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  • RBI Notifications

    Governance of the commercial banks

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

    This article discusses the nitty-gritty of the recently released discussion paper by the RBI on governance. Governance in the commercial bank has been in the news following the failures of some banks.

    Discussion paper by RBI

    • Recently RBI released a discussion paper on ‘Governance in Commercial Banks in India’.
    • Recently there have been high-profile instances involving governance failures in certain banks.
    • These instances have called into question the adequacy of the existing legal regime for ensuring good governance in commercial banks.
    • Internationally, the question of governance norms in banks is treated differently given the complex nature of functions performed by banks in comparison to other businesses.
    • Functions of the banks make them critical for allocation of resources in the economy, protection of consumer interests and maintenance of financial stability.

    Objectives of the discussion paper

    • The stated objective of the discussion paper is to align the current regulatory framework on bank governance with global best practices.
    • Best practices include the guidelines issued by the Basel Committee on Banking Supervision and the Financial Stability Board.

    Current regulatory framework

    • To this end, RBI adopts international standards for bank governance into the general corporate governance framework in India.
    • This general governance framework comprises the Companies Act, 2013, and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Requirements, 2015.
    • These governance norms focus on the responsibilities of the board of directors, board structure and practices.
    • And it also includes aspects of risk management, internal audit, compliance, whistle-blowing, vigilance, disclosure and transparency.

    Issue of connection between management and owner

    • RBI also constituted an internal working group to review the extant regulatory guidelines relating to ownership and control in private sector banks.
    • This group is expected to submit its report by September 30, 2020.
    • But the assumption that deeper connections between the management and the owners necessarily lead to mismanagement needs to evaluated carefully and recalibrated to ensure balanced reforms.
    • The governance risks attributable to such connections might be relevant for government-owned banks as well.

    Key recommendations in the paper

    • (1) The majority of a commercial bank’s board must comprise of independent directors.
    • This is a standard higher than that prescribed under the Companies Act and the SEBI Regulations.
    • (2) The chairperson of the board must be an independent director.
    • (3) Chairpersons of crucial board committees (the audit committee, the risk management committee and the nomination and remuneration committee) must be independent directors who are not chairpersons of any other board committee.
    • (4) The tenures of non-promoter CEOs and WTDs should be limited to 15 years.

    Way forward

    • In order to make the reform effective, the appointment process for independent directors also needs to be re-evaluated to limit the role of controlling-shareholders.
    • The liability regime for directors on the boards of banking companies should also be revisited to balance the rights and liabilities of the directors.
    • The efficacy of implementation of norms as prescribed will depend on adequate enforcement.
    • The findings of the report of the working group have to be considered to formulate a comprehensive and effective governance framework for commercial banking in India.

    Consider the question “Given the complex nature of functions performed by the banks in comparison to other businesses subjecting them to stricter norms of governance is necessary. In light of this examine the adequacy of existing governance norms and suggest ways to improve them.”

    Conclusion

    RBI must exercise caution to ensure that the reforms balance the interests of all the stakeholders and do not come at the cost of discouraging investments and entrepreneurship in the Indian banking industry.

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

    Why India is producing less and less oil?

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

    India’s crude oil production fell 7.1% in May 2020 compared to May 2019 on the back of low demand due to the Covid-19 pandemic.

    Practice question for mains:

    Q.Discuss the impact of Covid-19 pandemic on the global crude oil dynamics.

    Crude oil exploration in India

    • Crude oil production in India is dominated by two major state-owned exploration and production companies, ONGC and Oil India.
    • These companies are the key bidders for crude oil block auctions and end up acquiring most of the blocks that are put up for auction in India.

    Falling production

    • Domestic production of crude has been falling every year since FY 2012.
    • This has led to a steady climb in the proportion of imports in domestic crude oil consumption from 81.8% in 2012 to 87.6% in 2020.

    Why is production falling?

    • Most of India’s crude oil production comes from ageing wells that have become less productive over time.
    • A lack of new oil discoveries in India coupled with a long lead time to begin production from discovered wells has led to a steady decline in India’s crude oil production making dependency on imports.
    • The output of these ageing wells is declining faster than new wells can come up according to experts.
    • Domestic exploration companies are attempting to extend the life of currently operational wells.

    Why are there not more private players?

    • There has been a lack of interest in exploration and production in India from major private players, particularly those based abroad.
    • According to experts, this is because of long delays in the operationalization of production even after an oil block is allotted due to delays in approvals.
    • Some of the key approvals which are required to begin production include environmental clearances and approval by the Directorate General of Hydrocarbons after the allottee completes a seismic survey and creates a field development plan.

    What policy changes could help?

    • Existing public and private sector players have asked for reduced levies of oil production including oil cess, royalties, and profit petroleum especially when crude oil prices are below $45/barrel.
    • Experts say the requirement to pay royalties to the government at low crude prices can make it unviable for these companies to invest in further exploration and production.

    OALP could help

    • The government introduced the Open Acreage Licensing Programme (OALP) in 2019 to allow companies to carve out blocks that they are interested in and with lower royalties and no oil cess.
    • However, existing players are calling for a relaxation of royalties and oil cess on block allotted under previous policies.
    • The Chinese government offered a floor price to oil producers insulating them somewhat from any sharp falls in international crude prices.
    • This kind of policy at least allows for a company to have a fixed worst-case scenario for the sale of crude oil attracts more investment in exploration and production.

    Back2Basics: OALP

    • The OALP, a part of the government’s Hydrocarbon Exploration and Licensing Policy (HELP), gives exploration companies the option to select the exploration blocks on their own, without having to wait for the formal bid round from the Government.
    • The company then submits an application to the government, which puts that block up for bid.
    • OALP offers single license to explore conventional and unconventional oil and gas resources to propel investment in and provide operational flexibility to the investors.

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  • Wildlife Conservation Efforts

    New rules to regulate exotic animal trade

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

    The Environment Ministry’s wildlife division has introduced new rules to regulate the import and export of ‘exotic wildlife species’.

    Practice questions for mains:

    Q.What are Zoonotic Diseases? Discuss how the illicit trade in wildlife has resulted in the spread of zoonotic diseases of the scale of the ongoing COVID-19?

    Which exotic species are these new regulations talking about?

    • The Wildlife Crime Control Bureau is an organisation that is tasked with monitoring illegal trade.
    • The advisory says ‘exotic live species’ will cover animals under Appendices I, II and III of the Convention on International Trade in Endangered Species (CITES) of Wild Fauna and Flora.
    • It will not include species from the Schedules of the Wild Life (Protection) Act, 1972.

    What are the new rules?

    • Currently, it is the Directorate-General of Foreign Trade, Ministry of Commerce that oversees such trade.
    • Under the new rules, owners and possessors of such animals and birds must also register their stock with the Chief Wildlife Warden of their States.
    • Officials of the Wildlife Department will also prepare an inventory of such species and have the right to inspect the facilities of such traders to check if these plants and animals are being housed in inhumane conditions.
    • Additionally, stockists will have six months to declare their stock.

    Why such a move?

    • The illegal trade is estimated to generate revenues of up to $23 billion a year, a/c to FATF.
    • India continues to battle wildlife crime, with reports suggesting that many times such species are available for trade on online market places.

    Also read:

    Guidelines for Import of Exotic Species

    Back2Basics: CITES

    • CITES stands for the Convention on International Trade in Endangered Species of Wild Fauna and Flora.
    • It is as an international agreement aimed at ensuring “that international trade in specimens of wild animals and plants does not threaten their survival”.
    • It was drafted after a resolution was adopted at a meeting of the members of the International Union for Conservation of Nature (IUCN) in 1963.
    • It entered into force on July 1, 1975, and now has 183 parties.
    • The Convention is legally binding on the Parties in the sense that they are committed to implementing it; however, it does not take the place of national laws.
    • India is a signatory to and has also ratified CITES convention in 1976.

    CITES Appendices

    • CITES works by subjecting international trade in specimens of selected species to certain controls.
    • All import, export, re-exports and introduction from the sea of species covered by the convention has to be authorized through a licensing system.

    It has three appendices:

    • Appendix I includes species threatened with extinction. Trade-in specimens of these species are permitted only in exceptional circumstances.
    • Appendix II provides a lower level of protection.
    • Appendix III contains species that are protected in at least one country, which has asked other CITES Parties for assistance in controlling trade.

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  • Global Geological And Climatic Events

    What is ‘Last Glacial Maximum’?

    | Enviro & Biodiversity | Mains Paper 1: Important Geophysical Phenomena

    Researchers analysed simulations of this past climate and predicted that the ongoing climate change could reawaken an ancient climate pattern of the Indian Ocean Region (IOR).

    Try this question from CSP 2017:

    Q.With reference to ‘Indian Ocean Dipole (IOD)’, sometimes mentioned in the news while forecasting Indian monsoon, which of the following statements is/are correct?

    1. IOD phenomenon is characterized by a difference in sea surface temperature between tropical Western Indian Ocean and tropical Eastern Pacific Ocean.

    2. An IOD phenomenon can influence El Nino’s impact on the monsoon.

    Select the correct Option using the code given below:

    (a) Only 1

    (b) Only 2

    (c) Both 1 and 2

    (d) Neither 1 nor 2

    The Last Glacial Maximum

    • The Last Glacial Maximum (LGM) was the most recent time during the Last Glacial Period that ice sheets were at their greatest extent.
    • Vast ice sheets covered much of North America, Northern Europe, and Asia and profoundly affected Earth’s climate by causing drought, desertification, and a large drop in sea levels.
    • Growth of ice sheets commenced 33,000 years ago and maximum coverage was between 26,500 years and 19–20,000 years ago, when deglaciation commenced in the Northern Hemisphere.
    • It caused an abrupt rise in sea level.

    Shells predict IOR climate variability

    • By studying microscopic zooplankton called foraminifera, the team had published a paper in 2019 which first found evidence from the past of an Indian Ocean El Niño.
    • Foraminifera builds a calcium carbonate shell, and studying these can tell us about the properties of the water in which they lived.
    • The team measured multiple individual shells of foraminifera from ocean sediment cores and was able to reconstruct the sea surface temperature conditions of the past.
    • The Indian Ocean has the capacity to harbour much larger climate variability than observed during the last few decades or a century.

    Lessons to learn

    • There are many lessons to be learnt from this cooler period about our warmer future.
    • As it is, under present-day conditions, changes in the Indian Ocean Dipole and the El Niño–Southern Oscillation strongly affect Indian Monsoon variability from year to year.
    • If the hypothesized ‘equatorial mode’ emerges in the near future, it will pose another source of uncertainty in rainfall prediction and will likely amplify swings in monsoon rainfall.
    • It could bring more frequent droughts to East Africa and southern India and increased rainfall over Indonesia.

    Back2Basics

    What is the Indian Ocean Dipole? Explain its connection with the Indian monsoons

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  • Wildlife Conservation Efforts

    Species in news: Jungle Fowl

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

    A recent study by scientists has revealed new details about the earliest domestication of chicken from the Jungle Fowl.

    Try this question from CSP 2012:

    Q.What is the difference between the antelopes’ Oryx and Chiru?

    (a) Oryx is adapted to live in hot and arid areas like Africa and Arabia whereas Chiru is adapted to live in steppes and semi-desert areas of cold high mountains of Tibetan Plateau.

    (b) Oryx is poached for its antlers whereas Chiru is poached for its musk

    (c) Oryx exists in western India only whereas Chiru exists in northeast India only.

    (d) None of the statements (a), (b) and (c) given above is correct.

    Jungle Fowl

    • The DNA sequencing of 863 genomes has shown the first domestication of chicken occurred in southwestern China, northern Thailand and Myanmar.
    • The study involved sequencing of genomes from all four species of the genus Gallus, five subspecies of Red Jungle Fowl and various domestic chicken breeds collected worldwide.
    • It revealed single domestication from Red Jungle Fowl sub-species Gallus spadiceous.
    • The study also demonstrated that all five Red Jungle Fowl sub-species were genetically differentiated from each other approximately 50,000 years ago much earlier than domestication.
    • The results contradicted the earlier claim that chickens were domesticated in northern China and the Indus Valley.

    Domestication of Chicken

    • The question of domestication of chickens has intrigued scientists for centuries and has been the subject of debate.
    • Charles Darwin postulated that chickens were domesticated around 4,000 B.C. from a single ancestor, Red Jungle Fowl in the Indus Valley.
    • An important study published earlier from Uppsala University claimed the Grey Jungle Fowl had contributed to chicken domestication.
    • With this, a couple of studies from India, China and other South-Asian countries have argued the monophyletic origin of chicken.

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  • Modern Indian History-Events and Personalities

    Statistics Day and P.C. Mahalanobis

    Prelims Only | Science Tech | Mains Paper 3: Awareness in various sc and tech fields

    Statistics Day will be celebrated today on 29th June 2020 to popularize the use of Statistics in everyday life and sensitize the public as to how Statistics helps in shaping and framing policies.

    Try this question from CSP 2016:

    A recent movie titled The Man Who Knew Infinity is based on the biography of-

    (a) S. Ramanujan
    (b) S. Chandrasekhar
    (c) S. N. Bose
    (d) C. V. Raman

    Who was P.C. Mahalanobis?

    • Prasanta Chandra Mahalanobis (29 June 1893 – 28 June 1972) was an Indian scientist and statistician.
    • He is best remembered for the Mahalanobis distance, a statistical measure, and for being one of the members of the first Planning Commission of free India.
    • He made pioneering studies in anthropometry (the science of obtaining systematic measurements of the human body) in India.
    • He founded the Indian Statistical Institute and contributed to the design of large-scale sample surveys.
    • For his contributions, Mahalanobis has been considered the father of modern statistics in India.

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  • Coronavirus – Economic Issues

    Is printing money an option to tide over the crises

    | Economics | Mains Paper 3: Indian Economy

    India has been dealing with unprecedented crises-with China on border and with economy and pandemic within. Fighting these crises require resources. So, this article examines the options to raise revenue and the consequences that come with them.

    Increase in financial burden to counter China

    •  The Chinese military threat calls for immediate and strategic action by our defence and foreign affairs establishments.
    • India’s war against Pakistan in Kargil in May 1999 provides hints of the financial burden of a military threat.
    • India’s defence expenditure in the war year shot up by nearly 20% from the previous year.
    •  India’s defence budget for the next financial year was 2.7% of nominal GDP, the highest in decades.
    • China is a far mightier power than Pakistan.
    • India’s defence budget has been whittled down to just 2% of GDP for the financial year 2021.
    • China’s defence budget is nearly four times larger.
    • In all likelihood, the Chinese conflict will stretch central government finances by an additional one to two percentage points of GDP.

    Economics of healthcare

    •  The combined public health expenditure of States and the central government in India is a mere 1.5% of GDP.
    • While China’s is at 3% and America’s at 9%.
    • The COVID-19 epidemic is expected to linger on for another two years.
    • There is no option other than to significantly ramp up India’s health expenditure.
    • So, government will need additional funds of the equivalent of at least one percentage point of GDP to continue the fight against COVID-19.

    But economy is in bad shape

    • India’s economy has four major drivers: 1) Spending on consumption. 2) Government spending. 3) Investment. 4) external trade.
    • Spending by people is the largest contributor to India’s economic growth every year.
    • For every ₹100 in incremental GDP, ₹60 to ₹70 comes from people’s consumption spending.
    • The lockdown shut off people from spending for two full months.
    • India’s economy will contract for the first time in nearly five decades.
    • With the global economy in tatters, trade is not a viable alternative to offset the loss from consumption.
    • Investment is also not a viable option at this stage since the demand for goods and services has fallen dramatically.

    So, what we want is new “New Deal”

    • There are only two options to come out of this situation.
    • 1) Either put money in the hands of the needy to stimulate immediate consumption.
    • 2) Or, the government has to embark on a massive spending spree, akin to the “New Deal”.
    • New Deal was a series of programmes and projects instituted in the U.S. during the Great Depression of the 1930s.
    • Government will need to inject incremental funds of five percentage points of GDP to absorb the economic shock and kick start the spending cycle again.

    Findind resources while aoiding “junk rating”

    • Additional expenditure on health, defence and stimulus package plus making up for a shortfall in revenue will lead to a fiscal deficit of 10% of GDP.
    • The only option for the government to finance its needs is to borrow copiously.
    • Borrowing will obviously push up debt to ominous levels.
    • When government debt rises dramatically, it gives rise to a “junk” crisis.
    • With rising debt levels, international rating agencies will likely downgrade India’s investment rating to “junk”.
    • Junk rating will then trigger panic among foreign investors.
    • India thus faces a tough dilemma — save the country’s borders, citizens and economy or prevent a “junk” rating.

    Is printing money an option?

    • Economic theory states that if money is printed at will, it can lead to a massive spike in prices and inflation.
    • This theory has fallen flat in the past decade in developed nations such as America.
    • The U.S dollar, by virtue of being the world’s reserve currency, has in-built protection against a currency crisis that can be triggered by at-will printing of money.
    • India don’t have that protection.
    • Hence, the Reserve Bank of India can just create money at will and transfer them to government coffers electronically, some argue.
    • Whether money is printed or borrowed from others, it will still be counted as government debt.
    • And so, cannot escape a potential downgrade to a “junk” rating.

    Consider the question “As the government has been dealing with the unprecedented crises, it has to explore the option of monetisation of its debt. Examine the issues with such a move.”

    Conclusion

    How India emerges from this crisis will shape not just India’s destiny but the world’s. The best course of action is to borrow unabashedly to pull India out of the crisis and deal with the consequences of a potential “junk” nation label.

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

    Online education in India

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

    What are the benefits of Online Learning in distress situations?

    • In pandemic situation like today’s, where due to nationwide lockdown, all schools, colleges, universities were shut down, online learning comes as a savior to students and provided them with an opportunity to continue learning even while at home.
    • There was anxiety, particularly about the graduating batches of students, lest the ongoing session should be declared a ‘zero semester’. There were attempts from individual teachers to keep their students engaged. A few universities made arrangements for teachers to hold their classes virtually through video conferencing services such as Zoom. These are well-meaning attempts to keep the core educational processes going through this period.
    • Many private and government colleges in the country had been conducting online classes. Very small aperture terminals (VSATs) are still used by top Business schools in the country to create a closed user group (CUGs), which offers online classes globally. However, COVID-19 has hastened
    • Online education, a result of the digital world has brought a lot to the learning table at all levels of education, beginning from preschool up to higher level institutions. The move to remote learning has been enabled by several online tech stacks such as Google Classroom, Blackboard, Big Blue Button, Zoom and Microsoft Teams, all of which play an important role in this transformation.
    • With the development of ICT in education, online video-based micro-courses, e-books, simulations, models, graphics, animations, quizzes, games, and e-notes are making learning more accessible, engaging, and contextualized.
    • To ensure that learning never stops, the online education sector, and mobile networks have become the preferred platform. Teachers are preparing lessons using distance learning tools, and parents are learning new teaching techniques at home. Providing aid are the entrepreneurs offering online learning apps like BYJU’s, Adda24x7, Duolingo, Khan Academy, Witkali and several others.
    • Universities like World University of Design, Jawahar Lal Nehru University, Jamia Millia Islamia, Amity, IP University, Lovely Professional University and Mumbai University are offering online classes across different subjects.
    • Schools in 165 countries around the world have closed due to the Corona virus outbreak, according to UNESCO. And, according to the International Telecommunication Union(ITU), more than 1.5 billion school children around the world are using online education, following the global lockdown.
    • Online learning is not for everyone. Schools located in remote areas of the country with limited availability of electricity and internet is making restricted use of WhatsApp to stay connected with their classrooms.

      3.) Less intimidating

      Many students in classroom environments aren’t comfortable speaking in public. In an online environment, it can be much easier to share thoughts with others

      5.) Focus on ideas

      With an estimated 93 percent of communication being non-verbal, online students don’t have to worry about body language interfering with their message. While body language can be effective sometimes, academics are more about ideas, and online education eliminates physical judgments that can cloud rational discussion.

      5.) Focus on ideas

      With an estimated 93 percent of communication being non-verbal, online students don’t have to worry about body language interfering with their message. While body language can be effective sometimes, academics are more about ideas, and online education eliminates physical judgments that can cloud rational discussion.

      8.) Cost

      Although the cost of an online course can be as much or more than a traditional course, students can save money by avoiding many fees typical of campus-based education, including lab fees, commuting costs, parking, hostels, etc. Imagine living in Dhule but going to college in Mumbai.

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  • Issues with draft EIA Notification 2020

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

    The changes made in the recent notification gives rise to several issues. These changes and issues that could arise are discussed in this article.

    • Environmental Impact Assessment (EIA) is a process of evaluating the likely environmental impacts of a proposed project or development, taking into account inter-related socio-economic, cultural and human-health impacts, both beneficial and adverse.
    • UNEP defines Environmental Impact Assessment (EIA) as a tool used to identify the environmental, social and economic impacts of a project prior to decision-making.
    • It aims to predict environmental impacts at an early stage in project planning and design, find ways and means to reduce adverse impacts, shape projects to suit the local environment and present the predictions and options to decision-makers.
    • Environment Impact Assessment in India is statutorily backed by the Environment Protection Act, 1986 which contains various provisions on EIA methodology and process.

    History of EIA in India

    • The Indian experience with Environmental Impact Assessment began over 20 years back. It started in 1976-77 when the Planning Commission asked the Department of Science and Technology to examine the river-valley projects from an environmental angle.
    • Till 1994, environmental clearance from the Central Government was an administrative decision and lacked legislative support.
    • On 27 January 1994, the then Union Ministry of Environment and Forests, under the Environmental (Protection) Act 1986, promulgated an EIA notification making Environmental Clearance (EC) mandatory for expansion or modernisation of any activity or for setting up new projects listed in Schedule 1 of the notification.
    • The Ministry of Environment, Forests and Climate Change (MoEFCC) notified new EIA legislation in September 2006.
      • The notification makes it mandatory for various projects such as mining, thermal power plants, river valley, infrastructure (road, highway, ports, harbours and airports) and industries including very small electroplating or foundry units to get environment clearance.
      • However, unlike the EIA Notification of 1994, the new legislation has put the onus of clearing projects on the state government depending on the size/capacity of the project.

    The EIA Process

    EIA involves the steps mentioned below. However, the EIA process is cyclical with interaction between the various steps.

    • Screening: The project plan is screened for scale of investment, location and type of development and if the project needs statutory clearance.
    • Scoping: The project’s potential impacts, zone of impacts, mitigation possibilities and need for monitoring.
    • Collection of baseline data: Baseline data is the environmental status of study area.
    • Impact prediction: Positive and negative, reversible and irreversible and temporary and permanent impacts need to be predicted which presupposes a good understanding of the project by the assessment agency.
    • Mitigation measures and EIA report: The EIA report should include the actions and steps for preventing, minimizing or by passing the impacts or else the level of compensation for probable environmental damage or loss.
    • Public hearing: On completion of the EIA report, public and environmental groups living close to project site may be informed and consulted.
    • Decision making: Impact Assessment Authority along with the experts consult the project-in-charge along with consultant to take the final decision, keeping in mind EIA and EMP (Environment Management Plan).
    • Monitoring and implementation of environmental management plan: The various phases of implementation of the project are monitored.
    • Assessment of Alternatives, Delineation of Mitigation Measures and Environmental Impact Assessment Report: For every project, possible alternatives should be identified, and environmental attributes compared. Alternatives should cover both project location and process technologies.
      • Once alternatives have been reviewed, a mitigation plan should be drawn up for the selected option and is supplemented with an Environmental Management Plan (EMP) to guide the proponent towards environmental improvements.
    • Risk assessment: Inventory analysis and hazard probability and index also form part of EIA procedures.

    Importance of Precautionary Principle

    • The basis in global environmental law for the EIA is the “precautionary principle”.
    • Environmental harm is often irreparable and it is cheaper to avoid damage to the environment than to remedy it.
    • We are legally bound to the precautionary principle under international treaties and obligations, as well as by Supreme Court judgments.

    What is the issue?

    • Streamlining the EIA process and bringing it in line with recent judgments are the reasons given by the government for latest notification.
    • The Draft EIA Notification disables it, shrinks its scope and removes what teeth it did have.
    • The most devastating blow to the EIA regime is the creation of an ex-post-facto clearance route. 

    1.What is ex-post-facto clearance route?

    • It applies to ongoing or completed project for which an EIA clearance was never sought or granted, and the construction of the project took place regardless.[violating the norms]
    • The project now can be slapped with minor fines for the violations and get cleared.
    • Where such ex-post-facto clearances were being granted previously, the courts cracked down on them as illegal.
    • Therefore, what could not be ratified will now find itself notified.
    • The legality of sidestepping the courts is questionable and will have to be tested.

    How it will affect?

    •  It will become a business decision as to whether the
    • There is an argument that this route will be an “exception”.
    • But it is difficult to believe in India. Our law has a long history of expanding the exception into the rule.

    Time to furnish response shortened

    • The draft notification also shortens the time for the public to furnish responses on the project.
    • For project-affected people, who are frequently forest dwellers or otherwise do not have access to information and technology.
    • This will make it harder to put forth representations.

    2.Monitoring requirements reduced

    • Monitoring requirements have been slackened.
    • The draft EIA notification halves the frequency of reporting requirements from every six months to once a year.
    • It also extends the validity period for approvals in critical sectors such as mining.

    3.Scope of EIA reduced

    • Industries that previously required a full assessment have been downgraded.
    • The construction industry will be one such beneficiary, where only the largest projects will be scrutinised fully.
    • While defence and national security installations were always understandably exempt, a vague new category of projects “involving other strategic considerations” will also now be free from public consultation requirements.

    4.Recent industrial mishaps

    • Oil India Limited’s oil wells in the Tinsukia district, Assam went up in flames this month.
    • It is situated only a few kilometres away from protected forest.
    • Recent processes for expansion and modification apparently took place without fresh environmental clearance.
    • There was a deadly gas leak at LG Polymers’ Visakhapatnam plant in May.
    • The plant had been operating without a valid environmental clearance for decades.

    Consider the question “Examine the changes made in the draft EIA Notification and what are the issues with it? “

    Way Forward

    On a positive note, the 2020 draft notification has a clause dedicated to definitions to several terms related to EIA. It may be beneficial in the sense that it consolidates the EIA rules and has the potential of alleviating some ambiguity in the present law.

    • The ministry, instead of reducing the time for public consultation, should focus on ensuring access to information as well as awareness about the public hearing and its impact upon the whole EIA process.
    • In order to improve ease of doing business, the government should bring down the average delay of 238 days in granting environmental clearance, that emanates from bureaucratic delays and complex laws.
    • Grow now, sustain later should not be the policy, as the notion is dangerously tilted against the concept of sustainable development.

    Conclusion

    Environmental regulation must balance damage to the environment with sustainable development and possible benefits but the new notification lays more emphasis on the benefits and so must be reconsidered.

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  • Foreign Policy Watch: India-China

    Will banning Chinese imports hurt India’s exports?

    | International Relations | Mains Paper 2: India & Its Neighborhood – Relations

    • Following the recent clashes with Chinese troops in Ladakh, there has been a growing clamour in the country to boycott goods from the neighbouring country.
    • However, the development has caused an alarm among various industry bodies that are concerned about the adverse impact in the event of a blanket ban on exports in several sectors.

    Practice question for mains:

    Q.“Curbing Chinese imports to India will do more harm than any good”. Analyse.

    How dependent is India on Chinese imports?

    China accounts for a sizable portion of India’s top imports, especially where intermediate products or components and raw materials are concerned.  Electronics: The neighbouring country also accounts for 45 per cent of India’s total electronics imports.

    • A third of machinery and almost two-fifths of organic chemicals that India purchases from the world come from China.
    • Automotive parts and fertilizers are other items where China’s share in India’s import is more than 25 per cent.
    • Several of these products are used by Indian manufacturers in the production of finished goods, thus thoroughly integrating China in India’s manufacturing supply chain.
    • For instance India sources close to 90 per cent of certain mobile phone parts from China.

    India’s export to China

    • Even as an export market, China is a major partner for India. At $15.5 billion, it is the third-largest destination for Indian shipments.
    • At the same time, India only accounts for a little over two per cent of China’s total exports, according to the Federation of Indian Export Organisation (FIEO).

    How could a blanket ban on Chinese imports hit India’s exports?

    • Across sectors from pharmaceuticals to telecommunications and automobiles, industry associations have been speaking up against a complete boycott of Chinese imports.
    • A “blanket ban” may not be feasible because of India’s dependence on the country for crucial raw materials.
    • Banning the imports of raw materials from China without which products over here cannot be manufactured will make things difficult.
    • If China takes any retaliatory measures, it would impact India more negatively.

    Most crucial: The Pharma sector could be worst hit

    • For instance, of the nearly $3.6 billion worth of ingredients that Indian drug-makers import to manufacture several essential medicines, China catered to around 68 per cent.
    • India is considered one of the largest pharma industries in the world and accounts for a considerable portion of imports of finished formulations by other large economies like the US.
    • While pharma consignments from China have unofficially been stopped at ports in India, and are expected to be cleared after thorough checks,
    • A ban could create shortages of medicines both for India’s domestic and export markets.

    Are there any alternatives in this situation?

    • The decision to boycott non-essential products made in China can be left to the individuals.
    • However, trade-related measures like raising duties on cheaper raw materials imported from China would be better than an outright embargo.
    • This would still allow access to crucial ingredients in the short-term while India looks to build self-reliance or maybe switch to alternate trade partners.
    • It would be better to maybe raise duties on cheaper raw materials instead of going in for a blanket ban.

    Alternatives to Chinese imports

    • Countries like the US, Vietnam, Japan, Mexico and certain European countries could be tapped as alternate import sources for some critical electronic, vehicular and pharmaceutical components as well.
    • It is likely that the costs of the raw materials from these alternate sources will be higher and may get passed on to consumers if the manufacturers cannot absorb them.
    • India will need to look into the totality of its trade with China and Hong Kong and implement certain short- to long-term plans to reduce its dependence on them, according to FIEO.

    Way forward

    • The government’s “Atmanirbhar” focus is expected to help ministries handhold industries where self-reliance needs to be built.
    • Some measures, like the decision to push bulk drug parks in India, have to be executed.
    • While an increase in tariff can be one way to achieve import substitution, the more effective strategy would be to provide an ecosystem that addresses the cost disability of Indian manufacturing leading to such imports.

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