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  • Telecom and Postal Sector – Spectrum Allocation, Call Drops, Predatory Pricing, etc

    5G Technology and India’s preparedness

    Prelims Only | Science Tech | Mains Paper 3: S&T – Applications In Everyday Life

     

    The Department of Telecommunications (DoT) has sought inputs from telcos and other industry experts on the sale and use of radiofrequency spectrum over the next 10 years, including the 5G bands.

    Try this PYQ:

    Q. In India, which of the following review the independent regulators in sectors like telecommunications, insurance, electricity, etc.?

    1. Ad Hoc Committees set up by the Parliament
    2. Parliamentary Department Related Standing Committees
    3. Finance Commission
    4. Financial Sector Legislative Reforms Commission
    5. NITI Aayog

    Select the correct answer using the code given below:

    (a) 1 and 2

    (b) 1, 3 and 4

    (c) 3, 4 and 5

    (d) 2 and 5

    What is 5G technology?

    • 5G or fifth generation is the latest upgrade in the long-term evolution (LTE) mobile broadband networks.
    • It mainly works in 3 bands, namely low, mid and high-frequency spectrum — all of which have their own uses as well as limitations.

    Three bands of 5G

    • The low band spectrum has shown great promise in terms of coverage and speed of internet and data exchange, the maximum speed is limited to 100 Mbps (Megabits per second).
    • This means that while telcos can use and install it for commercial cellphones users who may not have specific demands for very high-speed internet, the low band spectrum may not be optimal for specialised needs of the industry.
    • The mid-band spectrum, on the other hand, offers higher speeds compared to the low band but has limitations in terms of coverage area and penetration of signals.
    • Telcos and companies, which have taken the lead on 5G, have indicated that this band may be used by industries and specialised factory units for building captive networks that can be moulded into the needs of that particular industry.
    • The high-band spectrum offers the highest speed of all the three bands, but has extremely limited coverage and signal penetration strength.
    • Internet speeds in the high-band spectrum of 5G have been tested to be as high as 20 Gbps (gigabits per second), while, in most cases, the maximum internet data speed in 4G has been recorded at 1 Gbps.

    Where does India stand in the 5G technology race?

    • On par with the global players, India had, in 2018, planned to start 5G services as soon as possible, with an aim to capitalize on the better network speeds and strength that the technology promised.
    • Indian private telecom players have been urging the DoT to lay out a clear road map of spectrum allocation and 5G frequency bands so that they would be able to plan the rollout of their services accordingly.
    • One big hurdle, however, is the lack of flow of cash and adequate capital with some companies due to their AGR dues.

    Global progress on 5G

    • More than governments, global telecom companies have started building 5G networks and rolling it out to their customers on a trial basis.
    • In countries like the US, some companies have taken the lead when it comes to rolling out commercial 5G for their users.
    • A South Korean company, which had started researching on 5G technology way back in 2011, has, on the other hand, take the lead when it comes to building the hardware for 5G networks for several companies.

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  • Banking Sector Reforms

    Bank Investment Company (BIC)

    | Economics | Mains Paper 3: Government Budgeting,Indian Economy

    Banks, especially the Public Sector Banks have to play an important role in the pandemic afflicted economy. With that aim, the government has been envisaging the Bank Investment Company (BIC) for the improvement of PSB governance. The article discusses the issues with the BIC.

    Background of the BIC

    • Recent reports suggest that the upcoming budget may include proposals for a Bank Investment Company (BIC), anchoring the government’s shareholding in its banks.
    • The BIC was proposed by the P J Nayak Committee constituted by the RBI in 2014 to examine governance at public and private sector banks.
    • The committee had offered two options — privatisation or a complete overhaul of bank governance.
    • The overhaul of bank governance is envisaged in the form of a gradual disassociation of the government from the operations, management and governance of PSBs.
    • The BIC is a welcome step in as much as it signals the government’s intent to pursue reforms to improve the governance and performance of PSBs.

    Concerns with the BIC

    • The ownership and governance of the BIC itself will be crucial.
    • BIC will need to be allowed to garner the requisite talent and expertise and operate with freedom.
    • In the absence of this, it would merely add another layer while preserving the status quo.
    • The less than encouraging experience of the Banks Board Bureau (BBB) that was to precede the BIC is instructive.

    Why BBB failed to achieve its objectives

    • The BBB was set up in 2016 to advise on the selection and appointment of senior board members and management.
    • However, in practice, the BBB’s advice has not always been heeded to, and appointments have not always been made on time.
    • The BBB, as originally conceived, was to consist of three senior bankers.
    • However, it was expanded to include representatives from the RBI and the government.
    • The BBB was also originally envisaged by the committee as a temporary arrangement.
    • However, no further steps have been forthcoming after its establishment.

    Way forward for BIC

    • The government would need to ensure the necessary freedom for the BIC to operate while circumscribing its own role.
    • The ultimate success of these reforms will depend on how the government disassociates itself and empowers the BIC.
    • The objectives of the BIC would have to be clearly defined too.
    • If capital raising is one of the goals, the structure of a holding company — with a portfolio of comparatively better performing and non-performing banks — to attract investments must be assessed.
    • In this regard, the RBI has reportedly, in the past, expressed reservations on the BIC structure being a potential challenge for investors to assess the relative risks, returns and performance of the banks.
    • This raises the question of whether privatisation would not be a better alternative, particularly as the transition of the government from an owner to a pure financial investor in its banks is likely to take time.

    Conclusion

    Given these concerns, privatisation may be a better alternative. The budget could signal this intent by announcing the first step — the repeal of the Bank Nationalisation Acts and the State Bank of India Act.

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  • Higher Education – RUSA, NIRF, HEFA, etc.

    Problem of control and governance of knowledge in a globalised world

    op-ed snap | Governance | Mains Paper 2: Health & Education

    The article highlights the issues with the criteria applied by the UGC to evaluate the faculty research.

    Impact of UGC standardisation on social sciences and humanities research

    • UGC has been the regulatory body responsible for maintaining standards in higher education, while addressing challenges of globalisation.
    • Processes of UGC mandated standardisation have in particular impacted social sciences and humanities research in Indian universities.
    • Over the years, UGC has linked institutional funding to ranking and accreditation systems like NAAC and NIRF.
    • In order to evaluate institutions, these bodies have evolved  criteria, which rank universities based on faculty research measured by citations in global journal databases like SCOPUS.
    • In comparison, importance granted to research outputs like books or other forms is declining.

    Issues with the criteria

    • The insistence of publication in journals fails to distinguish between the varied trajectory of disciplines.
    • While in STEM (Science, Technology, Engineering, Management) disciplines, research is often highly objective and quantified.
    • In social sciences and humanities research is subjective, analytical and argumentative.
    • In disciplines like history, sociology, politics, philosophy, psychology and literature, researchers spend years writing books that engage with ideas in complex ways.
    • In devaluing books as authentic forms of research, UGC does major disservice to scholars of social sciences and humanities.
    • Due to emphasis on publication, teachers spend most of their productive time writing articles and getting them published, thereby missing out on quality engagement with pedagogy and research.

    Issues with the process of peer review

    • The process of peer review itself is subjective, and depends upon the knowledge, inclination and availability of time of the particular reviewer.
    • It is often quite challenging for scholars to meet peer-review standards of A-listed journals.
    • This has actually required the UGC to expand its own list, ending up including and subsequently deleting a large number of locally published journals.

    Issue of inaccessibility

    • Publication of research in paywalled journal databases makes research inaccessible for students as universities continue to cut down library budgets.
    • Students and teachers, access articles through pirated sites like Libgen and Scihub, prone to be shut down at any point of time as evident from the litigations.
    • Clearly, access to knowledge is structurally made inequitable in favour of the elite and/or moneyed institutions and their constituents.

    Way forward

    • The above arguments maintain for the possible multiplicity that can emerge as the end-result of research.
    • Interdisciplinary and practice-based research can throw up social and ecological experiments, artworks and performances, and numerous new outcomes yet to be conceived as research outputs.
    • While the UGC hopes to raise the standards to global levels, precarity of employment, longer teaching hours, a dismal student-teacher ratio, lack of sabbaticals, research and travel grants, access to research facilities and office space, adversely impact the research potential of teachers.
    • Regulating research needs to be replaced with facilitating research, allowing minds to think and gestate.
    • Regulations without facilitation will merely bureaucratise the governance of knowledge without generating any pathbreaking insights.

    Conclusion

    The UGC needs to widen its criteria which values publication of a book as much as a research paper in the mandated journal to widen the research in social sciences and humanities.

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  • Foreign Policy Watch: India-Russia

    Russia withdraws from Open Skies Treaty

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

    Russia has announced that it was pulling out of the Open Skies Treaty, saying that the pact had been seriously compromised by the withdrawal of the United States.

    The New START, INF and now the OST …. Be clear about the differences of these treaties. For example- to check if their inception was during cold war era etc.

    Open Skies Treaty (OST)

    • OST is an agreement that allows countries to monitor signatories’ arms development by conducting surveillance flights over each other’s territories.
    • The idea behind the OST was first proposed in the early years of the Cold War by former U.S. President Dwight Eisenhower.
    • It came to existence decades later and was signed in 1992, during the George H.W. Bush presidency and after the Soviet Union had collapsed.
    • The OST came into effect in 2002 under the George W. Bush administration and it allows its 34 signatories to conduct unarmed reconnaissance flights over the territory of treaty countries.

    Issues with the OST

    • The U.S. has used the treaty more intensively than Russia.
    • Between 2002 and 2016, the U.S. flew 196 flights over Russia (in addition to having imagery from other countries) compared to the 71 flights flown by Russia.

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  • Foreign Policy Watch: India-Nepal

    Nepal once again raises Kalapani Boundary Issue

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

    Nepal has raised the Kalapani boundary dispute with India during the Joint Commission meeting of the Foreign Ministers.

    Q.The India-Nepal bilateral relations these days are increasingly seen through the lens of China factor. Examine.

    Kalapani Boundary Issue

    • Mapped within Uttarakhand is a 372-sq km area called Kalapani, bordering far-west Nepal and Tibet.
    • A treaty signed between Nepal and British India in 1816 determined the Makhali river, that runs through Kalapani, as the boundary between the two neighbours.
    • The Treaty of Sugauli concluded between British India and the Kingdom of Nepal in the year 1816, maps the Makhali River as the western boundary with India.
    • But different British maps showed the source of the tributary at different places which were mainly due to underdeveloped and less-defined surveying techniques used at that time.
    • However, the river has many tributaries that meet at Kalapani. For this reason, India claims that the river begins at Kalapani but Nepal says that it begins from Lipu Lekh pass, which is the source of most of its tributaries.
    • While the Nepal government and political parties have protested, India has said the new map does not revise the existing boundary with Nepal.
    • India claims that the river begins at Kalapani but Nepal says that it begins from Lipu Lekh pass, which is the source of most of its tributaries.

    Legal Dimension of Issue

    According to International Laws, the principles of avulsion and accretion are applicable in determining the borders when a boundary river changes course.

    • Avulsion: It is the pushing back of the shoreline by sudden, violent action of the elements, perceptible while in progress. Also, it can be defined as the sudden and perceptible change in the land brought about by water, which may result in the addition or removal of land from a bank or shoreline.
    • Accretion: It is the process of growth or enlargement by a gradual buildup. It is the natural, slow and gradual deposit of soil by the water.

    If the change of the river course is rapid – by avulsion – the boundary does not change. But if the river changes course gradually – that is, by accretion – the boundary changes accordingly.

    Since, the Gandak change, of course, has been gradual, India claimed Susta as part of their territory as per international laws.

    • On several occasions, India has tried to resolve the issue through friendly and peaceful negotiations, but the Nepali leadership has always shown hesitation in resolving the issue.
    • In Nepal, the issue has become a tool for arousing strong public sentiment against India. Therefore, resolving the issue may not be in the best interest of Nepal’s domestic politics.

    Significance for India

    • The Lipu Lekh pass serves strategic importance for India as a key point to monitor Chinese troop movement.
    • The link road via Lipulekh Himalayan Pass is also considered one of the shortest and most feasible trade routes between India and China.
    • The Nepalese reaction would probably have triggered in response to Chinese assertion.

    An undefined boundary claimed by Nepal

    • Nepal’s western boundary with India was marked out in the Treaty of Sugauli between the East India Company and Nepal in 1816.
    • Nepali authorities claim that people living in the low-density area were included in the Census of Nepal until 58 years ago.
    • Five years ago, Nepali Foreign Minister had claimed that the late King Mahendra “handed over the territory to India”.
    • By some accounts in Nepal, this allegedly took place in the wake of India-China War of 1962.

    Must read:

    [Burning Issue] India-Nepal Border Row

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  • Trade Sector Updates – Falling Exports, TIES, MEIS, Foreign Trade Policy, etc.

    India’s trade with China falls at five-year low

    | Economics | Mains Paper 3: Indian Economy

    India’s trade with China last year fell to the lowest since 2017, with the trade imbalance declining to a five-year low on the back of a slump in India’s imports from China.

    Try this PYQ:

    Q.Among the following, which one is the largest exporter of rice in the world in the last five years? (CSP 2019)

    (a) China

    (b) India

    (c) Myanmar

    (d) Vietnam

    India-China Trade

    • Two-way trade in 2020 reached $87.6 billion, down by 5.6%, according to new figures from China’s General Administration of Customs (GAC).
    • India’s imports from China accounted for $66.7 billion, declining by 10.8% year-on-year and the lowest figure since 2016.
    • It, however, rose to the highest figure on record, for the first time crossing the $20 billion-mark and growing 16% last year to $20.86 billion.

    What constitutes India’s import from China?

    • While there was no immediate break-up of the data in 2020, India’s biggest import in 2019 was electrical machinery and equipment, worth $20.17 billion.
    • Other major imports in 2019 were organic chemicals ($8.39 billion) and fertilizers ($1.67 billion), while India’s top exports were iron ore, organic chemicals, cotton and unfinished diamonds.

    India’s exports to China

    • The past 12 months saw a surge in demand for iron ore in China with a slew of new infrastructure projects aimed at reviving growth after the COVID-19 slump.
    • China’s total iron ore imports were up 9.5 per cent in 2020.

    A friction-induced low

    • The trade deficit, a source of friction between India and China, declined to a five year-low of $45.8 billion, the lowest since 2015.
    • Whether 2020 is an exception or marks a turn away from the recent pattern of India’s trade with China remains to be seen.
    • While India’s imports from China declined, so did India’s imports overall with a slump in domestic demand last year.
    • There is, as yet, no evidence to suggest India has replaced its import dependence on China by either sourcing those goods elsewhere or manufacturing them at home.

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  • Festivals, Dances, Theatre, Literature, Art in News

    [pib] Who was Thiruvalluvar?

    Prelims Only | History | Mains Paper 1: Arts & Culture

    The Prime Minister has extended his venerations to Thiruvalluvar on the Thiruvalluvar Day.

    Read everything about Sangam Literature from your basic sources.

    Who was Thiruvalluvar?

    • Thiruvalluvar is fondly referred to as Valluvar by Tamils was born during 4th -5th century CE.
    • His ‘Thirukkural’, a collection of 1,330 couplets (‘kurals’ in Tamil), are an essential part of every Tamil household.
    • It holds importance in the same way the Bhagavad Gita or the Ramayana are in traditional North Indian Hindu households.
    • Thiruvalluvar is revered as an ancient saint, poet, and a philosopher by Tamils, irrespective of their religion.
    • He is an essential anchor for Tamils in tracing their cultural roots; Tamils are taught to learn his couplets word-for-word and to follow his teachings in their day-to-day living.

    Also read:

    https://www.civilsdaily.com/news/sangam-era-older-than-previously-thought-finds-study/

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  • Skilling India – Skill India Mission,PMKVY, NSDC, etc.

    [pib] PMKVY 3.0

    PIBSchemes | Governance | Mains Paper 2: Government Scheme/Policies

    The Ministry of Skill Development and Entrepreneurship (MSDE) has launched Pradhan Mantri Kaushal Vikas Yojana (PMKVY) 3.0.

    Note the differences between all three versions of PMKVY.

    PMKVY 3.0

    • PMKVY 3.0 envisages training of eight lakh candidates over the scheme period of 2020-2021.
    • This phase three will focus on new-age and COVID-related skills.
    • The 729 PM Kaushal Kendras (PMKKs), empanelled non-PMKK training centres and more than 200 industrial training institutes under Skill India will be rolling out under it.
    • On the basis of the learning gained from PMKVY 1.0 and PMKVY 2.0, the MSDE has improved the newer version of the scheme to match the current policy doctrine and energize the skilling ecosystem.

    Implementation

    • PMKVY 3.0 will be implemented in a more decentralized structure with greater responsibilities and support from States/UTs and Districts.
    • District Skill Committees (DSCs), under the guidance of State Skill Development Missions (SSDM), shall play a key role in addressing the skill gap and assessing demand at the district level.
    • The new scheme will be more trainee- and learner-centric addressing the ambitions of aspirational Bharat.
    • PMKVY 2.0 broadened the skill development with the inclusion of Recognition of Prior Learning (RPL) and focus on training.
    • With the advent of PMKVY 3.0, the focus is on bridging the demand-supply gap by promoting skill development in areas of new-age and Industry 4.0 job roles.

    Back2Basics: PMKVY 1.0

    • PMKVY is a skill development initiative scheme of the Government of India for recognition and standardization of skills launched on16 July 2015;.
    • The aim of the scheme is to encourage aptitude towards employable skills and to increase the working efficiency of probable and existing daily wage earners, by giving monetary awards and rewards and by providing quality training to them.
    • For this qualification plans and quality, plans have been developed by various Sector Skill Councils (SSC) created with the participation of Industries.
    • National Skill Development Council (NSDC) has been made coordinating and driving agency for the same.

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  • Banking Sector Reforms

    Recapitalization of state-owned banks: Privatization should do it

    op-ed snap | Economics | Mains Paper 3: Indian Economy

    The article suggest the approach to deal with the problems banking in India faces.

    Banking sector under stress

    • Along with the other sectors, pandemic dealt a severe blow to the banking sector.
    • Stress tests reported in the Financial Stability Report (FSR) indicate that the low ratio of capital to risk-adjusted-assets (CRAR) is likely to decline further.
    • To revive the economy and resume sustained high growth, bold structural reforms will have to be combined with strong fiscal and monetary measures.

    Declining credit growth: monetary challenge

    • India’s credit-to-gross domestic product ratio is around 51%.
    • 51% not too low compared to other countries at comparable levels of per capita income.
    • However, the worry is that credit growth is declining rapidly.
    • It is mainly attributable to rising risk aversion among lenders, reflecting the high and rising level of NPAs.
    • Risk aversion spiked during the economic contraction.

    Rising NPA of Public Sector Banks

    • The FSR stress tests now indicate that the gross NPA ratio is likely to go up to as much as 13.5% by September 2021 in the report’s baseline case and 14.8% in the ‘severe stress’ case.
    • Within the banking sector, conditions are much worse in public sector banks (PSBs) compared to private banks (PBs) or foreign banks (FBs).
    • The gross NPA figure is forecast to rise to 16.2% for PSBs as compared to 7.9% and 5.4% for PBs and FBs in the baseline case.
    • Clearly, high NPAs are primarily a problem for PSBs, which still account for 60% of India’s total bank credit.

    Expanding banking sector: bypass PSBs and give a big push to private banking

    • The recent report on Ownership and Corporate Structure for Indian Private Sector Banks submitted by an RBI internal working group (IWG) espouses this approach.
    • The IWG’s main  recommendation is to enable large corporations and industrial houses to acquire banking licences.
    • The proposal has been strongly opposed by former governors and deputy governors of RBI, several former chief economic advisers, a former finance secretary, and, most significantly, all save one of the many experts the IWG consulted.

    Four issues with the push to private banking

    • 1) With an industry CRAR of only 12%, the proposed raising of the promoter share cap to 26% could potentially leverage the promoter’s investment by 32 times.
    • The very high risk appetite generated by such leveraging would subject depositors to a high level of systemic risk, given the limited deposit insurance provided in India.
    • 2) Excessive risk appetite would lead to imprudent lending, especially connected lending to group companies. Conglomerates always find ways around regulatory restrictions against such connected lending.
    • 3) Three, a conglomerate’s bank would have access to insider information on borrower companies that compete with its group companies.
    • 4) Conglomerate banks would lead to massive concentration of economic power and political influence against not just competing companies, but even the regulator.

    Way forward

    • A safer and cleaner option would be to help the country’s banking sector grow through simultaneous privatization and recapitalization of PSBs.
    • However, these options do not change the ownership and governance structure of PSBs, which is what primarily is to blame for their poor performance.
    • A better option is for PSBs to recapitalize themselves by raising fresh equity.
    • It would be more prudent financially and also more acceptable politically to test this approach with one or two small PSBs.

    Conclusion

    Government should try to adopt the approach which reduces the risks associated with giving push to private players in the banking sector while making the PSBs more efficient.

    Back2Basics: CRAR-Capital to risk-adjusted-assets

    •  The CRAR is the capital needed for a bank measured in terms of the assets (mostly loans) disbursed by the banks.
    • Higher the assets, higher should be the capital by the bank.
    • A notable feature of CRAR is that it measures capital adequacy in terms of the riskiness of the assets or loans given.

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  • PPP Investment Models: HAM, Swiss Challenge, Kelkar Committee

    Hybrid Annuity Model(HAM) for the benefit of the road sector

    op-ed snap | Economics | Mains Paper 3: Infrastructure: Energy, Ports, Roads, Airports, Railways Etc.,Investment Models

    The article explains the working of Hybrid Annuity Model in the road construction and the risks involved in the model.

    Investment in road sector

    • The central government has set a target of increasing the investment in infrastructure to over Rs 111 lakh crore over the period FY20-FY25.
    • Within the transportation segment, projects worth Rs 36.7 lakh crore, constituting 55% of transportation infra, are for the road sector.
    • The large investments planned in the road sector signifies its importance—it has a multiplier effect on the economy and provides large employment opportunities.

    Models for the road sector

    • Out of HAM (Hybrid Annuity Model) and BOT (Build, Operate and Transfer)—toll developers prefer the relatively lower risk HAM model.
    • This is due to its various positives like lower equity requirements, provision for mobilisation advances, better right of way availability, inflation-linked adjustments for bid project cost, termination payments during the construction period and de-linking construction and operations.
    • These HAM features have garnered a favourable response and mix of HAM awards has increased from 10% in FY16 to 48% in H1FY2021.

    How HAM works and risks involved

    • During the operations period for a HAM project, the recovery from authority is in the form of fixed annuity payments along with interest on balance accumulated annuity payments (calculated @300 bps over prevailing bank rate)
    • The only major risk for HAM is the prevailing low bank rates adversely affecting the overall project viability and returns.
    •  Such interest receipts account for around 45% of total inflows.
    • Low bank rate would thus reduce the overall inflows for a HAM project, thereby adversely affecting its debt coverage metrics and returns to the investors.
    • The second problem is related to delayed and inadequate interest rate transmission—there is a transmission lag for the project loan (linked to MCLR of banks).

    Changes in model concession agreement

    • As per revised concession agreement dated November 10, 2020, interest rate on annuities will be equal to the average MCLR of top 5 scheduled commercial banks plus 1.25% instead of bank rate.
    • With the average MCLR replacing the bank rate, there will be a natural hedge between the annuity inflows and interest costs,
    • This will reduce the interest rate risks to a large extent, and that too without any delay.
    • The other major revision is the grant payment from the authority which will now be paid in 10 instalments instead of five.
    • The other major revision is the grant payment from the authority which will now be paid in 10 instalments instead of five.
    • Thus, the spacing between the payment milestones is reduced.
    • This will improve the cash conversion cycle for the contractors executing the HAM projects as their payments are back to back in nature.
    • However, these changes will be applicable for new awards, and the fate of the existing HAM projects is hanging in the balance.

    Conclusion

    With improved attractiveness, HAM is expected to remain the mainstay for public-private partnership projects in the road sector.

    Source:-

    https://www.financialexpress.com/opinion/hamsome-gains/2171329/

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