mobilized.

    What are the logistical challenges in this kind of warfare?

    • One major challenge is that weapons jam, particularly in high-altitude areas.
    • When a soldier is at a height of 17,000 ft or above, it is very cold, and he needs to grease the weapons and clean the barrels at least once a week to ensure they function efficiently.
    • But at the time of combat, this becomes difficult.
    • Vehicles do not start when fuel jams. If the fuel is diesel, it won’t ignite unless it is mixed with thinners or other chemicals to make them thin enough to fire the engine.

    Ensuring proper reinforcement

    • In Galwan, which is an extremely tactical area and strategically important, reinforcement plays a vital role, particularly when the Indian troops are not in a position of advantage.
    • For communication equipment, troops need to carry more batteries because they drain very quickly at high altitude.
    • While a battery tends to last for 24 hours in the plains, it will drain in 1-2 hours in these severely cold areas.
    • Transport animals such as mules need to be used to maintain adequate supplies, which is not an easy task. Weather constraints play a major factor.
  • Initial Public Offer (IPO) of LIC

    The government has started the process to launch the initial public offer (IPO) of Life Insurance Corporation (LIC) within this year.

    Read the complete thread here at:

    [Burning Issue] Divestment of LIC

    Try this question from CSP 2019:

    Q.In India, which of the following review the independent regulators in sectors like telecommunications, insurance, electricity, etc.?

    1. Ad Hoc Committees set up by the Parliament
    2. Parliamentary Department Related Standing Committees
    3. Finance Commission
    4. Financial Sector Legislative Reforms Commission
    5. NITI Aayog

    Select the correct answer using the code given below:

    (a) 1 and 2

    (b) 1, 3 and 4

    (c) 3, 4 and 5

    (d) 2 and 5

    About LIC

    • LIC is an state-owned insurance group and investment corporation owned by the Government of India.
    • It was founded in 1956 when the Parliament of India passed the Life Insurance of India Act that nationalized the insurance industry in India.
    • Over 245 insurance companies and provident societies were merged to create the state-owned LIC.

    Why LIC IPO?

    • LIC is the largest investor in government securities and stock markets every year.
    • On an average, LIC invests Rs 55,000 crore to Rs 65,000 crore in stock markets every year and emerges as the largest investor in Indian stocks.
    • LIC also has huge investments in debentures and bonds besides providing funding for many infrastructure projects according to its Annual Report for 2017-18.

    Biggest IPO in Indian markets

    • The finance ministry has invited bids from transaction advisors, including consulting firms, investment bankers, and financial institutions, for assisting the government in the preparatory processes leading to the IPO.
    • The IPO is expected to be the biggest in the Indian capital markets given the size and scale of LIC, the country’s oldest and largest life insurer.

    What is the size and position of LIC in the insurance market?

    • Even if the government decides to sell 5-10 per cent of its equity in LIC through an IPO, the share sale of LIC, which was set up in 1956, is expected to be the largest.
    • The insurer’s total assets had touched an all-time high of Rs 31.11 lakh crore in 2018-19, an increase of 9.4 per cent.
    • The Corporation realized a profit of Rs 23,621 crore from its equity investment during 2018-19, down 7.89 per cent from Rs 25,646 crore in the previous year.
    • LIC would have at least one transaction of IPO of a size of at least Rs 5,000 crore, or a capital market transaction of at least Rs 15,000 crore.

    How does LIC fit into the overall disinvestment roadmap?

    • In the Budget 2020-21, the finance ministry had announced plans for IPO of LIC and a proposal to sell the government’s equity in the stressed IDBI Bank.
    • The government expects to raise Rs 90,000 crore through stake sale in LIC and IDBI Bank, and another Rs 1.2 lakh crore through other disinvestments.
    • LIC is also a majority shareholder in IDBI Bank.
    • The government had earlier listed the shares of General Insurance Corporation and New India Assurance through IPOs three years ago.

    What benefits can be expected through the IPO?

    • An IPO will certainly bring in transparency into affairs of LIC since it will be required to inform financial numbers and other market-related developments on time to the stock exchanges.
    • Investors can benefit from picking up equity in the insurer, which has been making underwriting profit as well as profits on its investments.
    • LIC’s investment in various equity and bond instruments will come under greater scrutiny after its lists on the exchanges.

    Back2Basics: IPO

    • IPO means Initial Public Offering. It is a process by which a privately held company becomes a publicly-traded company by offering its shares to the public for the first time.
    • Offering an IPO is a money-making exercise. Every company needs money, it may be to expand, to improve their business, to better the infrastructure, to repay loans, etc.
    • A private company, that has a handful of shareholders, shares the ownership by going public by trading its shares.
    • Through the IPO, the company gets its name listed on the stock exchange.

    Also read:

    Disinvestment Policy in India.

  • ‘Decarbonizing Transport in India (DTI)’ Project

    http://www.newsonair.com/writereaddata/News_Pictures/NAT/2020/Jun/NPIC-2020622172010.jpg

    NITI Aayog in collaboration with International Transport Forum (ITF) is set to launch the “Decarbonising Transport in India” project with the intention to develop a pathway towards a low-carbon transport system for India.

    Note the following things about ‘Decarbonising Transport in India (DTI)’ Project:

    1. Associated international institution

    2. Whether the institution is a UN body or not

    3. If India is a member of that body

    The DTI Project

    • The India project is carried out in the wider context of the International Transport Forum’s “Decarbonising Transport” initiative.
    • It is part of the “Decarbonising Transport in Emerging Economies” (DTEE) family of projects, which supports transport decarbonisation across different world regions.
    • India, Argentina, Azerbaijan, and Morocco are current participants.
    • The DTEE is a collaboration between the ITF and the Wuppertal Institute, supported by the International Climate Initiative (IKI) of the German Federal Ministry for the Environment.

    Objectives of the project

    • The project will design a tailor-made transport emissions assessment framework for India.
    • It will provide the government with a detailed understanding of current and future transport activity and the related CO2 emissions as a basis for their decision-making.

    About International Transport Forum (ITF)

    • The ITF is an inter-governmental organisation within the OECD (Organisation for Economic Co-operation and Development) system.
    • It is the only global body with a mandate for all modes of transport.
    • It acts as a think tank for transport policy issues and organises the annual global summit of transport ministers.
    • The ITF’s motto is “Global dialogue for better transport”.
    • India has been a member of ITF since 2008.

    Back2Basics: OCED

    • The OECD is an international, intergovernmental economic organization of 36 countries.
    • OECD was founded in the year 1961 to stimulate world trade and economic progress.
    • OECD originated in 1948, as the Organisation for European Economic Co-operation (OEEC).
    • The Organisation for European Economic Co-operation (OEEC) was founded to govern the predominantly US-funded Marshall Plan for post-war reconstruction on the continent.
    • The OEEC was instrumental in helping the European Economic Community (EEC). The EEC has evolved into the European Union (EU) to establish a European Free Trade Area.
    • India is NOT a member of OECD.
  • What is Foldscope?

    Indian researchers have explored and validated the clinical utility of Foldscope in the diagnosis of diseases using various patient samples.

    Though trivial, Foldscope is a significant invention with most crucial applications. It somehow offers an alternative to costly microscopes for some basic diagnosis.

    What is Foldscope?

    • Foldscope is an affordable origami-based microscopy device composed of a series of paper clippings.
    • Upon assembly, the device can hold a specimen slide for observation, and this specimen can be viewed via a mobile phone camera attached to it.

    How does it work?

    • Foldscope can be assembled using paper clips and mounted on a cell phone using coupler and glue drops.
    • To do the assessment, a patient sample like urine is smeared on a transparent glass slide and visualized under a Foldscope mounted on a cell phone.
    • Sample images can be enlarged using the zoom function of the mobile, which can be stored on the mobile memory card for later reference/patient records.
    • Foldscope visualizes calcium oxalate crystals, which are a major cause of kidney stones.

    Utility of Foldscope

    • Foldscope is particularly convenient to diagnose urinary tract infection (UTI) and monitor kidney stone.
    • The study evaluated the use of Foldscope in the clinical diagnosis of oral and urinary tract infections.
    • Using this tool, one can easily monitor own-kidney stone status at home with a simple glass-slide, a Foldscope and a phone in hand.
    • Such monitoring could perhaps avoid kidney stone reaching a painful state or surgery in recurring cases.
  • Agri reforms and way forward

    At a time when the economy is going through the crisis, anything that could provide revenue to the government will be a real godsend. This article suggests two such areas to tap into. It also examines the effects of recently issued 3 ordinances related to agriculture.

    Rs. 1,50,000 crore: Value of excessive grain stock

    • There is one area which the government can tap to raise more than Rs 1,00,000 crore.
    • As on June 1, FCI had unprecedented grain stocks of 97 million metric tonnes (MMT) in the Central Pool (see Figure).
    • Even on July 1, when the procurement of rabi ends, FCI is likely to have grain stocks of about 91-92 MMT.
    • This will be against a buffer stock norm of 41.12 MMT that are required for the Public Distribution system (PDS), and some strategic reserves.
    • So, compared to this norm, on July 1, FCI will have “excess stocks” of at least 50 MMT.
    • Even if one takes a conservative and lower ballpark figure of Rs 30,000/tonne  as the combined economic cost of rice and wheat, the value of this “excessive stock”, beyond the buffer norm, is Rs 1,50,000 crore.
    • This is unproductive capital locked-up in the Central pool of FCI.
    • Unlock this by liquidating “excess stocks” through open market operations.
    • It will not recover its full economic cost, as they are much higher than the prevailing market prices, but by not liquidating it.
    • But FCI will keep incurring unnecessary interest costs of about Rs 8,000-10,000 crore per annum.
    • This is simply not a good food policy.

    How will amendment to ECA 1955 will help

    •  Amendment of the Essential Commodities Act, via the ordinance route, can instil confidence in the private sector for building large scale storage.
    • Now, stocking limits will not be imposed on the private sector, except under exceptional circumstances.
    • The government, however, delete the clause of “extraordinary price rise”.
    • Removing it will lead to private sector building large and modern storage facilities (silos).
    • It will propel investments in building more efficient food supply lines.
    • The only condition could be to register large storage facilities under the Warehousing Development and Regulatory Authority (WDRA) to know how much stock is there with the private sector, and where.

    How will amendment to APMC Act will help

    • The ordinance on APMC creates multiple channels for farmers to sell their produce outside the APMC mandi system.
    • It also helps towards an unrestricted all India market for agri-produce.
    • Of course, it will be resisted by many states that are taking undue advantage of the APMC mandis’ virtual monopoly power.
    • But if the central ordinance is implemented in its true spirit, it will be a game-changer.

    How will the ordinance on contract farming will help

    • It aims to encourage contract farming.
    • The basic idea behind this is that farmers’ sowing decisions should be made in view of the expected prices of those crops at the time of harvest.
    • It is forward looking and more aligned to the likely demand and supply situation.
    • The current practice, where farmers’ sowing decisions are more influenced by last year’s price, often leads to the problem of boom and bust.
    • Although honouring an assured price remains a challenge when actual market conditions differ widely at the time of the harvest.

    Relook at food subsidy is needed

    •  In the Union budget of 2020-21, a sum of Rs 1,15,570 crore has been provisioned for food subsidy.
    • This number is highly misleading as FCI has been asked to borrow from the National Small Savings Fund (NSSF).
    • As on March 31, 2020, borrowings from the NSSF were Rs 2,54,600 crore, on which FCI pays an interest rate of 8.4 to 8.8 per cent per annum.
    • So, the real food subsidy bill for 2020-21 amounts to Rs 3,70,170 crore.
    • The Economic Survey has suggested- 1) reducing the coverage under PDS; 2) linking issue price to at least half of the procurement price; 3) move gradually towards cash transfers.
    • These steps will save a minimum of Rs 50,000 crore annually.

    Consider the question “There was a mention of reforms related to agri-sector in the recently announced stimulus package. Examine the issues with segments of agri-sector which necessitated these reforms.”

    Conclusion

    Liquidating the excess grain stock and rationalising the PDS could provide the government with much needed resources at a time when it needs it the most. Also, reforms in the related to agriculture could remove the stumbling blocks in the way towards the prosperity of farmers.

  • Why bad loans won’t start piling right away

    Steps taken by the government have averted the piling up of the bad loans, though for the time being only. When the moratorium period ends, we will see the spike in the bad loans. This article explains the same.

    Why bad loans are expected to increase

    •  Consumer spending has collapsed over the last few months due to the pandemic.
    • Though lately there have been some signs of revival, it will take a while before spending comes anywhere near the pre-covid level.
    • This will mean that many businesses will start running out of cash pretty soon if they have not already.
    • A company that starts running out of cash will not be in a position to repay its loans and, thus, will ultimately default.

    How individuals will be affected

    • A recent estimate by rating agency Crisil suggests that about 70% of 40,000 companies have cash to cover employee costs for only two quarters.
    • This tells us that companies will fire employees, before, during, or even after defaulting on a loan.
    • If companies do not resort to employee retrenchment, they will cut salaries and many already have.
    • Past payments and future business with vendors and suppliers will be negatively impacted.
    • In this situation, the problem at the company level will impact individuals too.
    • When individuals start having a cash flow problem, it will lead to defaults on retail loans

    But why we are not seeing the defaults happening already?

    • A moratorium is a deferment of repayment to provide temporary relief to borrowers. The loan ultimately needs to be repaid.
    • The Reserve Bank of India has let banks and non-banking financial companies (NBFCs) offer a moratorium on loans.
    • Hence, until the end of August, borrowers have an option to not repay the loans, without it being considered as a default.
    • Hence, any loan defaults will start only after August but they won’t be immediately categorized as a non-performing asset or a bad loan.
    • Bad loans are largely those loans that have not been repaid for 90 days or more.
    •  Hence, defaulted loans will be categorized as bad loans only post-November.
    • This will be revealed when banks publish their results for October to December 2020, in January-February 2021.

    Conclusion

    Even if 20% of loans that end up under a moratorium are defaulted on, the quantum of bad loans, especially those of public sector banks, will go up big time.

  • Detection of Fluorine in hot Extreme Helium (EHe) Stars

    A study by the Indian Institute of Astrophysics (IIA) has detected the presence of singly ionized fluorine for the first time in the atmospheres of hot Extreme Helium Stars.

    UPSC may ask a simple statement-based question considering the following points:

    If there is the presence of hydrogen, their abundance in universe and how it is different from neutron stars etc.

    What are EHe stars?

    • An extreme helium star or EHe is a low-mass supergiant that is almost devoid of hydrogen, the most common chemical element of the universe.
    • There are 21 of them detected so far in our galaxy.
    • The origin and evolution of these Hydrogen deficient objects have been shrouded in mystery.
    • Their severe chemical peculiarities challenge the theory of well-accepted stellar evolution as the observed chemical composition of these stars do not match with that predicted for low mass evolved stars.

    Why is the study significant?

    • Clues to the evolution of extreme helium stars require accurate determinations of their chemical composition, and the peculiarities, if any, become very important.
    • Fluorine plays a very crucial role in this regard to determine the actual evolutionary sequence of these hydrogen deficient objects.
    • The scientists explored the relationship of hot EHes with the cooler EHes, based on their fluorine abundance and spotted it in the former, thus establishing an evolutionary connection across a wide range of effective temperature.
    • This makes a strong case that the main form of these objects involves a merger of a carbon-oxygen (CO) and a Helium (He) white dwarf.
    • The detection of enhanced fluorine abundances in the atmospheres of hot EHes solves a decade-old mystery about their formation.
  • Species in news: Golden Langurs

    Primatologists have observed that the Gee’s golden langur (Trachypithecus geei) induce stillbirth of babies killed inside the womb of females, besides practising infanticide.

    Try this question from CSP 2013:

    Q. In which of the following States is lion-tailed macaque found in its natural habitat?

    1. Tamil Nadu
    2. Kerala
    3. Karnataka
    4. Andhra Pradesh

    Select the correct answer using the codes given below.

    a) 1, 2 and 3 only

    b) 2 only

    c) 1, 3 and 4 only

    d) 1, 2, 3 and 4

    Golden Langurs

    IUCN status: Endangered

    • It is an Old World monkey found in a small region of western Assam, and in the neighbouring foothills of the Black Mountains of Bhutan.
    • Long considered sacred by many Himalayan people, the golden langur was first brought to the attention of the western world by the naturalist E. P. Gee in the 1950s.
    • Their habitat lies in the region, south of the Brahmaputra River, on the east by the Manas River, on the west by the Sankosh River, all in Assam, India, and on the north by the Black Mountains of Bhutan
    • Chakrashila WLS in Assam is India’s first wildlife sanctuary with golden langur as the primary species.
    • They are listed in Appendix I of CITES and Schedule I of Wildlife Protection Act, 1972.
  • Open access renewable projects at risk

    Let us discuss renewable energy. Recently, state governments increased the standard charges on open access renewable projects and incentives were cut back. So, what can be implications of such steps? Read to know…

    What open access power user mean?

    • Open access allows large users of power – typically those who consume more than 1 MW – to buy power from the open market.
    • These open access buyers don’t have to depend on a more expensive grid.
    • Through incentives given by state governments, these non-grid avenues of power purchase have been encouraged in renewable energy projects.

    Now, state governments increased standard charges on open access renewable energy projects or are cutting back on incentives.

    Reason given by state: Tariff competitiveness of wind and solar power has shown a significant improvement.

    Implications:

    • Credit rating agency ICRA said that with the changes in policy, the viability of open access – against grid-connected energy – is no longer as attractive.
    • The open-access charges applicable in case of third party sale of power have also increased highlights the rising regulatory risk for such independent power producers (IPPs).
    • Earlier,  concessions were available from levy of cross-subsidy surcharge, transmission and wheeling charges as well as favourable banking facilities to promote the renewable sector.
    • Now, the power policies in many states have either completely withdrawn or reduced incentives given to open access  customers.

    Issues for group captive projects

    • A group captive scheme is where someone develops a power plant for collective usage of many commercial consumers.
    •  At present, a power project is considered ‘captive’ if consuming entity or entities consume at least 51% of the power generated and owns at least 26% of the equity.
    • The State Electricity Regulatory Commission (SERC) in Maharashtra has recently approved the levy of additional surcharge on group captive projects in renewable sector.
    • Group captive consumers were earlier exempt from such levy in Maharashtra.
    • Risk of other state following holds.

    Challenges

    • The viability of power procured under the open access route depends on discount offered by the power producer as compared to the grid tariffs.
    • The applicable open access charges across the key states are estimated to vary quite widely from Rs.2.5 per unit to Rs. 5 per unit.
    • Open access projects have tenure (5-10 years) of the power purchase agreements (PPAs) under the third-party sale route as against the 25 year-tenure for PPA in case of utility scale projects.
    • Net tariff realised for such projects remains exposed to regulatory risk given the likelihood of revision in open access charges by the regulators.
    • It is also subject to tightening of energy banking norms being observed by SERCs across the states.

    Consider the question “Examine the implications of policy changes adopted by the state with regard to open access charges and phasing out of other incentives to Independent Power Producers (IPPs)”

    Conclusion

    Move by states could jeopardise many projects and also threaten the progress made towards the adoption of clean energy.