December 2019
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Disinvestment in India

[oped of the day] The not-so bright idea of selling the family silverop-ed snap

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Nothing much

Mains level : Costs and Benefits of Disinvestment


Context

The proposed stake sale of profit-making public sector undertakings (PSUs) raises a few strategic issues of national importance.

Issues 

    • Ideological – that the Government must get out of business. 
    • Economic – to bring the fiscal deficit down. 
    • Long-term financial one – which option, public- or privately-owned, is better for the Government treasury.
    • National security and self-reliance – can India be under pressure if we do not have full control over petroleum? The United States, China, and other superpowers have control over their petroleum reserves.

Long-term financial issue

    • The Burmah Shell (Acquisition of Undertakings in India) Act 1976 enabled the Government of India to take ownership by paying ₹27.75 crores. 
    • One estimate of that amount in today’s terms is to use the inflation factor, which is about 22.42. This means that the Government would have paid ₹622.06 crores today. 
    • The current market value of BPCL varies between ₹85,000 crores and ₹115,000 crores. The government’s share at present is about 53.3%, which is worth between ₹45,000 crore and ₹61,500 crores. We got the company for a cheap price.
    • Since 2011, the total dividend it has earned is about ₹15,000 crore, which is several times the present value of the investment of ₹622 crores. 
    • If we estimate the present value of all future income that the Government would earn, by using inflation and calculate the value of all future flows, it would forego future income of about ₹78,589 crores. 
    • The effective tax rate on profit before tax for the BPCL is about 34%, whereas for the private sector player it is between 25% and 28%. So there will be a loss in tax revenue for the Government after any privatization.
    • Financially, we as a nation are worse off by selling such a profitable venture. 
    • As the case of BPCL and several other PSU ‘Navratnas’ shows, they have given supernormal returns to the public exchequer. 
    • Instead of selling such high performing PSUs, we should be selling the loss-making ones.

Issue of the fiscal deficit target

    • The fiscal deficit target of 3.4% is now reduced to 3.3%. 
    • As the revenue collections are not enough, the Government is planning the sale of well-running PSUs to meet the fiscal deficit target. 
    • Next year? – If the Government meets its fiscal deficit target by the stake sale of various PSUs including the BPCL this year, how would it meet that target next year? 
    • RBI reserve – In spite of the huge one-time dividend from the Reserve Bank of India, we are far from meeting the deficit target. 
    • Absence of fiscal prudence – Nothing much will change in terms of the expenditure or revenues in the coming years. These strategic sales and dividends cannot be repeated every year.
    • How to reach the targets – The real way of meeting the targets is to cut out wasteful Government expenditure. Most of this is on salaries and pensions, and ensure that the bureaucracy delivers.

On national security

    • Natural resources, especially oil, are a strategic national resource. 
    • The United States maintains such an underground crude oil reserve to mitigate any supply disruptions. 
    • The U.S. over 600 billion barrels, China 400, South Korea 146, Spain 120 and India 39.1. India has a target to substantially increase its reserves. 
    • While China sticks to state-owned national resources, we are moving in the opposite direction. National security also depends on the economic power that a Government has.
    • We do have plans to build the world’s largest refinery in India, with the help of Saudi Arabia, but ownership and control will be in foreign hands. 
    • With the strategic disinvestments, we will lose Government control over both crude and refining. 

Conclusion

    • Through this strategic disinvestment, we are financially worse off, and strategically the nation finds itself in a vulnerable situation.
    • We need to see through the ideological narrative coming from the developed nations. They embraced free trade when it suited them and are now trying to embrace protectionism. 
    • China adopted a market system but does not allow this to cloud its thinking when it comes to strategic national issues; the control remains with the Government. 
    • India too needs to re-think its strategy.
Judicial Appointments Conundrum Post-NJAC Verdict

[op-ed snap] Strength in numbers: On judge vacanciesop-ed snap

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Nothing much

Mains level : Judicial vacancies - Appointments delay


Context

On December 10, the Supreme Court of India said that 213 names recommended for appointment to various High Courts are pending with the government. 

Judicial Vacancies

  • High court judges – Data show that 38% of all sanctioned posts for High Court judges are lying vacant as of December 1.
  • Half capacity – High Courts of some states including Andhra Pradesh and Rajasthan are functioning at below half their actual capacity. 

Timelines

  • At each level of the appointment process of judges to the higher judiciary, there are time periods specified. 
  • MoP – The Memorandum of Procedure states that appointments should be initiated at least 6 months before a vacancy arises and 6 weeks of time is specified for the State to send the recommendation to the Union Law Minister. After this, the brief is to be sent to the Supreme Court collegium in 4  weeks. 
  • Collegium – Once the collegium clears the names, the Law Ministry has to put up the recommendation to the Prime Minister in 3 weeks who will, in turn, advise the President. 
  • No time limit – Thereafter no time limit is prescribed and the process comes to a standstill.

Supreme Court judgment

  • Deadline – The court has fixed 6 months to appoint at least those whose names the Supreme Court collegium, the High Courts and the Government have agreed upon. 
  • The Supreme Court’s recommendation now of a time limit to these appointments is welcome. 
  • Post NJAC – The equation between the court and the Union Government has been strained by the former’s decision to strike down the move to set up a National Judicial Appointments Commission.
  • NJAC – It would have been responsible for appointments and transfers to the higher judiciary in place of the Supreme Court collegium. 
  • Procedural lapses – reports of delays in appointments have become increasingly commonplace, with both sides testy over the procedure. 
  • Binding – If the collegium reiterates the names, the court said that the government has no option but to appoint the judges. 

Way ahead

  • It is for the court to take an increasingly firm hand to ensure that the collegium system that it fought so hard to protect actually functions effectively. 
  • Vacancies in the higher judiciary threaten every aspect of the justice delivery system and it is the courts, and the government, that always take the blame for any shortfall in justice.
Health Sector – UHC, National Health Policy, Family Planning, Health Insurance, etc.

[op-ed snap] Staggering spread: On vaccinesop-ed snap

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Nothing much

Mains level : Vaccine Hesitancy


Context

The reported measles cases decreased by 59% globally, from 2000 to 2018. At the same time, there has been a spike since 2016. 

Global Measles cases

  • Increase in numbers – There were over 1,32,000 reported cases in 2016. The numbers shot up to over 3,53,000 in 2018. 
  • More than doubled – the numbers in 2018 were more than double the previous year, the numbers in 2019 have already surpassed those of 2018. 
  • By mid-November 2019, over 4,00,000 cases were reported globally. 
  • Cases and deaths – WHO and the Centers for Disease Control and Prevention estimated the number of measles cases and deaths. Based on an updated estimation model, there have been nearly 10 million cases and over 1,42,000 measles deaths in 2018. 
  • Congo – The situation worsened in Congo, with a nearly four-fold increase in cases (from 65,000 in 2018 to 2,50,000 in 2019) and over 5,100 deaths. 

Vaccine Hesitancy

  • Vaccine hesitancy has been highlighted for the staggering spread in cases globally. 
  • The case of Congo – In DR Congo, there is low institutional trust, misinformation, vaccine shortage and even attacks on health-care centers and workers leading to the spread of both measles and Ebola. 
  • Other cases of VH  – The Philippines and the small Pacific island of Samoa serve are textbook cases of the sudden emergence of vaccine hesitancy. 
  • Dengue vaccine – Mass immunization using a newly approved dengue vaccine in the Philippines, before the risks were reported by the manufacturer, shattered public trust in vaccines. Low vaccine coverage led to measles and polio outbreaks.
  • Samoa – In Samoa, an error in preparing the measles, mumps, and rubella (MMR) injection led to the death of two infants. Fear-mongering led to a fall in vaccine uptake, leading to an outbreak of measles. 
  • Religion – In many European countries and the U.S., vaccine hesitancy has been on religious grounds and primarily due to anti-vaccination campaigns spreading fake news about vaccine safety. 

Countering Vaccine Hesitancy

  • Mandatory – About a dozen European countries have introduced laws making vaccination mandatory. 
  • New York City introduced such a law when the U.S. nearly lost its measles elimination status. 
  • Education is the key – Such laws may prove counterproductive in the long run. The only way to increase vaccine uptake is by educating the public.
  • India – 2.3 million children are not vaccinated against measles last year. India has much to do to protect its young citizens.
Citizenship and Related Issues

Explained: Nehru-Liaquat Agreement of 1950ExplainedPriority 1

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Nehru-Liaquat Agreement of 1950

Mains level : Significance of the said pact in justifying CAB



Rejecting the Opposition’s criticism that the CAB discriminates against minorities, the Union Home Minister has referred to the Nehru-Liaquat pact to justify the new legislation.

The Nehru-Liaquat Pact

  • The Liaquat–Nehru Pact was a bilateral treaty between India and Pakistan, where refugees were allowed to return to dispose of their property, abducted women and looted property were to be returned, forced conversions were unrecognized, and minority rights were confirmed.
  • Jawaharlal Nehru and Liaquat Ali Khan were the Prime Ministers of India and Pakistan.
  • Officially the agreement was signed on April 8, 1950.
  • The need for such a pact was felt by minorities in both countries following Partition, which was accompanied by massive communal rioting.
  • In 1950, as per some estimates, over a million Hindus and Muslims migrated from and to East Pakistan amid communal tension and riots such as the 1950 East Pakistan riots and the Noakhali riots.

Key takeaways of the plan

  • refugees were allowed to return unmolested to dispose of their property
  • abducted women and looted property were to be returned
  • forced conversions were unrecognized
  • minority rights were confirmed
Citizenship and Related Issues

Exemption categories under CABStates in News

Note4Students

From UPSC perspective, the following things are important :

Prelims level : CAB and its various prospects

Mains level : Issues over citizenship amendment bill



In the protests in the Northeast against the Citizenship Amendment Bill (CAB), 2019, the outrage has been most intense, sustained and widespread in Assam as its larger part is under CAB.

Exemption categories under CAB

There are two categories that have been given exemption — states protected by the ‘Inner Line’, and areas covered under the Sixth Schedule of the Constitution.

Inner Line Permit (ILP)

  • This is a special permit that citizens from other parts of India require to enter a state protected by the ILP regime.
  • Without an ILP granted by the state government, an Indian from another state cannot visit an state that is under the ILP regime.

Sixth Schedule

  • The Sixth Schedule relates to special provisions in administration of certain Northeastern states.
  • It provides special powers for Autonomous District Councils (ADCs) in these states.
  • ADCs have powers to enact laws in areas under their jurisdiction on a variety of subjects, one of its objectives being to boost self-governance by tribal communities.

State by state

Assam: The state has three Autonomous District Councils, two of which are geographically contiguous. While these are protected, CAB will be in effect in a larger area.

Meghalaya: This state too has three ADCs. Unlike in Assam, the ADCs in Meghalaya cover almost the entire state. Only a small part of Shillong is not covered. CAB will be effective in that part of Shillong while the rest of the state is protected.

Tripura: One ADC covers around 70% of the state’s area. However, the remaining 30% holds about two-thirds of the population. CAB is effective in the smaller, more densely populated regions.

Arunachal Pradesh: Entire state covered under ILP regime, protected from CAB.

Nagaland: Entire state covered under ILP regime, protected from CAB. So far, only Dimapur used to be outside the regime. Now, ILP has been extended to Dimapur, too, so the whole state is now exempt.

Mizoram: Entire state covered under ILP regime, protected from CAB. Additionally, the state has three ADCs that are also protected under the Sixth Schedule.

Manipur: Entire state gets new ILP protection. The state was not protected under either option, but following the introduction of CAB in Parliament, the government has introduced ILP in Manipur too.

Economic Indicators and Various Reports On It- GDP, FD, EODB, WIR etc

Volcker’s RulePriority 1

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Volcker's Rule

Mains level : Inflation control measures


Paul Volcker passed away on December 8. He was the economist who helped shape US economic policy during the period of “The Great Inflation” that lasted for roughly two decades starting in the mid-1960s.

 “The Great Inflation”

  • The Great Inflation of 1965-82 was one of the defining macroeconomic events in the US history.
  • It was marked by the abandonment of the global monetary system used during World War II, multiple economic recessions, and wage and price controls.
  • Inflation in the US rose from below 2 percent in 1962 to above 15 percent by 1979.
  • Paul Volcker was appointed Chairman of the Board of Governors of the United States Federal Reserve System on August 6, 1979, and given a second term in 1983.

Volcker’s Rule

  • The Volcker Rule generally prohibits banks from conducting certain investment activities with their own accounts and limits their dealings with hedge funds and private equity funds, also called covered funds.
  • In easy terms it prohibits banks from using customer deposits for their own profit.
  • They can’t own, invest in, or sponsor hedge funds, private equity funds, or other trading operations for their use.
  • It aims to protect bank customers by preventing banks from making certain types of speculative investments.
  • The Volcker Rule allows trading in two circumstances. First, banks can trade when it’s necessary to run their business. For example, they can engage in currency trading to offset their foreign currency holdings.
  • Second, banks can trade on behalf of their customers. They can use client funds only with the client’s approval.

The idea unique

  • What Volcker did differently was to emphasis a tighter control on reserves and bring in credit control policies at a time when it was generally accepted that controlling inflation required greater control over the growth rate of reserves and broad money.
  • Even so, despite these measures, the US economy entered a phase of recession in 1981 and unemployment rose to about 11 percent, but inflation was coming down.
  • By the end of 1982, the economy entered “a period of sustained growth and stability”.
Coal and Mining Sector

Rare Earths ElementsPrelims Only

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Rare earth elements and thier applications

Mains level : US-China trade war



The US Army plans to fund the construction of a Rare Earths processing facility to secure the domestic supply of minerals that are used to make military weapons and electronics.

This will be the first financial investment by the US military into commercial-scale Rare Earths production since the Manhattan Project to build the first atomic bomb during World War II.

Why such move?

  • The decision comes after China threatened to stop exporting Rare Earth materials to the US amid the ongoing trade war between the countries.
  • At present, China refines approximately 80%-90% of the world’s Rare Earths, thereby having substantial control over their supply.
  • While Rare Earth elements are used in building consumer electronics, in healthcare and transportation, they are especially important for governments because of their use in manufacturing defence equipment.

Rare Earths Elements

  • Rare Earth Elements or Rare Earth Metals are a set of 17 chemical elements in the periodic table — the 15 lanthanides, plus scandium and yttrium.
  • The 17 Rare Earths are cerium (Ce), dysprosium (Dy), erbium (Er), europium (Eu), gadolinium (Gd), holmium (Ho), lanthanum (La), lutetium (Lu), neodymium (Nd), praseodymium (Pr), promethium (Pm), samarium (Sm), scandium (Sc), terbium (Tb), thulium (Tm), ytterbium (Yb), and yttrium (Y).
  • They tend to occur in the same ore deposits as the lanthanides, and have similar chemical properties.
  • Despite their classification, most of these elements are not really “rare”.
  • One of the Rare Earths, promethium, is radioactive.
  • According to the Rare Earth Technology Alliance (RETA), the estimated size of the Rare Earth sector is between $10 billion and $15 billion.
  • About 100,000-110,000 tonnes of Rare Earth elements are produced annually around the world.

Uses

  • These elements are important in technologies of consumer electronics, computers and networks, communications, clean energy, advanced transportation, healthcare, environmental mitigation, and national defence, among others.
  • Scandium is used in televisions and fluorescent lamps, and yttrium is used in drugs to treat rheumatoid arthritis and cancer.
  • Rare Earth elements are used in space shuttle components, jet engine turbines, and drones.
  • Cerium, the most abundant Rare Earth element, is essential to NASA’s Space Shuttle Programme.
Innovations in Sciences, IT, Computers, Robotics and Nanotechnology

Mumbai-Pune Hyperloop projectPriority 1

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Hyperloop

Mains level : High speed connectivity in India: Prospects and Challenges



The new coalition government in Maharashtra is set to discuss the progress of ambitious Mumbai-Pune Hyperloop One.

What is Hyperloop?

  • It is a next-generation travel system that uses pods or capsules travelling at high speeds through low-pressure tubes erected on columns or tunneled underground using magnetic levitation.

How does it work?

  • The system is fully autonomous and sealed, so no driver-related error is anticipated.
  • In a sealed environment with almost no air resistance, the pods are expected to reach very high speeds.
  • The top speed could reach over 700 mph or 1,125 km/h.
  • This speed is more than two and a half times the top speed of the world’s fastest train, the Shanghai Maglev (267 mph or 430 km/h), and some 200 mph faster than the cruising speed of a commercial jetliner (460-575 mph/740-925 km/h).

What was the Branson plan?

  • Branson’s Virgin Hyperloop One proposed a hyperloop between Mumbai and Pune, which would reduce the travel time between the two cities to just 25 minutes from the existing three hours.
  • It would link central Pune, Navi Mumbai International Airport, and Mumbai. It was pitched as a plan with potential to transport 26 million people and make 159 million passenger trips per year.
  • The route would be 100 per cent electric, which means a reduction of greenhouse gas emissions up to 86,000 tonnes over 30 years.
  • The project involves construction across a length of 117.5 km; an initial testing track of 11.8 km was to be constructed in the first phase from Pune’s Hinjewadi.

What did the Maharashtra government do to take forward the proposal?

  • It was categorised as a “public infrastructure project”, and received Cabinet clearance to speed up land acquisition for the testing track.
  • The Pune Metropolitan Region Development Authority was assigned the task of overseeing the implementation of the first phase.
  • The government also decided to use the “Swiss challenge” method for the bidding of the project.
  • That means the first bidder would be challenged by other global bidders, and in order to stay in the game, would have to match those bids.
  • The method is normally used for unsolicited bids for public infrastructure projects.
Innovations in Sciences, IT, Computers, Robotics and Nanotechnology

Universal Product Code (UPC) or BarcodePrelims Only

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Barcode QR Code

Mains level : Applications of Barcode



Yesterday, engineer-scientist George Laurer died in North Carolina, USA, at age 94. He was the co-developer of the Universal Product Code (UPC), or barcode, in 1973.

What is Barcode?

  • A barcode is a method of representing data in a visual, machine-readable form. Initially, barcodes represented data by varying the widths and spacings of parallel lines.
  • These barcodes, now commonly referred to as linear or one-dimensional, can be scanned by special optical scanners, called barcode readers.

How the idea took shape

  • Barcode was the brainchild of Woodland; Laurer is credited with bringing the idea to fruition.
  • It was in the 1950s that Woodland thought about developing a system based on barcode symbology, called Bulls-Eye Barcode, which would describe a product and its price in a code readable by a machine.
  • Initially, Woodland took inspiration from the Morse Code, the well-known character-encoding scheme in telecommunications defined by dots and dashes.
  • Woodland’s idea seemed workable but he was unable to develop the system as the cost of laser and computing technology was extremely high in the 1950s.
  • Two decades later, in the 1970s, Laurer, who was then working for IBM, put Woodland’s idea to work, armed with less expensive laser and computing technology.
  • Laurer found that a rectangle system, which we see on most barcodes today, would be more workable than Bulls-Eye, which used a series of concentric circles that looked complicated.

Transformation brought about

  • Today, shoppers simply pick up a product at a store or a mall, and pay the bill as determined by a scan of the barcode.
  • Barcodes can be found in hundreds and thousands of products for identification and scanning, and allow retailers to identify prices instantly.
  • They also allow for easy check-outs and fewer pricing errors, and let retailers keep better account of their inventory.
  • The barcode also changed the balance of power in the retail industry.

Back2Basics

QR Code

  • The Quick Response (QR) code is the trademark for a type of matrix barcode (or two-dimensional barcode) first designed in 1994 for the automotive industry in Japan.
  • In practice, QR codes often contain data for a locator, identifier, or tracker that points to a website or application.
  • A QR code uses four standardized encoding modes (numeric, alphanumeric, byte/binary, and kanji) to store data efficiently; extensions may also be used.
  • The main advantage of a QR code is its versatility. QR codes can be used for anything and everything.
  • It became due to its fast readability and greater storage capacity compared to standard UPC barcodes.
ISRO Missions and Discoveries

RISAT-2BR1DOMR

Note4Students

From UPSC perspective, the following things are important :

Prelims level : RISAT-2BR1

Mains level : Uses and applications of RISAT-2BR1



ISRO’s rocket PSLV-C48 blasted off from the spaceport carrying India’s radar imaging earth observation satellite RISAT-2BR1 and nine foreign satellites.

This launch has marked a significant milestone for ISRO as it is the 50th flight of the PSLV and also the 75th vehicle mission from Sriharikota.

RISAT-2BR1

  • RISAT-2BR1 is an Indian radar reconnaissance satellite that is part of India’s RISAT programme and the fourth satellite in the series.
  • The satellite has resolution of 0.35 meters by which two objects separated by distance of 0.35 metres can be distinctly identified.
  • The mission duration is planned to be 5 years.
  • It is meant for applications in various fields like agriculture, forestry and disaster management support.
  • The other 9 satellites are being launched under a commercial arrangement with the NewSpace India Ltd.
NPA Crisis

[pib] Partial Credit Guarantee SchemeGovt. Schemes

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Partial Credit Guarantee Scheme

Mains level : NPA issue



The Union Cabinet has approved a partial credit guarantee scheme for public sector banks (PSBs) to purchase high-rated pooled assets from financially sound NBFCs and housing finance companies.

What is the decision about?

  • PSBs can purchase high-rated pooled assets from financially sound NBFCs/Housing Finance Companies (HFCs), with the amount of overall guarantee provided by government till the first loss of up to 10 per cent of fair value of assets being purchased by banks or Rs 10,000 crore, whichever is lower.
  • The scheme would cover NBFCs / HFCs that may have slipped into SMA-0 category during the one year period prior to 1.8.2018, and asset pools rated “BBB+” or higher.

Partial Credit Guarantee Scheme

  • The Union Government had issued the PCG Scheme in the Union Budget this year to provide a one-time partial credit guarantee to PSBs for purchase of pooled assets of financially sound NBFCs.
  • It aims to address temporary asset liability mismatches of otherwise solvent NBFCs/HFCs without having to resort to distress sale of their assets for meeting their commitments.
  • It allows PSBs to purchase pooled assets enabled by Government guarantee support under the Scheme to addressing temporary liquidity / cash flow mismatch issues of otherwise solvent NBFCs / HFCs.
  • This pooling would allow NBFCs without them having to resort to distress sale of their assets for meeting their commitments.
  • This will provide liquidity to the NBFC / HFC concerned for financing the credit demand of the economy, and also protect the financial system of the country from any adverse contagion effect that may arise due to the failure of such NBFCs / HFCs.

Validity of the scheme

  • The window for one-time partial credit guarantee offered by GoI will open from the date of issuance of the Scheme by the Government for a period of six months, or till such date by which Rupees One lakh crore assets get purchased by banks, whichever is earlier.

Major Impact

  • The proposed Guarantee support and resultant pool buyouts will help address NBFCs/HFCs resolve their temporary liquidity or cash flow mismatch issues.
  • It will enable them to continue contributing to credit creation and providing last mile lending to borrowers, thereby spurring economic growth.