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Subject: Economics

  • Government scraps Windfall Tax on Crude Oil

    Why in the News?

    The Government of India has scrapped the windfall tax on crude oil, which was previously set at ₹1,850 per tonne.

    What is Windfall Tax?

    Details
    Definition A higher tax levied on companies that earn unexpected and extraordinary profits due to external factors.
    Purpose To capture a portion of excess profits from industries benefiting from global price surges, such as oil.
    Imposition in India Imposed as a Special Additional Excise Duty (SAED) on crude oil production and exports of diesel, petrol, and aviation turbine fuel (ATF).
    Dynamic Tax Rate Revised every 15 days based on international oil prices in the preceding fortnight.
    First Imposed July 1, 2022, during the Russia-Ukraine conflict and post-COVID recovery.
    Application Applies to domestically produced crude oil and exports of diesel, petrol, and ATF.
    Reasons for Imposing
    • Sharp rise in global oil prices due to external factors like the Russia-Ukraine war.
    • Capture supernormal profits of energy companies for public welfare.
    Benefits
    • Generates revenue for public welfare schemes.
    • Ensures fair distribution of profits from market volatility.
    • Stabilizes fuel prices during inflation or supply chain disruptions.

     

    India’s Crude Oil Trade:

    • India is the 3rd largest oil consumer globally, following the US and China.
    • The country relies on imports for 85% of its oil needs, with this dependence expected to increase due to declining domestic production.
    • Russia has become India’s top oil supplier, with imports surging to 1.53 million barrels per day (bpd) in January 2024.
    • Russia (1st) > Iraq (2nd) > Saudi Arabia (3rd)> UAE (4th) – Crude oil export to India 

     

    PYQ:

    [2020] The term ‘West Texas Intermediate’, sometimes found in news, refers to a grade of:

    (a) Crude oil

    (b) Bullion

    (c) Rare earth elements

    (d) Uranium

    [2017] Petroleum refineries are not necessarily located nearer to crude oil producing areas, particularly in many of the developing countries. Explain its implications. (250 words)

  • [pib] BHASKAR Platform for India’s Startup Ecosystem

    Why in the News?

    The Department for Promotion of Industry and Internal Trade (DPIIT), under the Ministry of Commerce and Industry, has launched the BHASKAR platform.

    About BHASKAR Platform

    Details
    Platform Name Bharat Startup Knowledge Access Registry (BHASKAR)
    Launched By Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry
    Objective To strengthen India’s startup ecosystem by centralizing resources and facilitating collaboration
    Target Audience Startups, investors, mentors, service providers, and government bodies
    Key Features
    • Networking and Collaboration: Connects startups, investors, and mentors, enabling interaction across sectors.
    • Centralized Access to Resources: Provides instant access to critical tools, knowledge, and resources for startups, enhancing decision-making and growth.
    • Personalized BHASKAR IDs: Each stakeholder (startup, investor, mentor) receives a unique ID for tailored interactions and services.
    • Enhanced Discoverability: Users can easily search and find relevant resources, collaborators, and opportunities using powerful search features.
    • Access to Funding Opportunities: Facilitates connections between startups and potential investors for funding.
    • Global Outreach: Supports cross-border collaborations and fosters India’s global presence in the innovation ecosystem.
    Impact
    • Promotes innovation, entrepreneurship, and job creation
    • Enhances India’s status as a global leader in startups

    Growth of the Startup Ecosystem

    • As of May 2023, India boasts over 99,000 officially recognized startups, making it the third-largest startup ecosystem globally. This growth reflects an increase from 84,012 startups in 2022 and a notable rise from just 452 in 2016.
    • The ecosystem has also produced 108 unicorns, startups valued at over $1 billion, collectively worth approximately $340.80 billion

    PYQ:

    [2015] “Success of ‘Make in India’ program depends on the success of ‘Skill India’ programme and radical labour reforms.” Discuss with logical arguments.

  • A human touch to India’s mineral ecosystem

    Why in the News?

    The Indian government’s Mines and Minerals Act of 2015, which mandated auctions and established the District Mineral Foundation (DMF), continues to ensure local communities benefit from natural resource-led development.

    • DMF after entering its 10th year has amassed almost ₹1 lakh crore, transforming mineral wealth into a development lifeline for these regions.

    How did the District Mineral Foundation (DMF) work in India?

    • The DMF mandates mining licensees and leaseholders to contribute a portion of their royalty payments to the DMF. The ‘National DMF Portal’ has been introduced to enhance transparency and efficiency.
    • It aims to promote sustainable development and welfare for mining-affected communities.
    • A District Collector leads the DMF, ensuring that funds are allocated to areas with the greatest need.
      • Funds are used for decentralized, community-centric development projects in mining districts.
    • As of 2024, around 3 lakh projects have been sanctioned across 645 districts in 23 states. These initiatives focus on improving socio-economic and human development indicators.

    About Pradhan Mantri Khanij Kshetra Kalyan Yojana (PMKKKY):

    • Objective: Launched under the DMF, PMKKKY focuses on implementing developmental and welfare projects in mining-affected regions.
      • It aims to minimise the negative impacts of mining on local communities and ensure sustainable livelihoods.
    • Complementary Approach: PMKKKY works alongside existing state and central government schemes, reinforcing district development goals.
    • PMKKKY projects cover healthcare, education, skill development, sanitation, water supply, and sustainable livelihoods.
      • It has also empowered women through self-help groups and supported youth skill development initiatives like drone technology training.

    Significance and Scope of DMF in India:

    • Community Welfare: DMFs provide direct financial resources for the welfare of communities affected by mining activities, transforming mineral wealth into tangible social benefits.
    • Inclusive Development: DMFs empower local communities, with focus on social inclusivity by involving elected representatives and non-elected gram sabha members in governance structures.
    • Cooperative Federalism: DMFs are a model of cooperative federalism, converging national, state, and local governance to address mining impacts and foster regional development.
    • Innovation and Planning: Various DMFs innovate to maximise project impact, adopting three-year plans for goal-oriented development, establishing dedicated engineering departments, and employing Public Works Department personnel for efficient project execution.
    • Sustainability: DMFs aim to align with the Sustainable Development Goals (SDGs), focusing on forest dwellers’ livelihoods, sports infrastructure, and health. They contribute to long-term environmental and socio-economic sustainability.

    Way Forward:

    • Standardisation and Best Practices: Establish uniform guidelines to standardise successful practices across DMFs while retaining local knowledge, ensuring efficient implementation of long-term, goal-oriented projects.
    • Enhanced Integration with National Schemes: Strengthen the integration of DMF activities with ongoing central and state schemes, particularly in aspirational districts, to amplify the socio-economic and environmental benefits in mining-affected regions.

  • India raises Import Tax on Edible Oils

    Why in the News?

    • India has increased the basic import tax on crude and refined edible oils by 20% to protect domestic farmers suffering from low oilseed prices.
      • The move could push up edible oil prices, reduce demand, and potentially lower imports of palm oil, soyoil, and sunflower oil.

    Edible Oil Scenario in India                                              

    • India imports more than 70% of its vegetable oil demand, mainly sourcing:
      • Palm oil from Indonesia, Malaysia, and Thailand, and
      • Soyoil and sunflower oil from Argentina, Brazil, Russia, and Ukraine.
    • Palm oil constitutes over 50% of India’s edible oil imports.

    NITI Aayog Report on Edible Oil Self-sufficiency: Key Highlights

    NITI Aayog, along with the Ministry of Agriculture and other stakeholders, released a report titled “Pathways and Strategies for Accelerating Growth in Edible Oils Towards the Goal of Atmanirbharta.”

    Details
    Consumption Details India consumes 19.7 kg/year per capita edible oil, with 16.5 million tonnes of imports in 2022-23; only 40-45% of demand met through domestic production.
    Projections
    • Domestic production could reach 16 MT by 2030
    • 26.7 MT by 2047 under Business-As-Usual (BAU) scenario
    Strategic Interventions
    • Crop Retention and Diversification
    • Horizontal Expansion (increase cultivation area)
    • Vertical Expansion (improve yield through technology)
    Self-sufficiency Targets
    • Edible oil production of 36.2 MT by 2030
    • 70.2 MT by 2047
    Key Recommendations Focus on seed quality, modern processing infrastructure, and public-private partnerships for growth

     

    PYQ:

    [2018] Consider the following statements

    1. The quantity of imported edible oils is more than the domestic production of edible oils in the last five years.

    2. The Government does not impose any customs duty on all imported edible oils a special case.

    Which of the statements given above is/are correct?

    (a) 1 only

    (b) 2 only

    (c) Both 1 and 2

    (d) Neither 1 nor 2

  • The shock of crumbling infrastructure and the solution

    Why in the News?

    The recent collapse of under-construction bridges in Bihar highlights ongoing quality control challenges in India’s infrastructure sector, despite efforts like PM Gati Shakti and increased capital expenditure in 2024.

    Issues of Quality Control and Project Implementation in Infrastructure in India 

    • Quality Control Deficiencies: There are significant gaps in the quality control mechanisms for infrastructure projects. Many projects lack a robust system for monitoring and ensuring quality at every stage, from planning to execution. The absence of comprehensive quality assurance frameworks as evidenced by recent bridge collapses in Bihar.
    • Need for Modern Project Management Practices: Traditional project management practices are often outdated and ineffective in addressing the complexities of modern infrastructure projects.

    Internal Challenges in India’s Infrastructure Sector:

    • Project Delays and Cost Overruns: Infrastructure projects frequently experience delays and cost overruns, with a report indicating that 431 projects faced a total cost overrun of ₹4.82 lakh crore.  
    • Lack of Comprehensive Planning: Many infrastructure projects, especially in urban areas, suffer from poor planning and project management, with urban local bodies and local self-governments lacking the necessary capacity and expertise.
    • Multiple Clearances and Bureaucratic Delays: Industrial and commercial activities often require numerous clearances, leading to delays in project conception and commissioning.
    • Funding and Resource Misallocation: Delayed and poorly managed projects crowd out funding for other essential projects, burdening the government with extra expenditures and increasing procurement costs.

    Need to Integrate Modern Tools and Techniques: (Way forward)

    • Real-time Data Management: Traditional project management methods need an overhaul to incorporate modern tools like real-time data collection and analysis, which can help track progress and make timely interventions.
    • Global Best Practices in Project Management: The government must adopt international best practices, like the UK’s Infrastructure and Projects Authority model, which emphasizes efficient project delivery.
    • Program Management Approach: A holistic approach to managing multiple projects systematically, integrating resources, time, and information efficiently, as seen in successful projects like the Shendra-Bidkin industrial corridor.
    • GIS-Based Platforms: Initiatives like PM Gati Shakti demonstrate the integration of GIS-based platforms for real-time monitoring, enabling better coordination among various stakeholders to meet deadlines and enhance project quality.

  • Is it time for India to introduce a Universal Basic Income?

    Why in the News?

    The rise in jobless growth, driven by automation and AI, has led to growing inequality, prompting discussions on implementing Universal Basic Income (UBI) in many countries.

    What does the ILO say on Inflation and unemployment in India? 

    • The ILO reports that 83% of the unemployed population in India are youth, due to the rapidly changing economy influenced by automation and AI.
      • This trend has exacerbated income inequality, with a 1.6% drop in global labour income share between 2004 and 2024, significantly affecting developing nations like India.
    • The report indicates that persistent inflation and geopolitical tensions have led to aggressive monetary policies, which could further strain the labor market.
      • The ILO anticipates a slight increase in global unemployment in 2024, reflecting ongoing structural issues in labor markets.

    What will be its implications on Indian growth and development? 

    • Social Implications: Falling living standards and weak productivity due to automation could lead to greater inequality, undermining social justice efforts in India.
      • The ILO suggests that increasing unemployment and inflation could result in social unrest and political instability without effective social safety nets.
    • Political Implications: It makes it difficult for the decision making and governance due to the drop in global labour income, prompting India to increase budget allocations for welfare programs.
    • Economic Implications: The emphasis on generating employment in labor-intensive sectors is crucial. The government policies should prioritize job creation to counteract the effects of automation and ensure that growth benefits a broader segment of the population.

    What are the safety nets for India? 

    • Cash Transfer Schemes: Programs targeting farmers and women, as well as cash transfers for unemployed youth, represent existing safety nets that provide some level of income support.
    • Employment Guarantee Schemes: Initiatives like the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) aim to provide employment and income security to rural households, although funding and implementation have faced challenges.
    • Universal Basic Social Safety Nets: Experts suggest that rather than a full UBI, India should focus on enhancing existing social safety nets to ensure they are more universal and effective in addressing the needs of the unemployed and underemployed populations.

  • India to partner for European Hydrogen Week

    Why in the News?

    India will be the exclusive partner for European Hydrogen Week in November 2024.

    About European Hydrogen Week

    • European Hydrogen Week is an annual event organized by the European Commission, Hydrogen Europe, and others.
    • It serves as a platform to discuss the future of hydrogen technologies, policy developments, and their role in decarbonizing Europe’s economy.
    • It features conferences, exhibitions, and networking opportunities.
    • It focuses on the development, deployment, and scaling of green hydrogen as part of the European Green Deal and the EU’s climate-neutrality targets for 2050.

    Significance of India’s Partnership

    • Strengthening Green Energy Goals: Aligns India with global initiatives in decarbonizing industries and energy systems, advancing its commitment to the Paris Agreement and Net Zero 2070 target.
    • Access to Advanced Hydrogen Technologies: Provides India with cutting-edge hydrogen technologies from Europe, enhancing production, storage, and transportation capabilities for Green Hydrogen.
    • Boosting Technological Innovation: Facilitates collaborative research and development, allowing India to create cost-effective hydrogen solutions and drive domestic innovation in clean energy.
    • Building Global Leadership: Establishes India as a global leader in the Green Hydrogen sector, reinforcing its commitment to climate change mitigation and sustainable development.

    PYQ:

    [2019] In the context of proposals to the use of hydrogen-enriched CNG (H-CNG) as fuel for buses in public transport, consider the following statements:

    1. The main advantage of the use of H-CNG is the elimination of carbon monoxide emissions

    2. H-CNG as fuel reduces carbon dioxide and hydrocarbon emissions.

    3. Hydrogen up to one-fifth by volume can be blended with CNG as fuel for buses.

    4. H-CNG makes the fuel less expensive than CNG.

    Which of the statements given above is/are correct?

    (a) 1 only

    (b) 2 and 3 only

    (c) 4 only

    (d) 1, 2, 3 and 4

  • PM E-Drive Scheme

    Why in the News?

    The Union Cabinet approved the PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-Drive) Scheme with an outlay of ₹10,900 crore over two years.

    About PM E-DRIVE Scheme:

    Details
    Name PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE) Scheme
    Total Outlay ₹10,900 crore for two years
    Goal
    • Promote electric mobility, reduce pollution, and enhance fuel security
    • Reduce range anxiety by providing charging infrastructure in cities and highways.
    Incentives Direct subsidies for e-2Ws, e-3Ws, e-buses, e-ambulances, and e-trucks
    Key Components
    • ₹3,679 crore for demand incentives for e-2Ws, e-3Ws, e-ambulances, and e-trucks.
    • ₹500 crore for e-ambulances.
    • ₹4,391 crore for e-buses.

    Other components:
    E-Vouchers
    • Aadhaar-authenticated e-voucher for EV buyers;
    • Signed by both buyer and dealer for claiming incentives.
    E-Bus Procurement ₹4,391 crore for 14,028 e-buses in 9 major cities (Delhi, Mumbai, Kolkata, Chennai, Ahmedabad, Surat, Bangalore, Pune, Hyderabad)
    Charging Infrastructure ₹2,000 crore for 72,300 public EV charging stations, including fast chargers for e-4Ws, e-buses, e-2Ws, and e-3Ws
    Incentivizing E-Trucks ₹500 crore tied to scrapping certificates from MoRTH-approved scrapping centres
    Testing and Upgradation ₹780 crore for upgradation of MHI’s test agencies for green mobility technologies

     

    PYQ:

    [2019] How is efficient and affordable urban mass transport key to the rapid economic development in India?

  • Launch of PM Gram Sadak Yojana- Phase IV

    Why in the News?

    The Union Cabinet has approved Phase IV of the Pradhan Mantri Gram Sadak Yojana (PMGSY-IV) to build 62,500 km of all-weather roads, connecting villages across India.

    About Pradhan Mantri Gram Sadak Yojana (PMGSY)

    Details
    Launch 
    • In 2000 by former PM Late Atal Bihari Vajpayee.
    • To provide connectivity to unconnected habitations.
    Nodal Agency Ministry of Rural Development
    Type Centrally Sponsored Scheme
    Phases
    • Phase I: Focus on connecting unconnected habitations.
    • Phase II: Upgrading roads built in Phase I to enhance rural infrastructure.
    • Phase III: Consolidation of 1.25 lakh km of rural roads connecting habitations to Gramin Agricultural Markets, Higher Secondary Schools, and Hospitals. Cost: ₹80,250 crore (2019-2025). Funding: 60:40 (Centre), 90:10 for North-East and Himalayan States.

    Phase IV: Aims at constructing 62,500 km of all-weather roads to provide connectivity to 25,000 unconnected habitations with focus on Left-Wing Extremism (LWE) areas, tribal areas, and remote regions.
    Road Length and Coverage 62,500 km of all-weather roads covering 25,000 unconnected habitations.

    Benefits of PMGSY-IV

    • Road Connectivity for 25,000 Villages: All-weather roads will provide reliable access to previously unconnected rural habitations, improving transportation and accessibility.
    • Socio-Economic Transformation: These roads will act as catalysts for socio-economic development in rural areas, enabling access to government educational institutions, health services, markets, and growth centers.
    • Enhanced Infrastructure: The construction will adopt international benchmarks and best practices, such as using Cold Mix Technology, Waste Plastic, Full Depth Reclamation, and materials like Fly Ash and Steel Slag, contributing to eco-friendly construction.

    PYQ:

    [2020] In rural road construction, the use of which of the following is preferred for ensuring environmental sustainability or to reduce carbon footprint?

    1. Copper slag
    2. Cold mix asphalt technology
    3. Geotextiles
    4. Hot mix asphalt technology
    5. Portland cement

    Select the correct answer using the code given below:

    (a) 1, 2 and 3 only

    (b) 2, 3 and 4 only

    (c) 4 and 5 only

    (d) 1 and 5 only

  • The role of district agro-met offces in supporting farmers 

    Why in the News?

    Last week, PTI reported that the India Meteorological Department (IMD) plans to reintroduce District Agro-Meteorology Units (DAMUs) as part of the Gramin Krishi Mausam Sewa (GKMS) scheme.

    Background: In 2018, the IMD set up 199 District Agro-Meteorology Units (DAMUs) in collaboration with the Indian Council of Agricultural Research to provide sub-district level agricultural advisories based on weather data. However, these DAMUs were shut down in March following an order from the IMD.

    What are Agro-Meteorological Advisories?

    • Agro-meteorological advisories provide farmers with critical information about weather conditions that affect agricultural practices. This includes forecasts related to rainfall, temperature, and wind speeds, which are crucial for planning sowing, harvesting, irrigation, and the use of fertilizers and pesticides.
    • These advisories are particularly important for small and marginal farmers, who make up about 80% of India’s farming community and primarily rely on rain-fed agriculture.
    • The advisories are disseminated in local languages, ensuring accessibility. They are shared through various channels, including text messages, WhatsApp groups, newspapers, and direct communication from DAMU staff.
    • By providing timely weather information, these advisories help farmers plan their agricultural activities effectively and ultimately contribute to enhancing crop yields and farmers’ incomes.

    Why Did the Government shut down the District Agro-Met Units (DAMUs)?

    • Agro-meteorological data was automated: The closure of DAMUs was influenced by claims from the NITI Aayog that agro-meteorological data was automated, which undermined the role of DAMU staff in preparing and disseminating agricultural advisories. This misrepresentation led to recommendations for privatization and monetization of the services previously offered for free.
    • Financial and Administrative Issues: The decision to shut down DAMUs was attributed to ongoing financial challenges, including delayed salary disbursements for DAMU staff, and administrative issues that hampered the program’s effectiveness.
    • Shift Towards Centralization: The government suggested transitioning to a centralized model for weather data collection and advisory services, which could potentially reduce the localized support that DAMUs provided to farmers.

    Way forward: 

    • Re-establish Local Support: Reinstate District Agro-Meteorology Units (DAMUs) to provide localized, targeted weather advisories and support, ensuring that small and marginal farmers receive timely, relevant information.
    • Improve Data Integration and Communication: Enhance the integration of automated weather data with localized advisory services, and streamline communication channels to reach farmers through various platforms effectively.