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  • Foreign Policy Watch: India-China

    A ‘Taiwan flashpoint’ in the Indo-Pacific

    op-ed snap | | Mains Paper 2: Effect Of Policies & Politics Of World On India’S Interests

    Context

    If the rising confrontation between the United States and China erupts into a clash of arms, the likely arena may well be the Taiwan Strait.

    Historical background of the Taiwan issue

    • The Guomindang (KMT) forces under Chiang Kai-shek lost the 1945-49 civil war to the Chinese Communist Party (CCP) in 1949. forces under Mao Zedong.
    • Chiang retreated to the island of Taiwan and set up a regime that claimed authority over the whole of China and pledged to recover the mainland eventually.
    • The CCP in turn pledged to reclaim what it regarded as a “renegade” province and achieve the final reunification of China.
    • Role of the U.S.: Taiwan could not be occupied militarily by the newly established People’s Republic of China (PRC) as it became a military ally of the United States during the Korean War of 1950-53.
    • This phase came to an end with the U.S. recognising the PRC as the legitimate government of China in 1979, ending its official relationship with Taiwan and abrogating its mutual defence treaty with the island.
    • Strategic ambiguity policy of the US: Nevertheless, the U.S. has declared that it will “maintain the ability to come to Taiwan’s defence” while not committing itself to do so.
    • This is the policy of “strategic ambiguity”.
    • The PRC has pursued a typical carrot and stick policy to achieve the reunification of Taiwan with the mainland.
    • It has held out the prospect, indeed preference for peaceful reunification, through promising a high degree of autonomy to the island under the “one country two systems”.
    • The “one country two systems” formula first applied to Hong Kong after its reversion to Chinese sovereignty in 1997.

    China-Taiwan economic links

    • Taiwan business entities have invested heavily in mainland China and the two economies have become increasingly integrated.
    • Between 1991 and 2020, the stock of Taiwanese capital invested in China reached U.S. $188.5 billion and bilateral trade in 2019 was U.S. $150 billion, about 15% of Taiwan’s GDP.
    • By the same token, China is capable of inflicting acute economic pain on Taiwan through coercive policies if the island is seen to drift towards an independent status.

    Prospects for peaceful reunification

    • Taiwan has two major political parties.
    • The KMT, dominated by the descendants of the mainlanders remains committed to a one-China policy.
    • The Democratic Progressive Party (DPP), on the other hand, is more representative of the indigenous population of the island, and favours independence.
    • Faced with aggressive threats from China and lack of international support, the demand for independence has been muted.
    • Ever since the DPP under Tsai Ing-wen won the presidential elections in 2016, China has resorted to a series of hostile actions against the island, which include economic pressures and military threats.
    • One important implication of this development is that prospects for peaceful unification have diminished.
    • Sentiment in Taiwan in favour of independent status has increased.

    Role of the US

    • While the U.S. does not support a declaration of independence by Taiwan, it has gradually reversed the policy of avoiding official-level engagements with the Taiwan government
    • The first breach occurred during the Donald Trump presidency.
    • The Joe Biden officials have continued this policy.
    • The Taiwanese representative in Washington was invited to attend the presidential inauguration ceremony (Biden), again a first since 1979.
    • Reports have now emerged that U.S. defence personnel have been, unannounced, training with their Taiwanese counterparts for sometime.

    Implications for Quad and India

    • The recent crystallisation of the Quad, of which India is a part, and the announcement of the AUKUS, with Australia being graduated to a power with nuclear-powered submarines, may act as a deterrent against Chinese moves on Taiwan.
    • But they may equally propel China to advance the unification agenda before the balance changes against it in the Indo-Pacific.
    • For these reasons, Taiwan is emerging as a potential trigger point for a clash of arms between the U.S. and China.

    Consider the question “What are the implications of Taiwan issue and the US involvement in it for India?”

    Conclusion

    In pursuing its Indo-Pacific strategy, India would do well to keep these possible scenarios in mind.

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  • Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

    India needs a carbon policy for agriculture

    op-ed snap | Enviro & Biodiversity | Mains Paper 3: Agriculture and related issues

    Context

    The UK is set to host the 26th UN Climate Change Conference of the Parties (CoP26) in Glasgow from October 31 to November 12 with a view to accelerate action towards the Paris Agreement’s goals. The focus should be on climate finance and transfer of green technologies at low cost.

    Cause of concern for India

    • According to the Global Carbon Atlas, India ranks third in total greenhouse gas emissions by emitting annually around 2.6 billion tonnes (Bt) CO2eq, preceded by China (10 Bt CO2eq) and the United States (5.4 Bt CO2eq), and followed by Russia (1.7Bt) and Japan (1.2 Bt).
    • India ranked seventh on the list of countries most affected due to extreme weather events, incurring losses of $69 billion (in PPP) in 2019 (Germanwatch, 2021).
    • The fact that 22 of the 30 most polluted cities in the world are in India is a major cause of concern.
    • Delhi is the world’s most polluted capital as per the World Air Quality Report, 2020.

    Issues raised in global negotiation on climate change

    • Nations are still quibbling about historical global emitters and who should take the blame and fix it.
    • Global negotiations on climate change often talk about emissions on a per capita basis and the emission intensity of GDP.
    • Per capita emission: Of the top five absolute emitters, the US has the highest per capita emissions (15.24 tonnes), followed by Russia (11.12 tonnes).
    • India’s per capita emissions is just 1.8 tonnes, significantly lower than the world average of 4.4 tonnes per capita.
    • If one takes emissions per unit of GDP, of the top five absolute emitters, China ranks first with 0.486 kg per 2017 PPP $ of GDP, which is very close to Russia at 0.411 kg per 2017 PPP $ of GDP.
    • India is slightly above the world average of 0.26 (kg per 2017 PPP $ of GDP) at 0.27 kg, while the USA is at 0.25, and Japan at 0.21.
    • In our Nationally Determined Contributions (NDCs) submitted in 2016, India committed to “reduce emission intensity of its GDP by 33 to 35 per cent by 2030 from 2005 level.”

    Sector-wise emission and share of agriculture in it

    • Global emissions show that electricity and heat production and agriculture, forestry and other land use make up 50 per cent of the emissions.
    • But the emissions pie in India owes its largest chunk (44 per cent) to the energy sector, followed by the manufacturing and construction sector (18 per cent), and agriculture, forestry and land use sectors (14 per cent), with the remaining being shared by the transport, industrial processes and waste sectors.
    • The share of agriculture in total emissions has gradually declined from 28 per cent in 1994 to 14 per cent in 2016.
    • However, in absolute terms, emissions from agriculture have increased to about 650 Mt CO2 in 2018, which is similar to China’s emissions from agriculture.
    • Agricultural emissions in India are primarily from the livestock sector (54.6 per cent) in the form of methane emissions due to enteric fermentation and the use of nitrogenous fertilisers in agricultural soils (19 per cent) which emit nitrous oxides; rice cultivation (17.5 per cent) in anaerobic conditions accounts for a major portion of agricultural emissions followed by livestock management (6.9 per cent) and burning of crop residues (2.1 per cent).

    Way forward: Carbon policy for agriculture

    • Reward farmers through carbon credit: A carbon policy for agriculture must aim not only to reduce its emissions but also reward farmers through carbon credits which should be globally tradable.
    • Focus on livestock: With the world’s largest livestock population (537 million), India needs better feeding practices with smaller numbers of cattle by raising their productivity.
    • Switch areas from rice to maize: While direct-seeded rice and alternative wet and dry practices can reduce the carbon footprint in rice fields, the real solution lies in switching areas from rice to maize or other less water-guzzling crops.
    • Efficient fertiliser use: Agricultural soils are the largest single source of nitrous oxide (N2O) emissions in the national inventory.
    • Nitrous oxide emissions from use of nitrogen-fertiliser increased by approximately 358 per cent during 1980-81 to 2014-15.
    • An alternative for better and efficient fertiliser use would be to promote fertigation and subsidise soluble fertilisers.
    • Incentives and subsidies: The government should incentivise and give subsidies on drips for fertigation, switching away from rice to corn or less water-intensive crops, and promoting soluble fertilisers at the same rate of subsidy as granular urea.

    Consider the question “Agriculture sector is one of the significant contributors to the greenhouse gas emissions. This underscores the importance of carbon policy for agriculture in India. In this context, suggest the steps needed to be taken under the policy.” 

    Conclusion

    Carbon policy for agriculture in India would help it meet its goals in reducing emissions while making agriculture climate-resilient.

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    Back2Basics: Anaerobic conditions

    • An anaerobic process in which organic food is converted into simpler compounds, and chemical energy (ATP) is produced. Certain types use the electron transport chain system to pass the electrons to the final electron acceptor, which may be an inorganic or an organic compound, but not oxygen.

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  • International Monetary Fund,World Bank,AIIB, ADB and India

    Issues faced by World Bank and IMF

    | International Relations | Mains Paper 2: International Institutions

    This article discusses some inherent issues with the international organizations (IOs) i.e., the World Bank (Bank) and International Monetary Fund (IMF) (aka Bretton Woods Twins). This comes in the backyard of the WB decision to scrap its flagship publication, the ‘Doing Business’ report.

    Issue over chair: A monopoly of the West

    • Common individuals to head: The individuals which are common to them: Paul Wolfowitz, Jim-Kim, David Malpass, Rodrigo Rato, Dominique-Strauss Kahn, Christine Lagarde, and Kristalina Georgieva.
    • Monopoly of US/EU: They have all become heads via a dual monopoly selection procedure: Only an American can head the Bank and only a European can head the IMF.
    • Personal integrity: This has been called into question, the most recent being the revelations of malfeasance at the World Bank where data was apparently massaged to make at least two major countries — China and Saudi Arabia— look better than they would otherwise have been.

    Issues with these heads: Hypocrisy

    • Political accountability: Within countries, we expect reasonable standards of integrity from heads of important institutions, and democratic political accountability mechanisms exist to ensure that.
    • Probity: The effectiveness and legitimacy of these individuals and indeed of the international institutions they head require personal qualities of probity.
    • Non-virtuous preachers: These heads often go around the developing world, preaching the virtues of good governance, from arguing against the scourge of corruption to improving data integrity.
    • Undue parameters: There are even World Bank indices to rank countries on those metrics.

    How has this impacted these institutions?

    Ans. The credibility of the institutions is lost.

    • It is not just the charge of hypocrisy, but also the effect on the morale and motivation of the staff of these institutions.
    • Many of them chose to work here because of a commitment to public service.
    • The recent letter by more than 300 former World Bank staff, expressing their anguish at the recent revelations on the Doing Business index, captures this sentiment.

    Why such issues grapple these institutions?

    • Goal definition: International institutions operate in a grey zone of neither clearly being in or outside the realm of formal politics and hence have weaker mechanisms of accountability.
    • Selection of heads: The selection procedure for choosing heads of the Bank and the Fund has been a dismal failure. Compromised heads are potentially more biased.
    • Indoctrination: Contrast this with the growing alarm and anxiety that characterizes the rise of China and its attempts to place its own nationals in existing IOs as well as creating new ones.

    Chinese has intruded even into these

    • Countries place their nationals to head these institutions, both for prestige and to pursue their national interests.
    • China has its own nationals now head four of the 15 UN specialized agencies (it suffered a rare setback to head the World Intellectual Property Organisation last year).

    Conclusion

    • The contest between the West (and especially the US) and China to shape the global order is becoming manifest.
    • China’s efforts, its success, and more broadly its influence in IOs should certainly raise deep concerns, most notably the suppression of the inquiry into the origins of the coronavirus.
    • Looking ahead, if the US and Europe do not hold themselves to the standards they exhort to the rest of the world, their credibility and legitimacy will continue to degrade.
    • This will cede ground and soft power to geopolitical rivals.

    Way forward

    • So, global political leaders convening next week for the annual meetings of the Bank and Fund must act with urgency and conviction to stem the rot.
    • They must open the selection of the heads of these institutions to the best candidate, regardless of nationality.
    • And to pave the way, they should clear up the current mess over the Doing Business saga.

    Back2Basics:

    International Org. | Part 7 | Bretton Woods Institutions – World Bank Group

     

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  • Disinvestment in India

    Air India Disinvestment Deal

    | Economics | Mains Paper 3: Effects Of Liberalization On The Economy, Changes In Industrial Policy and their effects on Industrial Growth

    After 68 years, Air India is all set to return to the Tata fold.

    What is the deal?

    • The Tatas will own 100% stake in Air India, as also 100% in its international low-cost arm Air India Express and 50% in the ground handling joint venture, Air India SATS.
    • Apart from 141 planes and access to a network of 173 destinations including 55 international ones, Tatas will also have the ownership of iconic brands like Air India, Indian Airlines and the Maharajah.

    History of Air India

    • Prominent industrialist JRD Tata founded the airline in 1932 and named it Tata Airlines.
    • As India gained Independence, the government bought 49% stake in AI.
    • In 1946, the aviation division of Tata Sons was listed as Air India, and in 1948, the Air India International was launched with flights to Europe.
    • In 1953, Air India was nationalised and for the next over four decades it remained the prized possession for India controlling the majority of the domestic airspace.

    Why was Air India sold?

    • End of Monopoly: With economic liberalisation and the growing presence of private players, this dominance came under serious threat.
    • Govt running an airline: Ideologically too, the government running an airline did not quite gel with the mantra of liberalisation.
    • Continuous losses: By 2007, AI (which flew international flights) was merged with the domestic carrier, Indian Airlines, to reduce losses.
    • Wastage of taxpayers money: But it is the mark of how poorly the airline was run that it has never made a profit since 2007.

    Why wasn’t it sold earlier?

    Ans. Fear over Operational Freedom

    • The first attempt to reduce the government’s stake — disinvestment — was made in 2001 under the then NDA government.
    • But that attempt — to sell 40% stake — failed.
    • In 2018, the government made another attempt to sell the government stake — this time, 76%. But it did not elicit even a single response.
    • In the latest attempt started in January 2020, the government has been able to finally conclude the sale.

    So how was it managed this time?

    • Govt gives up stakes: The mere fact that the government retained a partial stake. In other words, as long as the government kept a certain shareholding of AI, private players did not seem interested.
    • Operational freedom: That’s because the mere idea of government ownership, even if it was as little as 24%, made private firms wonder if they would have the operational freedom needed.
    • Debt sharing: In the past, the government expected the bidders to pick up a certain amount of the debt. This time, the government let the bidders decide the amount of debt they wanted to pick up.

    Significance of the deal

    [A] From the government’s perspective: A success

    • Disinvestment: It underscores govt commitment to reducing the its role in the economy.
    • Easing burden on taxpayers: This claims to have saved taxpayers from paying for daily losses of AI.
    • Economic reforms: Given the historical difficulties in AI’s disinvestment, or any disinvestment at all this is a significant achievement.

    [B] Business perspective: Still a failure

    • Missing the target: Purely in terms of money, the deal does not result in as big a step towards achieving the government’s disinvestment target of the current year.
    • Unresolved bankruptcy: The assets left with the government, such as buildings, etc., will likely generate Rs 14,718 crore. But that will still leave the government with a debt of Rs 28,844 crore to pay back.

    [C] Value perspective: Success for Tatas

    • Business success: From the Tatas’ perspective, apart from the emotional aspect of regaining control of an airline that they started, AI’s acquisition is a long-term bet.
    • Investment boost: The Tatas are expected to invest far more than what they have paid the government if this bet is to work for them.

    Conclusion

    • Complete liberalization: The privatisation of Air India is a message from the Government to the markets and global investors that it has the political will to bite the reform bullet.
    • Roadmap for economic reforms: The govt had to shed the “over-conservatism” that is typical of bureaucracy.
    • Future disinvestments: A transaction as “tough and complex” as Air India’s in an open, transparent and competitive bidding process, will boost future privatisation.

    Way forward

    • Other loss-making PSUs continue to drain taxpayers’ hard-earned money and get abused and fleeced in the name of social welfare.
    • The govt should imbibe this experience gained in future disinvestment biddings.

     

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  • Foreign Policy Watch: India-ASEAN

    India-ASEAN FTA

    IOCR | International Relations | Mains Paper 2: Bilateral, Regional and Global Groupings and agreements involving India

    The Commerce and Industry Minister has called for a renegotiation of the India-ASEAN free trade agreement (FTA).

    Why such move?

    • The MCI aims to prevent its misuse by ‘third parties’ and remove trade restrictions as well as non-tariff barriers that he said had hurt Indian exports disproportionately since the pact was operationalized in 2010.
    • The focus needed to be on new rules to eliminate misuse ‘by third parties outside ASEAN’, the minister said, hinting at China.
    • India had to deal with several restrictive barriers on exports in the ASEAN region, particularly in the agriculture and auto sectors.

    About ASEAN

    • Members:
    • Officially the Association of Southeast Asian Nations, ASEAN is an economic union comprising 10 member states in Southeast Asia.
    • It promotes intergovernmental cooperation and facilitates economic, political, security, military, educational, and sociocultural integration between its members and other countries in Asia.

    India-ASEAN Free Trade Agreement

    • The initial framework agreement for ASEAN–India Free Trade Area (AIFTA) was signed on 8 October 2003 in Bali, Indonesia.
    • The FTA came into effect on 1 January 2010.
    • The FTA had emerged from a mutual interest of both parties to expand their economic ties in the Asia-Pacific region.

    Background of the AIFTA

    • India’s Look East policy was reciprocated by similar interests of many ASEAN countries to expand their interactions westward.
    • After India became a sectoral dialogue partner of ASEAN in 1992, India saw its trade with ASEAN increase relative to its trade with the rest of the world.
    • Between 1993 and 2003, ASEAN-India bilateral trade grew at an annual rate of 11.2%, from US$2.9 billion in 1993 to US$12.1 billion in 2003.
    • Total Indian FDI into ASEAN from 2000 to 2008 was US$1.3 billion.

    Acknowledging this trend and recognising the economic potential of closer linkages, both sides recognised the opportunities to pave the way for the establishment of an ASEAN–India Free Trade Area (FTA).

    Structure of the AIFTA

    • The signing of the ASEAN-India Trade in Goods Agreement paves the way for the creation of one of the world’s largest FTAs – a market of almost 1.8 billion people with a combined GDP of US$2.8 trillion.
    • It sees tariff liberalisation of over 90 percent of products traded between the two dynamic regions, including the so-called “special products”.
    • The products include palm oil (crude and refined), coffee, black tea and pepper.

    Criticism

    While there are many benefits to the ASEAN-India FTA, there is concern in India that the agreement will have several negative impacts on the economy.

    • Opening-up its market: This FTA will allow them to increase the market access of their products.
    • No specific gains: It is criticised, however, that India will not experience as great an increase in market access to ASEAN countries as ASEAN will in India.
    • Export driven ASEAN: The economies of the ASEAN countries are largely export-driven. Considering India’s expansive domestic market, the ASEAN countries will look eagerly towards India as a home for its exports.
    • Huge trade deficit: Since the early 2000s, India has had an increasing trade deficit with ASEAN. It is feared that a gradual liberalisation of tariffs and a rise in imported goods into India will threaten several sectors of the economy.
    • Inaccessible Markets: As a dominant exporter of light manufacturing products, ASEAN has competitive tariff rates that make it difficult for India to gain access to the industry market in ASEAN countries.
    • Cheaper imports: The state of Kerala is an important exporter in the national export of plantation products. It fears that cheap imports of oil palm, rubber, coffee, and fish would lower domestic production, adversely affecting farmers and ultimately its economy.

     

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  • RBI Notifications

    RBI suspends G-Sec Acquisition Programme (GSAP)

    Prelims Only | Economics | Mains Paper 3: Indian Economy

    The Reserve Bank of India (RBI) has decided to halt its bond-buying under the G-Sec Acquisition Programme (GSAP).

    Why such move?

    • The GSAP had succeeded in ensuring adequate liquidity and stabilising financial markets.
    • Coupled with other liquidity measures, it facilitated congenial and orderly financing conditions and a conducive environment for the recovery.

    What is GSAP?

    • The G-Sec Acquisition Programme (G-SAP) is basically an unconditional and a structured Open Market Operation (OMO), of a much larger scale and size.
    • G-SAP is an OMO with a ‘distinct character’.
    • The word ‘unconditional’ here connotes that RBI has committed upfront that it will buy G-Secs irrespective of the market sentiment.

    What are Government Securities?

    • These are debt instruments issued by the government to borrow money.
    • The two key categories are:
    1. Treasury bills (T-Bills) – short-term instruments which mature in 91 days, 182 days, or 364 days, and
    2. Dated securities – long-term instruments, which mature anywhere between 5 years and 40 years

    Note: T-Bills are issued only by the central government, and the interest on them is determined by market forces.

    Why G-Secs?

    • Like bank fixed deposits, g-secs are not tax-free.
    • They are generally considered the safest form of investment because they are backed by the government. So, the risk of default is almost nil.
    • However, they are not completely risk-free, since they are subject to fluctuations in interest rates.
    • Bank fixed deposits, on the other hand, are guaranteed only to the extent of Rs 5 lakh by the Deposit Insurance and Credit Guarantee Corporation (DICGC).

    Other decisions

    • The RBI, however, remained ready to undertake G-SAP as and when warranted by liquidity conditions.
    • It would also continue to flexibly conduct other liquidity management operations including Operation Twist (OT) and regular open market operations (OMOs).

    Answer this PYQ in the comment box:

    Q.Consider the following statements:

    1. The Reserve Bank of India manages and services the Government of India Securities but not any State Government Securities.
    2. Treasury bills are issued by the Government of India and there are no treasury bills issued by the State Governments.
    3. Treasury bills offer are issued at a discount from the par value.

    Which of the statements given above is/are correct?

    (a) 1 and 2 only

    (b) 3 Only

    (c) 2 and 3 only

    (d) 1, 2 and 3

     

    Post your answers here:

     

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    Back2Basics: Open Market Operations (OMO)

    • OMOs is one of the quantitative monetary policy tools which is employed by the central bank of a country to control the money supply in the economy.
    • It is a part of the Market Stabilization Scheme (MSS) by the RBI.
    • OMOs are conducted by the RBI by way of sale or purchase of government securities (g-secs) to adjust money supply conditions.
    • The central bank sells g-secs to remove liquidity from the system and buys back g-secs to infuse liquidity into the system.

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  • Animal Husbandry, Dairy & Fisheries Sector – Pashudhan Sanjivani, E- Pashudhan Haat, etc

    What is Palk Bay Scheme?

    Schemes | Agriculture | Mains Paper 3: Economics Of Animal-Rearing

    The Union Government is considering increasing the unit cost of deep-sea fishing vessels under the Palk Bay scheme to make it more attractive to fisherfolk.

    Palk Bay Scheme

    • The Palk Bay Scheme is the official scheme for diversification of trawl fishing boats from Palk Strait into deep sea fishing boats.
    • It is aimed at encouraging fishermen to take up deep-sea fishing and put an end to disputes arising between the India and Sri Lanka.
    • The project helps fishermen in the Palk Straits, who are not exposed to deep-sea fishing, to venture deep into the Indian Ocean, Arabian sea and other deep-sea areas to look for fish like tuna that are in high demand.

    Why need such a scheme?

    • Bottom trawling, an ecologically destructive practice, involves trawlers dragging weighted nets along the sea-floor, causing great depletion of aquatic resources.

    Key components of the scheme

    • The project aims to replace all trawler boats and introduce over 2,000 deep sea fishing boats in a course of five years.
    • The scheme, under the aegis of Blue Revolution scheme – is funded by the Centre – 50 per cent and state government – 20 per cent for a boat costing Rs 80 lakh.
    • Of the balance 30 per cent, 10 per cent is contributed by the beneficiary (fisherman), and the remaining 20 per cent is funded by banks.

    Must read:

    [Burning Issue] India- Sri Lanka Fishermen Issues

     

     

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  • Indian Air Force Updates

    Challenges facing Indian Air Force

    | Security Issues | Mains Paper 3: Various Security Forces, Agencies & Their Mandates

    Context

    A host of challenges greets India’s new Air Chief.

    Challenges

    • The challenges include the rewiring of India’s military into new theatre commands, the reservations expressed by the IAF about its “support” role and the visible depletion in operational air assets due to obsolescence and lack of new platforms.
    • The decline in platforms is stark and from a strength of 42 combat squadrons in 2002, the IAF now operates barely 30.
    • This shortfall in numbers would remain through this decade.
    • Even as there are plans to create new theatre commands and allocate existing air assets to the new formations, the depletion in numbers merits urgent review.

    Steps taken

    • The purchase of 83 Tejas Light Combat Aircraft (LCA) will be a fillip even as the sturdy MIGs are finally phased out.
    • In the next decade, the IAF hopes to induct the indigenous fifth-generation Advanced Medium Combat Aircraft (AMCA) and the Multi-Role Fighter Aircraft (MRFA) — a new platform that would be built in India with a foreign entity, the “original equipment manufacturer” (OEM), and thereby move up to 35 squadrons.
    • Issues: The AMCA is “under design” and India’s track record in the design and manufacture of indigenous fighter aircraft is cost- and time-intensive.
    • As regards the MRFA, the request for information for 114 jets has just been issued.
    • The Rafale experience and the long delays associated with it would suggest that speedy selection of an OEM will be elusive.

    Way forward

    • Air power is becoming technologically more refined with unmanned platforms, cyber-space linkages and AI advances.
    • The inherent trans-border nature of this military capability needs astute professional and political husbanding.
    • Acquiring credible aerospace power with a meaningful degree of indigenisation will need a greater degree of national resolve, professional integrity and resource allocation than is the case now.
    • China has demonstrated the degree of suasion and intimidation that airpower can bring to bear in relation to Taiwan.

    Conclusion

    A reality check about the quantity and quality of India’s air power and the roles it can undertake should precede its disaggregation to theatre commands in the run-up to India@75.

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  • Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

    Seeding a data revolution in Indian Agriculture

    op-ed snap | Agriculture | Mains Paper 3: Inclusive Growth & Issues

    In June this year, two significant documents relating to the Indian agriculture sector were released.

    What are the reports about?

    • The first is a consultation paper on the India Digital Ecosystem of Agriculture (IDEA) and the second on Indian Agriculture: Ripe for Disruption from a private organisation, Bain and Company.
    • Through their work, these reports have depicted the agriculture reforms announced by the union government as a game-changer in the agriculture sector.

    Challenges highlighted

    The major challenges of the agriculture sector are:

    1. Food Sufficiency but Nutrition Deficiency
    2. High import of edible oil and oilseeds
    3. Yield plateaus
    4. Degrading soil, Water stress
    5. Inadequate market infra/linkages
    6. Unpredictable, volatile prices
    7. Post-harvest losses, wastages
    8. Lack of crop planning due to information asymmetry

    Key takeaway: Way for doubling farmers income

    • These reports in short argues that benefiting from the huge investments into the agri-ecosystem, doubling farmers’ income targets can be achieved in near future.
    • The Indian agriculture sector in future will encompass farm to fork and pave the way for a single national market with a national platform with better connection between producer and consumers.

    The forecast

    • The Bain report is a data-based prediction on agri-business scenarios, anchored to the agricultural set-up at present and predicting its future trajectories in another 20 years.
    • It includes targeting the production of alternative proteins, and food cell-based food/ingredients and initiating ocean farming, etc.
    • The report has a ‘today forward– future back approach’ and predicts a drastic investment opportunity development by 2025.
    • The agriculture sector (currently worth $370 billion), is estimated to receive an additional $35 billion investment.

    The two enabling conditions for such investment opportunities are:

    1. Changes in the regulatory framework, especially recent changes in the Farm Acts and
    2. Digital disruption

    The IDEA of integration

    • Digital disruption: The blueprint of “digital agriculture” is similar to the digital disruption mentioned in the Bain report.
    • Integration: Eventually, the farmer and the improvement of farmers’ livelihood is the aim of the IDEA concept and it is proposed to happen through tight integration of agri-tech innovation and the agriculture industry.
    • Enabling conditions: To be precise, the IDEA concept profounds the creation of second enabling conditions (which is described in the Bain report).
    • Openness of data: The IDEA principles explicitly talk about openness of data, which means open to businesses and farmers, indicating the kind of integration it aims at.
    • Value-added innovative services: by agri-tech industries and start-ups are an integral part of the IDEA architecture.
    • Data architecture: The services listed in the document (to be available on the platform) are equally important data for farmers and businesses.

    A thread of digital disruption

    • The IT industry has opposition to IDEA mainly due to the ethics of creating a Unique Farmer ID based on one’s Aadhaar number and also the potential for data misuse.
    • Beyond the news coverage about the prospects of achieving the goal of Doubling Farmers Income on which the present government has almost lost its hope.

    Issues with these reports

    • The Bain report has not been widely discussed — at least in the public domain.
    • The assumptions used by authors especially for its ‘future back approach’, need more or less focusing on widespread food production in controlled environments.
    • The emission, energy, and other resource footprints and sustainability issues around these techniques are not adequately studied.

    Yet these reports are important

    • The report has convincingly demonstrated the business opportunity available in supply chains between farm to APMC mandi and mandi to the customer.
    • This can be realised with the support of digital disruption and the latest agriculture reforms.
    • Both these reports heavily rely on digital disruption to improve farmers’ livelihoods, without discussing how much farmers will be prepared to benefit from the emerging business.

    An unconvincing ‘how’

    • Digital divide: The fact is that a majority of small and marginal farmers are not technology-savvy.
    • No capacity building: That most of them are under-educated for capacity building is ignored amidst these ambitious developments.
    • Unrealistic assumptions: The Bain report relies on the general assumption that more investments into the agriculture sector will benefit farmers; ‘but how’ has not been convincingly answered.
    • Overemphasis on technology: Similarly, how the technology fix will help resolve all the issues of Indian agriculture listed at the beginning of the report is unclear in the IDEA concept.
    • Reluctance by farmers: These reports ignore the protest of farmers against the reforms without considering it as a barrier or risk factor resulting in a repealing of these new farm laws.

    Way ahead: Focus on the farmer

    • A data revolution is inevitable in the agriculture sector, given its socio-political complexities.
    • However, we cannot just count on technology fixes and agri-business investments for improving farmers’ livelihoods.
    • There need to be immense efforts to improve the capacities of the farmers in India – at least until the educated young farmers replace the existing under-educated small and medium farmers.
    • This capacity building can be done through a mixed approach through FPOs and other farmers’ associations where technical support is available for farmers.

    Conclusion

    • Considering the size of the agriculture sector of the country this is not going to be an easy task but would need a separate program across the country with considerable investment.

     

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  • Coal and Mining Sector

    Coal Crisis in India

    | Economics | Mains Paper 3: Infrastructure: Energy, Ports, Roads, Airports, Railways Etc.

    More than half of the country’s 135 coal-fired power plants are running on fumes – as coal stocks run critically low.  They have fuel stocks of less than four days, government data shows.

    Coal shortage in India

    • In a country where 70% of the electricity is generated using coal, this is a major cause for concern as it threatens to derail India’s post-pandemic economic recovery.
    • Utilities are scrambling to secure coal supplies as inventories hit critical lows after a surge in power demand from industries and sluggish imports due to record global prices push power plants to the brink.

    How did the crisis escalate?

    • As India’s economy picked up after a deadly second wave of Covid-19, demand for power rose sharply.
    • Power consumption in the last two months alone jumped by almost 17%, compared to the same period in 2019.
    • At the same time global coal prices increased by 40% and India’s imports fell to a two-year low.
    • India is the world’s second largest importer of coal despite also being home to the fourth largest coal reserves in the world.
    • Power plants that usually rely on imports are now heavily dependent on Indian coal, adding further pressure to already stretched domestic supplies.

    What is the likely impact?

    • Experts say importing more coal to make up for domestic shortages is not an option at present.
    • India has seen shortages in the past, but what’s unprecedented this time is coal is really expensive now.
    • Businesses at the end of the day pass on these costs to consumers, so there is an inflationary impact – both direct and indirect that could potentially come from this.
    • If the crisis continues, a surge in the cost of electricity will be felt by consumers.
    • Retail inflation is already high as everything from oil to food has become more expensive.

    Other reasons for this crisis

    • In recent years, India’s production has lagged as the country tried to reduce its dependence on coal to meet climate targets.
    • Prices of power-generation fuels are surging globally as electricity demand rebounds with industrial growth, tightening supplies of coal and liquefied natural gas.
    • India is competing against buyers such as China, the world’s largest coal consumer, which is under pressure to ramp up imports amid a severe power crunch.
    • Rising oil, gas, coal and power prices are feeding inflationary pressures worldwide and slowing the economic recovery from the COVID-19 pandemic.

    Challenges posed

    • The desire to cut its reliance on heavily polluting coal burning power plants has been a major challenge for the government in recent years.
    • The question of how India can achieve a balance between meeting demand for electricity from its almost 1.4bn people has to be answered.

    What can the government do?

    • Experts advocate a mix of coal and clean sources of energy as a possible long-term solution.
    • It’s not completely possible to transition and it’s never a good strategy to transition 100% to renewables without a backup.
    • Long term investment in multiple power sources aside a crisis like the current one can be averted with better planning.
    • There is need for closer coordination between Coal India Limited – the largest supplier of coal in the country and other stakeholders.
    • For now, the government is working with state-run enterprises to ramp up production and mining to reduce the gap between supply and demand.

    Way forward

    • This is a global phenomenon, one not specifically restricted to India.
    • It is unclear how long the current situation will last.
    • With the monsoon on its way out and winter approaching, the demand for power usually falls.
    • So, the mismatch between demand and supply may iron out to some extent.

    Try answering this PYQ:

    Consider the following statements:

    1. Coal sector was nationalized by the Government of India under Indira Gandhi.
    2. Now, coal blocks are allocated on lottery basis.
    3. Till recently, India imported coal to meet the shortages of domestic supply, but now India is self- sufficient in coal production.

    Which of the statements given above is/are correct?

    (a) 1 only

    (b) 2 and 3 only

    (c) 3 only

    (d) 1, 2 and 3

     

    Post your answers here.

     

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