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Subject: Economics

  • Digital Agriculture

    digital

    Context

    • The world’s population will grow to 10 billion by 2050; agricultural land has halved in the last 50 years; 20-40% of crop yield is lost to pests and disease and another 10-25% is lost post-harvest. Take into account geo-political factors like the Ukraine war in account, and food security is a big problem facing mankind. In all this, digital technologies may be the answer to ills in agriculture; vitally, they can help achieve sustainability if we overcome challenges.

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    Agriculture’s digital drive

    • Use of modern technology: Farming is witnessing the use of modern technology for higher productivity and profitability. Today, farmers use digital tools for farm management, financial services, market services, information and much else.
    • Smart agriculture use of AI and IOT: ‘Smart agriculture’ uses software for remote sensing, apart from big data, the Internet of Things (IoT) and artificial intelligence (AI). IoT in agriculture comprises sensors, drones and computer imaging integrated with analytical tools to generate actionable insights.
    • Use of data and ML: Predictive analytics allows quick decision-making based on information drawn from data mining, data modelling and machine learning (ML).
    • Digital adoption of Supply chain: Digital adoption can add value across the entire farm-to-fork (F2F) supply chain, covering the journey from planting to harvesting (of fruits, vegetables, grains, etc) till it arrives on one’s plate. This journey’s stakeholders include farm suppliers, farmers, food processors, traders, retailers and finally end consumers.
    • Precision farming: Precision farming helps raise crop yields while minimizing the use of resources. It measures and analyses the needs of different fields and crops to aid waste management, reduce production costs, make optimal use of water and minimize environmental impacts.

    digital

    The challenges of digital adoption in the Farm to Fork (F2F) supply chain

    • Risks concentrated on farmer: For example, all risk is concentrated on the farmer, who is encumbered by the vagaries of weather, selection of profitable products, poor access to crop insurance, etc. We need to provide more value to the farmer in compensation for that burden.
    • Trust deficit in the overall functioning of the F2F model: Over time, decision-making in food production, crop marketing, transport, etc, has got heavily concentrated in the hands of large agricultural entities or producers. While production has risen, the democratization of decision-making has suffered.
    • Digital inequalities: The sector’s digital transformation is characterized by digital inequalities between large and small farmers, or between high- and low-income countries.
    • Challenges in the supplier ecosystem: A fertilizer or agriculture equipment manufacturer may want to help farmers but is handicapped in creating the right ecosystem to provide a holistic solution.
    • Capital expenditure a major challenge: Subsistence farmers cannot afford capital expenditure, and other farmers have financial constraints too. This is a major challenge at the farm level.

    digital

    What binds these supply chain components together?

    • Sustainability: which refers to practices that ensure long-term increased farm production and higher income while protecting the environment. Farmers apply inputs to only those parts of the field that need it, improving product quality, reducing input cost, increasing productivity and ensuring environmental sustainability.
    • Evolving digital ecosystem: India’s evolving digital ecosystem and high-speed internet are making it possible for agritech startups to utilize AI/ML models.
    • Precision techniques: Companies using precision techniques are helping farmers increase yields substantially.
    • No middlemen: Due to a rise in online agritech platforms, farmers can now sell their products directly without any middlemen involved and thereby increase their incomes. This also helps create trust and transparency between farmers and consumers.
    • Digital access to the market: In India, rising internet use and smartphone penetration has changed the face of agriculture in significant ways already, especially how small and medium farmers operate. It is helping with direct access to markets, thus allowing farmers to retain a higher proportion of the value created.

    Current status of Indian agriculture

    • While there is large scope for using digital technologies for agriculture in India, various problems must be overcome.
    • As of now, the use of farming technology among India’s farmers is low.
    • Productivity is also low, given small landholdings and significant overcrowding, which also contributes to our low level of mechanization.
    • The absence of agricultural marketing makes farmers depend on local traders and middlemen to sell their farm produce, which is sold at very low prices.

    Digital

    Government Initiatives towards Digital Agriculture:

    • AgriStack: The Ministry of Agriculture and Farmers Welfare has planned to create ‘AgriStack’ – a collection of technology-based interventions in agriculture. It will create a unified platform for farmers to provide them end-to-end services across the agriculture food value chain.
    • Digital Agriculture Mission: This has been initiated for 2021 -2025 by the government for projects based on new technologies like artificial intelligence, blockchain, remote sensing and GIS technology, use of drones and robots, etc.
    • Unified Farmer Service Platform (UFSP): UFSP is a combination of Core Infrastructure, Data, Applications, and Tools that enable seamless interoperability of various public and private IT systems in the agriculture ecosystem across the country. UFSP is envisaged to play the following role:
      • Act as a central agency in the Agri ecosystem (like UPI in the e Payments)
      • Enables Registration of the Service Providers (public and private) and the Farmer Services.
      • Enforces various rules and validations required during the service delivery process.
      • Acts as a Repository of all the applicable standards, API’s (Application Programming Interface) and formats.
      • Act as a medium of data exchange amongst various schemes and services to enable comprehensive delivery of services to the farmer.
    • National e-Governance Plan in Agriculture (NeGP-A): A Centrally Sponsored Scheme, it was initially launched in 2010-11 in 7 pilot States, which aims to achieve rapid development in India through the use of ICT for timely access to agriculture-related information to the farmers.
      • In 2014-15, the scheme was further extended for all the remaining States and 2 UTs.
    • Other Digital Initiatives: Kisan Call Centres, Kisan Suvidha App, Agri Market App, Soil Health Card (SHC) Portal, etc.

    Way forward

    • The digital revolution is touching every sphere of life and hence it is high time to bring agriculture in its ambit.
    • The MoUs to rope in the private sector can help in
      • quicker modernisation of Farms,
      • easier access to various schemes and
      • subject matter knowledge.
    • Such practices must be studied in depth via pilot projects and extended to whole India if found successful.
    Other Schemes for Farmers

    National e-Governance Plan in Agriculture (NeGPA):

    • It was initially launched in seven selected States in the last quarter of 2010-11.
      • This Scheme has subsequently been extended to the 2nd Phase to cover all the States and 2 UTs from 2014-15.
    • Aim:
      • To achieve rapid development in India through use of Information & Communication Technology (ICT).
      • It will provide timely access to agriculture related information for the farmers.
    • The possible components for modern management of agriculture are
      • Remote Sensing
      • Geographical Information System
      • Data Analytics
      • Artificial Intelligence & Machine Learning and
      • Internet of Things.
    • Under this initiative, one Stop Window-Farmers Portal (www.farmer.gov.in) has been developed for dissemination of information like.
      • seeds variety,
      • Storage Godown,
      • Pests and plant diseases,
      • Best Agricultural Practices,
      • Watershed,
      • Mandi details etc.
    • SMS/mKisan Portal (www.mkisan.gov.in) has also been developed.
      • It will send advisories on various crop related matters to the registered farmers through SMSs.
      • In mkisan. more than 5 crores farmers are registered for receiving crop advisories through SMS.
    • Various mobile applications including KisanSuvidha have also been developed.
      • They facilitate dissemination of information to farmers on the critical parameters viz.,
        • Weather, Market Prices,
        • Plant Protection,
        • Agro-advisory,
        • Extreme Weather Alerts,
        • Input Dealers ( of Seed, Pesticide, Fertilizer, Farm Machinery),
        • Soil Health Card,
        • Cold Storage & Godowns,
        • Veterinary Centre & Diagnostic labs,
        • Crop Insurance Premium Calculator
      • This app launched in 2016, has more than 13 lakh downloads.

    Strengthening/Promoting Agricultural Information System (AGRISNET):

    • It is the scheme for strengthening the IT infrastructure of the Department and its offices.
    • Fund allocated under the scheme is also utilized for making payment to the vendor for sending SMS through mkisan portal.

    Source: PIB

    What’s New

    Important Links

    Conclusion

    • Digital technology in agriculture is designed to support innovation and sustainable farm practices. To ensure its success, all changes must be holistic in their benefits.

    Mains question

    Q. Digital technologies are highly changing the face of agriculture and thereby farm to fork (F2F) supply chain. Discuss and also highlight the challenges in F2F supply chain.

     

  • FSSAI sets standards for Basmati Rice

    basmati

    In a bid to promote the business around basmati rice, the Food Safety and Standards Authority of India (FSSAI) notified standards for basmati rice. They will be enforced from August 1, 2023.

    Food Safety and Standards Authority of India (FSSAI)

    • The FSSAI is an autonomous body established under the Ministry of Health & Family Welfare, Government of India.
    • It has been established under the Food Safety and Standards Act, 2006 which is a consolidating statute related to food safety and regulation in India.
    • It is responsible for protecting and promoting public health through the regulation and supervision of food safety.
    • It is headed by a non-executive Chairperson, appointed by the Central Government, either holding or has held the position of not below the rank of Secretary to the Government of India.

     

    Basmati Rice

    • Basmati, pronounced is a variety of long, slender-grained aromatic rice which is traditionally grown in India, Pakistan, and Nepal.
    • As of 2019, India accounted for 65% of the international trade in basmati rice, while Pakistan accounted for the remaining 35%.
    • Many countries use domestically grown basmati rice crops; however, basmati is geographically exclusive to certain districts of India and Pakistan.
    • India accounts for over 70% of the world’s basmati rice production.
    • The areas which have a geographical indication are in the states of Punjab, Haryana, Himachal Pradesh, Delhi, Uttarakhand, Western Uttar Pradesh and Jammu and Kashmir.

    What are the standards set out by FSSAI?

    • Fragrance: Basmati has the characteristic fragrance identified with this variety and is free from artificial fragrances and colouring.
    • Grain size: The authority has also set standards on parameters such as average size of grains and their elongation ratio after cooking.
    • Vital contents: It has set the maximum limits for moisture, amylose content, uric acid, damaged grains and presence of non-basmati rice.
    • Varieties included: The standards are applicable to brown basmati rice, milled basmati rice, parboiled brown basmati rice and milled parboiled basmati rice.

    Economics of Basmati

    • Basmati rice is exported out of India and had an annual forex earning of Rs 25,053 crore during 2021-22.
    • India accounts for two-thirds of the global supply of basmati rice.

    Significance of the move

    • FSSAI hopes that the standards would protect consumer interest and ensure the quality of basmati rice.
    • In 2020, India’s application for a geographical indication tag recognised in the European Union market was put on hold after Pakistan opposed the move.
    • Before this, in 1997, Texas-based Company RiceTec developed American basmati varieties and patented them.
    • These were introduced in the international market as ‘Kasmati’ and ‘Texmati’.
    • However, the patent was contested in the year 2000 by the Centre for Scientific and Industrial Research (CSIR), India’s premier science and industry organisation, saying the term ‘basmati’ could be used only for rice grown in India and Pakistan.

     

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  • New India: The world’s next engine of growth

    growth

    “The mantle of the G20 presidency has come at the right time, allowing India to influence the global agenda based on its own priority of accelerated, inclusive and resilient growth”

     Context

    • The pandemic has proven to be the breakout moment in India’s long overdue emergence as the world’s next engine of growth. New India is bearing fruit at a time when one-third of the world’s economy is facing a slowdown. Speaking at FICCI’s 95th annual general meeting, Finance Minister said that the upcoming budget will set the template for the next 25 years, which is India’s Amrit Kaal.

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    A gloomy global outlook

    • Prospectus of global growth: According to the International Monetary Fund (IMF), global growth will nearly halve to 3.2 per cent in 2022 and fall further to 2.7 per cent in 2023, reflecting stalling growth in the US, China and the Euro Zone.
    • Global inflation: Higher food and energy prices have led to global inflation peaking at 8.8 per cent in 2022 which is, however, expected to decline to 6.5 per cent in 2023 and 4.1 per cent in 2024.
    • Developed nations are struggling to tame inflation: Developed nations have adopted excessive stimulus measures. According to a report by the McKinsey Global Institute, in 2020 and 2021, households globally added $100 trillion to global wealth on paper as asset prices soared and $39 trillion in new currency and deposits were minted and debt and equity liabilities increased by about $50 trillion and $75 trillion, respectively, as governments and central banks stimulated economies.
    • Russia- Ukraine conflict inflicting fiscal pain: Meanwhile, the continuing Russia-Ukraine conflict is inflicting fiscal pain beyond the immediate region
    • Disrupted supply chain by China’s covid policy: While China’s Covid policy has disrupted supply chains, which are now once again threatened by a potential fallout of an abrupt reversal.
    • India’s inflation is largely imported: India’s own fight against inflation, which is largely imported, has been aided by fiscal and monetary policy working in tandem with a little help from easing commodity prices.

    growth

    India stands at a bright spot amidst significant challenges

    • Fastest-growing large economy in the world: However, India stands out as a rare bright spot with the economy estimated to grow around 7 per cent in FY23 and a growth forecast of 6.1-6.5 per cent in FY24, thus retaining the tag of the fastest-growing large economy in the world.
    • Inflation coming down within RBI’s tolerance level: In an encouraging sign, retail inflation eased to 5.88 per cent in November, thus coming within the RBI’s tolerance band after 11 months. While it is too early to declare victory in terms of taming inflation, policymakers must now chart out a path that prioritises growth
    • India likely to overtake Japan and Germany to become 3rd largest economy: Having recently surpassed the UK to become the world’s fifth-largest economy, India is likely to overtake Japan and Germany before the end of the decade to become the third-largest economy in the world.
    • What made this possible: Reforms aimed at enhancing ease of doing business and reducing the cost of doing business in a large, unified domestic market along with a focus on boosting the manufacturing sector through the Production Linked Incentive (PLI) schemes, which are helping attract large investments including in critical areas like semiconductors.

    growth

    What India has to share with the world?

    • G20 leadership to bring about structural transformation: Its priority as G20 president is to focus on areas, which have the potential to bring about structural transformation leading to accelerated, inclusive and resilient growth.
    • Concept of LiFE for a sustainable lifestyle: Similarly, the concept of LiFE (Lifestyle for the Environment) draws upon ancient sustainable traditions to reinforce modern-day environmentally conscious practices.
    • Knowledge sharing: Finally, knowledge sharing in areas like digital public infrastructure and financial inclusion will enable the wider adoption of disruptive technologies.

    growth

    Conclusion

    • Investors both domestic and global must now come forward and participate in the India growth story which, in turn, will give a much-needed boost to global growth going ahead. Speaking at the World Economic Forum last year, PM Modi said “Make in India, Make for the World”. There has never been a better time to invest in India and reap the benefits of what it has to offer.

    Mains question

    Q. At a time when one-third of the world’s economy is facing a slowdown India stands at a brighter spot Discuss. Highlight what India has to share with the world?

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  • FMC Projects to push coal out of mines quicker

    coal

    The coal ministry has announced several first-mile connectivity (FMC) projects, in line with the government’s coal logistics policy.

    What is first-mile connectivity in coal?

    • FMC refers to transportation of coal from pitheads to dispatch points from where it would be transported to consumers.
    • Under FMC, coal producers adopt alternate transport methods—such as mechanized conveyor systems and computerized loading on to railway rakes—to replace road transport.
    • FMC projects reduce manual intervention and loading time.
    • It also quickens the evacuation process or the movement of coal from pitheads.

    What does the coal logistics policy say?

    According to the draft, the policy is aimed at developing a “technologically enabled, integrated, cost-efficient, resilient, sustainable and trusted logistics ecosystem in the country for accelerated and inclusive growth”.

    • Optimal infrastructure: In other words, it aims to create an optimal infrastructure for coal transportation at the origin and destination points for quicker transport.
    • Integrated evacuation: It also seeks to develop an eco-friendly, multi-modal integrated national coal evacuation infrastructure.
    • Dedicated corridors: The other goal is to establish smart coal logistics corridors to ensure complete oversight from the mine to the consumption point.

    Why is the government emphasizing on FMC?

    There are several missing links in the coal supply chain, which would now be plugged through planned projects.

    • FMC is part of the government’s plans to achieve energy security and end import dependence.
    • FMC would also lower carbon emissions since it reduces dependence on road transport for evacuation of coal.

    Economic significance of FMCs

    • Artificial shortages: Last year, India witnessed a power crisis due to a shortage of coal.
    • Low availability of railway rakes: Along with the scarcity of domestic coal, the low availability of railway rakes added to the crisis. Post that, the government made efforts to boost the availability of rakes.
    • Logistics boost: Noting that power demand is set to increase with growing economic activity, a robust logistics ecosystem for coal has become imperative.
    • Last-mile energy connectivity: In addition to first mile connectivity, India is keen to strengthen the last mile as well.

    Progress till date

    • Under the draft policy, setting up FMC would be made part of the mine allocation process. So, more such projects are set to come up.
    • The coal ministry has taken up additional 19 FMC projects for Coal India and Singareni Collieries with a capacity of 330 million tonne per annum (MTPA).
    • These projects will be implemented by FY27.

     

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  • Indian economic growth forecast

    growth

    Context

    • The Indian economy is expected to grow at 7 per cent in 2022-23 as per the first advance estimates of national income released by the National Statistical Office (NSO) on Friday. This is marginally higher than the RBI’s most recent assessment in the December monetary policy committee meeting, the central bank had lowered its expectation of growth to 6.8 per cent.

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    growth

    Estimate: Indian economic growth

    • As per the latest estimates growth is likely to slow down in later half: Considering that the economy grew by 9.7 per cent in the first half of the financial year (April-September), the latest estimate implies that growth is likely to slow down to 4.5 per cent in the second half of the year (October-March) as the base effect wanes.
    • Full year growth estimates India will be fastest growing economy: Notwithstanding that, the full-year growth estimate suggests that India will be one of the fastest-growing economies in the world.

    Positive signs in the Indian Economy

    • Positive medium-term growth prospects: Company and bank balance sheets are healthier, credit growth is rising, and capacity utilisation has increased, all of which augur well for investment activity.
    • Positive impact on tourism: The waning of Covid-19 should hopefully have a positive impact on travel, transport and tourism. Construction activity should pick up further with the reduction in housing inventory and almost stable prices over the last decade.
    • On inflation India is doing better: On the inflation front, India is doing better than many advanced economies and emerging markets.

    growth

    Areas of concern

    • Private consumption is likely to contract in the second half of the year: While the pace of contraction is expected to be marginal, the slowdown in spending could be due to either the exhaustion of pent-up demand or the lagged impact of a tighter monetary policy.
    • Exports growth likely to grow: As per the estimates, exports are likely to grow at almost 12 per cent in the second half of the year. This is at odds with recent data which showed that export growth has actually slowed down considerably as advanced economies have come under pressure.
    • Agriculture growth likely to slow down: Agricultural growth is expected to slow down in the second half. As per some analysts this is not in sync with the healthy sowing rates and reservoir levels.
    • Manufacturing will go upward: The manufacturing sector, which was almost flat in the first half of the year, is expected to witness an uptick in the second half. It is difficult to reconcile this with the view that both domestic demand and exports are likely to remain subdued, which would in turn impact industrial production.
    • Government spending will remain almost flat: Public administration, defence and other services, which largely connotes government spending, is expected to remain more or less flat in the second half. This is odd considering that government consumption expenditure is pegged to grow at 7.2 per cent during the period.

    growth

    As the data is not yet concrete, estimates made are likely to change

    • As the first advance estimates suffer from data limitations, they are based only on seven to eight months of data these are likely to change once more data is available.
    • However, they do provide some sense of underlying momentum in economic activities, and are useful in the context of the upcoming Union budget.
    • The last budget had assumed a nominal GDP growth of 11.1 per cent. However, as per the latest estimates, nominal GDP is expected to grow at a significantly higher pace of 15.4 per cent.

    Conclusion

    • Along with trends in tax collections as per which the government’s revenues will surpass budgeted targets by a significant margin, these growth estimates only increase the likelihood of the Centre meeting its budgeted fiscal deficit target for the year.

    Mains question

    Q. As per the first advance estimates of national income released by the National Statistical Office, Indian economy is expected to grow at 7 per cent in 2022-23. In light of this discuss some of the latest projections and the areas of concern for Indian economic growth.

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  • What is New Umbrella Entity (NUE) Network?


    umbrella

    The Reserve Bank of India (RBI) is said to have put on hold licensing of the New Umbrella Entity (NUE) network, a fintech institution planned as a rival to National Payments Corporation of India (NPCI).

    Why in news?

    • Six groupings, which included Facebook, Google, Amazon, Flipkart and others, had applied for NUE licences.

    What is New Umbrella Entity (NUE)?

    • NUE is an entity (under the Companies Act 2013) that will manage and operate the new payment system in the retail sector such as ATMs, POS, UPI etc.
    • NUEs will be set up for profit entities that will manage payments in the retail space.
    • These could offer a host of retail payment services, including setting up of ATMs, offering white-label, point of sale terminals, Aadhaar-based payments, remittance services, and develop newer payment methods.
    • They will also manage clearing and settlement systems that could be an alternative to the bank-promoted NPCI.
    • They will be allowed to charge fees for transactions (unlike the existing NPCI).
    • All NUEs will have to be interoperable with the National Payments Corporation of India (NPCI).

    Why need NUEs?

    • The NPCI is at the epicentre of the digital payments in the country.
    • RBI has introduced NUEs to end the so-called monopoly of NPCI.
    • The central bank also noted that during the pandemic, with people spending more time at home the usage of e-commerce has increased, and there’s been a significant rise in the incidence of internet fraud, cyber-crimes.

    If NPCI is doing its job well, then why NUE?

    • 48% of all electronic retail payments in the country pass through the NPCI infrastructure.
    • RBI’s concern stems from having the operations of so much of the country’s payment system concentrated in one entity.

    How will NUE aid Consumers?

    • With the introduction of NUEs, options for payment will increase for users.
    • This will result in more competition and eventually help boost transaction volumes for both platforms as e-commerce expands and reaches deeper into India’s unbanked hinterland.
    • In the World Bank’s most recent report on financial inclusion in 2017, some 190 million Indians did not have a bank account and more than half did not make or receive digital payments.
    • Customers who face frequent sever transaction due to server overload currently have few options.
    • In the new regime, they’ll be able to try the other platform.

    What about Data Safety?

    • Compliance as far as data safety and privacy is concerned holds good for all and sundry in the payments and banking space.
    • Every entity involved in payments and settlement have to follow the same set of rules.
    • RBI already have a new set of guidelines on “Regulation of Payment Aggregators and Payment Gateways” .
    • It ensures that neither the authorised Payment Aggregators (PAs) nor the merchants on-boarded by them can store customer card credentials within their database or server to avoid data breaches and potential abuse.

    Will NUEs replace NPCI?

    • NUEs will co-exist with NPCI to strengthen the payment infrastructure network.
    • A robust and resilient infrastructure is needed to ensure the government’s ambitious target of one billion digital transactions per day is achieved.
    • NUEs will not replace but complement NPCI in taking India’s digital payment success story to new heights.
    • By establishing a neutral and independent standards-setting body, we can make sure that the system as a whole in our country evolves in the best traditions of digital infrastructure adopted anywhere in the world.

     

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  • RBI to issue first-ever Sovereign Green Bonds

    green bond

    The RBI would issue Sovereign Green Bonds (SGrBs) in two tranches of ₹8,000 crore each on January 25 and February 9.

    What are Sovereign Green Bonds?

    • A bond is an instrument to raise debt.
    • Since 2007, a market for bonds specifically self-labelled or designated as ‘green’ has emerged.
    • This label differentiates a green bond from a regular bond, which signifies a commitment to exclusively use funds raised to finance or re-finance “green” projects, assets, or business activities.
    • When these bonds carry guarantees related to the repayment of principal and payment of interest by the sovereign or the government, they are called sovereign green bonds (SGrB).

    How are the projects for green bonds selected?

    • A project is classified “green” on the basis of four key principles. These include-
    1. Encouraging energy efficiency in resource utilisation
    2. Reducing carbon emissions and greenhouse gases
    3. Promoting climate resilience and
    4. Improving natural ecosystems and biodiversity, especially in accordance with SDG (Sustainable Development Goals).

    When is the first sovereign green bond likely to be issued? 

    • In her Budget speech early this year, Finance Minister announced that sovereign green bonds will be issued for mobilising resources for green infrastructure.
    • The proceeds will be deployed in public sector projects that help in reducing the carbon intensity of the economy.
    • These green bonds would be available in 5-year and 10-year tenure.

    How are they different from conventional government bonds?

    • Government bonds or government securities (G-Secs) are normally categorised into two — Treasury Bills and dated or long-term securities.
    • These bonds carry coupon rates and are tradable in the securities market.
    • SGrB is one form of dated security. It will have a tenor and interest rate.
    • Money raised through SGrB is part of overall government borrowing.

    Who are likely to be the buyers of these bonds? 

    • Both domestic and international investors are expected to be interested in SGrB.
    • However, one thinking is foreign investors may be slightly hesitant due to currency risk.

     

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  • Centre clears National Green Hydrogen Mission

    hydrogen

    The Union Cabinet approved the National Green Hydrogen Mission, which is aimed at making India the global hub for the production of green hydrogen.

    What is Green Hydrogen?

    • Green hydrogen is hydrogen gas produced through the electrolysis of water.
    • It is an energy-intensive process for splitting water into hydrogen and oxygen— using renewable power to achieve this.
    • The current cost of green hydrogen in India is ₹300 to ₹400 per kg.

    Green Hydrogen Mission

    • The National Hydrogen Mission was launched on August 15, 2021, with a view to cutting down carbon emissions and increasing the use of renewable sources of energy.
    • The Ministry of New and Renewable Energy (MNRE) will formulate the scheme guidelines for implementation.

    Key features

    • Power capacity: The mission seeks to promote the development of green hydrogen production capacity of at least 5 MMT per annum with an associated renewable energy capacity addition of about 125 GW in the country by 2030.
    • Job creation: It envisages an investment of over ₹8 lakh crore and creation of over 6 lakh jobs by 2030.
    • Reducing energy import bill: It will also result in a cumulative reduction in fossil fuel imports of over ₹1 lakh crore and abatement of nearly 50 MMT of annual greenhouse gas emissions by 2030.
    • Export promotion: The mission will facilitate demand creation, production, utilisation and export of green hydrogen.
    • Incentivization: Under the Strategic Interventions for Green Hydrogen Transition Programme (SIGHT), two distinct financial incentive mechanisms targeting domestic manufacturing of electrolysers and production of green hydrogen will be provided under the mission.
    • Green Hydrogen Hubs: Regions capable of supporting large-scale production and/or utilisation of hydrogen will be identified and developed as Green Hydrogen Hubs.

    Hydrogen Energy: A Backgrounder

    • Hydrogen is an important source of energy since it has zero carbon content and is a non-polluting source of energy in contrast to hydrocarbons that have net carbon content in the range of 75–85 per cent.
    • Hydrogen energy is expected to reduce carbon emissions that are set to jump by 1.5 billion tons in 2021.
    • It has the highest energy content by weight and lowest energy content by volume.
    • As per International Renewable Energy Agency (IRENA), Hydrogen shall make up 6 per cent of total energy consumption by 2050.
    • Hydrogen energy is currently at a nascent stage of development, but has considerable potential for aiding the process of energy transition from hydrocarbons to renewable.

    Why hydrogen?

    • Better properties: At standard temperature and pressure, hydrogen is a nontoxic, nonmetallic, odourless, tasteless, colourless, and highly combustible diatomic gas.
    • Clean fuel: Hydrogen fuel is a zero-emission fuel when burned with oxygen. It can be used in fuel cells or internal combustion engines. It is also used as a fuel for spacecraft propulsion.
    • Ample sources: Hydrogen can be sourced from natural gas, nuclear power, biomass, and renewable power like solar and wind.
    • Phasing out carbon: India remains committed to environmental and climate causes with a massive thrust on deploying renewable energy and energy efficiency measures.
    • Diversification of our energy basket: This would be the key lever enabling this transition. That’s why the emergence of hydrogen at the centre stage is a welcome development.

    How Hydrogen can be produced?

    Commercially viable Hydrogen can be produced from –

    1. Hydrocarbons including natural gas, oil and coal through processes like steam methane reforming, partial oxidation and coal gasification
    2. Renewables like water, sunlight and wind through electrolysis and photolysis and other thermo-chemical processes.

    How is Green Hydrogen produced?

    • For source material, green hydrogen today is typically generated from water through a process known as electrolysis, which uses an electric current to split water into its component molecules of hydrogen and oxygen.
    • This is done using a device called an electrolyzer,  which utilizes a cathode and an anode (positively and negatively charged electrodes).
    • This process produces only oxygen – or steam – as a by-product.
    • As for energy supply, to qualify as “green hydrogen,” the source of electricity used for electrolysis must derive from renewable power, such as wind or solar energy.
    • Currently the production of green hydrogen is two or three times more expensive than blue hydrogen.

    How can green hydrogen be used?

    Hydrogen can be used in broadly two ways. It can be burnt to produce heat or fed into a fuel cell to make electricity.

    • Fuel-cell  Mobility: Hydrogen electric cars and trucks
    • Container ships powered by liquid ammonia made from hydrogen
    • “Green steel” refineries burning hydrogen as a heat source rather than coal
    • Hydrogen-powered electricity turbines that can generate electricity at times of peak demand to help firm the electricity grid

    Challenges in producing Green Hydrogen

    India’s transition towards a green hydrogen economy (GHE) can only happen once certain key issues are addressed.

    • Supply-Chain Issues: GHE hinges upon the creation of a supply chain, starting from the manufacture of electrolysers to the production of green hydrogen, using electricity from a renewable energy source.
    • Technology: Green hydrogen needs electrolysers to be built on a scale larger than we’ve yet seen.
    • Storage: Either very high pressures or very high temperatures are required, both with their own technical difficulties.
    • Explosion Hazard: It is hazardous because of its low ignition energy and high combustion energy.
    • Risk to use: Automotive fuels are highly inflammable, but a vehicle laden with hydrogen is likely to be more vulnerable in case of a major accident.
    • High Cost of Production: To become competitive, the price per kilogram of green hydrogen has to reduce to a benchmark of $2/kg. At these prices, green hydrogen can compete with natural gas.
    • Energy intensivity: Creating green hydrogen needs a huge amount of electricity, which means an enormous increase in the amount of wind and solar power to meet global targets.
    • Lack of proper infrastructure, only 500 Hydrogen stations exist globally. Only countable manufacturers are involved as market players in this technology.
    • Others: Low user acceptance and social awareness. Developing after-sales service for hydrogen technology.

    Policy and Economic Challenges

    • Economic sustainability: One of the biggest challenges faced by the industry for using hydrogen commercially is the economic sustainability of extracting green or blue hydrogen.
    • Technological challenges: The technology used in production and use of hydrogen like Carbon Capture and Storage (CCS) and hydrogen fuel cell technology are at nascent stage.
    • Cost Factor: These technologies are expensive which in turn increases the cost of production of hydrogen and will require a lot of investment which in turn add fiscal pressure on government.
    • Higher Maintenance costs: Maintenance costs for fuel cells post-completion of a plant can be costly.
    • Need for legal and administrative adherence: Certification mechanisms, recommendations, and regulations for different components of the system.

    Way forward

    • Hydrogen energy is at a nascent stage of development but has significant potential for realizing the energy transition in India.
    • The new policy is a futuristic vision that can help the country not only cut down its carbon emissions but also diversify its energy basket and reduce external reliance.
    • India’s transition can be a testament to the world on the achievement of energy security, without compromising the goal of sustainable development.
    • The GoI must strongly pursue the objective of creating a GHE to make India a global manufacturing hub and place itself at the top of the green hydrogen export market.

  • Broadcasting Infrastructure and Network Development (BIND) Scheme

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    The Cabinet Committee on Economic Affairs approved the “Broadcasting Infrastructure and Network Development (BIND)” scheme to upgrade Prasar Bharati to expand the public service broadcasting infrastructure across the country.

    Prasar Bharati

    • Prasar Bharati is India’s state-owned public broadcaster, headquartered in New Delhi.
    • It is a statutory autonomous body set up by Prasar Bharati Act, 1990.
    • It comprises the Doordarshan Television Network and Akashvani All India Radio, which were earlier media units of the Ministry of Information and Broadcasting.

     

    BIND Scheme

    • BIND scheme is the vehicle for providing financial support to Prasar Bharati for expenses related to expansion and upgradation of its broadcasting infrastructure, content development and civil work.
    • Its features include-
    1. Outreach expansion: It will enable the public broadcaster to undertake a major upgradation of its facilities with better infrastructure which will widen its reach, in the LWE, border and strategic areas and provide high quality content to the viewers.
    2. Quality content: Another major priority area of the scheme is the development of high-quality content for both domestic and international audience and ensuring availability of diverse content to the viewers.
    3. More TV channels: It seeks to upgrade the capacity of DTH platform to accommodate more channels.
    4. Expansion of radio coverage: The scheme will increase coverage of AIR FM transmitters in the country to 66 percent by geographical area and 80 percent by population up from 59 percent and 68 percent respectively.
    5. Free DISH services: The scheme also envisages free distribution of over 8 lakh DD Free Dish STBs to people living in remote, tribal, left wing extremism inflicted and border areas.

    Benefits provided

    Ans. Employment generation

    • The project has the potential to generate indirect employment by way of manufacturing and services related to supply and installation of broadcast equipment.
    • Content generation and content innovation for AIR and DD has the potential of indirect employment of persons with varied experience of different media fields in the content production sector including TV/radio production, transmission and associated media-related services.
    • Further, the project for expansion of the reach of DD Free Dish is expected to generate employment opportunities in the manufacturing of the DD Free Dish DTH boxes.

     

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  • What is Purchasing Managers Index (PMI)?

    India’s Services sector reported a sharp growth with Services Purchasing Managers’ Index (PMI) surging to 58.5 last month from 56.4 in November 2022.

    Purchasing Managers’ Index (PMI)

    • PMI is an indicator of business activity — both in the manufacturing and services sectors.
    • It is a survey-based measure that asks the respondents about changes in their perception of some key business variables from the month before.
    • It is calculated separately for the manufacturing and services sectors and then a composite index is constructed.
    • The PMI is compiled by IHS Markit based on responses to questionnaires sent to purchasing managers in a panel of around 400 manufacturers.

    How is the PMI derived?

    • The PMI is derived from a series of qualitative questions.
    • Executives from a reasonably big sample, running into hundreds of firms, are asked whether key indicators such as output, new orders, business expectations and employment were stronger than the month before and are asked to rate them.

    How does one read the PMI?

    • A figure above 50 denotes expansion in business activity. Anything below 50 denotes contraction.
    • Higher the difference from this mid-point greater the expansion or contraction. The rate of expansion can also be judged by comparing the PMI with that of the previous month data.
    • If the figure is higher than the previous month’s then the economy is expanding at a faster rate.
    • If it is lower than the previous month then it is growing at a lower rate.

    What are its implications for the economy?

    • The PMI is usually released at the start of the month, much before most of the official data on industrial output, manufacturing and GDP growth becomes available.
    • It is, therefore, considered a good leading indicator of economic activity.
    • Economists consider the manufacturing growth measured by the PMI as a good indicator of industrial output, for which official statistics are released later.
    • Central banks of many countries also use the index to help make decisions on interest rates.

     

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