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  • Policy Wise: India’s Power Sector

    The supply bottlenecks causing power shortages

    Context

    The power sector in India is going through a crisis. Peak shortages in some states have reached double digits.

    Chronology of the crisis

    • First, with summer approaching before time, power demand has shot up to record levels.
    • The second reason for the rise in power demand is that the economy is recovering, and demand from the industrial sector is going up.
    • All things put together, power demand crossed 207 GW on April 29, which is about 14 per cent higher than what it was a year ago.
    • Experts feel that the peak demand may even touch 215 GW in the coming months.

    Coal shortage crisis

    • On average, coal stocks available are only good enough for about eight days’ generation against a norm of 24 days.
    • In some plants, the stocks available are just about enough to run the plant for a day or two more.
    • Part of the problem of poor coal stock is also rumoured to be on account of the non-payment of dues of coal companies.
    • But this is not the major cause of the shortage.

    Reasons for coal shortage and fall in generation

    • The fall in coal stock in power stations is because of two main reasons.
    • 1] Rise in international price of coal: The first is that due to a rise in the international price of coal on account of the Ukraine crisis, all plants that were importing coal have either stopped generating completely or are generating at much lower levels.
    • We have a sizeable generating capacity based on imported coal, estimated at about 16 GW to 17 GW.
    • All these plants after stopping imports are now looking for domestic coal, creating pressure on domestic coal.
    • 2] Non-availability of rakes with Indian railways for transporting coal: Though about 22 MT of coal may be available in power stations, if one includes the stocks available with mining companies, the figure is well over 70 MT.
    • So, it is all a question of transporting the coal to the power stations.
    • 3] Fall in generation from gas-based plants: To make matters worse, generation from gas-based plants has also fallen due to high gas prices in the world market.
    • 4] Impact on hydro generation: Reservoirs, too, are drying up due to intense heat which will adversely affect hydro generation.

    Transportation problem faced by Indian railways

    • The railways have about 2,500 rakes which can be used for coal transportation.
    • With a turn-around time of about four-and-a-half days which goes up to nine days for coastal regions, the railways can provide only about 525 rakes on any single day. 
    • Of this, about 100 rakes are used for transporting imported coal and therefore, only about 425 rakes are available on a daily basis for transporting domestic coal.
    • But only 380 rakes were being provided in the first half of April this year, though efforts are on to increase this to about 415 rakes.
    • The railways prefer to transport coal over short distances in order to save on the turn-around time.
    • There is also the issue of availability of tracks since they are being used on a back-to-back basis.
    • Thus production has to be enhanced so that the replenishment rate is higher than consumption.
    • Unless we do that, the total stock of coal in the country will deplete further and it will no longer be a mere transportation problem as it is now, but a general lack of supply of coal.

    Conclusion

    This is the right time to enhance coal production and build adequate stocks because once the monsoon sets in, production will fall.

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  • Languages and Eighth Schedule

    The Debate on National Language

    Remarks by a Hindi actor to the effect that Hindi is the national language of India has sparked controversy recently over the status of the language under the Constitution.

    What is the status of Hindi?

    • Under Article 343 of the Constitution, the official language of the Union shall be Hindi in Devanagari script.
    • The international form of Indian numerals will be used for official purposes.

    The debate

    • Inherent opposition to Hindi: The Constituent Assembly was bitterly divided on the question, with members from States that did not speak Hindi initially opposing the declaration of Hindi as a national language.
    • Colonial footprints of English: Proponents of Hindi were insistent that English was the language of enslavement and that it should be eliminated as early as possible.
    • Fear of Hindi imposition: Opponents were against English being done away with, fearing that it may lead to Hindi domination in regions that did not speak the language.
    • Inefficacy of Sanskrit: There were demands to make Sanskrit the official language, while some argued in favour of ‘Hindustani’.
    • Issue over Script: There were differences of opinion over the script too. When opinion veered towards accepting Hindi, proponents of the language wanted the ‘Devanagari’ script to be adopted both for words and numerals.

    Major outcome: No national language

    • It was decided that the Constitution will only speak of an ‘official language’.
    • And that English would continue to be used for a period of 15 years.
    • The Constitution said that after 15 years, Parliament may by law decide on the use of English and the use of the Devanagari form of numbers for specified purposes.

    What is the Eighth Schedule?

    • The Eighth Schedule contains a list of languages in the country. Initially, there were 14 languages in the schedule, but now there are 22 languages.
    • There is no description of the sort of languages that are included or will be included in the Eighth Schedule.

    Constitutional position of Eighth Schedule

    There are only two references to these languages in the text of the Constitution.

    (i) Article 344(1):

    • It provides for the formation of a Commission by the President, which should have a Chairman and members representing these scheduled languages.
    • The purpose of the Commission is to make recommendations for the progressive use of Hindi for official purposes of the Union and for restricting the use of English.

    (ii) Article 351:

    • It says it is the Union government’s duty to promote the spread of Hindi so that it becomes “a medium of expression for all elements of the composite culture of India”.
    • It also aims to assimilate elements of forms and expressions from Hindustani and languages listed in the Eighth Schedule.

    What were the 1965 protests about?

    • The Official Languages Act, 1963 was passed in anticipation of the expiry of the 15-year period during which the Constitution originally allowed the use of English for official purposes.
    • Its operative section provided for the continuing use of English, notwithstanding the expiry of the 15-year period.
    • Jawaharlal Nehru had given an assurance in 1959 that English would remain in official use and as the language of communication between the Centre and the States.
    • The Official Languages Act, 1963, did not explicitly incorporate this assurance, causing apprehensions in some States as the January 1965 deadline neared.
    • At that time, PM Lal Bahadur Shastri reiterated the government’s commitment to move towards making Hindi the official language for all purposes.

    TN loops in the agitation

    • In Tamil Nadu, then known as Madras, the prospect of the use of Hindi as the medium of examination came due to recruitment examination of union.
    • It created an apprehension that Hindi would be imposed in such a way that the future employment prospects of those who do not speak Hindi will be bleak.

    Creating an exception for Tamil Nadu

    • With the Congress government in the State taking the view that the people had nothing to fear about, protests broke out in January 1965.
    • It took a violent turn after more and more student activists joined the protest, and continued even after key Dravida Munnetra Kazhagam (DMK) leaders were arrested.
    • More than 60 people died in police firing and other incidents as the protests went on for days.
    • The agitation died down later, but by then the Congress at the Centre realised the sensitivity of the language issue among Tamil-speaking people.
    • When the Official Language Rules were framed in 1976, it was made clear that the Rules apply to the whole of India, except Tamil Nadu.

    What is the three-language formula?

    • Since the 1960s, the Centre’s education policy documents speak of teaching three languages — Hindi, English and one regional language in Hindi-speaking States, and Hindi, English and the official regional language in other States.
    • In practice, however, only some States teach both their predominant language and Hindi, besides English.
    • In States where Hindi is the official language, a third language is rarely taught as a compulsory subject.
    • Tamil Nadu has been steadfastly opposing the three-language formula and sticks to teaching Tamil and English.
    • It argues that those who need to know Hindi can learn on their own.

     

     

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  • Parliament – Sessions, Procedures, Motions, Committees etc

    Quasi-Federalism in India

    This newscard is an excerpt from the original article published in the TH.

    Why in news?

    • The contemporary discourse on federalism in India is moving on a discursive across multiple dimensions, be it economic, political and cultural,
    • It is argued that India is at an inflection point vis-a-vis Centre-State relations owing to increasing asymmetry.

    What is Federalism?

    • Federalism is a system of government in which the power is divided between a central authority and various constituent units of the country.
    • This vertical division of power among different levels of governments is referred to as federalism.
    • Federalism is one of the major forms of power-sharing in modem democracies.

    Indian case: Federal, quasi-federal or hybrid?

    • India consciously adopted a version of federalism that made the Union government and State governments interdependent on each other (latter more vis-a-vis the former).

    The federal features of the Constitution of India are:

    • Written Constitution: Features of the Indian Constitution is not only a written document but also the longest constitution in the world. Originally, it included a Preamble, 395 articles (22 parts), and 8 schedules.
    • Dual Polity: The constitution establishes a dual polity that includes the union at the periphery. Each is endowed with sovereign powers to be exercised in the field assigned to them respectively by the Constitution.
    • Bicameralism: The constitution provides for a bicameral legislature in which an upper house (Rajya Sabha) and a lower house (Lok Sabha). Rajya Sabha represents the states of the Indian Union, whereas The Lok Sabha represents the people of India as a whole.
    • Division of Powers: The Constitution divided the powers between the Center and the states in terms of the Union List, State List, and Concurrent List in the Seventh Schedule.
    • Supremacy of the Constitution: The Constitution is the supreme law of the country. The laws made by the Center and the states should be in conformity with Provision. Otherwise, they may be declared invalid by the Supreme or High Court through its power of judicial review.
    • Rigid Constitution: The division of powers established by the Constitution as well as supremacy of the constitution can be maintained only if the method of its amendment is rigid. It is necessary for both houses to agree to amend the constitution.
    • Independent judiciary: The constitution establishes an independent judiciary headed by the Supreme Court for two purposes: one, to protect the supremacy of the constitution, and two, to settle the disputes between the Centre and states or between the states.

    Besides the above federal features, the Indian constitution also possesses the following unitary features:

    • Strong Centre: The division of powers is in favour of the centre and unequal from a federal point of view. Firstly, the Union list contains more subjects than the state list, secondly, the more important subjects have been included in the union list and the Centre has overriding authority over the concurrent list.
    • Single constitution: The constitution of India embodies not only the constitution of the Centre but also those of the states. Both the Centre and the States must operate within this single frame.
    • Destructible nature of states: Unlike in other federations, the states in India have no right to territorial integrity. The parliament can change the area, boundaries, or name of any state.
    • Emergency provisions: The emergency provisions are contained in Part XVIII of the Constitution of India, from Articles 352 to 360. In the emergency provisions, the central government becomes all-powerful and the states go into total control of the Centre.
    • Single citizenship: Single citizenship means one person is the citizenship of the whole country. The constitution deals with citizenship from Articles 5 and 11 under Part 2.
    • All India services: In India, there are all India services (IAS, IPS and IFS) which are common to both the Centre and the states. These services violate the principle of federalism under the constitution.
    • Appointment of governor: The governor is appointed by the president. He also acts as an agent of the Centre. Through him, the Centre exercises control over the states.
    • Integrated election machinery: The election commission conducts elections for central and state legislatures. But the Election commission is constituted by the president and the states have no say in this matter.
    • Equality (= Equity) of representation: The states are given representation in the upper house on the basis of population. Hence, the membership varies from 1 to 31.
    • Integrated Judiciary: The term Integrated Judiciary refers to the fact that rulings made by higher courts bind lower courts. The Supreme Court of India incorporates all lower courts, from the Gram Panchayat to the High Courts. The Supreme Court is at the very top.
    • Union veto over State Bills:  The governor has the authority to hold certain sorts of laws passed by the state legislature for presidential consideration. The President has the authority to refuse to sign such bills not only in the first instance but also in the second.

    Reasons for a centralised federal structure

    There are at following reasons that informed India’s choice of a centralised federal structure.

    1. Partition of India and the concomitant concerns: The 1946 Objectives Resolution introduced by Nehru in the Assembly were inclined towards a decentralised federal structure wherein States would wield residuary powers.
    2. Reconstitution of social relations in a highly hierarchical and discriminatory society: The centralised structure would unsettle prevalent trends of social dominance, help fight poverty better and therefore yield liberating outcomes.
    3. Building of a welfare state: In a decentralised federal setup, redistributive policies could be structurally thwarted by organised (small and dominant) groups. Instead, a centralised federal set-up can prevent such issues and further a universal rights-based system.
    4. Alleviation of inter-regional economic inequality: Provincial interventions seemed to exacerbate inequalities. India’s membership in the International Labour Organization, the Nehru Report (1928), and the Bombay Plan (1944) pushed for a centralised system to foster socio-economic rights and safeguards for the working and entrepreneurial classes.
    5. Linguistic reorganization: It would not have been possible if India followed a rigid or conventional federal system. In other words, the current form of federalism in the Indian context is largely a function of the intent of the government of the day and the objectives it seeks to achieve.
    • From the above, it is clear that India has deviated from the traditional federal systems like the USA   and incorporated a large number of unitary features, tilting the balance of power in favor of the Centre.
    • Hence K C Wheare described the constitution of India as “quasi-federal”.

    Conclusion

    • The majoritarian tendencies sometimes are subverting the unique and indigenised set-up into an asymmetrical one.
    • Inter alia, delayed disbursal of resources and tax proceeds, bias towards electorally unfavourable States, evasion of accountability, imposition of language, weakening institutions, proliferation of political ideologies all signal towards the diminishing of India’s plurality or regionalisation of the nation.
    • While it would be safe to argue that our federal set-up is a conscious choice, its furthering or undoing, will depend on the collective will of the citizenry and the representatives they vote to power.

     

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  • Anti Defection Law

    What is Office-of-Profit?

    The Election Commission (EC) has sent a notice to Jharkhand CM over an office-of-profit charge against him for allotment of a mining lease in his name last year.

    Why in news?

    • Under Section 9A of the Representation of the People Act, 1951, the CM could face disqualification for entering into a government contract.
    • The Constitution of India does not define the Office of Profit. It has only mentioned it under Article 102 (1) and Article 191 (1).

    What is ‘Office of Profit’?

    • MPs and MLAs, as members of the legislature, hold the government accountable for its work.
    • The essence of disqualification is if legislators hold an ‘office of profit’ under the government, they might be susceptible to government influence, and may not discharge their constitutional mandate fairly.
    • The intent is that there should be no conflict between the duties and interests of an elected member.
    • Hence, the office of profit law simply seeks to enforce a basic feature of the Constitution- the principle of separation of power between the legislature and the executive.

    What governs the term?

    • At present, the Parliament (Prevention of Disqualification) Act, 1959, bars an MP, MLA or an MLC from holding any office of profit under the central or state government unless it is exempted.
    • However, it does not clearly define what constitutes an office of profit.
    • Legislators can face disqualification for holding such positions, which bring them financial or other benefits.
    • Under the provisions of Article 102 (1) and Article 191 (1) of the Constitution, an MP or an MLA (or an MLC) is barred from holding any office of profit under the Central or State government.

    An undefined term

    • The officials of the law ministry are of the view that defining an office of profit could lead to the filing of a number of cases with the Election Commission and the courts.
    • Also, once the definition is changed, one will also have to amend various provisions in the Constitution including Article 102 (1) (a) and Article 109 (1) (a) that deal with the office of profit.
    • It will have an overarching effect on all the other sections of the Constitution.

    Factors constituting an ‘office of profit’

    • The 1959 law does not clearly define what constitutes an office of profit but the definition has evolved over the years with interpretations made in various court judgments.
    • An office of profit has been interpreted to be a position that brings to the office-holder some financial gain, or advantage, or benefit. The amount of such profit is immaterial.
    • In 1964, the Supreme Court ruled that the test for determining whether a person holds an office of profit is the test of appointment.

    What is the ‘test of appointment’?

    Several factors are considered in this determination including factors such as:

    1. whether the government is the appointing authority,
    2. whether the government has the power to terminate the appointment,
    3. whether the government determines the remuneration,
    4. what is the source of remuneration, and
    5. the power that comes with the position.

     

     

  • Coronavirus – Health and Governance Issues

    No one can be forced to get vaccinated: SC

    The Supreme Court has upheld the right of an individual against forcible vaccination and the government’s COVID-19 vaccination policy to protect communitarian health.

    What is the news?

    • Vaccine hesitancy has been on rise these days.
    • The SC has found certain vaccine mandates imposed by the State governments and Union Territory administrations disproportionate.
    • They tend to deny access to basic welfare measures and freedom of movement to unvaccinated individuals.

    Right not to get vaccinated

    • The bench upheld the right to bodily integrity and personal autonomy of an individual in the light of vaccines and other public health measures.
    • Bodily integrity is protected under Article 21 (right to life) of the Constitution and no individual can be forced to be vaccinated.
    • The court struck a balance between individual right to bodily integrity and refuse treatment with the government’s concern for public health.

    Subject to scrutiny

    • When the issue is extended to “communitarian health”, the government was indeed “entitled to regulate issues”.
    • But its right to regulate by imposing limits to individual rights was open to judicial scrutiny.

    What is Vaccine Hesitancy?

    • The reluctance of people to receive safe and recommended available vaccines is known as ‘vaccine hesitancy’.
    • This was already a growing concern before the COVID-19 pandemic.
    • A framework developed from research done in high-income countries, called ‘the 5C model of the drivers of vaccine hesitancy’, provides five main individual person–level determinants for vaccine hesitancy:
    1. Confidence
    2. Complacency
    3. Convenience (or constraints)
    4. Risk calculation
    5. Collective responsibility

    Questions raised by vaccine hesitancy

    1. To end the pandemic, wherein no one is safe until everyone is safe, how relevant and strong are the arguments on freedom of choice?
    2. How is the fight against this global crisis impacted when prominent personalities assert on making a choice contrary to global good?
    3. Amid the raging pandemic and the persistent threat of future waves, how can vaccine scepticism and hesitancy be addressed worldwide?

    Why is it a cause of concern?

    • Re-surging of covid cases: Amid the ongoing Omicron surge, there have been reports pointing to the unvaccinated population driving the current surge in COVID-19 cases in Europe and US.
    • Risk of future waves and danger mutations: Large scale vaccine hesitancy could drag the pandemic longer by ensuring sustained continuance of the COVID-19 diseases and emergence of newer and deadlier variants.

    Various causes for vaccine hesitancy

    • Scepticism: There are many reasons for vaccine scepticism. Vaccine hesitancy is complex and context specific varying across time, place and vaccines.
    • Fake news: The conspiracy theories on social media have brought negative publicity for vaccination. These seem to have created propaganda against the vaccines.
    • Malfunctions: The sensational highlighting of vaccine fatalities event by the media is driving vaccine hesitancy to some extent.
    • Myths and beliefs: In some places radical religious factors have driven vaccine hesitancy resulting in myth against vaccines. This is also a leading factor of prevalence of Polio in Pakistan and Afghanistan.
    • Policy fluctuations: The frequent flip-flops by governments on the vaccination issue have resulted in a low trust among the general populace regarding vaccination.
    • Public trust: Vaccine hesitancy is also influenced by factors such as complacency, convenience and confidence.

    Way forward

    With no “one-size-fits-all” solution to vaccine hesitancy, contextualised and curated approaches are crucial.

    • Dispelling misinformation: There is the need to dispel all misinformation – unscientific, incorrect and unsubstantiated.
    • Counselling: WHO has put forth the BeSD (behavioural and social drivers) vaccination model, which emphasises “motivation” as the vanguard of human psychology during a vaccination drive.
    • Standard safeguards: The fact that vaccines meet the necessary safety standards set by the various organizations needs to be highlighted.
    • Vaccine equality: There is the need to ensure access of affordable, quality and timely vaccines to all.
    • Highlighting success: Countries must highlight the success observed due to the vaccination programmes, wherein despite rapid rise in cases the hospitalization and death rates remain within controllable limits.

     

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  • UDAY Scheme for Discoms

    [pib] National Open Access Registry (NOAR)

    National Open Access Registry (NOAR) has successfully gone live from 1st May 2022.

    What is NOAR?

    • NOAR is a centralized online platform through which the short-term open access to the inter-state transmission system is being managed in India.
    • It is an integrated platform accessible to all stakeholders in the power sector, including open access customers (both sellers and buyers), power traders, power exchanges, National/Regional/State LDCs and others.
    • The platform provides automation in the workflow to achieve shorter turnaround time for the transactions.
    • NOAR platform also has a payment gateway integrated for making payments related to interstate short-term open access transactions.
    • NOAR platform provides transparency and seamless flow of information among stakeholders of open access.

    Key features

    • Centralized System: Single point electronic platform for all the stakeholders
    • Automated Process: Automated administration process of the short-term open access
    • Common Interface: Interface with the RLDCs scheduling applications and Power Exchanges (s)
    • Payment Gateway: Make payments related to STOA transactions

     

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  • Disinvestment in India

    LIC

    Context

    LIC is now at a transformational moment. Its listing on the bourses should lift LIC to be a part of the elite corporate community in India.

    Insurance sector in India

    • Opening of the insurance sector: A milestone in the history of India’s insurance industry was the opening of the sector for private participation in the year 2000 and this caused widespread concern that LIC will find the competition tough and could very well be marginalised.
    • Today, there are 24 private players in the life insurance space and many of them have foreign collaborations.
    • LIC has steadily grown in the past six decades and today with over 290 million policyholders and an asset value of ₹38 lakh crore ($520 billion), it ranks as one of the largest insurance companies in the world.
    • Yet, LIC remains a colossus capturing 75% of the life insurance business in the country.
    • Its claim settlement at 99.87% is far above the industry average of 84%.

    Role of LIC in skilling and women’s employment

    • LIC created large scale employment for women right from its inception in 1956. 
    • Thousands of women became LIC agents in the 1950s and 60s, when job opportunities were scarce.
    • There was no entry barrier in terms of age or fixed time for work.
    • Education requirement was a mere high school pass.
    • Many of these women were housewives who could earn an extra income by selling LIC policies.
    • This was a period before the arrival of digital technologies and mobile phones.
    • Skill development program: LIC’s training programme with its mix of online education and real-life case studies offer the best model for India’s skill development programmes.
    •  LIC’s relevance comes from its track record of creating vast number of employment opportunities for ordinary Indians, male and female, urban and rural.

    Policies focused on savings

    • In a country of vast poverty and low income, LIC recognised from the beginning that it cannot sell insurance as a risk cover on premature death.
    • It, therefore, devised policies focussing on savings and the need for children’s education and daughter’s marriage which are fundamentals to family values in India.
    • These policies also ensured that a part of the premium paid was returned at regular intervals before the maturity period, providing liquidity for emergencies.
    • They simultaneously covered risk caused by death.
    • People-centric approach: While the private players concentrated on technology-driven marketing, LIC’s approach was significantly people-centric.
    • When Pradhan Mantri Jan Dhan Yojana was launched for financial inclusion of over 300 million of the rural population on August 15, 2014, LIC was already there with its policies covering a rural population of 200 million.

    Conclusion

    The nation must not forget the fact that LIC was built on sweat and tears, pain and sacrifice of ordinary Indians. It is these democratic credentials that remain LIC’s most valuable asset.

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  • Climate Change Impact on India and World – International Reports, Key Observations, etc.

    India must use markets to decarbonise

    Context

    Climate change is bound to impact human lives and the global economy at an exceptionally high scale in the not-so-distant future. The solution to the problem calls for government intervention.

    Carbon intensive nature of India’s energy ecosystem

    • After China and the United States, India, which releases 2.44 billion tonnes of carbon dioxide annually, is the third-largest emitter of this GHG, making it a key player in emissions reduction.
    •  The International Energy Agency’s (IEA) World Energy Outlook 2017 Report estimates that India will account for nearly one-fourth of the global energy demand by 2040.
    • As per the IEA’s India Energy Outlook 2021 Report, India’s energy system is highly dependent on fossil fuels — coal, oil and bioenergy — that supply about 90 per cent of the country’s demand.
    • Low electrification: About 38 per cent of primary energy is consumed for power generation, implying that the level of electrification is still low in the country.
    • Power generation is highly dependent on coal — about 78 per cent of it comes from this fossil fuel — and, transportation is almost entirely dependent on oil.
    • The Indian energy ecosystem is, thus, highly carbon-intensive.

    Climate change as a feature of market failure

    • Market failure due to climate change: Economic activities by consumers (driving or air-conditioning, for instance) and by producers (such as electricity generation and manufacturing) cause emissions, leading to pollution and global warming.
    • Negative externalities: These negative externalities, causing outcomes that are not efficient, are not reflected in the costs incurred by consumers or producers.
    • The true costs to the consumers, producers and society are not reflected in the market interactions.
    • This leads to an uncontrolled rise in emissions and also breeds apathy towards mitigation efforts.

    Way forward

    • Government intervention: Achieving economic growth sustainably requires a strategy for reducing carbon emissions aggressively while also focusing on efficiency, equity, fairness and behavioural aspects.
    • The solution to the problem of market failure calls for government intervention.
    • Limits of emission: The most natural option of government intervention for reducing emissions is by fixing limits of emissions through regulation, taking into consideration the Nationally Determined Contribution targets set by the country under the Paris Agreement.
    • Experts have shown that the wrongly set emission levels could lead to cost-inefficient outcomes.
    • It makes it difficult for the regulator to obtain the information about each firm’s abatement-cost and damage-cost schedules in advance.
    • Therefore, setting emission targets and regulating emissions through command and control might be good only during the initial phase of the mitigation strategy.
    • Why Carbon tax is a better option? The carbon tax is a better option than regulating the pre-fixed levels of emissions.
    • The marginal cost of abatement rises as the firms keep on reducing the emissions further, and the firm will stop reducing emissions and choose to pay tax at the point when the cost of abatement becomes higher than the rate of tax.
    • This option will lead to near-efficient outcomes.
    •  The trading scheme will bring in higher efficiency as the price of certificates will be determined by allowing firms facing low and high abatement costs to compete in the free market as per their own abatement and damage cost schedules.
    •  The emissions trading scheme will determine the optimal and cost-efficient levels of emissions reduction by providing a choice to the firms to either mitigate or trade — the net effect of this will be a reduction in emissions.
    • The low abatement-cost firms will keep reducing emissions as they would profit by trading the certificates.
    • Equity in energy access: The issue of equity in energy access must be addressed by channelling the revenues generated from carbon pricing to households and firms impacted by the carbon trading and carbon tax — these could be through incentives or lump-sum transfers.

    Conclusion

    The socio-economic impact of decarbonising the economy and the way humans live would be crucial in setting our priorities. We have limited time and our resources are scarce.

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  • Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

    PDS has had a spectacular run. That may not last

    Context

    2020-21 was one of Indian agriculture’s finest moments, as memorable as 1967-68 that inaugurated the Green Revolution. Agriculture was the only sector to grow 3.3 per cent in 2020-21, even as the economy overall contracted by 4.8 per cent.

    Increase in grain offtake under PDS

    • NFSA along with PMGKAY has led to a massive jump in grain offtake through the PDS.
    •  More importantly, this increase has largely taken place in the poorer states.
    • UP, Bihar and Jharkhand together accounted for 21.6 per cent of national grain offtake in 2012-13, which was pre-NFSA.
    • Sales of rice and wheat under various government schemes totalled 92.9 million tonnes (mt) in 2020-21 and 105.6 mt in 2021-22.
    • This was as against an average offtake of 62.5 mt during the first seven years after the implementation of the National Food Security Act (NFSA) in 2013-14 and 48.4 mt in the seven years preceding the legislation.

    Provisions under NFSA

    • The NFSA legally entitles up to 75 per cent of India’s rural and 50 per cent of the urban population — translating into some 813.5 million people — to receive 5 kg of grain per person per month at highly subsidised rates of Rs 2/kg for wheat and Rs 3/kg for rice.
    • In the wake of the Covid-induced economic disruptions, a new Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) scheme was launched giving NFSA beneficiaries an extra 5 kg grain per person per month free of cost.
    • PMGKAY was implemented for eight months (April-November) in 2020-21 and 11 months (May-March) of 2021-22.

    PDS reforms in states

    • Only a handful of states — Kerala, Tamil Nadu and Andhra Pradesh — had well-functioning PDS till the early 2000s.
    • In the late-2000s, Chhattisgarh initiated reforms to curb diversion/leakages by entrusting the running of fair price shops to cooperatives and local bodies (as against private licensees), making timely allocation and supplying grain directly to PDS outlets (bypassing middle-level distribution agencies), and using IT to track dispatches right from procurement centres to points of sale.
    • Chhattisgarh’s example was emulated by Odisha, followed by Madhya Pradesh and West Bengal — all by 2015-16.
    • The three poorest states are the latest entrants to the list.
    • The accompanying charts show the offtake of rice and wheat both at the all-India level and for the three poorest states as per the NITI Aayog’s National Multidimensional Poverty Index — Bihar, Jharkhand and Uttar Pradesh (UP).
    • UP particularly has seen its grain offtake soar from 9.5 mt to 17.3 mt in the last two years.
    • Out of the 17.3 mt (10.7 mt wheat and 6.6 mt rice) distributed in 2021-22, 7.8 mt comprised free grains under PMGKAY.
    • The PDS, indeed, turned out to be the only effective social safety net during the pandemic.
    • Some states went beyond rice and wheat.

    Challenges

    •  The expansion of the PDS, especially post-NFSA, was underwritten by the superabundance of rice and wheat in government granaries.
    • Official wheat procurement is likely to halve this time from last year’s record 43.3 mt, because of a poor crop singed by the abnormal spike in March temperatures.
    • Rice stocks are far more comfortable, though the precarious supply situation in fertilisers raises questions about the prospects for the coming kharif season.
    • Looking ahead, the Food Corporation of India’s stocks can probably sustain the pre-2020-21 annual offtake levels of 60-65 mt – enough for NFSA, but certainly not schemes such as PMGKAY.

    Conclusion

    The PDS was originally meant to protect ordinary people from extraordinary price rises. Whether it can do that at a time of renewed global inflation remains to be seen.

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

    Confidentiality ring amendment and its impact on antitrust disputes

    Context

    Amazon (the defendant) decided to take the confidentiality route towards its submissions in an order dated March 7 passed by the DG-CCI on the Amazon dispute.

    About the Confidentiality Ring

    • In 2015, the EU mandated the creation of a data room to respect the confidentiality of certain documents.
    • The EU has to protect this mandate to ensure that the right of defence is not prejudiced. 
    • Articles 101 and 102 of the Treaty of the European Union, which states: “Through confidentiality rings, DG Competition (EU) can safeguard the rights of defence while respecting the legitimate interests in the confidentiality of the information providers.
    • In addition, confidentiality rings remove or reduce the burden of preparing non-confidential versions of documents.”

    Adoption of Confidentiality ring by CCI

    • CCI’s investigation under Sections 3, 4 or 5 of the Competition Act are related to the suo motu powers given to the director-general of the commission, which have now extended toward establishing a confidentiality ring.
    • The CCI has taken an alternative view by vaguely replacing the intent with the regulation.
    • The commission may provide the Confidentiality ring after providing a reasonable opportunity to the informant to represent its case before the Commission.
    • This casts an onus on the informant.
    • Turning to the provider of confidential information, the party seeking confidentiality has to submit reasons and the same must be rebutted by the informant, CCI or any other parties, largely driven by the CCI.

    Issues with the CCI adoption of the Confidentiality Ring

    1] Indiscriminate use of defendant’s reputation ground

    • What would happen if the informant seeks additional documents so that the agency is not prejudiced?
    • By hearing parties out, through redacted information the CCI is bound to be questioned as to the reasons for deciding in a certain manner and worse, could stifle the process at the start.
    • This is likely because the CCI has to hear the objections that the informant may have regarding the reasons for keeping information confidential.
    • The usual ground for seeking this protection is the defendant’s reputation.
    • However, this defence can be used to indiscriminately to subdue any counter that may arise from the informant, who may not possess the intricate details of how a cartel works.

    2] Rejection of informant’s right to know the information

    • The second question is about the relief under Section 35 of the Act that empowers the CCI to establish a confidentiality ring including the parties in dispute to disseminate the information for which the confidentiality clause is invoked.
    • However, this is immediately caveated by Regulation 8 of the “Confidentiality Ring” Amendment of April 8, which states that the informant shall not be part of the ring.
    • This will essentially lead the CCI to gather more information surreptitiously for the determination of the case.
    • Void the informant’s right to know information: It has also effectively rejected the informant’s right to know the information, which would be necessary to establish their claim.
    • Brings secrecy: This not only empowers the CCI to further its cause of suo motu investigation but also brings secrecy to cases of high-value disputes.

    3] It protects the defendant

    • The reason the CCI decided to establish a confidentiality ring is the opposite of the EU directive.
    • The EU would like to protect the information provider, but the CCI seems to want to protect the documents of the defendant.
    • This contradicts the intent in regulation 1 wherein the CCI intends to protect the informant and regulation 2, which gives unfettered rights to “parties” in the dispute to summarily drop the confidentiality card which, according to any reasonable person, includes the defendant.

    Conclusion

    The protection provided to the informants, unfortunately, turns out to be to the advantage of the defendants, who are usually large multi-billion dollar entities. It enables the CCI to ringfence its investigation creating legal immunity for “all” involved.

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