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Archives: News

  • How are Districts created?

    The West Bengal cabinet has approved the creation of seven new districts in the state.

    What are Districts?

    • India’s districts are local administrative units inherited from the British Raj.
    • They generally form the tier of local government immediately below that of India’s subnational states and territories.
    • A district is headed by a Deputy Commissioner/ Collector, who is responsible for the overall administration and the maintenance of law and order.
    • The district collector may belong to IAS (Indian Administrative Service).
    • Districts are most frequently further sub-divided into smaller administrative units, called either tehsils or talukas or mandals, depending on the region.

    How are new districts carved?

    • The power to create new districts or alter or abolish existing districts rests with the State governments.
    • This can either be done through an executive order or by passing a law in the State Assembly.
    • Many States prefer the executive route by simply issuing a notification in the official gazette.

    How does it help?

    • States argue that smaller districts lead to better administration and governance.
    • For example, in 2016, the Assam government issued a notification to upgrade the Majuli sub-division to Majuli district for “administrative expediency”.

    Does the Central government have a role to play here?

    • The Centre has no role to play in the alteration of districts or creation of new ones. States are free to decide.
    • The Home Ministry comes into the picture when a State wants to change the name of a district or a railway station.
    • The State government’s request is sent to other departments and agencies such as the Ministry of Earth Sciences, Intelligence Bureau, Department of Posts, Geographical Survey of India Sciences and the Railway Ministry seeking clearance.
    • A no-objection certificate may be issued after examining their replies.

     

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  • INSTC

    Context

    Last week, two 40-ft containers of wood laminate sheets crossed the Caspian Sea from Russia’s Astrakhan port, entered Iran’s Anzali port, continued their southward journey towards the Arabian Sea, entered the waters at Bandar Abbas and eventually reach Nhava Shiva port in Mumbai.

    Launch of INSTC

    • The journey of containers signalled the launch of the International North South Transport Corridor (INSTC), a 7,200-km multi-modal transport corridor that combines road, rail and maritime routes connecting Russia and India via central Asia and Iran.
    • The legal framework for the INSTC is provided by a trilateral agreement signed by India, Iran and Russia at the Euro-Asian Conference on Transport in 2000.
    • Since then Kazakhstan, Belarus, Oman, Tajikistan, Azerbaijan, Armenia and Syria have signed instruments of accession to become members of the INSTC.
    • Once fully operational, the INSTC is expected to reduce freight costs by 30% and journey time by 40% in comparison with the conventional deep sea route via the Suez Canal.
    • The corridor is expected to consolidate the emerging Eurasian Free Trade Area.

    Significance for India

    • Geopolitical link: The INSTC’s launch provides missing pieces of the puzzle about India’s refusal to condemn Russia’s invasion of Ukraine.
    • India’s investment in the INSTC is exemplified by its involvement in Iran’s Chabahar port and the construction of a 500-km Chabahar-Zahedan railway line.
    •  The India Ports Global Limited, a joint venture between the Jawaharlal Nehru Port Trust and Kandla Port Trust, will develop the port along with Iran’s Aria Banader.
    • IRCON International will contribute to constructing the railway line.
    • A special economic zone around Chabahar will offer Indian companies the opportunity to set up a range of industries.
    • The INSTC, thus, provides an opportunity for the internationalisation of India’s infrastructural state, with state-run businesses taking the lead and paving the way for private companies.

    Geopolitical significance for India

    • Access to Afghanistan and Central Asia: Once completed, this infrastructure will allow India access to Afghanistan and central Asia, a prospect strengthened by the Taliban government’s support for the project.
    • India can now bypass Pakistan to access Afghanistan, central Asia and beyond.
    • North-South transport corridor: The INSTC can shape a north-south transport corridor that can complement the east-west axis of the China-led Belt and Road Initiative (BRI).
    • Non-alignment to multi-alignment: India’s founding role in both the INSTC and the Quad exemplify its departure from non-alignment to multi-alignment.
    • The INSTC offers a platform for India to closely collaborate with Russia, Iran and Central Asian republics. 
    • That two of its partners are subject to Western sanctions hasn’t prevented India from collaborating with the U.S., Japan and Australia as part of the Quad to create and safeguard a free and open Indo-Pacific.

    Conclusion

    As a transcontinental multi-modal corridor that aims to bring Eurasia closer together, the INSTC is a laudable initiative in its own right. That it helps India consolidate its multi-alignment strategy sweetens the deal.

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  • Parliamentary panel reviews Goa Civil Code

    A parliamentary panel has reviewed Goa’s uniform civil code, and some of its members feel that there are some peculiar and outdated provisions related to matrimony in it.

    What is Goa Civil Code?

    • The Goa Civil Code is a set of civil laws that governs all residents of the coastal State irrespective of their religion and ethnicity.
    • Citing various positives of the Goa Civil Code, Goa CM had urged that it could be a model for implementing the UCC across the country.

    Why in news?

    • GCC has come under focus amid a call for the implementation of a Uniform Civil Code (UCC) across the country.
    • The UCC features prominently on the present regime’s ideological agenda, and the party had made promises on it in the run-up to the Lok Sabha elections in 2014 and 2019.
    • This had an intimidating impact on certain sections of the population whose archaic provisions of personal laws were untouched for the sake of appeasement.

    Why Goa model is in news?

    • It was observed that a majority of the State’s people are “quite happy and content with it”.
    • It is a living example of peaceful implementation of UCC.
    • There were, however, some peculiar clauses in the law related to matrimony and division of property, which were outdated and not based on the principle of equality.

    What is a Uniform Civil Code?

    • A Uniform Civil Code (UCC) is one that would provide for one personal civil law for the entire country.
    • This would be applicable to all religious communities in their personal matters such as marriage, divorce, inheritance, adoption etc.

    Basis for UCC

    • Article 44, one of the Directive Principles of the Constitution lays down that the state shall endeavour to secure a UCC for the citizens throughout the territory of India.
    • These, as defined in Article 37, are not justiciable (not enforceable by any court) but the principles laid down therein are fundamental in governance.

    UCC vs. Right to Freedom of Religion

    1. Article 25 lays down an individual’s fundamental right to religion
    2. Article 26(b) upholds the right of each religious denomination or any section thereof to “manage its own affairs in matters of religion”
    3. Article 29 defines the right to conserve distinctive culture

    Reasonable restrictions on the Freedom of Religion

    • An individual’s freedom of religion under Article 25 is subject to “public order, health, morality” and other provisions relating to FRs, but a group’s freedom under Article 26 has not been subjected to other FRs.
    • In the Constituent Assembly, there was division on the issue of putting UCC in the fundamental rights chapter. The matter was settled by a vote.
    • By a 5:4 majority, the fundamental rights sub-committee headed by Sardar Patel held that the provision was outside the scope of FRs and therefore the UCC was made less important.

    Minority Opinion in the Constituent Assembly

    • Some members sought to immunize Muslim Personal Law from state regulation.
    • Mohammed Ismail, who thrice tried unsuccessfully to get Muslim Personal Law exempted from Article 44, said a secular state should not interfere with the personal law of people.
    • B Pocker Saheb said he had received representations against a common civil code from various organizations, including Hindu organizations.
    • Hussain Imam questioned whether there could ever be uniformity of personal laws in a diverse country like India.
    • B R Ambedkar said “no government can use its provisions in a way that would force the Muslims to revolt”.
    • Alladi Krishnaswami, who was in favour of a UCC, conceded that it would be unwise to enact UCC ignoring strong opposition from any community.
    • Gender justice was never discussed in these debates.

    What about Personal Laws?

    • Citizens belonging to different religions and denominations follow different property and matrimonial laws which are an affront to the nation’s unity.
    • If the framers of the Constitution had intended to have a UCC, they would have given exclusive jurisdiction to Parliament in respect of personal laws, by including this subject in the Union List.
    • “Personal Laws” are mentioned in the Concurrent List.

    Various customary laws

    • All Hindus of the country are not governed by one law, nor are all Muslims or all Christians.
    • Muslims of Kashmir were governed by a customary law, which in many ways was at variance with Muslim Personal Law in the rest of the country and was, in fact, closer to Hindu law.
    • Even on registration of marriage among Muslims, laws differ from place to place.
    • In the Northeast, there are more than 200 tribes with their own varied customary laws.
    • The Constitution itself protects local customs in Nagaland. Similar protections are enjoyed by Meghalaya and Mizoram.
    • Even reformed Hindu law, in spite of codification, protects customary practices.

     Why need UCC?

    • UCC would provide equal status to all citizens
    • It would promote gender parity in Indian society.
    • UCC would accommodate the aspirations of the young population who imbibe liberal ideology.
    • Its implementation would thus support the national integration.

    Hurdles to UCC implementation

    • There are practical difficulties due to religious and cultural diversity in India.
    • The UCC is often perceived by the minorities as an encroachment of religious freedom.
    • It is often regarded as interference of the state in personal matters of the minorities.
    • Experts often argue that the time is not ripe for Indian society to embrace such UCC.

    These questions need to be addressed which are being completely ignored in the present din around UCC.

    1. Firstly, how can uniformity in personal laws are brought without disturbing the distinct essence of each and every component of the society.
    2. Secondly, what makes us believe that practices of one community are backward and unjust?
    3. Thirdly, has other uniformities been able to eradicate inequalities which diminish the status of our society as a whole?

    Way forward

    • It should be the duty of the religious intelligentia to educate the community about its rights and obligations based on modern liberal interpretations.
    • A good environment for the UCC must be prepared by the government by explaining the contents and significance of Article 44 taking all into confidence.
    • Social reforms are not overnight but gradual phenomenon. They are often vulnerable to media evils such as fake news and disinformation.
    • Social harmony and cultural fabric of our nation must be the priority.

     

    Also read this comprehensive article:

    [Sansad TV] Perspective: Uniform Civil Code

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  • E-waste management

    A proposed framework by the Centre for regulating e-waste in India has upset a key link of India’s electronic waste collection system and threatens the livelihood of thousands of people.

    Menace of E-Waste in India

    • Electronic waste, or electronic goods that are past their productive life and old parts, is largely handled by India’s vast informal sector.
    • Spent goods are dismantled and viable working parts refurbished, with the rest making their way into chemical dismantling units.
    • Many of these units are run out of unregulated sweatshops that employ child labour and hazardous extraction techniques.

    Remedy against this: Extended Producer Responsibility (EPR)

    • To address all of this, the Environment Ministry brought the E-waste (Management) Rules, 2016.
    • This introduced a system of Extended Producer Responsibility (EPR) compelling makers of electronic goods to ensure a proportion of the goods they sold every year was recycled.
    • They are expected to maintain records annually demonstrating this.
    • Most companies however did not maintain an in-house unit in charge of recycling and this gave rise to a network of government-registered companies, called Producer Responsibility Organisations (PRO).

    How PROs work?

    • PROs act as an intermediary between manufacturers and formal recycling
    • They are (expected to be) technologically equipped to recycle end-of-life electronic goods safely and efficiently.
    • The PROs typically bid for contracts from companies and arrange for specified quantities of goods to be recycled.
    • They provide companies certified proof of recycling that they then maintain as part of their records. Several PROs work on consumer awareness and enable a supply chain for recycled goods.

    Functional PROs in India

    • As of March 2022, the Central Pollution Control Board (CPCB) has registered 74 PROs and 468 authorised dismantlers.
    • They have a collective recycling capacity of about 1.3 million tonnes.

    What is the extent of E-Waste production in India?

    • The Ministry estimated 7.7 lakh tonnes of e-waste to have been generated in 2018-19.
    • Around one million tonnes in 2019-20 of which only a fifth (about 22% in both years) has been confirmed to be “dismantled and recycled”.

    What is the controversy now?

    • This May, the Ministry issued a draft notification that does away with the PROs and dismantlers and vests all responsibility of recycling with authorised recyclers.
    • Only a handful of authorised recyclers exist in India.
    • Recyclers will source a quantity of waste, recycle them and generate electronic certificates.
    • Companies can buy these certificates equivalent to their annual committed target and thus do not have to be involved with engaging the PROs and dismantlers.
    • Dismantling a fledgling system was detrimental to the future of e-waste management in India.

    What is the rationale behind?

    • The Centre has not explained its rationale for dismantling the existing system in its draft notification.
    • However, a final policy is yet to emerge.
    • The new rules would track the material that went in for recycling with the output claimed by a recycler when they claimed GST (Goods and Services Tax) input credit.

    Also read this comprehensive article:

    [Yojana Archive] E-waste Management

     

    Try this PYQ:

    Q.In India, ‘extended producer responsibility’ was introduced as an important feature in which of the following?

    (a) The Bio-medical Waste (Management and Handling) Rules, 1998

    (b) The Recycled Plastic (Manufacturing and Usage) Rules, 1999

    (c) The e-Waste (Management and Handling) Rules, 2011

    (d) The Food Safety and Standard Regulations, 2011

     

    [wpdiscuz-feedback id=”soxwqxn8gi” question=”Please leave a feedback on this” opened=”1″]Post your answers here.[/wpdiscuz-feedback]

     

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  • PM and President’s photos in Govt Ads: Judicial Interpretation

    The Madras High Court has directed the Tamil Nadu government to include the photographs of the President of India and Prime Minister in advertisements on the 44th Chess Olympiad underway in Chennai.

    Why in news?

    • The HC relied on a 2015 Supreme Court ruling that issued guidelines on government spending on advertisements.

    How can we classify Govt Ads with other political ads?

    The primary cause of government advertisement is to use public funds:

    • To inform the public of their rights, obligations, and entitlements
    • To explain Government policies, programs, services and initiatives.

    2015 Supreme Court’s Ruling

    • In Common Cause v Union of India, the Supreme Court sought to regulate the government expenditure on advertisements.
    • It essentially regulated the 2007 New Advertisement Policy of the Government of India.
    • The petitioners had argued that there is arbitrary spending on advertisements by the government.
    • The allegations ranged from wastage of public money for political mileage to using advertisements as a tool to manipulate media.
    • A three-judge Bench comprising then CJI P Sathasivam, and Justices Ranjan Gogoi and N V Ramana had set up a committee to suggest a better policy.

    What are the guidelines?

    • No endorsement: Patronization of any particular media house must be avoided and award of advertisements must be on an equal basis to all newspapers who may, however, be categorized depending upon their circulation.
    • The Government Advertisements (Content Regulation) Guidelines 2014 have five broad principles:
    1. Advertising campaigns are to be related to government responsibilities
    2. Materials should be presented in an objective, fair manner and designed to meet objectives of the campaign
    3. Advertisements must not directed at promoting political interests of a party
    4. Campaigns must be justified and undertaken in a cost-effective manner
    5. Advertisements must comply with legal requirements and financial regulations

    What did the Supreme Court rule?

    • It largely accepted the committee report except on a few issues:
    1. The appointment of an ombudsman to oversee the implementation of the guidelines
    2. A special performance audit of government spending
    3. An embargo on publication of advertisements on the eve of elections
    • The ruling mandated that government advertisements will not contain a political party’s symbol, logo or flag.
    • They are required to be politically neutral and must refrain from glorifying political personalities.

    What about photographs in advertisements?

    • The Supreme Court agreed with the committee’s suggestion that photographs of leaders should be avoided and only the photographs of the President/ PM or Governor/ CM shall be used for effective government messaging.
    • Then-Attorney General had opposed the recommendation arguing that if the PM’s photograph is allowed in the advertisement, then the same right should be available to his cabinet colleagues as the PM is the “first among the equals”.
    • The court, while restricting the recommendation to the photos of the President and Prime Minister, added the photograph of the Chief Justice of India to that list of exceptions.

    What are the takeaways from the SC and HC verdicts?

    • The SC ruling stepped into content regulation, which is a facet of the right to freedom of speech and expression, and was also in the domain of making policy.
    • This raised questions on the judiciary stepping on the executive’s domain.
    • The SC ruling did not mandate publication of the photograph of the PM and President, but only restricts publication of photos of government officials other than the President, PM, CJI, CM and the Governor.
    • In an opposition-ruled state such as Tamil Nadu, exclusion of the PM’s photos is seen as a political move.
    • The HC said that considering the “national interest” in the issue, the “excuses taken by the state” cannot be accepted.

     

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  • Uncontrolled Descent of Space Debris

    A Chinese booster rocket made an uncontrolled return to earth, leading to US furore against Beijing for not sharing information about the potentially hazardous object’s descent.

    Yet another Chinese irresponsibility

    • Ending over a week of global anxiety and alarm, the debris from a large Chinese rocket – the Long March 5B — crashed to earth over the Pacific and the Indian oceans.
    • It felt into the Sulu Sea near Malaysia.
    • The 22-tonne core stage of the rocket hurtled uncontrollably back to earth. There were fears that it might hit a populated area.
    • China, however, had dismissed these fears despite widespread criticism for rocket re-entry risks imposed by it on the world.

    What is an Uncontrolled Re-entry?

    • Generally, the core or first stage of a rocket is made up of heavy pieces that usually don’t reach orbit after liftoff, and fall back safely along a near-precise projected trajectory.
    • If they do enter an orbit, then a costly de-orbit manoeuvre is required for a steered, controlled return using engine burn.
    • Without a de-orbit manoeuvre, the orbital core stage makes an uncontrolled fall.

    Why did it fell back?

    • Gigantic remnants from China’s Long March 5B rockets’ core stage are known to make such fiery, out-of-control descents back to earth.
    • Most nations’ rockets, separate the launcher from the payload before leaving the atmosphere.
    • An extra engine then gives the payload a final boost.
    • But China’s 5B series does NOT use a second engine and pushes right into orbit, the report points out.

    Why is it difficult to track uncontrolled descents?

    • The variables involved make it difficult to precisely track the re-entry time and drop zone of rocket debris in uncontrolled descents.
    • The factors that make this prediction extremely challenging include atmospheric drag, variations in solar activity, angle and rotational variation of the object among others.
    • A miscalculation of even a minute in re-entry time could result in the final resting place of the debris changing by hundreds of kilometres.
    • It’s important to understand that among the 10 tough things that we do in space, debris re-entry is probably one of the toughest ones to predict.

    Are there laws regulating space junk?

    Yes. The Space Liability Convention of 1972.

    • It defines responsibility in case a space object causes harm.
    • The treaty says that a launching State shall be absolutely liable to pay compensation for damage caused by its space objects on the surface of the earth or to aircraft, and liable for damage due to its faults in space.
    • The Convention also provides for procedures for the settlement of claims for damages.
    • However, there is no law against space junk crashing back to earth.
    • In April this year, suspected debris from a Chinese rocket was found in two Maharashtra villages.

    Cases of settlements

    • In 1979, the re-entry of NASA’s 76-ton Skylab had scattered debris over uninhabited parts of Australia, and the space agency was fined $400 for littering by a local government.
    • The only settlement using the Liability Convention was between the erstwhile Soviet Union and Canada over the debris of Soviet Cosmos 954 falling in a barren region.
    • Canada was paid CAD 3 million in accordance with international law for cleaning up the mess.

    Do you know?

    The 1979 Skylab was rumoured to be falling in India. We may ask our parents who were apparently kids at that time. The event was widely perceived as a Pralay (doomsday) in rural India back then! People were in all joy with festive food/partying every day fearing so that they would never see the next dawn!!

  • Exercise AL NAJAH-IV

    India and Oman will carry out a 13-day military exercise with a focus on counter-terror cooperation.

    Exercise AL NAJAH-IV

    • This is the fourth edition of India-Oman joint military exercise ‘AL NAJAH-IV’.
    • It is held between contingents of Indian Army and the Royal Army of Oman is scheduled to take place at the Foreign Training Node of Mahajan Field Firing Ranges.
    • The previous edition of the exercise was organised in Muscat in March 2019.
    • The scope of the exercise includes “professional interaction, mutual understanding of drills and procedures, the establishment of joint command and control structures and elimination of terrorist threats”.

    India-Oman Relations: A Backgrounder

    • The Sultanate of Oman is a strategic partner of India in the Gulf.
    • Both nations are linked by geography, history and culture and enjoy warm and cordial relations.
    • An Indian consulate was opened in Muscat in February 1955 which was upgraded to a consulate general in 1960 and later into a full-fledged embassy in 1971.
    • The first ambassador of India arrived in Muscat in 1973.

    History of the ties

    • Oman, for many years, was ruled by Sultan Qaboos bin Said al Said, who was a friend of India.
    • Sultan Qaboos, the longest-reigning leader of the modern Arab world, died in January ‘2020 at the age of 79.
    • He was a man who was, as a student, taught by Shankar Dayal Sharma who went on to become the President of India.
    • Sultan Qaboos’s father, an alumnus of Ajmer’s Mayo College, sent his son to study in Pune for some time, where he was former President Shankar Dayal Sharma’s student.

    Economic ties

    • Expatriate community: Oman has over five hundred thousand Indian nationals living there making them the largest expatriate community in Oman. They annually remit $780 million to India.
    • Bilateral trade: In 2010, bilateral trade between India and Oman stood at $4.5 billion. India was Oman’s second-largest destination for its non-oil exports and its fourth-largest source for Indian imports.
    • Energy: India has been considering the construction of a 1,100-km-long underwater natural gas pipeline from Oman called the South Asia Gas Enterprise (SAGE).

    Defense cooperation

    Oman is the first Gulf nation to have formalized defense relations with India.

    • Naval cooperation: The Indian Navy has berthing rights in Oman, and has been utilizing Oman’s ports as bases for conducting anti-piracy operations in the Gulf of Aden.
    • Tri-services base: In February 2018, India announced that it had secured access to the facilities at Duqm for the Indian Air Force and the Indian Navy. Duqm had previously served as a port for the INS Mumbai.
    • Arms trade: The standard issue rifle of the Royal Army of Oman is India’s INSAS rifle.
    • Bilateral exercises: Naseem al-Bahr (Arabic for Sea Breeze) is a bilateral maritime exercise between India and Oman. The exercise was first held in 1993.

    Significance of Oman for India

    • Oman is India’s closest defense partner in the Gulf region and an important anchor for India’s defense and strategic interests.
    • It is the only country in the Gulf region with which all three services of the Indian armed forces conduct regular bilateral exercises and staff talks, enabling close cooperation and trust at the professional level.
    • It also provides critical operational support to Indian naval deployments in the Arabian sea for anti-piracy missions.

    Duqm port and its strategic imperative

    • In a strategic move to expand its footprint in the Indian Ocean region, India has secured access to the key Port of Duqm in Oman for military use and logistical support.
    • This is part of India’s maritime strategy to counter Chinese influence and activities in the region.
    • The Port of Duqm is strategically located, in close proximity to the Chabahar port in Iran.
    • With the Assumption Island being developed in Seychelles and Agalega in Mauritius, Duqm fits into India’s proactive maritime security roadmap.
    • In recent years, India had deployed an attack submarine to this port in the western Arabian Sea.

    Deterrent in ties: Chinese influence in Oman

    • China started cultivating ties with the Arab countries following the former Soviet Union’s invasion of Afghanistan.
    • Beijing has cultivated close ties with Oman and the latter was, in fact, the first country to deliver oil to China.
    • As of today, 92.99 per cent of Oman’s oil exports go to China, making China Oman’s largest oil importer.
    • Oman and China signed an agreement to establish an Oman-China Industrial Park at Duqm in 2016.
    • China has identified Oman as a key country in the region and has been enhancing defence ties with it steadily.

    Way forward

    • India does not have enough energy resources to serve its current or future energy requirements. The rapidly growing energy demand has contributed to the need for long term energy partnerships with countries like Oman.
    • Oman’s Duqm Port is situated in the middle of international shipping lanes connecting East with West Asia.
    • India needs to engage with Oman and take initiatives to utilise opportunities arising out of the Duqm Port industrial city.

     

     

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  • Government bailouts are not the answer to India’s energy sector woes

    Context

    Across several states, the fiscal situation is becoming increasingly challenging. Yet, the common thread that runs through these deficits — state ownership and control — remains unaddressed.

    State ownership: structural cause of India’s deficit

    • Coal India’s inability to raise production to meet growing demand contributed to the recent power crisis.
    • The state-owned power distribution companies have failed to bring down losses despite many schemes and packages.
    • The state control of these critical aspects of India’s power chain is central to a higher current account deficit and growing fiscal risks at the state level.

    Coal output fails to meet the demand

    • From 2013-14, the Indian economy has grown by around 50 per cent (in real terms).
    • But Coal India, which accounts for around 80 per cent of India’s total coal production, was able to raise its output by just 34 per cent over the same period.
    • Increased reliance on imported coal: India’s coal imports (thermal and cooking) rose to a staggering 230.3 million tonnes in 2020-21, up 37 per cent from 168.5 million tonnes in 2013-14.
    • Coal imports for thermal power alone have more than doubled in the first quarter, compared to the same period last year.
    • To put this in perspective — the value of coal imports in just the first three months of this year is likely to be around half of what was imported in all of last year.
    • Increase in current account deficit: This growing reliance on coal imports (along with crude and gold) is at the root of the country’s widening current account deficit.
    • An inability to ramp up production, to forecast demand accurately, as every episode of coal shortage over the years has exposed, is the hallmark of the coal sector that is still largely the preserve of a public sector monopoly.

    Problem of DISCOMS

    • No improvement in financial and operational issues: Despite repeated attempts to turn around their financial and operational positions, on key metrics, the divide between the public and private sector discoms is deepening.
    • In 2019-20, public sector discoms lost Rs 0.72 per unit of power sold, while private discoms made Rs 0.20 per unit.
    • High AT&C losses: Similarly, in 2019-20, the AT&C losses (due to operational inefficiencies) for state discoms were pegged at 21.7 per cent, while for the private sector, losses were at 8 per cent.
    • With deteriorating finances, the net worth of all public sector discoms put together stands at a negative Rs 61,757 crore, while for the private sector, it is a positive Rs 24,965 crore.
    • There have been several attempts to rescue state discoms.
    • In the early 2000s, the scheme for repayment of SEB dues amounted to Rs 41,473 crore.
    • In 2012, the financial restructuring plan added up to Rs 1.19 lakh crore.
    • In 2015, UDAY involved a transfer of Rs 2.01 lakh crore to state government balance sheets.
    • Notwithstanding various schemes to turn around their finances, the total debt of all discoms put together stood at Rs 5.14 lakh crore at the end of 2019-20.
    • Of this, Rs 4.87 lakh crore is owed by state discoms.
    • Impact on entire power chain: A deterioration in the financial position of discoms means that their dues to power generating companies start mounting, which in turn delay payments to coal miners, affecting the financial stability of the entire power chain.

    Declining cross-subsidisation

    • As tariffs charged by discoms are much higher than the cost of alternatives, a sizeable part of non-agricultural sales of discoms (industrial and commercial consumers) have already shifted towards captive and solar.
    •  And with the ministry of power recently reducing the threshold for green energy open access, more and more consumers will increasingly opt out.
    • This would mean that discom losses will rise as cross subsidisation from commercial and industrial consumers will decline, increasing their dependence on state subsidies.
    • In 2019-20, the total state subsidy claimed and released was around Rs 1.1 lakh crore or 17 per cent of total discom revenue.
    • This will only increase down the line, making future bailouts even more fiscally challenging.

    Conclusion

    Tackling these deficits requires addressing the issue of government control over critical aspects of India’s energy sector. Without shifting to market-determined prices — reforms are ultimately about price — little headway is likely to be made.

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  • India’s first Global Bullion Exchange unveiled

    Prime Minister has launched India’s first International Bullion Exchange (IIBX) at the Gujarat International Finance Tec-City (GIFT City) near Gandhinagar.

    What is Bullion?

    • Bullion refers to physical gold and silver of high purity that is often kept in the form of bars, ingots, or coins.
    • It can sometimes be considered legal tender and is often held as reserves by central banks or held by institutional investors.

    When was the IIBX announced?

    • During her 2020 budget speech, Finance Minister announced the setting up of India International Bullion Exchange (IIBX) at International Financial Services Center (IFSC) at GIFT City in Gandhinagar.
    • The International Financial Services Centres Authority (Bullion Exchange) Regulations, 2020, was notified in December 2020 for trading of precious metals, including gold and silver.
    • These regulations also cover bullion exchange, clearing corporation, depository and vaults.

    What is the IIBX?

    • India for the first time had liberalised gold imports through nominated banks and agencies in the 1990s.
    • Now, the eligible qualified jewellers in India have been allowed to directly import gold through IIBX.
    • For this, jewellers will have to become a trading partner or a client of an existing trading member.
    • In addition, the exchange has set up necessary infrastructure to store physical gold and silver.
    • The exchange will sell physical gold and silver and aims to be set up on the lines of the Shanghai Gold Exchange and Borsa Istanbul in order to make India a key regional hub for bullion flows.

    How will it work?

    • The thought process behind setting this up is to enable the trading of commodities on an exchange.
    • Since this is international exchange, trading can take place in US dollars as well.
    • India has positioned itself as one of the biggest trading hubs in Asia.
    • Because of the competitive pricing on IIBX, international players will be happy to use our vaulting services.
    • Moreover, with this being a free trade zone, no duty will be paid.

    What was the practice up until now?

    • Currently, gold in India is imported on a consignment model into different cities by nominated banks and agencies approved by the RBI and then supplied to traders/jewellers.
    • The banks and other agencies get a fee from the gold exporter for handling, storage, etc, and also add a premium to the gold while transacting with domestic buyers.
    • The buyer passes this charge on to the value chain until it reaches the end customer.

    What change did IIBX bring?

    • With the IIBX becoming operational today, qualified domestic buyers can, through a branch in Gift City, purchase the bars and coins.
    • This purchase can be done from an international supplier who is a member of the IIBX.

    What is the advantage of an exchange?

    • Through the dis-intermediation by facilitating transactions through an anonymously traded exchange platform, bullion is made available across special economic zones (SEZs) at International Financial Services Centres Authority (IFSCA)-approved vaults.
    • This means the growth of IIBX is not just limited to GIFT City but across jewellery manufacturing hubs nationwide.
    • The qualified jeweller allowed to import gold through IIBX, or a jeweller who is a client of an IIBX member, can view the available stock and place the order.
    • This shall nudge jewellers towards just-in-time inventory management.
    • It will also result in greater transparency in pricing, and order sequencing, thereby removing any room for unfair preference by supplier, importing or logistics agency.

    Which jewellers have come on board?

    • So far, 64 big jewellers have come onboard and more applications are in the pipelines.
    • Some of the big names include Malabar Gold Pvt Ltd, Titan Company Ltd, Bangalore Refinery Pvt Ltd, RBZ Jewellers Pvt Ltd, Zaveri and Company Pvt Ltd.

    What are the new RBI guidelines for importing gold?

    • Banks may now allow qualified Jewellers to remit advance payments for 11 days for import of gold through IIBX in compliance to the extant Foreign Trade Policy and regulations issued under IFSC Act.
    • According to the RBI, all payments by qualified jewellers for imports of gold through IIBX shall be made through the exchange mechanism as approved by IFSCA.

    Who can enrol on the exchange?

    1. Non-Resident Individual / Proprietorship Firm
    2. Registered Partnership Firm
    3. Private Limited Company
    4. Public Limited Company
    5. Qualified Jewellers
    6. Branches of IBU at GIFT City
    7. Foreign Bullion Suppliers who follow OECD guideline
    • In order to become a qualified jeweller, entities require a minimum net worth of Rs 25 crore.
    • And 90 per cent of the average annual turnover in the last three financial years through deals in goods categorised as precious metals.
    • NRIs and institutes will also be eligible to participate in the exchange after registering with the International Financial Services Centre Association (IFSCA).
    • Jewellers will be able to transact on IIBX only as trading members or as clients of a trading member.
    • If one wants to become a trader, a qualified jeweller will have to establish a branch or a subsidiary in IFSC (international financial services centre) and apply to the IFSCA.

    What products does IIBX offer?

    • IIBX offers a diversified portfolio of products and technology services at a cost which is far more competitive than the Indian exchanges as well as other global exchanges in Hong Kong Singapore, Dubai, London and New York.
    • Gold 1 kg 995 purity and gold 100 gm 999 purity with a T+0 settlement (100% upfront margin) are expected to trade at IIBX initially.
    • All contracts will be listed, traded and settled in US Dollar
    • The exchange will have three vaults – one operated by Sequel Global (ready and approved), the second one to be operated by Brinks India is ready and awaiting final approval and the third is under construction.
    • Once the gold is imported by the authorised entities it will be deposited at one of the vaults which will issue bullion depository receipts.
    • These receipts will then be traded in dollars on the exchange.

    Significance of IIBX

    • The IIBX shall be the “Gateway for Bullion Imports into India”, wherein all the bullion imports for domestic consumption shall be channelized through the exchange.
    • The exchange ecosystem is expected to bring all the market participants to a common transparent platform for bullion trading.
    • It would provide efficient price discovery, assurance in the quality of gold, and enable greater integration with other segments of financial markets.

     

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  • Core Sector output expands by 12.7%

    India’s eight core sectors’ output growth moderated to 12.7% in June, from 18.1% in May, with all sectors except crude oil registering an uptick in production.

    What are the Core Industries in India?

    • The main or the key industries constitute the core sectors of an economy.
    • In India, there are eight sectors that are considered the core sectors.
    • They are electricity, steel, refinery products, crude oil, coal, cement, natural gas and fertilizers.

    Index of Eight Core Industries (ICI) vs Index of Industrial Production (IIP)

    [A] Index of Eight Core Industries

    • The monthly Index of Eight Core Industries (ICI) is a production volume index.
    • ICI measures collective and individual performance of production in selected eight core industries viz. Coal, Crude Oil, Natural Gas, Refinery Products, Fertilizers, Steel, Cement and Electricity.
    • Prior to the 2004-05 series six core industries namely Coal, Cement, Finished Steel, Electricity, Crude petroleum and Refinery products constituted the index basket.
    • Two more industries i.e. Fertilizer and Natural Gas were added to the index basket in 2004-05 series. The ICI series with base 2011-12 will continue to have eight core industries.

    Components covered in these eight industries for the purpose of compilation of index are as follows:

    • Coal – Coal Production excluding Coking coal.
    • Crude Oil – Total Crude Oil Production.
    • Natural Gas – Total Natural Gas Production.
    • Refinery Products – Total Refinery Production (in terms of Crude Throughput).
    • Fertilizer – Urea, Ammonium Sulphate (A/S), Calcium Ammonium Nitrate (CAN), Ammonium chloride (A/C), Diammonium Phosphate (DAP), Complex Grade Fertilizer and Single superphosphate (SSP).
    • Steel – Production of Alloy and Non-Alloy Steel only.
    • Cement – Production of Large Plants and Mini Plants.
    • Electricity – Actual Electricity Generation of Thermal, Nuclear, Hydro, imports from Bhutan.

    [B] Index of Industrial Production

    • The Index of Industrial Production (IIP) is an index for India which details out the growth of various sectors in an economy such as mineral mining, electricity and manufacturing.
    • The all India IIP is a composite indicator that measures the short-term changes in the volume of production of a basket of industrial products during a given period with respect to that in a chosen base period.

    Difference between the two

    • IIP is compiled and published monthly by the National Statistics Office (NSO), Ministry of Statistics and Programme Implementation six weeks after the reference month ends.
    • However, ICI is compiled and released by Office of the Economic Adviser (OEA), Department of Industrial Policy & Promotion (DIPP), and Ministry of Commerce & Industry.
    • The Eight Core Industries comprise nearly 40.27% of the weight of items included in the Index of Industrial Production (IIP).
    • These are Electricity, steel, refinery products, crude oil, coal, cement, natural gas and fertilisers.

    Importance of Core Industries

    • The core sectors have a major impact on the Indian economy and significantly affect most other industries as well.
    • Their measures help account for the physical volume of production in India.
    • Their analysis offers a clearer and more realistic assessment of what’s happening in the economy
    • Their progress is used by government agencies for policy-making purposes.
    • They remain extremely relevant for the calculation of the quarterly and advanced Gross Domestic Product (GDP) estimates.
    • The core sector is also known as Infrastructure output as they represent the basic industries that form the base of the economy.

    Do you know about the Strategic Sectors?

    The government has identified four strategic sectors where the presence of state-run companies will be reduced to a minimum.

    1. Atomic energy, space and defence
    2. Transport and telecommunications
    3. Power, petroleum, coal and other minerals and
    4. Banking, insurance and financial services

     

    Try this PYQ:

    Q.In the ‘Index of Eight Core Industries’, which one of the following is given the highest weight?

    (a) Coal production

    (b) Electricity generation

    (c) Fertilizer production

    (d) Steel production

     

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