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  • Indians can now make Payments using UPI in UAE

    Tourists or migrants to the United Arab Emirates (UAE) with Indian bank accounts will be able to make UPI payments at shops, retail establishments and other merchants in the gulf nation.

    What is UPI?

    • Unified Payments Interface (UPI) is an instant real-time payment system developed by National Payments Corporation of India (NPCI) facilitating inter-bank transactions.
    • The interface is regulated by the Reserve Bank of India (RBI) and works by instantly transferring funds between two bank accounts on a mobile platform.

    How does the service work?

    • The NPCI and UAE’s Mashreq Bank’s NEOPAY have partnered for this service
    • It will be mandatory for users to have a bank account in India with UPI enabled on it.
    • The users will also need an application, like BHIM, to make UPI payments.

    Will UPI be accepted everywhere in the UAE?

    • Payments using UPI will only be accepted at those merchants and shops which have NEOPAY terminals.

    Does NPCI have other such international arrangements?

    • NPCI’s international arm NIPL have several such arrangements with international financial services providers for its products, including UPI and RuPay cards.
    • Globally, UPI is accepted in Bhutan and Nepal, and is likely to go live in Singapore later this year.
    • In Singapore, a project to link UPI with the city-state’s instant payment system PayNow is being undertaken by the RBI and the Monetary Authority of Singapore.
    • The linkage is targeted for operationalization by July this year.

    Back2Basics: Bharat Interface for Money (BHIM)

    • BHIM is an Indian mobile payment App developed by the National Payments Corporation of India (NPCI), based on the Unified Payments Interface (UPI).
    • Named after B. R. Ambedkar and launched on 30 December 2016 it is intended to facilitate e-payments directly through banks and encourage cashless transactions.
    • The application supports all Indian banks which use UPI, which is built over the Immediate Payment Service (IMPS) infrastructure and allows the user to instantly transfer money between bank accounts of any two parties.
    • It can be used on all mobile devices.

    Answer this PYQ in the comment box:

    Q. With reference to digital payments, consider the following statements:

    1. BHIM app allows the user to transfer money to anyone with a UPI-enabled bank account.
    2. While a chip-pin debit card has four factors of authentication, BHIM app has only two factors of authentication.

    Which of the statements given above is/ are correct? (CSP 2018)

    (a) 1 only

    (b) 2 only

    (c) Both 1 and 2

    (d) Neither 1 nor 2

     

    [wpdiscuz-feedback id=”ra78wdcdft” question=”Please leave a feedback on this” opened=”1″]Post your answers here.[/wpdiscuz-feedback]

     

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  • UK to issue Open General Export Licence (OGEL) to India

    In the backdrop of the rapid geopolitical turmoil, PM Modi and his British counterpart Boris Johnson agreed on a new and expanded India-UK defence partnership and vowed to seal an ambitious free trade agreement by the end of the year.

    What is the news?

    • The UK is creating an Open General Export Licence (OGEL) for India to reduce bureaucracy and slashing delivery times for defence procurement.
    • It will partner with India on new fighter jet technology as well as in the maritime sphere to detect and respond to threats.

    What is OGEL?

    • The open General Licence is a type of license that is used for the export license that is issued by the government for domestic suppliers.
    • The items that are to be exported in India are categorised into three types. They are prohibited items, restricted items, and freely importable items. These classifications are made based on the nature and use of the products.
    • The application processing and grant of OEGL will be taken care of by the Department of Defence Production. The process will vary for each case.
    • The primary aim of the OEGL is to give a boost to the defence exports of India. This will also improve the ease of doing business and imports and exports.
    • The countries allowed under the OGELs are: Belgium, France, Germany, Japan, South Africa, Spain, Sweden, UK, USA, Canada, Italy, Poland and Mexico.

    Items to be exported

    • The items permitted under OGEL includes components of ammunition & fuse setting device without energetic and explosive material; firing control & related alerting and warning equipment & related system; and body protective items.
    • Complete aircraft or complete unmanned aerial vehicles (UAVs) and any components specially designed or modified for UAVs are excluded under this license.

     

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  • Maldives bans ‘India Out’ Campaign

    Maldivian President Ibrahim Mohamed Solih issued a decree banning the ‘India Out’ campaign, now led by former President Abdulla Yameen, terming it a “threat to national security”.

    The India-Out Campaign

    • Maldivian protesters recently demanded the Solih administration to ‘stop selling national assets to foreigners’, implying India.
    • ‘India Out’ campaign in Maldives had started sometime last year as on-ground protests in the Maldives and later widely spread across social media platforms under the same hashtag.
    • It is not related to people-to-people conflict (Indian diaspora) but is discontent on close relationship between Maldivian government & India.

    Causes for the anti-India sentiments

    • Political instability: The anti-India sentiment is nearly a decade old and can be traced back to when Abdulla Yameen Abdul Gayoom became president in 2013. He used anti-India sentiments for his political mobilization and started tilting China.
    • Controversy over helicopter gift: Two Dhruv Advanced Light Helicopters (ALF) that were given by India to the Maldives for ocean search-and-rescue operations. Opposition tried to portray this as military presence in the country.
    • Confidential agreements: Most agreements being signed between the Ibrahim Solih government and India are backdoor and has not been publicly discussed in the Maldives Parliament.
    • Alleged interference in domestic politics: India being a big neighbour, there are unsubstantiated perceptions & allegations on Indian Diplomats stationed in Maldives interfering in Domestic affairs.

    Restoration of ties

    • Ibrahim Mohamed Solih who became President in 2018 has restored Maldives close ties with India.

    India-Maldives Relations: A backgrounder

    • India and Maldives are neighbors sharing a maritime border.
    • Both nations established diplomatic relations after the independence of Maldives from British rule in 1966.
    • India was one of the first nations to recognize Maldives’ independence.
    • Since then, India and Maldives have developed close strategic, military, economic and cultural relations.
    • Maldivians generally regard Indians and India as a friend and trusted neighbor in the field economic, social and political.

    Major irritants in ties

    • Political Instability: India’s major concern has been the impact of political instability in the neighborhood on its security and development.
    • Increasing radicalization: In the past decade or so, the number of Maldivians drawn towards terrorist groups like the Islamic State (IS) and Pakistan-based jihadist groups has been increasing.
    • Inclination towards terror: Radicalism in the island nation has increased the possibility of Pakistan-based terror groups using remote Maldivian islands as a launch pad for terror attacks against India and Indian interests.
    • Chinese affinity: China’s strategic footprint in India’s neighborhood has increased. The Maldives has emerged as an important ‘pearl’ in China’s “String of Pearls” construct in South Asia.

    Recent gestures by India

    [1] 2014 Malé drinking-water crisis

    • In the wake of a drinking water crisis in Malé in December 2014, following collapse of the island’s only water treatment plant, Maldives urged India for immediate help.
    • India came to rescue by sending its heavy lift transporters like C-17 Globemaster III, Il-76 carrying bottled water.

    [2] 2020 Covid-19 crisis

    • During the COVID-19 crisis of 2020, India extended help to Maldives in the form of financial, material and logistical support.
    • Also, the IAF airlifted 6.2 tonnes of essential medicines and hospital consumables to Maldives, as part of ‘Operation Sanjeevani’.

    [3] Greater Male Connectivity Project

    • India has recently announced the signing of a $500-million infrastructure project for the construction of the Greater Malé Connectivity Project (GMCP).
    • This infrastructure project, the largest-ever by India in the Maldives, involves the construction of a 6.74-km-long bridge and causeway link.

    Why is Maldives significant for India?

    • Increasing maritime cooperation: As maritime economic activity in the Indian Ocean has risen dramatically in recent decades, the geopolitical competition too in the Indian Ocean has intensified.
    • Toll Gate in Indian Ocean: It is situated at the hub of commercial sea-lanes running through the Indian Ocean. More than 97% of India’s international trade by volume and 75% by value passes through the region.
    • Naval cooperation: Maldives is an important partner in India’s role as the net security provider in the Indian Ocean Region.
    • Important SAARC member: Besides, Maldives is a member of the South Asian Association for Regional Cooperation (SAARC) and the South Asia Subregional Economic Cooperation (SASEC).
    • People To People Contact: There is a significant population of Maldivian students in India. They are aided by a liberal visa-free regime extended by India. There is also medical tourism.
    • Major destination for Tourists: Tourism is the mainstay of the Maldivian economy. The country is now a major tourist destination for some Indians and a job destination for others.

    Conclusion

    • There is a significant Indian diaspora in the Maldives. Innumerable Indians work across the hospitality, education, and health-care sectors of the Maldives economy.
    • India must use its Diaspora more extensively for strengthening its relations.

     

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  • Special Purpose Acquisition Companies (SPACs)

    The government is reportedly considering a regulatory framework for special purpose acquisition companies (SPACs) to lay the ground for the possible listing of Indian companies through this route in the future.

    What are SPACs?

    • An SPAC, or a blank-cheque company, is an entity specifically set up with the objective of acquiring a firm in a particular sector.
    • They aim to raise money in an initial public offering (IPO) without any operations or revenues.
    • The money that is raised from the public is kept in an escrow account, which can be accessed while making the acquisition.
    • If the acquisition is not made within two years of the IPO, the SPAC is delisted and the money is returned to the investors.
    • While SPACs are essentially shell companies, a key factor that makes them attractive to investors are the people who sponsor them.
    • Globally, prominent celebrities have participated in SPACs.

    Why in news?

    • According to reports, the Company Law Committee was set up in 2019 to make recommendations to boost ease of doing business in India.
    • This committee has made this suggestion regarding SPACs in its report submitted to the government recently.
    • The concept of SPAC has existed for nearly a decade now, and several investors and company promoters have used this route to take their investments public.
    • The vehicle gained momentum in 2020, which was a record year for SPAC deals; this record was broken in 2021.

    Where does India stand?

    • Early last year, renewable energy producer ReNew Power announced an agreement to merge with RMG Acquisition Corp II, a blank-cheque company.
    • This became the first involving an Indian company during the latest boom in SPAC deals.
    • As things stand now, the Indian regulatory framework does not allow the creation of blank cheque companies.
    • The Companies Act, 2013 stipulates that the Registrar of Companies can strike off a company if it does not commence operations within a year of incorporation.

    Risk factors around SPACs

    • The boom in investor firms going for SPACs and then looking for target companies have tilted the scales in favour of investee firms.
    • This has the potential, theoretically, to limit returns for retail investors post-merger.
    • SPACs are mandated to return money to their investors in the event no merger is made within two years.
    • However the fineprint of several SPAC prospectuses shows that certain clauses could potentially prevent investors from getting their monies back.
    • Historically, though, this has not happened yet.

     

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  • New research about Jupiter’s moon Europa

    A team of researchers from Stanford University have said that on one of Jupiter’s moons Europa, a prime candidate for life in the solar system might have abundance of water pockets beneath formations called double ridges.

    About Europa

    • Europa is slightly smaller than Earth’s moon and its diameter is about one-quarter that of the Earth.
    • Even though Europa has a very thin oxygen atmosphere, it is considered one of the most promising places in the solar system to find present-day environments that are suitable for life beyond the Earth.
    • It is also believed that underneath Europa’s icy surface the amount of water is twice that on Earth.
    • NASA notes that scientists believe Europa’s ice shell is 15-25 km thick and is floating on an ocean, which is estimated to be 60-150 km deep.
    • Interestingly, while its diameter is less than the Earth’s, Europa probably contains twice the amount of the water in all of the Earth’s oceans.
    • NASA is expected to launch its Europa Clipper in 2024.
    • The module will orbit Jupiter and conduct multiple close flybys to Europa to gather data on the moon’s atmosphere, surface and its interior.

    What is the new finding?

    • It is already known that Europa, whose surface is mostly solid water ice, contains water beneath it.
    • The researchers are now saying that the double ridges – the formations which are most common on Europa’s surface and are similar to those seen on Earth’s Greenland ice sheet .
    • They are formed over shallow pockets of water.

    Significance of the recent findings

    • The central implication is that the shallow water pockets beneath the double ridge increase the potential habitability of the moon.
    • The ice shell, which is potentially miles thick, has been a difficult prospect for scientists to sample.
    • But according to the new evidence, the ice shell is believed to be less of a barrier and more of a dynamic system.
    • This means that the ice shell does not behave like an inert block of ice, but rather undergoes a variety of geological and hydrological processes.
    • This suggests active volcanism and thus a possibility for life.

     

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  • Russia’s new nuclear missile ‘Sarmat’

    Amidst stiff resistance from Ukraine in the ongoing war and harsh sanctions imposed by the West, Russia went ahead and tested its new Inter Continental Ballistic Missile (ICBM) Sarmat.

    What is Sarmat?

    • The RS-28 Sarmat (NATO name Satan-II) is reported to be able to carry ten or more warheads and decoys
    • It has the capability of firing over either of the earth’s poles with a range of 11,000 to 18,000 km.
    • It is expected to pose a significant challenge to the ground-and-satellite-based radar tracking systems of the western powers, particularly the USA.
    • The ten warheads are Multiple Independently-Targetable Re-entry Vehicles and each has a blast yield of .75 MT.
    • The Sarmat will also be the first Russian missile which can carry smaller hypersonic boost-glide vehicles. These are manoeuvrable and hard to intercept.
    • It is a liquid-fuelled missile as compared to US ICBMs which have moved on to solid fuel systems.

    Who is it named after?

    • The Sarmat is named after nomadic tribes that roamed the steppes of present-day Southern Russia, Ukraine and Kazakhstan in the early medieval period.
    • Sarmatians were highly developed in horsemanship and warfare.
    • It goes on to say that the administrative capabilities and political expertise of Sarmatians contributed to their gaining widespread influence and by the 5th century BC.
    • They held control of the land between the Urals and the Don River.
    • In the 4th century they crossed the Don and conquered the Scythians, replacing them as rulers of almost all of southern Russia by the 2nd century.

    Was Russia known to be developing this missile?

    • It was widely known that Russia was developing a new ICBM to replace its older ones.
    • An announcement in this regard was made by Vladimir Putin in 2018 while making his State of the Nation address to the Federal Assembly.
    • He had stated at the time that the first Regiment fully armed with Sarmat ICBM will be operational by the end of 2022.
    • The deteriorating relations between Russia and the Western Powers is said to have given an impetus to its development.

     

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  • Freebies model of Governance

    Context

    Against the backdrop of promises of freebies in Punjab, this article deals with the harm caused by such freebies to the economy, life quality and social cohesion in the long run.

    Macroeconomic stability of the Union and the States

    • India is a Union of states. It is not a confederation of states.
    • The Union is indestructible.
    • The Union, therefore, is integral to both the Centre and the states.
    • The strength of the Centre lies in the strength of the states.
    • Therefore, the macroeconomic stability of the Union is contingent on the macroeconomic stability of both the Centre and states.

    The complex issue of freebies

    • There is great ambiguity in what “freebies” mean.
    • Merit goods Vs. Public goods: We need to distinguish between the concept of merit goods and public goods on which expenditure outlays have overall benefits.
    • Examples of this are the strengthening and deepening of the public distribution system, employment guarantee schemes, support to education and enhanced outlays for health, particularly during the pandemic.
    • All over the world, these are considered to be desirable expenditures.
    • Freebies could be expensive? It’s not about how cheap the freebies are but how expensive they are for the economy, life quality and social cohesion in the long run.

    Issues with the culture of competitive freebie politics

    1] It affects macroeconomic stability

    • Freebies undercut the basic framework of macroeconomic stability.
    • The politics of freebies distorts expenditure priorities.
    • Outlays are being concentrated on subsidies of one kind or the other.
    • Illustratively, in the case of Punjab, while estimates vary, some have speculated that the promise of freebies might cost around Rs 17,000 crore.
    • As we know, the debt-to-GDP ratio of Punjab is already at 53.3 per cent for 2021-22, which would worsen on account of these new measures.

    2] Distortion of expenditure priorities

    • Take, for instance, the change to the new contributory pension scheme from the old scheme, which had a fixed return.
    • Rajasthan announced that it would revert to the old pension scheme.
    • This decision is regressive as the move away from the old scheme was based on the fact that it was inherently inequitable.
    • The pension and salary revenues of Rajasthan amount to 56 per cent of its tax and non-tax revenues.
    • Thus, 6 per cent of the population, which is made up of civil servants, stands to benefit from 56 per cent of the state’s revenues.
    • Intergenerational inequality: This is fraught with dangers not only of intergenerational inequality, but also affects the broader principles of equity and morality.

    3] Increases social inequality

    • The issue of intergenerational equity leads to greater social inequalities because of expenditure priorities being distorted away from growth-enhancing items.

    4]  It affects the environment

    • When we talk of freebies, it is in the context of providing, for example, free power, or a certain quantum of free power, water and other kinds of consumption goods.
    • This distracts outlays from environmental and sustainable growth, renewable energy and more efficient public transport systems.

    5]  The distortion of agricultural priorities

    • The depleting supply of groundwater is an important issue to consider when speaking of freebies pertaining to free consumption goods and resources.

    6] Effect on the future of manufacturing

    • Lower the quality of competitiveness: Freebies lower the quality and competitiveness of the manufacturing sector by detracting from efficient and competitive infrastructure enabling high-factor efficiencies in the manufacturing sector.

    7] Subnational bankruptcy

    • Freebies bring into question market differentiation between profligate and non-profligate states and whether we can have a recourse mechanism for subnational bankruptcy.

    Way forward

    • The race to the bottom implies government deregulation of markets and business.
    • We must strive instead for a race to efficiency through laboratories of democracy and sanguine federalism where states use their authority to harness innovative ideas and solutions to common problems which other states can emulate.

    Consider the question “What are the challenges in dealing with the competitive freebies politics? What are its drawbacks?”

    Conclusion

    The economics of freebies is invariably wrong. It is a race to the bottom. Indeed, it is not the road to efficiency or prosperity, but a quick passport to fiscal disaster.

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  • The Delhi MCA Act and the spirit of federalism

    Context

    Recently, both Houses of Parliament passed the Delhi Municipal Corporation (Amendment) Act, 2022, to unify the trifurcated Delhi Municipal Corporations.

    Background of the trifurcation

    • The split-up was first proposed in the 1987 Balakrishnan Committee Report which was bolstered in the 2001 Virendra Prakash Committee Report.
    • The proposal finally took shape in 2011 and the law to trifurcate was enacted.
    • A seven-member Delhi Legislative Assembly Panel was set up in 2001 to study the recommendations and suggest modalities.
    • Trifurcation in 2011: The proposal finally took shape in 2011 and the law to trifurcate was enacted.

    Changes introduced by the amendment

    • The law provides that the power to determine the number of wards, extent of each ward, reservation of seats, number of seats of the Corporation, etc. will now be vested in the Central government. 
    • The number of seats of councillors in the Municipal Corporations of Delhi is also to be decided now by the Central government.
    • By exercising that very power, the number of councillors to the Municipal Corporations of Delhi has been reduced from 272 to 250.
    • The Central government has also taken over powers from the State to decide on matters such as ‘salary and allowances, leave of absence of the Commissioner, the sanctioning of consolidation of loans by a corporation, and sanctioning suits for compensation against the Commissioner for the loss or waste or misapplication of municipal fund or property

    Issues with the changes made

    • The Central government’s line is that the amendment has been passed as in Article 239AA of the Constitution, which is a provision that provides for special status to Delhi.
    • No consultation with Delhi govt.-The large-scale changes by the Central government has been done without any consultation with the Delhi government.
    • Not in line with  Part IXA of the Constitution:  Part IXA specifically states that it will be the Legislature of the State that will be empowered to make laws concerning representation to the municipalities.
    • Part IXA is a specific law while Article 239AA is general law: The argument of the Centre that Article 239AA can be applied over and above Part IXA of the Constitution does not hold good as the latter is a specific law that will override the general law relatable to Article 239AA.
    • Against the federalism: In State of NCT of Delhi vs Union of India judgment the Supreme Court held, “The Constitution has mandated a federal balance wherein independence of a certain required degree is assured to the State Governments.”
    • It was made clear that the aid and the advice of the State government of Delhi would bind the decision of the Lieutenant General in matters where the State government has the power to legislate.
    • No doubt, the amendment to the Delhi Municipal Corporation Act, 1957 will lead to further litigation on the aspect of a sharing of powers between the State of NCT of Delhi and the Central government.

    Conclusion

    The interference of the Centre in matters such as municipal issues strikes a blow against federalism and the celebrated Indian model of decentralisation.

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  • How the Central and State governments procure Wheat?

    Wheat procurement is now underway in various states of the country.

    Wheat Procurement in India

    • The main purpose of procuring for the central pool is ensuring the MSP as well as the country’s food security by making food available to the weaker sections at affordable prices.
    • The Centre procures wheat by paying the minimum support price (MSP) announced for the crop.
    • The States do it under two systems:
    1. The centralised one, also called the non-decentralised procurement system (non-DCP) and
    2. The decentralised one, also called DCP

    (1) Non-DCP

    • Under this system, the Food Corporation of India (FCI) directly or through state government agencies procure wheat from the purchase centres established across the states based on various parameters like moisture, lustre, broken/shrivelled etc.
    • In Punjab and Haryana, farmers sell their crop to the central agency or state agencies through Arhtiyas (commission agents).
    • The wheat procured by the state agencies is handed over to the FCI for storage or for transportation to the consuming states.
    • The FCI, which is the central nodal agency for wheat procurement, pays the cost of procured wheat to the state agencies.

    (2) DCP

    • The decentralised system was brought in the late 1990s to promote local procurement and save the transportation cost and time.
    • The state government or its agencies procure, store and distribute wheat against the Centre’s allocation for targeted PDS and other weaker sections etc. with the state.
    • The excess stocks procured by the state and its agencies are handed over to the FCI for the central pool.
    • The expenditure incurred by the state government on the procurement, storage and distribution of stocks under the decentralised system are reimbursed by the Centre.

    Role of Arhtiyas

    • Apart from paying the MSP, the Centre also reimburses the arhtiyas’ commission, administrative charges, mandi labour charges, transportation charges, custody and maintenance charges, interest charges, the gunny bag cost and statutory taxes.
    • The cost of excess stocks handed over to the FCI is reimbursed to the state government or agencies as per the Centre’s policies.
    • Procurement agencies ensure that the stocks brought to mandis are purchased as per the specifications fixed by the government and farmers are not compelled to sell their crop below the MSP.
    • But if a farmer gets a better price from private players, he can sell to them.

    From how many states is wheat procured for the central pool?

    • There are 15 states on the procurement list for the central pool, but the contributions from seven of the states are negligible.
    • Only Punjab, Haryana, Madhya Pradesh, Uttar Pradesh and Rajasthan are the main contributors to the central pool.
    • Bihar also contributed to some extent in the last season.

    How much wheat is procured for the central pool by the FCI every year?

    • According to the records of the FCI, from 2011 to 2021, procurement for the central pool was between 25-40 per cent of the total wheat production.
    • The procurement has doubled in the past one decade as 22.5 million tonnes of wheat was procured in 2011 and 43.3 million in 2021.
    • The current season of procurement is going on.

    What is the procurement scale against the total production of wheat in India?

    • In 2011 the total production of wheat was 88 million tonnes while it was around 109 million tonnes in 2021.
    • And the government’s procurement was 26 per cent and around 40 per cent in 2011 and 2021 respectively.
    • The procured grain is used for export purposes, the public distribution system and maintaining a particular stock for an emergency period.
    • The remaining 60 per cent of the production goes to the bakery industry and other wheat-related businesses.
    • Farmers also keep some of this wheat for their self-consumption.

    What is the share of wheat contribution of various states to the central pool?

    • Barring 2020, Punjab has been the number one wheat contributor to the central pool.
    • The state has increased its contribution from 102.09 lakh tonnes in 2011 to 132. 22 lakh tonnes in 2021.
    • Haryana has also increased its contribution from 63.47 lakh tonnes to around 84.93 lakh tonnes in the same period.
    • Madhya Pradesh’s contribution was 35.38 lakh tonnes in 2011, which jumped to the highest among all states—129.42 lakh tonnes—in 2020 and was 128.16 lakh tonnes last year.
    • Uttar Pradesh’s contribution increased from 16.45 lakh tonnes to 56.41 lakh tonnes, and Rajasthan’s contribution rose from 4.76 lakh tonnes to 23.40 lakh tonnes in the same period.

    Note: Punjab (despite its small size compared to MP, UP) is also the leading wheat producer state in India.

    Back2Basics: Minimum Support Price (MSP)

    • MSP is a form of market intervention by the GoI to insure agricultural producers against any sharp fall in farm prices.
    • The MSP are announced at the beginning of the sowing season for certain crops on the basis of the recommendations of the Commission for Agricultural Costs and Prices (CACP).
    • MSP is price fixed to protect the producer – farmers – against excessive fall in price during bumper production years.
    • In case the market price for the commodity falls below the announced minimum price due to bumper production and glut in the market, govt. agencies purchase the entire quantity offered by the farmers at the announced minimum price.
    • The minimum support prices are a guarantee price for their produce from the Government.
    • The major objectives are to support the farmers from distress sales and to procure food grains for public distribution.

    Methods of calculation

    • In formulating the level of MSP and other non-price measures, the CACP takes into account a comprehensive view of the entire structure of the economy of a particular commodity or group of commodities.
    • The CACP makes use of both micro-level data and aggregates at the level of district, state and the country.
    • Other factors include cost of production, changes in input prices, input-output price parity, trends in market prices, demand and supply, inter-crop price parity, effect on industrial cost structure, effect on cost of living, effect on general price level, international price situation, parity between prices paid and prices received by the farmers and effect on issue prices and implications for subsidy.

    Procurement agencies

    • Food Corporation of India (FCI) is the designated central nodal agency for price support operations for cereals, pulses and oilseeds.
    • Cotton Corporation of India (CCI) is the central nodal agency for undertaking price support operations for Cotton.

     

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  • [pib] UDAN Scheme awarded PM Award for Excellence in Public Administration

    The Ministry of Civil Aviation’s flagship Regional Connectivity Scheme UDAN (Ude Desh ka Aam Nagrik) has been awarded Prime Minister’s Award for Excellence in Public Administration this year.

    What is UDAN Scheme?

    • The Ude Desh Ka Aam Nagrik (UDAN) scheme is a low-cost flying scheme launched with the aim of taking flying to the masses.
    • The first flight under UDAN was launched by the PM in April 2017.
    • It is also known as the regional connectivity scheme (RCS) as it seeks to improve air connectivity to tier-2 and tier-3 cities through revival of unused and underused airports.

    Working of the Scheme

    • Airlines are awarded routes under the programme through a bidding process and are required to offer airfares at the rate of ₹2,500 per hour of flight.
    • At least 50% of the total seats on an aircraft have to be offered at cheaper rates.
    • In order to enable airlines to offer affordable fares they are given a subsidy from the govt. for a period of three years.

    Success of the scheme

    • In a short span of 5 years, today 419 UDAN routes connect 67 underserved/unserved airports, including heliports and water aerodromes, and over 92 lakh people have benefited from it.
    • More than 1 lakh 79 thousand flights have flown under this scheme.
    • UDAN scheme has immensely benefitted several sectors pan-India including Hilly States, North-Eastern region, and Islands.
    • The scheme also led to development of new Greenfield Airports such as Pakyong near Gangtok in Sikkim, Tezu in Arunachal Pradesh, and Kurnool in Andhra Pradesh.
    • Krishi UDAN Scheme launched in August 2020, on international and national routes has assisted farmers in transporting agricultural products.

    Issues with the working

    • Discontinuance: In reality, some of the routes launched have been discontinued as most of the routes awarded under UDAN are not active.
    • On-paper Ambitions: UDAN was expanded to provide improved connectivity to hilly regions and islands through helicopters and seaplanes. However, they mostly remain on paper.
    • The reasons include:
    1. Failure to set up airports or heliports due to lack of availability of land
    2. Airlines unable to start flights on routes awarded to them or finding the routes difficult to sustain
    3. Adverse impact of the COVID-19 pandemic

    Various challenges

    • Lack of funds: Many small airlines await infusion of funds, to be able to undertake maintenance of aircraft, pay rentals to lessors, give salaries to its staff, etc.
    • Maintenance issue: Many players don’t have more than one or two planes and they are often poorly maintained. New planes are too expensive for these smaller players.
    • Availability of pilots: Often, they also have problems with the availability of pilots and are forced to hire foreign pilots which costs them a lot of money and makes the business unviable.
    • Competition: Only those routes that have been bagged by bigger domestic players such as IndiGo and SpiceJet have seen a better success rate.

    Way forward

    • The govt offers subsidies for a route for a period of three years and expects the airline to develop the route during this time so that it becomes self-sufficient.
    • Airlines need an extension of the subsidy period for their operational continuity.
    • Due to the rise in COVID cases, travel restrictions and passenger safety too needs to be taken into consideration in the loss-making of such airlines.

     

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