[op-ed snap] Redactive pricing audit and the CAG’s duties

Mains Paper 2 : Constitutional Bodies |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : CAG

Mains level : Redactive Pricing approach in CAG's Report harm transparency in democratic institutions.


CONTEXT

The Supreme Court’s observations in connection with the Rafale fighter aircraft deal by citing the Comptroller and Auditor General of India’s (CAG’s) report on redacted pricing, and subsequent media reports and the controversy over “stolen files” brought back into the spotlight the role of the supreme audit institution of India.

Questions surrounding the report

  • What is redactive pricing?
  • Does the constitutional mandate provide redactive pricing to be included in the CAG’s audit reports submitted to the President to be placed before Parliament?
  • Do any supreme audit institutions (SAIs) such as the National Audit Office, the Government Accountability Office or Commonwealth countries follow redactive pricing in audit reports?

Redaction

Redaction is the selection or adaption by ‘obscuring or removing sensitive information’ from a document prior to publication.

Duties of CAG

  • The CAG is mandated to audit all receipts and expenditures of the three-tier governments in India and report to the legislature judiciously, independently, objectively in compliance with applicable laws, rules and regulations, without fear and favour.
  • He conducts financial compliance and performance audits and submits his reports to the legislature to help people’s representatives in enforcing legislative oversight and public accountability of the executive.
  • Legislative committees such as the Public Accounts Committee and Committee on Public Undertakings examine the CAG’s selected reports.

Explanations regarding redactive Pricing

  • In the preface of the audit report, the CAG stated that redactive pricing was unprecedented but had to be accepted due to the Ministry’s insistence citing security concerns.
  • Consequently, the full commercial details were withheld and the figures on the procurement deal were blackened.

Not Transparent measure

  • It was unprecedented that an audit report submitted by the CAG to the President under Article 151 of the Constitution suppressed relevant information.
  • Whether the Ministry’s insistence citing security concerns could have been accepted by the CAG can be examined only by the Supreme Court in the light of the constitutional provisions on the CAG’s duties and parliamentary privileges and prerogatives.
  • Redactive pricing is nowhere used in SAI audit reports.
  • It does not seem to have been used in a government audit by any SAI of any country.
  • Redactive pricing in the ‘Performance Audit Report of the Comptroller and Auditor General of India on Capital Acquisition in Indian Air Force (Union Government – Defence Services, Air Force, Report No. 3 of 2019)’ suppresses more than it reveals.
  • For example, in the Rafale deal, Parliament, its committees, the media and other stakeholders of the CAG’s reports cannot obtain complete, accurate and reliable information due to redactive pricing.
  • The reduction in the original requirement, to 36 aircraft, a waiver of the earlier decision to involve Hindustan Aeronautics Limited, observations of the Indian Negotiating Team, cost escalation due to inclusion of bank guarantee and performance guarantee were not compared properly to arrive at the audit conclusion.

Pricing is Pivotal to procurement

  • Pricing is an integral part of the procurement decision-making process of any equipment, product, goods or service.
  • Therefore, price integrity and comparative competitiveness are at the heart of any procurement decision.

Way Forward

  • Given the dynamics of international competition in competitive products and pricing in today’s modern market scenario, pricing, delivery and post-delivery service and other conditions are essentially covered in an SAI audit.
  • It is a complex audit, demanding exceptional insight, expertise, knowledge and skills.
  • Seek expertise – In case the CAG’s office lacks expertise to conduct a performance audit, expertise can be sought from the pool of resources or credible organisations to be coopted in the audit team.
  • No resorting to redactive Pricing – Pricing decisions must be subjected to detailed analysis, without resorting to redactive pricing.
  • The privilege of Parliament – Parliament is constitutionally privileged to know what the executive had done and how and under what conditions a procurement was decided. The CAG’s audit is expected to highlight value for money in purchase decisions.

Conclusion

A performance audit is done to establish whether the procurement activity was executed keeping in mind economy, efficiency, effectiveness, ethics and equity. Only a thorough pricing audit can bring out the credibility and integrity of a purchase decision, thereby achieving an SAI’s constitutionally mandated responsibilities.

Government Budgets

[op-ed snap] If food prices rise

Mains Paper 3 : Issues Related To Farm Subsidies & Msp |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Inflation

Mains level : Low inflation in food prices is affecting well being of farmers and trend might revers soon.


CONTEXT

For 32 months running (from September 2016 to April 2019), consumer food inflation has been trailing general retail inflation.

Background

  • To understand its significance, rewind to the preceding 32 months (from January 2014 to August 2019), when in as many as 25 months the annual increase in food prices exceeded overall consumer inflation.
  • Food prices aren’t pinching as before and have also not been a hot-button issue in the current Lok Sabha elections — unlike in 2014, when they were one of the key reasons for the then Congress-led ruling alliance’s rout.
  • Bringing down retail food inflation from near double-digit to low single digit levels — even negative in many months — has, indeed, been a signal achievement of the government.

Impact of Low inflation

  • However, it hasn’t been an unmixed blessing.
  • While consumers have benefitted, the same cannot be said about farmers, for whom flat or falling prices of food and other agri produce have spelled disaster.

Reversal of trend  –

  • Meanwhile, there are also signs of a trend reversal.
  • The last couple of months have seen prices of a host of farm commodities — from coarse grains, cattlefeed ingredients and cotton to tomatoes and seasonal vegetables — going up significantly.
  • Even milk and sugar are beginning to shake off a prolonged bear phase.

Reasons for reversal

  • The immediate trigger for this seems to be drought in large parts of Maharashtra, Gujarat, Karnataka, Andhra Pradesh and Telangana.
  • But there could be structural reasons as well.

Disastrous for farmers –

  1. Cutting down crop acreages – It is not difficult to believe that sustained low produce realisations have broken the backs of many farmers, leading them to cut down crop acreages or underfeed their cattle.

2. Impact on yields – These are bound to impact yields and supply at some point. In that case, a normal monsoon alone, as forecast by the Met Department, may not be enough.

3. Long time to overcome the decline in productivity – Farmers aren’t going to ramp up output overnight, just as insufficiently nourished bovines will take time to calve and produce close to their genetic potential.

4. Return of food inflation – If structural supply constraints combine with a not-so-great monsoon, the result may well be a return of food inflation.

Way forward

  • That, on the face of it, may not be good news for the next government.
  • The mistake it should avoid is to clamp the usual restrictions on exports, internal trade and stocking, even while allowing unlimited imports at zero duty.
  • On the contrary, this is the time to scrap the Essential Commodities Act and laws allowing agricultural produce trade only in government-controlled wholesale mandis.
  • The current food inflation, if at all, is a necessary price correction that will help restore farmer confidence.
  • Improved price realisations would also create an environment to phase out wasteful government spending, whether through market-distorting minimum support price procurement operations or under-pricing of fertilisers, water and electricity.
  • Farmers deserve remunerative prices, not handouts.
Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

Coastal Regulation Zone: How rules for building along coast have evolved

Mains Paper 3 : Conservation, Environmental Pollution & Degradation, Eia |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : CRZ

Mains level : CRZ Regulations


News

Background

  • The Supreme Court has recently ordered the demolition of some constructions in Kerala’s Ernakulum, for violating Coastal Regulation Zone (CRZ) norms.
  • While the CRZ Rules are made by the Union Environment Ministry, implementation is supposed to be done by state governments through their Coastal Zone Management Authorities.
  • The states are also supposed to frame their own coastal zone management plans in accordance with the central Rules.

The CRZ Rules

  • CRZ Rules govern human and industrial activity close to the coastline, in order to protect the fragile ecosystems near the sea.
  • The Rules, mandated under the Environment Protection Act, 1986, were first framed in 1991.
  • They sought to restrict certain kinds of activities, like large constructions, setting up of new industries, storage or disposal of hazardous material, mining, or reclamation and bunding, within a certain distance from the coastline.
  • In all CRZ Rules, the regulation zone has been defined as the area up to 500 m from the high-tide line.
  • Several kinds of restrictions apply, depending on criteria such as the population of the area, the ecological sensitivity, the distance from the shore, and whether the area had been designated as a natural park or wildlife zone.

Why such rules?

The basic idea is: because areas immediately next to the sea are extremely delicate, home to many marine and aquatic life forms, both animals and plants, and are also threatened by climate change, they need to be protected against unregulated development.

Evolution of Rules

  • The Centre notified fresh CRZ Rules in 2011, which addressed some concerns. An exemption was made for the construction of the Navi Mumbai airport.
  • Projects of the Department of Atomic Energy, which plans to set up nuclear power plants near the coast, were exempted.
  • After even these Rules were found inadequate, however, the MoEFCC in 2014 set up a six-member committee under then Earth Sciences Secretary Shailesh Nayak to give suggestions for a new set of CRZ Rules.
  • Simultaneously, the Chennai-based National Centre for Sustainable Coastal Management defined a new high-tide line along India’s entire coastline to remove ambiguities.
  • Separately, the Survey of India defined a hazard line along the coasts — to be used mainly for disaster management planning.
  • Based on these and other inputs, the MoEFCC issued fresh CRZ Rules in December 2018, which removed certain restrictions on building, streamlined the clearance process, and aimed to encourage tourism in coastal areas.

New Rules under CRZ regulations

  • The government notified new CRZ Rules with the stated objectives of promoting sustainable development and conserving coastal environments.
  • For the so-called CRZ-III (Rural) areas, two separate categories have been stipulated.
  • In the densely populated rural areas (CRZ-IIIA) with a population density of 2,161 per sq km as per the 2011 Census, the no-development zone is now 50 m from the high-tide level, as against the 200 m stipulated earlier.
  • In the CRZ-IIIB category (rural areas with population density below 2,161 per sq km) continue to have a no-development zone extending up to 200 m from the high-tide line.
  • The new Rules have a no-development zone of 20 m for all islands close to the mainland coast, and for all backwater islands in the mainland.

Problems with some states

  • Despite several amendments, states found the 1991 Rules to be extremely restrictive.
  • They complained that if applied strictly, the Rules would not allow simple things like building decent homes for people living close to the coast, and carrying out basic developmental works.
  • The 1991 Rules also created hurdles for showpiece industrial and infrastructure projects such as the POSCO steel plant in Odisha and the proposed Navi Mumbai airport in the first decade of the new century.
Coastal Zones Management and Regulations

Explained: Strait of Hormuz — the world’s most important oil artery

Mains Paper 2 : India & Its Neighborhood - Relations |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Strait of Hormuz

Mains level : US-Iran turmoil and its impact on India


News

Why in news?

  • The Strait of Hormuz, a vital shipping route linking Middle East oil producers to markets in Asia, Europe, North America and beyond, has been at the heart of regional tensions for decades.
  • Recently two Saudi oil tankers were among vessels targeted in a “sabotage attack” off the coast of the UAE, condemning it as an attempt to undermine the security of global crude supplies.
  • Iran’s foreign ministry called the incidents “worrisome and dreadful” and asked for an investigation.

Strait of Hormuz

  • The Strait of Hormuz is a strait between the Persian Gulf and the Gulf of Oman.
  • It provides the only sea passage from the Persian Gulf to the open ocean and is one of the world’s most strategically important choke points.
  • The waterway separates Iran and Oman, linking the Gulf to the Gulf of Oman and the Arabian Sea.
  • The Strait is 21 miles (33 km) wide at its narrowest point, but the shipping lane is just two miles (three km) wide in either direction.

Why does it matter?

  • The US Energy Information Administration estimated that 18.5 million barrels per day (bpd) of seaborne oil passed through the waterway in 2016.
  • That was about 30 per cent of crude and other oil liquids traded by sea in 2016.
  • With global oil consumption standing at about 100 million bpd, that means almost a fifth passes through the Strait.
  • Most crude exported from Saudi Arabia, Iran, the UAE, Kuwait and Iraq — all members of the Organization of the Petroleum Exporting Countries are shipped through the waterway.
  • It is also the route used for nearly all the liquefied natural gas (LNG) produced by the world’s biggest LNG exporter, Qatar.

Why always in turmoil?

  • During the 1980-1988 Iran-Iraq war, the two sides sought to disrupt each other’s oil exports in what was known as the Tanker War.
  • The US Fifth Fleet, based in Bahrain, is tasked with protecting the commercial ships in the area.
  • The fleet ensures that the critical waterway remains open, provocative Iranian military maneuvers are likely in the immediate offing as is a nuclear restart.
  • Iran agreed to rein in its nuclear programme in return for an easing of sanctions under a 2015 deal with the United States and five other global powers.
  • Washington pulled out of the pact in 2018. Western powers fear Iran wants to make nuclear weapons. Tehran denies this.
  • The UAE and Saudi Arabia have sought to find other routes to bypass the Strait, including building more oil pipelines.

Have there been incidents in the strait before?

  • In January 2012, Iran threatened to block the Strait in retaliation for US and European sanctions that targeted its oil revenues in an attempt to stop Tehran’s nuclear programme.
  • In May 2015, Iranian ships fired shots at a Singapore-flagged tanker which it said damaged an Iranian oil platform, causing the vessel to flee. It also seized a container ship in the Strait.
  • In July 2018, Iranian President hinted Iran could disrupt oil flows through the Strait in response to US calls to reduce Iran’s oil exports to zero.
  • A Revolutionary Guards commander also said Iran would block all exports through the Strait if Iranian exports were stopped.
  • The US in turn declared the guards a terrorist organization.
Iran’s Nuclear Program & Western Sanctions

Herbivore census in Gujarat’s Gir forest

Mains Paper 3 : Conservation, Environmental Pollution & Degradation, Eia |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Asiatic Lion Census

Mains level : Asiatic Lion Conservation Project


News

  • Every summer, the Forest Department of Gujarat conducts an Herbivore Census in Gir forest.

Herbivore Census

  • The Herbivore Census covers ungulates such as spotted deer, blue bulls (nilgais), sambars, Indian gazelles (chinkaras), four-horned antelopes (choshinga) and wild boars, as well as Indian langurs and peafowl.
  • This year’s exercise is of particular significance because it is the last Herbivore Census ahead of next year’s Lion Census, which is a once-in-five-years exercise.

Why it matters?

  • Wild ungulates and langurs are the main prey of Asiatic lions, the endangered species whose only wild population in the world is surviving in the 22,000 sq km Greater Gir area.
  • A count provides a sense of the available of the prey base for lions as well as other predators like leopards, hyenas and wolves.
  • A strong prey base can reduce depredation of livestock by lions and can reduce man-animal conflict.
  • In 2013-14, the last Herbivore Census before the previous Lion Census, the total count of all herbivores was 1.32 lakh, higher than the about 1.25 lakh counted in 2012-13.

Why it’s done in summer

  • During summer, foliage is reduced to a minimum in dry and deciduous tropical forests, which affords the best visibility for conducting a census.
  • Also, wild animals concentrate around water points, which in Gir include 450 artificial ones filled by the Forest Department.
  • The forest is divided into 19 routes and forest divisions for the census, with teams transacting routes thrice — morning, afternoon and evening — and depending on direct sighting.

Navigate to the page for additional reading

Asiatic Lion Conservation Project

Wildlife Conservation Efforts

DNA database for Indian Rhino

Mains Paper 3 : Conservation, Environmental Pollution & Degradation, Eia |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : DNA Database for Indian Rhino

Mains level : Conservation of Rhinos


News

  • The Environment Ministry has embarked on a project to create DNA profiles of all rhinos in the country.

DNA Database of Indian Rhino

  • By 2021, the Indian rhino could be the first wild animal species in India to have all its members DNA-sequenced.
  • The project’s proponents include the World Wildlife Fund for Nature-India (WWF-India) and the Centre-funded Wildlife Institute of India (WII).
  • The exercise would be useful in curbing poaching and gathering evidence in wildlife crimes involving rhinos.
  • There are about 2,600 rhinos in India, with over 90% of the population concentrated in Assam’s Kaziranga National Park.
  • Around 60 samples of tissue have been collected so far from some rhinos living outside Kaziranga.

About Indian Rhino

  • The Indian rhinoceros also called the greater one-horned rhinoceros and great Indian rhinoceros is a rhinoceros native to the Indian subcontinent.
  • It is listed as Vulnerable on the IUCN Red List, as populations are fragmented and restricted to less than 20,000 km2 .
  • It once ranged across the entire northern part of the Indian Subcontinent, along the Indus, Ganges and Brahmaputra River basins, from Pakistan to the Indian-Myanmar border.
  • Poaching for rhinoceros horn became the single most important reason for the decline of the Indian rhino.
Wildlife Conservation Efforts

[pib] High-speed Expendable Aerial Target (HEAT)

Mains Paper 3 : Achievements Of Indians In S&T |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : ABHYAS, HEAT

Mains level : Not Much


News

  • DRDO conducted successful flight test of ABHYAS – High-speed Expendable Aerial Target (HEAT) from Interim Test Range, Chandipur in Odisha.

High-speed Expendable Aerial Target (HEAT)

  • HEAT offers a realistic threat scenario for practice of weapon systems. It is designed for autonomous flying with the help of an autopilot.
  • It is designed on an in-line small gas turbine engine and uses indigenously developed MEMS based navigation system for its navigation and guidance.
  • The performance of the system was as per simulations carried out and demonstrated the capability of ABHYAS to meet the mission requirement for a cost effective HEAT.
  • The flight test was tracked by various RADARS & Electro Optic Systems and proved its performance in fully autonomous way point navigation mode.
Indian Missile Program Updates