The 17th edition of the India-U.S. bilateral exercise, Yudh Abhyas 2021, got underway in mountainous terrain and cold climate conditions of Alaska, US.
Yudh Abhyas 2021
Exercise Yudh Abhyas is the largest running joint military training and defence cooperation endeavour between India and USA.
The exercise aims at enhancing understanding, cooperation and interoperability between the two armies.
Why it is significant?
Interestingly, this is the only India-U.S. service exercise continuing in bilateral format.
The India-U.S. Malabar naval exercise became trilateral with the addition of Japan in 2015 and further brought in all the Quad partners together with the inclusion of Australia in 2020.
Similarly, Japan joined the India-U.S. bilateral air exercise, Cope India, as an Observer in 2018 and the plan is to make it trilateral in phases.
Other than the Malabar, Japan had sent observers for the first time during Cope India 2018 as an Observer in 2018. s
Check out Lakshay’s excerpt on how he cleared UPSC 2020:-
Civils Daily is different than all the other online learning platform when it comes to comprehensive preparation for CSE. Lakshay Chaudhary came in contact with CivilsDaily in the year 2016. Back then he utilized open and free support for current affairs and contemporary issues from Civils Daily. He is undergoing IRAS training.
In the 2020 attempt Lakshay improved his rank and maintained a consistent success with AIR even as a working professional. Here, Civils Daily’s Smash Mains and 250+ Proobable Questions helped him to score high in main GS exam.
Role of Mentorship under Sajal Sir has given definite shape to the smart work by Lakshay. With his clarity of thoughts we prefer to have discussions for specific strategies for all the stages.
Heartiest congratulations to Lakshay Kumar Chowdhury AIR 132 UPSC Civil Services 2020
With over 80% enrolled students in 2020 attending UPSC interviews, Smash Mains is back again. This is an invite-only program that will start on October 24th, 2021.
Mentorship will be provided free of cost by Sajal Sir. Only administrative cost will be charged. To enroll click here
About Smash Mains 2021
Dear Students,
The fact that you have been missing the cut-off with a small margin (repeatedly) tells that there are some fundamental issueswith your approach. You might be aware or not about this. But just realization is not enough, you have to work on its execution as well. And bringing that to fruition will be possible through a guided process under a meticulously designed plan.
Smash mains is a highly personalized and intensive handholding program for the crème-de-la-crème (veterans) amongst UPSC aspirants (the intake is 50 students). Right now we have only 5 seats left.
Note: The Entry is Restricted to those who have appeared in UPSC interview in the past 2 years or have missed the mains cut off by a whisker.
The focus is on identifying and highlighting the issues with your preparation (information / analysis / utilization). According to your strength and weaknesses, a tailor-made strategy is developed. Under Sajal sir’s strict monitoring, incremental improvements are aimed every day, after every session.
Sajal sir’s marks in UPSC 2017 GS Mains paper were:
GS Paper 1 – 132
GS Paper 2 – 125
GS Paper 3 – 130
Progression of Smash Mains 2021
After completing the Mains Test series, you will have a one-to-one detailed and in-depth interaction with Sajal sir. Final refinements are done to every answer. Value addition material, as well as pointers, will be provided here. We will work with you to ensure you have enough material for value addition. Our focus will be on providing tips that add the missing X factor to your answers.
Why is Smash 2021 the best way to prepare for mains?
Individual attention and approachability are the USPs of this program.
Not putting Penguins among the Fowls – You already know how to write an average answer (you’re missing it by a few marks actually). You want to know how to increase your score from 90 to 110-115. The approach followed by other institutes in their Test series is the same for a veteran and a complete newbie and here lies the problem. Without personalizedone-to-one interaction with someone like Sajal sir (who has scored these awesome marks), it will be difficult for you to rectify these minute yet very important shortcomings.
Evaluation is a strength of this program and we put it on a high priority. Sajal sir himself is involved in the process, unlike other institutes where evaluation is outsourced to those who themselves might not have appeared for mains (It’s bizarre). It shouldn’t be based on ‘model answers’ as there are 3-4 ways of approaching an answer. Only a seasoned player will be able to go beyond these model answers and be able to appreciate your approach (If it’s innovative) even if it differs from the model answers provided.
Test copies get checked in a time-bound manner. The questions, answers and material provided are of the highest quality.
Emphasis on execution and utilization of knowledge – Mains is not only about knowledge but the way you express the relevant knowledge in the most optimum manner.
Sajal sir’s interventions are highly specific and not generalized. Sitting right in front of you he walks you through each and every question. Always there, he will not let you lose your focus.
The Tamil Nadu government has passed an Act seeking an exemption from treating NEET as the sole and mandatory requirement for medical admission in the state. The Act, which is yet to get approval from the President.
NEET issue in Tamil Nadu
The Justice A K Rajan committee was appointed by the state government of Tamil Nadu to examine whether NEET is an equitable method of selection.
Its report lends credence to the belief that NEET tends to give an advantage to students from privileged backgrounds.
It also observed that NEET, in terms of orientation, is biased towards the Central Board of Secondary Education (CBSE).
In the section titled ‘Size of coaching market’, the report brings out two poignant facts.
One, by inadvertently creating a “market for coaching”, NEET has helped to create an “extractive industry of coaching” as an essential condition for clearing it.
Two, the coaching fees are not only high, but are beyond the reach of many, especially the poor and marginalised.
Acting upon the committee’s recommendation, the Tamil Nadu government has passed an Act seeking an exemption from treating NEET.
The Act, which is yet to get approval from the President.
An educational intervention which was introduced as a solution to foster equality of opportunity has turned out to be the primary cause of deepening inequality of participation and opportunity.
Important questions
There are at least two important questions.
Equality of opportunity: First, does NEET help foster equality of opportunity for everyone without unduly advantaging or disadvantaging anyone?
Second, is NEET’s bias towards CBSE justifiable in an immensely diverse country like ours, where varied school curricula coexist with a highly unequal access to financial and educational resources and opportunities?
The question here is: How can NEET promote parity of participation when aspiring first-generation students from marginalised and poor households participate from a highly unequal position in the first place?
NEET disregards the fact that the terms and conditions of participation are highly unequal and biased.
Way forward
The National Education Policy (NEP 2020) envisions a curriculum and pedagogy which will promote holistic learning, social responsibility and multilingualism, among other things.
It is important, therefore, to significantly restructure the focus of NEET keeping in mind the spirit of NEP and varied school curricula in regional languages.
Conclusion
A restructured NEET, which does not require intensive and repeated coaching as a prerequisite and is not biased towards any board, can go a long way in promoting the parity of participation and nourishing the capacity to aspire, especially of the poor and marginalised.
Civilsdaily has become a force to reckon with. With our bold initiatives and maturing innovations, we are pushing the boundaries even further constantly thinking about bettering the learning outcomes for so many students.
Inviting applications for open positions is a rare event for us. We don’t remember the last time we did something like this. This means it is an extremely rare opportunity for you.
A career in education with Civilsdaily empowers you to help students, to be respected by them and by others, and to experience job satisfaction in a way that is impossible in many other careers.
Our awesome offices at 1 LGF Apsara Arcade will leave a lasting impression on you.
Please do not fill the application incorrectly. Most candidates say they are applying for a full-time position just to get an interview call. It’s really a turnoff.
Failing to qualify Prelims does not mean that you give up! There have been top rankers in the history of UPSC who failed to qualify Prelims multiple times but learned from each mistake and kept improving themselves. Pranav Vijayvargiya (AIR Rank 65) 2020 is the biggest example of this. He failed consecutively in 2 prelims but he kept himself motivated and finally got (AIR Rank 65) under the guidance of Sajal sir.
Fear of failure keeps you from learning and this is not the time to lose hope! It may be a tough situation but there’s still a lot you can learn from it.
Sajal Sir has helped over 400 aspirants secure ranks in the last 6 years. He has helped 30 students secure ranks in the top 100 in UPSC 2020. He knows about success but he also knowshow success is built from lessons of failure. He knows how bad the situation may become if you don’t qualify for Prelims but he also knows how to use that learning to crack the exam. And that’s the secret he will share with you in an absolutely free webinar.
Failing to qualify Prelims does not mean that you give up! There have been top rankers in the history of UPSC who failed to qualify Prelims multiple times but learned from each mistake and kept improving themselves. Pranav Vijayvargiya (AIR Rank 65) 2020 is the biggest example of this. He failed consecutively in 2 prelims but he kept himself motivated and finally got (AIR Rank 65) under the guidance of Sajal sir.
Fear of failure keeps you from learning and this is not the time to lose hope! It may be a tough situation but there’s still a lot you can learn from it.
Sajal Sir has helped over 400 aspirants secure ranks in the last 6 years. He has helped 30 students secure ranks in the top 100 in UPSC 2020. He knows about success but he also knowshow success is built from lessons of failure. He knows how bad the situation may become if you don’t qualify for Prelims but he also knows how to use that learning to crack the exam. And that’s the secret he will share with you in an absolutely free webinar.
Check out Shahansha’s excerpt on how he cleared UPSC 2020:-
Here we have a fighter who used to love uniforms over all other forms of services and hence his only preference for services was IPS this time. He was already serving the nation as an IRPS but his desire to get into an all India Services found expression when he found his name up in the list.
He used to follow Civilsdaily IAS for a long time and he liked the guidance with respect to preparing for services. Like many other toppers, he found the free and mentored content top-notch. Even during his everyday transits to the office and back, he used to rely on CDs Application for furthering his preparation.
A go-getter attitude coupled with an optimistic personality is what Shahansha is very much about. Rest lets listen in to him to understand him better.
Heartiest congratulations to Shahansha K S AIR 142 UPSC Civil Services 2020
In his speech at the Shanghai Cooperation Organization (SCO) meet last month, PM Modi stressed on commitment for increasing its connectivity with land-locked Central Asia.
What is the Central Asia Region?
Central Asia is a region in Asia which stretches from the Caspian Sea in the west to China and Mongolia in the east, and from Afghanistan and Iran in the south to Russia in the north.
It includes the former Soviet republics of Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan.
India-Central Asia Ties
India has decades-old wish to connect with the resource and fuel-rich Central Asian nations.
Since the emergence of the Central Asian Republics as independent countries in the early 1990s, New Delhi has been trying to establish ties with them.
Trade and collaboration
India’s trade with the five Central Asian Republics—Kazakhstan, Uzbekistan, Turkmenistan, Kyrgyzstan and Tajikistan—was below $ 2 billion in 2018.
The potential areas for collaboration include construction, sericulture and pharmaceuticals to IT and tourism.
Much of this trade was routed through Iran, Russia or the United Arab Emirates (UAE).
Efforts for connectivity
Turkmenistan–Afghanistan–Pakistan–India (TAPI) Gas Pipeline
Development of Iran’s Chabahar Port
Zaranj-Delaram Highway
International North-South (Transit) Corridor (INSTC)
About INSTC
In 2000, India, Iran and Russia agreed on a new route for trade that later came to be known as INSTC.
It was aimed at cutting the costs and time in moving cargo between Russia and India.
The pact was ratified in 2002 and the original multi-modal route linked Mumbai in India to Bandar Abbas and Bandar-e-Anzali in Iran, then across the Caspian Sea to Astrakhan, Moscow and St. Petersburg in Russia.
Over the years, more countries joined the INSTC.
In 2003, India and Iran announced the development of the Chabahar port in the Sistan-Balochistan province.
China’s opportunism: Based on proximity
China’s trade with Central Asia was $50 billion-$60 billion in the same period.
The obvious advantage in China’s favour is geographical proximity.
Hurdles for India
Lack of mutual trust: Unfortunately, many connectivity options are not open to them today due to the lack of mutual trust.
Pakistan factor: Tensions with Pakistan mean there is no viable land route towards Central Asia.
Iran and the US sanctions: Efforts to look for a circuitous route via Iran (and Afghanistan) have stalled due to US sanctions on Iran.
Issues in Iran-Afghanistan bypass route
Recent events acquire broader geopolitical relevance for India in this route:
Taliban takeover of Afghanistan: The takeover of Afghanistan by the Pakistan-backed Taliban has severely set back India’s plans in Central Asia.
Iran’s bypassing of India: Iran’s overtures has been clearly visible after itself allocating Farzad-B Gas exploration contract to another company bypassing India.
Central Asia’s importance for India
Fossil fuels: While Central Asia is seen as fuel-rich and, hence, important for an energy-starved India.
Mineral richness: Central Asian states are also mineral-rich, and Kazakhstan, for one, has been a source of uranium for India’s nuclear power plants.
Market for India: A country like India which is seen as a major economy has to have a presence in these markets. INSTC also offers a safe and cost-effective route to the EU (European Union) market.
Convergence against Terrorism: India can forge a common position on terrorism and radicalization, which is a matter of concern to the region as much as it is to India.
India’s recent engagement
Defence collaboration: In recent years, New Delhi has engaged with Central Asian Republics in the defence sphere through military exercises (say Ex Kazind).
Engagement at UN: Political and economic engagement is also important, given the imperatives of working together at a body such as the United Nations (UN).
Technological ties: India has set up universities there—Sharda and Amity are examples.
Scope for expansion
Dairy Sector: There is scope for collaboration in the dairy sector.
Pharma: Indian firms have been setting up pharmaceutical units in Russia that can serve these countries as well.
Info Technology: IT and IT-enabled services are two other areas.
Cultural connect: Bollywood movies are quite famous in these countries.
Way forward
India needs to develop into stronger bonds of trade and commercial bonds which will be possible once the INSTC crystallizes.
Conclusion
The road ahead in the short term is difficult as India doesn’t seem to have any real leverage to get the connectivity projects with Central Asia going.
India has been negotiating with individual bilateral partners though.
The PM has inaugurated the GatiShakti — National Master Plan for infrastructure development aimed at boosting multimodal connectivity and driving down logistics costs.
GatiShakti — National Master Plan
PM GatiShakti is a digital platform that connects 16 ministries — including Roads and Highways, Railways, Shipping, Petroleum and Gas, Power, Telecom, Shipping, and Aviation.
It aims to ensure holistic planning and execution of infrastructure projects.
The objective is to ensure that every department now has visibility of each other’s activities providing critical data while planning and execution of projects.
Through this, different departments will be able to prioritize their projects through cross-sectoral interactions.
Notable features
Geospatial data: The portal will offer 200 layers of geospatial data, including on existing infrastructure such as roads, highways, railways, and toll plazas.
Protected areas management: It would also geographic information about forests, rivers, and district boundaries to aid in planning and obtaining clearances.
Realtime monitoring: The portal will also allow various government departments to track, in real-time and at one centralized place, the progress of various projects.
Monitoring mechanism
The National Master Plan has set targets for all infrastructure ministries.
A project monitoring group under the Department for Promotion of Industry and Internal Trade (DPIIT) will monitor the progress of key projects in real-time.
It would report any inter-ministerial issues to an empowered group of ministers, who will then aim to resolve these.
Need for such Project
Avoiding poor infrastructure planning: Examples of poor infrastructure planning included newly-built roads being dug up by the water department to lay pipes.
Creating a multi-modal network: The government expects the platform to enable various government departments to synchronize their efforts into a multi-modal network.
Timely completion of infra projects: It is also expected to help state governments give commitments to investors regarding timeframes for the creation of infrastructure.
Inefficient connectivity: Currently, a number of economic zones and industrial parks are not able to reach their full productive potential due to inefficient multi-modal connectivity.
Easy clearance: The portal allows stakeholders to apply for these clearances from the relevant authority directly.
Logistics costs in India
Studies estimate that logistics costs in India are about 13-14% of GDP as against about 7-8% of GDP in developed economies.
High logistics costs impact cost structures within the economy by making it more expensive for exporters to ship merchandise to buyers.
Benefits offered by PM-GatiShakti
Collaborative planning: It would incorporate infrastructure schemes under various ministries and state governments, including the Bharatmala and inland waterways schemes, and economic zones.
Logistics boost: It would boost last-mile connectivity and thus bring down logistics costs with integrated planning and reducing implementation overlaps.
The Centre has accorded ‘Maharatna’ status to the state-owned Power Finance Corporation Ltd (PFC), thus giving PFC greater operational and financial autonomy.
About PFC Ltd.
Power Finance Corporation Ltd. (PFC) is an Indian financial institution under the ownership of Ministry of Power.
Established in 1986, it is the financial backbone of Indian Power Sector.
PFC is the 8th highest profit making Central Public Sector Enterprise (CPSE) as per the Department of Public Enterprises Survey for FY 2017–18.
It is India’s largest NBFC and also India’s largest infrastructure finance company.
Benefits of Maharatna Status
This new status will enable PFC to offer competitive financing for the power sector, which will go a long way in making available affordable & reliable ‘Power For All 24×7’.
This will also impart enhanced powers to the PFC Board while taking financial decisions.
It can make equity investments to undertake financial joint ventures and wholly-owned subsidiaries and undertake mergers and acquisitions in India and abroad.
It can also structure and implement schemes relating to personnel and Human Resource Management and Training.
It can also enter into technology Joint Ventures or other strategic alliances among others.
Back2Basics: Central Public Sector Enterprises
The CPSEs are run by the Government under the Department of Public Enterprises of Ministry of Heavy Industries and Public Enterprises.
The government grants the status of Navratna, Miniratna and Maharatna to them based upon the profit made by these CPSEs.
The Maharatna category has been the most recent one since 2009, other two have been in function since 1997.
Maharatna
Navratna
Miniratna Category-I
Miniratna Category-II
Eligibility
Three years with an average annual net profit of over ₹2,500 crore
OR
Average annual Net worth of ₹10,000 crore for 3 years
OR
Average annual Turnover of ₹20,000 crore for 3 years
A score of 60 (out of 100), based on six parameters which include net profit, net worth, total manpower cost, total cost of production, cost of services, PBDIT (Profit Before Depreciation, Interest and Taxes), capital employed, etc.,
AND
A company must first be a Miniratna and have 4 independent directors on its board before it can be made a Navratna
Have made profits continuously for the last three years or earned a net profit of ₹30 crore or more in one of the three years
Have made profits continuously for the last three years and should have a positive net worth.
Benefits for investment
₹1,000 crore – ₹5,000 crore, or free to decide on investments up to 15% of their net worth in a project
Up to₹1,000 crore or 15% of their net worth on a single project or 30% of their net worth in the whole year
Up to₹500 crore or equal to their net worth, whichever is lower
Up to₹300 crore or up to 50% of their net worth, whichever is lower
The Ministry of Home Affairs recently issued a notification extending the jurisdiction of the Border Security Force from 15 km to a depth of 50 km along the international borders in three states — Punjab, Assam and West Bengal.
Background of the notification about jurisdiction of BSF
The last notification of the MHA (July 3, 2014), which defined the jurisdiction of the BSF, stated that the force could operate in the entire states of Nagaland, Manipur, Mizoram, Tripura and Meghalaya without any restrictions whatsoever.
In Gujarat, it had jurisdiction up to a depth of 80 km and in Rajasthan up to 50 km.
In Punjab, Assam and West Bengal, the BSF jurisdiction was up to a depth of 15 km only.
Under the latest notification issued on October 11, 2021, there is no change in the northeastern states and Rajasthan.
In Gujarat, jurisdiction has been reduced from 80 km to 50 km.
The controversial change is in Assam, West Bengal and Punjab, where the BSF jurisdiction has been extended from 15 km to 50 km.
It is this part of the notification which has generated controversy, though the criticism has been made by leaders of Punjab and West Bengal.
Why the government of India decided to extend the jurisdiction of BSF?
Assam, West Bengal and Punjab have international borders.
Changed threat perception: The threat perception from across the international borders has undergone a sea change in the context of recent developments in the Af-Pak region.
Efforts to destabilise Punjab: Radical groups of different shades are feeling emboldened and are going to make a determined attempt to destabilise Punjab.
Pakistan-sponsored terrorist groups, particularly the Lashkar-e-Toiba and Jaish-e-Muhammad, will almost certainly renew their onslaught in the border states.
West Bengal has already undergone a huge demographic change.
Assam faces multiple problems of ethnic insurgencies, smuggling, counterfeit currency, drug trafficking, etc.
Police need assistance: The police across the country are in a state of atrophy and they need the assistance of central armed police forces even for maintaining normal law and order.
As such, their effectiveness against the emerging trans-border threats is suspect.
Implications for powers of police and federalism
The home ministry’s latest notification only seeks to reinforce the capabilities of the state police in securing the states under section 139 of the BSF Act, which empowers the members of the force to discharge certain powers and duties within local limits of the areas specified in the schedule.
The jurisdiction of the state police has neither been curtailed nor its powers reduced in any manner.
It is just that the BSF will also be exercising powers of search, seizure and arrest in respect of only the Passport Act 1967, Passport (Entry into India) Act 1920 and specified sections of the Criminal Procedure code.
The power to register FIR and investigate the case remains with the state police.
The Indian Constitution, no doubt, fulfils some conditions of a federation, but it leans towards a strong Centre.
Conclusion
National security is a paramount consideration. It is unfortunate that the BSF is being dragged into political controversy when it would actually be over-stretching itself to strengthen national security.
Failing to qualify Prelims does not mean that you give up! There have been top rankers in the history of UPSC who failed to qualify Prelims multiple times but learned from each mistake and kept improving themselves. Pranav Vijayvargiya (AIR Rank 65) 2020 is the biggest example of this. He failed consecutively in 2 prelims but he kept himself motivated and finally got (AIR Rank 65) under the guidance of Sajal sir.
Fear of failure keeps you from learning and this is not the time to lose hope! It may be a tough situation but there’s still a lot you can learn from it.
Sajal Sir has helped over 400 aspirants secure ranks in the last 6 years. He has helped 30 students secure ranks in the top 100 in UPSC 2020. He knows about success but he also knowshow success is built from lessons of failure. He knows how bad the situation may become if you don’t qualify for Prelims but he also knows how to use that learning to crack the exam. And that’s the secret he will share with you in an absolutely free webinar.
With rising power demands in the domestic sector, Indian utilities are facing a severe shortage of coal, which is the primary fuel powering 70 percent of India’s energy consumption. More than half of the country’s 135 coal-fired power plants are running on fumes – as coal stocks run critically low. India’s thermal power plants currently have an average of four days worth of coal stock against a recommended level of 15-30 days, with a number of states highlighting concerns about blackouts as a result of the coal shortage.
Coal has become a priceless commodity of late in a white-hot market with an over 100 percent jump in prices, which is driven mainly by China and India – the two largest consumers of thermal coal globally.
What is the extent of the current coal crisis?
A number of states including Delhi, Punjab, and Rajasthan have raised concerns about potential blackouts as a result of low coal inventory at thermal power plants and have already reported load shedding. India is the world’s second-largest importer of coal despite also being home to the fourth-largest coal reserves in the world.
Increase in power demand
The shortage in coal is a result of a sharp uptick in power demand as the economy recovered from the effects of the pandemic.
Global factors
A sharp increase in the international prices of coal due to a shortage in China have also contributed to the coal shortage.
Unseasonal rains in Indonesia, Covid-induced production cuts in Australia have ensured a once-in-a-lifetime bull run in coal prices.
A balance is possible if and when the global supply chain – both in terms of prices as well as availability – improves.
China consumes nearly half of the coal produced globally and Indonesia and Australia happen to be two of the largest exporters.
India sources 43 per cent of its imported coal from Indonesia and 26 per cent from Australia.
Low accumulation of stocks by Thermal power plants
Low accumulation of stock by thermal power plants has contributed to the coal shortage in India.
Heavy rains in coal bearing areas had also led to a slowdown in the supply of coal to thermal plants.
Coal and lignite fired thermal power plants account for about 54 per cent of India’s installed power generation capacity but currently account for about 70 per cent of power generated in the country.
Increase in the price of the other fuels
Incidentally, the demand for coal has also gone up because other sources of generating power – natural gas, for instance – have become even costlier.
The price of natural gas, too, has increased nearly 100 per cent in 2021 alone.
This has hampered the plan to grow the share of renewable energy as well.
Legacy issues
Legacy issues of heavy dues of coal companies from certain states viz., Maharashtra, Rajasthan, Tamil Nadu, UP, Rajasthan and Madhya Pradesh also contributed to this coal shortage.
Power plants that usually rely on imports are now heavily dependent on Indian coal, adding further pressure to already stretched domestic supplies.
Why is the demand for natural gas surging?
Nations across the world are committed to reducing carbon emissions. China has committed to becoming carbon neutral by 2060.
To reduce its emissions, China needs to give up coal, reduce consumption of other dirty fossil fuels and adopt cleaner energy such as natural gas and renewables.
The country is also taking harsh measures to reduce pollution in Beijing before the February 2022 Winter Olympics and thus display its commitment to decarburization.
The targets China has set for itself is seen to have escalated the current energy crisis in the nation where two-thirds of the electricity was generated from burning coal.
European Union has targeted to become carbon neutral by 2050 and reduce greenhouse gas emissions by 55% by 2030 compared to 2005 levels.
Why are prices between domestic and global coal widening?
Domestic coal prices in India are largely decided by Coal India. An increase in coal prices generally has a knock on effect on power prices and inflation..
Coal India has kept prices steady over the last year despite global coal prices rising steeply in the same period.
Meanwhile, Asia’s coal price benchmarks have hit record highs in the recent times, buoyed by global demand for power generation fuels as economies open up.
A major power crisis in China is the latest event driving global demand for the fuel.
Why are utilities unable to pass on higher costs?
India’s power tariffs, set by the respective states, are among the lowest in the world as state-run distribution companies have absorbed higher input costs to keep tariffs steady.
This has left many of these companies deeply indebted, with cumulative liabilities running into billions of dollars.
This triggered delayed payments to power producers, often affecting cash flows and disincentivising further investment in the electricity generation sector.
Indian power producers locked in long-term agreements with distribution utilities often cannot pass on higher input costs unless clauses are included in their contracts.
What does the deepening energy crisis mean for India?
The sharp rise in global coal prices came as a boon for domestic suppliers such as Coal India.
As the supply crunch in the key overseas markets grew and prices soared, the demand for coal from domestic sources climbed. Coal India and other producers increased output, yet supply remains quite tight.
Over 70% of India’s power is generated from burning coal while the share of natural gas is just about 5%. Thus, rising natural gas prices had a limited impact on the cost of power generation in India.
India, however, suffered a scare when the inventory of coal with power plants reached critically low levels, as demand surged about 11%. The situation was resolved by diverting coal away from non-power uses.
The power demand is set to climb higher when more restrictions are eased, including those on cinema halls and multiplexes.
While efforts are on to provide an uninterrupted supply of coal to power plants, non-power users are likely to suffer.
Indian households were more affected by the rise in prices of petroleum products as consumption of cooking gas, petrol and diesel grew.
What does it mean for global recovery?
Higher fuel prices are only one part of the problem. Temporary closures of factories in China will slow the repair of global value chains that broke down last year when countries locked down their economies.
These shutdowns will lead to another round of disruption in the supply of parts to makers of various goods across the globe.
The temporary shutdowns also mean missed deadlines for delivery of merchandise ahead of the November-January holiday season sales in many parts of the world.
When power rationing was ordered, factories in China were racing to meet the global and domestic demand for everything from apparel to mobile phones and other gadgets.
Higher fuel prices and shortages will add to inflationary pressures in the global economy and hurt the recovery of demand in lower-income economies.
What are the recent Reforms in Coal Sector?
Commercial mining of coal allowed, with 50 blocks to be offered to the private sector.
Entry norms will be liberalized as it has done away with the regulation requiring power plants to use “washed” coal.
Coal blocks to be offered to private companies on revenue sharing basis in place of fixed cost.
Coal gasification/liquefaction to be incentivized through rebate in revenue share.
Coal bed methane (CBM) extraction rights to be auctioned from Coal India’s coal mines.
Challenges posed
The desire to cut its reliance on heavily polluting coal burning power plants has been a major challenge for the government in recent years.
The question of how India can achieve a balance between meeting demand for electricity from its almost 1.4bn people has to be answered.
Way Forward
Ramp-up domestic coal production
The efforts are being taken to fill the shortage of coal from domestic mines and to do so the government is working closely with coal producing companies to ramp up domestic production of coal.
Reduce demand-supply mismatches
Load shading is not new to India. Rationing of power supply in rural and semi-urban areas will be the immediate solution for the power distress in industrial areas.
Rationalize the coal imports
India will need to amplify its imports despite the financial cost. The gap in the coal demand after domestic production has to be filled by the imports from Indonesia and Australia.
Focus on Hydro-power generation and natural gal
India has the immense potential in the Hydro-power generation and is among the most important sector for generating electricity after thermal power plants.
The sector performs at its peak around the rainy season which typically extends from June to October.
There could be a larger role for natural gas to play, even with global prices currently surging.
Increasing the share of Renewable energy
Experts advocate a mix of coal and clean sources of energy as a possible long-term solution.
It’s not completely possible to transition and it’s never a good strategy to transition 100% to renewables without a backup.
Long term investment in multiple power sources aside a crisis like the current one can be averted with better planning.
Increased coordination
There is need for closer coordination between Coal India Limited – the largest supplier of coal in the country and other stakeholders.
For now, the government is working with state-run enterprises to ramp up production and mining to reduce the gap between supply and demand.
Decentralized power generation
The main issue is that we are dependent on large, centralized power generation.
The only way our power sector can absorb shocks better is if large power plants are augmented by decentralized generation sources at village level.
This can be a template for better resilience to future power crises.
Coal stocking norms
To avoid such a crisis situation in future, the Ministry of Power has worked out a strategy which includes tweaking the coal stocking norms. If the power plants do not follow them, then there will be a penal provision.
To overcome the storage issue in the generation of electricity from renewable sources, the government is working on a provision for creating more storage facilities in the grid.
Conclusion
India can learn a lesson from Europe’s power crisis. While Europe has gas power plants to stand in, India doesn’t have similar options. As we move more towards greening our power sources, we need to provision for paying for standby thermal generation to avoid a mega-crisis. Adequate liquidity for backup reserve capacity needs to be planned and provisioned for.
Probably, the present situation is a good opportunity to rethink and fine-tune the energy policy without further delay. Bits and pieces reforms will not work anymore, as the chain has to been broken and a complete overhaul is required.
The Pandora Papers, published on October 3, once again expose the illegal activities of the rich and the mighty across the world.
About the Pandora Papers investigation
It is “the world’s largest-ever journalistic collaboration, involving more than 600 journalists from 150 media outlets in 117 countries”.
The International Consortium of Investigative Journalists (ICIJ) has researched and analysed the approximately 12 million documents in order to unravel the functioning of the global financial architecture.
The Pandora Papers, unlike the previous cases, are not from any one tax haven; they are leaked records from 14 offshore services firms. The data pertains to an estimated 29,000 beneficiaries.
The 2.94 terabytes of data have exposed the financial secrets of over 330 politicians and public officials, from more than 90 countries and territories.
These include 35 current and former country leaders.
Role of financial centres and banks
A large extent of the illicit financial flows have a link to New York City and London, the biggest financial centres in the world that allow financial institutions such as big banks to operate with ease.
The big financial entities operating from these cities have been prosecuted for committing illegalities.
In 2012, an investigation into the London Interbank Offered Rate or LIBOR — crucial in calculating interest rates — led to the fining of leading banks such as Barclays, UBS, Rabobank and the Royal Bank of Scotland for manipulation.
These banks also operate a large number of subsidiaries in tax havens to help illicit financial flows.
Modus operandi
Tax havens enable the rich to hide the true ownership of assets by using: trusts, shell companies and the process of ‘layering’.
Financial firms offer their services to work this out for the rich.
They provide ready-made shell companies with directors, create trusts and ‘layer’ the movement of funds.
The process of layering involves moving funds from one shell-company in one tax haven to another in another tax haven and liquidating the previous company.
This way, money is moved through several tax havens to the ultimate destination.
Since the trail is erased at each step, it becomes difficult for authorities to track the flow of funds.
It appears that most of the rich in the world use such manipulations to lower their tax liability even if their income is legally earned.
Why funds are moved to the tax havens?
Even citizens of countries with low tax rates use tax havens.
Over the three decades, tax havens have enabled capital to become highly mobile, forcing nations to lower tax rates to attract capital.
This has led to the ‘race to the bottom’, resulting in a shortage of resources with governments to provide public goods, etc., in turn adversely impacting the poor.
Lowering tax liability: It appears that most of the rich in the world use such manipulations to lower their tax liability even if their income is legally earned.
Moving funds out of reach of creditors: Revelations suggest that funds are moved out of national jurisdiction to spirit them away from the reach of creditors and not just governments.
Many fraudsters are in jail but have not paid their creditors even though they have funds abroad.
Challenges in checking the illicit financial flows
The very powerful who need to be onboard to curb illicit financial flows (as the Organisation for Economic Co-operation and Development, or the OECD is trying) are the beneficiaries of the system and would not want a foolproof system to be put in place to check it.
Strictly speaking, not all the activity being exposed by the Pandora Papers may be illegal due to tax evasion or the hiding of proceeds of crime.
The authorities will have to prove if the law of the land has been violated.
Operators outside the purview of tax authorities: Many Indians have become non-resident Indians or have made some relative into an NRI who can operate shell companies and trusts outside the purview of Indian tax authorities.
That is why prosecution has been difficult in the earlier cases of data leakage from tax havens.
The Supreme Court of India-monitored Special Investigation Team (SIT) set up in 2014 has not been able to make a dent.
Role of organised sector: The Government’s focus on the unorganised sector as the source of black income generation is also misplaced since data indicate that it is the organised sector that has been the real culprit and also spirits out a part of its black incomes.
Way forward
Global minimum tax: Recent development has been the agreement among almost 140 countries to levy a 15% minimum tax rate on corporates.
Though it is a long shot, this may dent the international financial architecture.
Ending banking secrecy: Other steps needed to tackle the curse of illicit financial flows are ending banking secrecy and a Tobin tax on transactions; neither of which the OECD countries are likely to agree to.
Consider the question “How illicits financial flows affect the economies of the nations? What are the challenges in curbing it?”
Conclusion
To curb the illicit financial flows, the global community needs to reach a consensus on several issues and tackle the challege collectively.
Failing to qualify Prelims does not mean that you give up! There have been top rankers in the history of UPSC who failed to qualify Prelims multiple times but learned from each mistake and kept improving themselves. Pranav Vijayvargiya (AIR Rank 65) 2020 is the biggest example of this. He failed consecutively in 2 prelims but he kept himself motivated and finally got (AIR Rank 65) under the guidance of Sajal sir.
Fear of failure keeps you from learning and this is not the time to lose hope! It may be a tough situation but there’s still a lot you can learn from it.
Sajal Sir has helped over 400 aspirants secure ranks in the last 6 years. He has helped 30 students secure ranks in the top 100 in UPSC 2020. He knows about success but he also knowshow success is built from lessons of failure. He knows how bad the situation may become if you don’t qualify for Prelims but he also knows how to use that learning to crack the exam. And that’s the secret he will share with you in an absolutely free webinar.
During his second year of college, Dilpreet started to spare time for civil services. He followed the current affairs from CivilsDaily website and prepared his own small notes. It was only his dedication that made him to also seek institutional guidance from CivilsDaily.
He opted for Prelims test series and Samachar Manthan for detailed current affairs guidance cum strategy. What he specifically admires about the program was the personal guidance he received from Sajal sir, who himself was the topper in GS 2017 papers.
In addition to his moments of success, Dilpreet also attempts to address some of the most common and sought after questions by many aspirants. Lets hear him out in our “Unheard” Toppers Talk series for UPSC 2020.
Heartiest congratulations to Dilpreet Singh AIR 237 UPSC Civil Services 2020
