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  • Foreign Policy Watch: India-China

    New disengagement agreement in eastern Ladakh

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

    In the first major breakthrough in talks China’s Defence Ministry that PLA and Indian troops on the southern and northern shores of Pangong Tso began synchronized and organized disengagement.

    This newscard presents a holistic report on the ground situation of Sino-India border disputes in Ladakh.

    Also, try this PYQ from CSP 2020:

    Q.Siachen Glacier is situated to the

    (a) East of Aksai Chin

    (b) East of Leh

    (c)North of Gilgit

    (d) North of Nubra Valley

    New plan in eastern Ladakh

    • As of now, the disengagement process seems restricted to the north and south banks of Pangong Tso.
    • The process has started with the pulling back of certain columns of tanks from the south bank region by both sides.
    • At the moment, there is no pullback of troops from the friction points and the heights they are positioned on.
    • That will happen in a phased and verified manner.

    Disengagement from Pangong Tso

    • China will pull its troops on the north bank towards the east of Finger 8.
    • Similarly, India will also position its forces at its permanent base near Finger 3.
    • Similar action will be taken by both the parties in the south bank area as well.
    • Both sides have also agreed that the area between Finger 3 and Finger 8 will become a no-patrolling zone temporarily, till both sides reach an agreement through military and diplomatic discussions to restore patrolling.
    • Further, all the construction done by both sides on the north and south banks of the lake since April 2020 will be removed.

    Why is this area important?

    • The north and south banks of Pangong Tso are two of the most significant and sensitive regions when it comes to the current standoff that began in May 2020.
    • What makes the areas around the shores of the lake so sensitive and important is that clashes here marked the beginning of the standoff.
    • It is one of the areas where the Chinese troops had come around 8 km deep west of India’s perception of the Line of Actual Control.
    • China had positioned its troops on the ridgeline connecting Fingers 3 and 4, while according to India the LAC passes through Finger 8.

    Take a glimpse of all friction points along Indian borders:

    India is at an advantage

    • Further, it is in the south bank of the lake that Indian forces in an action in late August had gained a strategic advantage by occupying certain peaks, outwitting the Chinese.
    • Indian troops had positioned themselves on heights of Magar Hill, Mukhpari, Gurung Hill, Rezang La and Rechin La, which were unoccupied by either side earlier.
    • Since then, the Chinese side had been particularly sensitive as these positions allowed India to not only dominate Spanggur Gap.
    • It is a two-km wide valley that can be used to launch an offensive, as China had done in 1962, they also allow India a direct view of China’s Moldo Garrison.

    Why has this taken so long?

    • Since September, China has insisted that India first pull its troops back from the south bank of Pangong Tso, and the Chushul sub-sector.
    • However, India has been demanding that any disengagement process should include the entire region, and troops should go back to their April 2020 positions.
    • However, it seems that for now, both sides have agreed to first disengage from the Pangong Tso area only.

    Principles of disengagement

    In military and diplomatic discussions with China India expects a solution to the issue on the basis of three principles:

    1. LAC should be accepted and respected by both parties.
    2. Neither party should attempt to change the status quo unilaterally.
    3. All agreements should be fully adhered to by both parties.

    Does this mean that the standoff is resolved?

    • There are still some outstanding issues that remain regarding deployment and patrolling on LAC.
    • The Pangong Tso region is just one of the friction areas. There are other friction points, all north of the Pangong Tso, where the troops have been face-to-face since last year.
    • The situation in Depsang Plains continues to be a concern.
    • Both sides agree that complete disengagement under bilateral agreements and protocols should be done as soon as possible.
    • After the talks so far, China is also aware of our resolve to protect the sovereignty of the country.

    Need for confidence building

    • Two of the main stumbling blocks in finding a permanent resolution are lack of trust and no clarity on intent.
    • Any permanent resolution will include first, disengagement of troops from the frontlines from all friction points.
    • Then de-escalation will entail sending the troops from the depth areas to their original bases.
    • Both sides have around 50,000 troops in the region, along with additional tanks, artillery and air defence assets.

    Conclusion

    • A resolution has to include sending these troops and military equipment where they came from on both sides.
    • But neither side had been willing to take the first step to reduce their troop or military strength, as it does not trust the other side.

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  • [pib] Seaweeds Mission

    PIB | Enviro & Biodiversity | Mains Paper 3: Conservation, Environmental Pollution & Degradation, Eia

    TIFAC has unveiled a Seaweed Mission for commercial farming of seaweeds and its processing for value addition.

    Note the species of edible seaweeds mentioned in the newscard.

    Seaweed Mission

     

    The Mission envisages the following activities:

    • establishing model demonstration farms over one hectare for the cultivation of economically important seaweeds in nearshore and onshore along the Indian coast
    • Kappaphycus all over Indian coast
    • Gracilaria dura in Gujarat
    • Gracilariaverrucosa in Chilika Lake (Odisha)
    • Ulva Linza or Ulva prolife rain Chilika Lake (Odisha)
    • Ulva Lactuca or Ulva fasciata or Ulva indica all over India coast

    Proposed Sites: Gujarat / Tamil Nadu / Andhra Pradesh / Odisha / Karnataka

    Seaweed production in India

    • Out of the global seaweed production of ~ 32 million tons fresh weight valued around 12 billion US dollars. China produces ~57 %, Indonesia ~28% followed by South Korea.
    • India is having a mere share of ~0.01-0.02%.
    • Despite several advantages, commercial seaweeds cultivation has not been taken place in the country at an appropriate scale, as being practised in South-East Asian countries.
    • By an estimate, if cultivation is done in ≈10 million hectares or 5% of the EEZ area of India, it can provide employment to ~ 50 million people.
    • Seaweed cultivation also enhances ocean productivity, abates algal blooms and sequesters millions of tons CO2.

     

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  • Labour, Jobs and Employment – Harmonization of labour laws, gender gap, unemployment, etc.

    [pib] SAKSHAM Portal

    PIB | Economics | Mains Paper 3: Issues relating growth and development, employment

    The Technology Information, Forecasting and Assessment Council (TIFAC) has launched SAKSHAM, a dynamic job portal for mapping the skills of Shramiks.

    The name SAKSHAM closely leans towards HRD, Employment and Entrepreneurship developments.  Make a note of it. It can create confusion while revision.

    SAKSHAM

    • SAKSHAM is an acronym for Shramik Shakti Manch.
    • The portal with the demand and supply data uses an algorithm and AI tools, for geospatial information on demand and availability of Shramiks, and also provides analysis on skill training programmes of Shramiks.
    • It would directly connect Shramiks with MSMEs and facilitate placement of blue-collar jobs.
    • The pilot portal originally initiated with two districts is now being launched as an all India portal.

    Key features

    • A dynamic job portal – an opportunity for Shramiks and MSMEs
    • Facilitate the creation of 10 lakh blue-collar jobs
    • Direct connect between Shramiks and MSMEs, no middleman in between
    • Minimise migration of Shramiks – job opportunity in proximate MSMEs

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  • Disasters and Disaster Management – Sendai Framework, Floods, Cyclones, etc.

    A resilient future for Uttarakhand

    op-ed snap | Enviro & Biodiversity | Mains Paper 3: Conservation, Environmental Pollution & Degradation, Eia,Disaster Management

    The article discusses the factors that could explain the cause of the recent flash floods in Uttarakhand and suggest the immediate steps to deal with such disasters.

    What makes Uttarakhand vulnerable

    • Days after a glacier burst in the Chamoli district of Uttarakhand caused flash floods, the scientific community is still struggling to understand what triggered the disaster.
    • Uttarakhand is located in the midst of young and unstable mountains and is subject to intense rainfall.
    • For years experts have voiced their fears about an impending disaster due to climate change, rapid and indiscriminate construction activities, and the subsequent ecological destruction in the region.
    • Studies have shown that widespread settlements, farming, cattle grazing and other anthropogenic activities could destroy the natural barriers that control avalanches and floods, thereby enhancing the possibilities of a glacial lake outburst flood.
    • The Hindu Kush Himalaya Assessment Report (2019) had pointed out that one-third of the Hindu Kush Himalaya’s glaciers would melt by 2100 and potentially destabilise the river regime in Asia, even if all the countries in the region fulfilled their commitments under the Paris Agreement.

    Possible causes of the current glacial outburst

    • The current glacier burst was loosely attributed to erosion, a build-up of water pressure, an avalanche of snow or rocks, landslides or an earthquake under the ice.
    • A rock mass, weakened from years of freezing and thawing of snow, may have led to the creation of a weak zone and fractures leading to a collapse that resulted in flash floods.

    Issue of construction activity

    • Experts and activists have incessantly asked for scrutiny into the construction of hydroelectric power projects in Uttarakhand.
    • There have also been allegations about the use of explosives in the construction of dams and other infrastructure.
    • In 2014, an expert committee led by Dr Ravi Chopra, instituted to assess the role of dams in exacerbating floods, provided hard evidence on how haphazard construction of dams was causing irreversible damage to the region.

    7 Immediate steps

    • 1) Investing in resilience planning, especially in flood prevention and rapid response.
    • 2) Climate proofing the infrastructure such as by applying road stabilisation technologies for fragile road networks and strengthening existing structures like bridges, culverts and tunnels.
    • 3) Strengthening embankments with adequate scientific know-how
    • 4) Reassessing development of hydropower and other public infrastructure.
    • 5) Investing in robust monitoring and early warning system.
    • 6) Establishing implementable policies and regulatory guidelines to restrict detrimental human activities, including responsible eco- and religious tourism policies.
    • 7) Investing in training and capacity building to educate and empower local communities to prevent and manage risks effectively.

    Consider the question “What are the factors that make Uttarakhand vulnerable to natural disasters? Suggest the measures to prevent and deal with the disasters” 

    Conclusion

    India needs to urgently rise up to the challenge by applying innovative and inclusive solutions that support nature and marginalised communities, to restore and rebuild a resilient future for Uttarakhand.

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  • Mother and Child Health – Immunization Program, BPBB, PMJSY, PMMSY, etc.

    MTP amendment Bill

    | Polity | Mains Paper 2: Government Scheme/Policies,Health & Education

    The article discusses the provision of the medical board in the MTP (Amendment) Act and issues with it.

    Proposal of medical board

    • The Medical Termination of Pregnancy (Amendment) Bill (‘MTP Bill’) passed in the Lok Sabha is scheduled to be tabled for consideration in Rajya Sabha.
    • The Act prescribes the setting up of medical boards in every state and Union territory (UT), consisting of a gynaecologist, paediatrician, radiologist or sonologist and any other members as proposed by that state or UT.
    • Each board will be responsible for diagnosing substantial foetal abnormalities that necessitate termination of pregnancy after a 24-week gestation period.
    • Medical boards are a form of third-party authorisation and were not envisaged in the MTP Act, 1971.

    Issues with the proposal

    • In the context of the current healthcare budgetary challenges, this proposal to set up infrastructure across the country to regulate medical termination of pregnancies is both financially unsound and practically impossible.
    • India’s healthcare system has neither the financial investment nor the infrastructure to sustain the operation and functioning of medical boards in every state and UT.
    • Due to the weak healthcare infrastructure in the country, it would be practically impossible to constitute these boards with the requisite specialists.
    • Even where they are set up, the accessibility of such boards for pregnant persons, especially those living in rural areas, remains a major challenge.
    • More importantly, subjecting people to multiple invasive examinations is a grave violation of their rights to privacy and dignity.
    • Requiring pregnant persons to navigate a bureaucratic web of authorisation will inevitably lead to delays and thereby impede access to safe and legal abortion services.

    Poor public financing and privatisation of healthcare

    • At 1.6 per cent of GDP in 2019-20 India’s current level of public financing of health is one of the lowest in the world
    • This has meant that most health expenditure in the country is out of pocket (OOP) — borne by patients themselves.
    • OOP expenditure on healthcare is recorded at 58.7 per cent as per the National Health Accounts in 2016-17.
    • The central government has preferred to incentivise private players to set up or offer services, instead of building infrastructural and professional capacity.
    • Privatisation drives up costs of care and the handing over of public facilities to the private sector can have catastrophic consequences.
    • They additionally remain non-accountable to state authorities in terms of affordability or transparency for instance, through Right to Information enquiries, or to uphold fundamental rights like non-discrimination in treatment or employment, or even the fundamental right to health.
    • The National Sample Survey Organisation (NSSO)’s 75th report shows that less than 20 per cent of the population is covered by health insurance in India.
    • According to the National Health Profile 2017, India has only one doctor for roughly 10,200 people in the public sector.

    Consider the question “Discsss the changes made by the Medical Termination of Pregnancy (Amendment) Bill and the challenges its provision could face.”

    Conclusion

    Poor public health infrastructure and absence of specialists across the country have meant that most abortions do not happen in the public sector, but at private centres or at home. With overwhelming shortfalls in specialist availability, especially in rural and scheduled areas, it would be impossible to constitute boards with requisite specialist representation as contemplated under the MTP Bill.

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  • Foreign Policy Watch: India-China

    Taking the long view with China

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

    The article explains the various choices India faces in the geopolitical landscape shaped by emergence of two Asian giants.

    New challenges and hard choices on geopolitical front

    • As it moves to becoming the third largest economy in the world, India needs to have a clear-eyed world view and strategy as it makes hard choices.
    • It needs to reject the developing country regional mindset that has shaped India’s  national aims and foreign policy.
    • We have a “special and privileged strategic partnership” with Russia which provides more than three-quarter of India’s military equipment and a “comprehensive global strategic partnership” with the U.S.
    • India’s relationship with the U.S.-led Quadrilateral Security Dialogue (Quad), where the others are military allies, has rightly been cautious, as U.S. President Joe Biden sees China as a ‘strategic competitor’ rather than a ‘strategic rival’.
    • Realism dictates that India does not need to compromise on its strategic autonomy.
    • India faces two sides of the China conundrum: Defining engagement with its neighbour which is consolidating an expanding BRI while remaining involved with the strategic, security and technological concerns of the U.S.

    China’s dominance in financial sphere

    • In the financial sphere, there is the real possibility of the Chinese renminbi becoming a global reserve currency or e-yuan becoming the digital payments currency.
    • China is the world’s largest trading economy.
    • It could soon become the world’s largest economy.
    • China has stitched together an investment agreement with the EU and with most of Asia.
    • Relative attractiveness will determine when the dollar goes the way of the sterling and the guilder.
    • China, facing technological sanctions from the U.S., may well put in the hard work to make this happen soon.

    China: Partner, competitor, and economic rival

    • Some form of the EU’s China policy of seeing the emerging superpower as a partner, competitor, and economic rival depending on the policy area in question is going to be the global norm. 
    • This broad perspective is also reflected in India’s participation in both the Shanghai Cooperation Organisation, designed to resist the spread of Western interests, and in the U.S.-led Quad, with its anti-China stance.
    • Within the United Nations, India’s interests have greater congruence with China’s interests rather than the U.S.’s and the EU’s.
    • Sharing the COVID-19 vaccine with other countries distinguishes India, and China, from the rest.

    India’s engagement with the U.S.

    • The congruence between India and the U.S. lies in the U.S.’s declared strategic objective of promoting an integrated economic development model in the Indo-Pacific as a credible alternative to the BRI, but with a caveat.
    • Instead of an alternate development model, India should move the Quad towards supplementing the infrastructure push of the BRI in line with other strategic concerns in the region.
    • For example, developing their scientific, technological capacity and digital economy, based on India’s digital stack and financial resources of other Quad members, will resonate with Asia and Africa.

    India’s role in global governance

    • Another area where India can play a ‘bridging role’ is global governance.
    • President Xi Jinping’s “community with shared future for mankind”, and Prime Minister Narendra Modi’s “climate justice” and asking how long India will be excluded from the UN Security Council, challenge the frame of the liberal order without providing specific alternatives.
    • With respect to digital data, India has recently expressed that there must be reciprocity in data sharing, and this is the kind of ‘big idea’ for sharing prosperity that will gain traction with other countries.

    India’s growing influence

    • India’s recent policies are gaining influence at the expense of China and the West, and both know this trend will accelerate.
    • The steps to a $5 trillion economy, shift to indigenous capital military equipment, and a new Science, Technology and Innovation Policy underline impact, capacity and interests.
    • ASEAN remains keen India re-join its trade pact to balance China.
    • It is being recognised that India’s software development prowess could shape a sustainable post-industrial state different to the U.S. and China model.

    Consider the question “Examine how India’s foreing policy priorities and its role in global governance is shaped by China’s rise.”

    Conclusion

    As in the historical past, Asia is big enough for both Asian giants to have complementary roles, share prosperity and be independent of each other and of the West.

     

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  • Railway Reforms

    National Rail Plan for 2030

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

    The Budget unveiled the National Rail Plan 2030. 

    Key provision in the Budget for railways

    • First, there is a National Rail Plan (NRP) for 2030.
    • Second, the Western dedicated freight corridor (DFC) and the Eastern DFC will be commissioned by June 2022.
    • Parts of DFC will be in public-private partnership (PPP) mode.
    • Third, there will be an East Coast corridor (Kharagpur to Vijaywada), an East-West corridor (Bhusaval to Kharagpur/Dankuni) and a North-South corridor (Itarsi to Vijayawada).
    • Fourth, all broad-gauge routes will be electrified by December 2023.
    • Fifth, there will be safety and passenger amenity measures.

    National Rail Plan provisions

    • The NRP is meant to increase the share of railways in freight, rectifying the pre-Independence and post-Independence bias
    • It also aims to develop capacity that will cater to demand in 2050.
    • It provides for mapping of the existing railway network on a GIS platform.
    • The primary value addition of the NRP is an analysis of the existing network, with expected additions (such as the National Infrastructure Pipeline) also built in.
    •  NRP bases decision making on objective criteria.

    Pricing and cross-subsidy issue

    • In 2018-19, as per the NRP, India’s operating ratio (OR) was 0.59 for freight and 1.92 for passenger traffic.
    • The problem is low passenger fares and artificially high freight rates required to cross-subsidise those.
    • This is not the complete picture since normally, freight and passenger trains share common sections of track and passenger trains are given preference over goods trains in getting a path (route from point A to point B).
    • Therefore, the average speed of a freight train is 24 km/hour — average speed is a surrogate indicator.
    • A superior indicator is transit time — the time taken for a consignment to reach from one point to another.

    Need for decreasing the cost and increasing the average speed

    • Indian Railways has a system of HDN and HUN identification for the present network.
    • HDNs are high-density routes.
    • HUNs are highly-used networks with multiple origins and destinations and no clear single haul corridor.
    • HUNs are primarily for passengers.
    • For freight, HDNs are important.
    • HDNs and HUNs carry 80 per cent of the traffic and there are sections where capacity utilisation is more than 100 per cent.
    • With traffic increasing, capacity utilisation will worsen.
    • If the intention is to increase rail share in the total freight carried to 44 per cent, the average speed must increase and costs must decline.
    • With the Western and Eastern DFCs, both should happen.

    Consider the question “What are the factors responsible for preventing the railways from realising its contribution in the development of the country. How far will the National Rail Plan help railways deal with these factors?” 

    Conclusion

    The implementation of the NRP will help railways deal with the issues faced by it.

    Back2Basics: Operating Ratio

    • The operating ratio shows the efficiency of a company’s management by comparing the total operating expense of a company to net sales.
    • An operating ratio that is decreasing is viewed as a positive sign, as it indicates that operating expenses are becoming an increasingly smaller percentage of net sales.

    OR = (Operating Expenses + Cost of Goods Sold)/ Net sales​ 

     

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  • Parliament – Sessions, Procedures, Motions, Committees etc

    What is Division Voting?

    | Polity | Mains Paper 2: Parliament & State Legislatures

    Parliament saw the first instance of division voting in times of the pandemic, with Major Ports Authorities Bill 2020 passed in Rajya Sabha as members voted through slips in view of social distancing norms in place.

    What is the news?

    • The Bill provides for the regulation of major ports and will replace the Major Port Trusts Act of 1963, and a board of Major Port Authority for each major port will replace the current port trusts.
    • The Opposition has charged that the Bill is aimed at privatization of ports.
    • Opposition members said the legislation would adversely affect states’ rights.

    What is Division Voting?

    • A motion is a binary question raised in Parliament for a decision to be taken by MPs.
    • A division is a type of voting which records how each MP voted on a motion.
    • There are three methods of holding a Division i.e.
    1. By operating  the  Automatic  Vote  Recorder
    2. By distributing ‘Ayes’  and  ‘Noes’  slips  in  the  House  and
    3. By members going into  the  Lobbies
    • However, the method of recording of votes in Lobbies has become obsolete ever since the installation of  Automatic  Vote Recording machine.
    • This procedure has not been used for the last two decades

    Not a usual practice

    In spite of the advantages offered by division, it is not the default method of voting in Parliament.

    • The division is only mandated for a set of motions which require a special majority of the house to be passed.
    • For example, constitutional amendment bills have to be passed by a majority of the total membership of that House and by a majority of not less than two-thirds of the members of the House “present and voting”.
    • To ensure that this condition is fulfilled, a division is called for. On other occasions, individual MPs have to ask for a division.
    • During the term of the last Lok Sabha (2014-19), voting by division was held only on 108 occasions. Only half of these were asked for by MPs, the other half related to constitutional amendment bills.

    What is the preferred method?

    • The preferred method for making decisions in Parliament is through a voice vote.
    • In this method, MPs orally convey their agreement or disagreement to a motion.
    • It clubs the individual decisions of MPs in one loud chorus of “Ayes” or “Noes”.
    • Being an oral vote, it does not put on parliamentary record the stand of political parties and individual MPs on contentious political issues.

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  • Parliament – Sessions, Procedures, Motions, Committees etc

    What is Breach of Privilege?

    | Polity | Mains Paper 2: Parliament & State Legislatures

    An MP has issued a breach of privilege notice against an MP from Bengal in the Lok Sabha.

    Try this PYQ:

    Q.With reference to the Parliament of India, which of the following Parliamentary Committees scrutinizes and reports to the House whether the powers to make regulations, rules, sub-rules, by-laws etc. conferred by the constitution of delegated by the Parliament are being properly exercised by the Executive within the scope of such delegation?

    (a) Committee on Government Assurances

    (b) Committee on Subordinate Legislation

    (c) Rules Committee

    (d) Business Advisory Committee

    What is the news?

    • The accused MP has cast some aspersions with respect to the conduct of a judge.
    • The question is whether the conduct of a judge can be discussed on the floor of the House or not.
    • Article 121 of the Constitution does not allow allegations to be levelled against a sitting or a former judge.

    Breach of Privilege

    • The powers, privileges and immunities of either House of the Indian Parliament and of its Members and committees are laid down in Article 105 of the Constitution.
    • Article 194 deals with the powers, privileges and immunities of the State Legislatures, their Members and their committees.
    • Parliamentary privilege refers to the right and immunity enjoyed by legislatures, in which legislators are granted protection against civil or criminal liability for actions done or statements made in the course of their legislative duties.

    What constitutes a breach of this privilege?

    • While the Constitution has accorded special privileges and powers to parliamentarians and legislators to maintain the dignity and authority of the Houses, these powers and privileges are not codified.
    • Thus, there are no clear, notified rules to decide what constitutes a breach of privilege, and the punishment it attracts.
    • Any act that obstructs or impedes either House of the state legislature in performing its functions, or which obstructs or impedes any Member or Officer of such House in the discharge of his duty, or has a tendency, directly or indirectly, to produce such results is treated as a breach of privilege.
    • It is a breach of privilege and contempt to print or publish libel reflecting on the character or proceedings of the House or its Committees or on any member of the House for or relating to his character or conduct as a legislator.

    Procedure followed in cases of an alleged breach

    • The Legislative Assembly Speaker or Legislative Council Chairman constitutes a Privileges Committee consisting of 15 members in the Assembly and 11 members in the Council.
    • The members to the committee which has quasi-judicial powers are nominated based on the party strength in the Houses.
    • The Speaker or Chairman first decides on the motions.
    • If the privilege and contempt are found prima facie, then the Speaker or Chairman will forward it to the Privileges Committee by following the due procedure.
    • At present, there is no Privileges Committee in either House of the state legislature.
    • The Committee will seek an explanation from all the concerned, will conduct an inquiry and will make a recommendation based on the findings to the state legislature for its consideration.

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  • Oil and Gas Sector – HELP, Open Acreage Policy, etc.

    Significance of crude oil crossing $60 a barrel

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

    The price of Brent crude crossed the $60 per barrel mark after over a year on the back of oil-producing countries maintaining production cuts due to lockdowns.

    What is Crude Oil?

    • Petroleum also known as crude oil and oil is a naturally occurring, yellowish-black liquid found in geological formations beneath the Earth’s surface.
    • It is commonly refined into various types of fuels.
    • Components of petroleum are separated using a technique called fractional distillation, i.e. separation of a liquid mixture into fractions differing in boiling point by means of distillation, typically using a fractionating column.
    • It consists of naturally occurring hydrocarbons of various molecular weights and may contain miscellaneous organic compounds.
    • The name petroleum covers both naturally occurring unprocessed crude oil and petroleum products that are made up of refined crude oil.

    Why has the price of crude oil risen sharply?

    • Major oil-producing countries had cut oil production last year amid a sharp fall in demand due to the Covid-19 pandemic.
    • However oil-producing countries have continued to limit production despite an increase in prices with Saud Arabia cutting its own oil production by 1 million barrels per day to strengthen crude oil prices.
    • Expectations of strong improvements in demand with the global rollout of the Covid-19 vaccine have also put upward pressure on crude oil prices according to experts.

    How will this impact India?

    • The rise in the price of Brent crude will lead to an increase in India’s import bill.
    • India imports of 80 per cent of its crude oil requirements and the average price of Indian basket of crude oil has already risen to $54.8 barrel for January.
    • The upward move in crude prices will also put upward pressure on petrol and diesel prices across the country which is already at all-time highs.

    Signs of no remedy

    • The government had hiked central taxes on petrol and diesel by Rs 13 per litre and Rs 11 per litre in 2020 to boost revenues amid lower economic activity.
    • The increase in taxes had prevented consumers from getting the benefit of low fuel prices as international prices crashed during the first quarter of last fiscal.

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