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Subject: Economics

  • 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

    bind

    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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  • Reserve Bank Integrated Ombudsman Scheme (RBIOS)

    Issues related to ATM/debit cards and mobile/electronic banking were the top grounds of complaints received at the Office of Banking Ombudsman (OBO).

    Why in news?

    • Of these, 3,04,496 complaints were handled by the 22 Offices of RBI Ombudsman (ORBIOs), including the complaints received under the three erstwhile Ombudsman Schemes till November 11, 2021.
    • Complaints related to ATM/ debit cards were the highest at 14.6% of the total, followed by mobile/ electronic banking at 13.6%.
    • About 90% of the total complaints were received through digital modes, including on the online Complaint Management System (CMS) portal.
    • Majority 66.1% of the maintainable complaints were resolved through mutual settlement/ conciliation/ mediation.

    Banking Ombudsman Scheme

    • The Banking Ombudsman Scheme is an expeditious and inexpensive forum for bank customers for resolution of complaints relating to certain services rendered by banks.
    • It is introduced under Section 35 A of the Banking Regulation Act, 1949 by RBI with effect from 1995.
    • Presently the Banking Ombudsman Scheme 2006 (As amended upto July 1, 2017) is in operation.
    • All Scheduled Commercial Banks, Regional Rural Banks and Scheduled Primary Co-operative Banks are covered under the Scheme.
    • As per the present regulations, the ombudsman redressal is allowed for complaints where the compensation amount for any loss suffered by the complainant is limited to Rs 20 lakh.
    • Under the RBI-OS, 2021, following the ‘One Nation, One Ombudsman’ principle, the territorial jurisdictions have been abrogated, and complaints are assigned to all the ombudsmen by the CMS.

    What about other sectors?

    • The Reserve Bank Integrated Ombudsman Scheme (RBIOS) amalgamates three ombudsman scheme of RBI – banking ombudsman scheme of 2006, ombudsman scheme for NBFCs of 2018 and ombudsman scheme of digital transactions of 2019.
    • The unified ombudsman scheme will provide redress of customer complaints involving deficiency in services if the grievance is not resolved to the satisfaction of the customers or not replied within a period of 30 days.
    • The new scheme also includes non-scheduled primary co-operative banks with a deposit size of Rs 50 crore and above.
    • The integrated scheme makes it a “One Nation One Ombudsman’ approach and jurisdiction neutral.

     

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  • Demonetization and the digital payment ecosystem

    digital

    Context

    • Paperless payments have been a big national goal ever since 8 November 2016, when India rendered ₹500 and ₹1,000 currency notes useless in a stunning decision that was upheld as valid by the Supreme Court on recently. Today, our cash intensity remains roughly on the same incline as it was earlier. But online payments have soared. This means a fine policy judgement call will need to be made soon.

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    digital

    Demonetization: A brief Analysis

    • The supreme court rejected petitions arguing that demonetization was done illegally and by 4:1 bench majority Supreme court held the process as satisfactory.
    • The overnight note-ban was also found to satisfy a general test of proportionality. For all the hardship caused by weeks of cash starvation, that exercise of authority was not judged too drastic for its aims.
    • The extent to which unaccounted-for money was flushed out, terror funding frozen and commerce formalized cannot reliably be estimated, but small businesses were clearly hit hard and India’s economy slowed down soon after.

    digital

    The changing trend: How we are transacting?

    • Rise of digitals payments: The past half decade’s big trend in our use of money has been the exponential rise of a platform that’s part of our digital stack of public goods.
    • Spectacular success of UPI: Designed for instant transfers between bank accounts done via mobile phones, the Unified Payments Interface (UPI) has been a spectacular success since its 2016 launch.
    • UPI transactions for instance: According to National Payments Corporation of India (NPCI), its operator, UPI processed more than 74 billion transactions in 2022, up 90% over 2021, worth almost ₹126 trillion, a 76% leap.

    Examining feasibility of levying user fee on UPI and the E-rupee

    • Financial support to UPI: The case for UPI as India’s payment bedrock is weakened by the fact that while it levies no user fee, it isn’t a costless service. Last year, the finance ministry justified financial support for UPI on the ground that it’s a digital public good with immense convenience for the public and productivity gains for the economy.
    • Coast benefit review must be done: If public funds are increasingly needed to back UPI as it expands, we must put it to a cost-benefit review as we go along; UPI is already logging huge sums and the total for 2023 may be much more.
    • Promoting E-rupee: It’s not just a cost consideration that should make us promote RBI’s retail e-rupee instead for routine payments.
    • E-rupee is a direct liability of RBI: The E-rupee’s mass usage would involve circulation of money that’s a direct liability of the central bank (an IOU issued by it, i.e., like cash), which would better serve the cause of economic stability. This is because what RBI owes its currency bearers is entirely free of risk, while the same cannot be said of banks.

    digital

    Why India needs a digital rupee?

    • Online transactions: India is a leader in digital payments, but cash remains dominant for small-value transactions.
    • High currency in circulation: India has a fairly high currency-to-GDP ratio.
    • Cost of currency management: An official digital currency would reduce the cost of currency management while enabling real-time payments without any inter-bank settlement.

    Conclusion

    • For superior systemic safety, the e-rupee should get a significant share of online payment swipes. Even if its holdings earn no interest, it could catch on if the security of its value, ease of liquidity and erasure of data trails (below a limit) are duly advertised. For an e-rupee to aid macro level prudence, it will have to eat into UPI.

  • Blue economy and marine pollution

    Blue economy

    Context

    • Blue economy relates to presentation, exploitation and regeneration of the marine environment. It is used to describe sustainability-based approach to coastal resources. The worry is that the oceans are under severe threat by human activities, especially when the economic gains come at the cost of maintaining environmental sanity.

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    Blue economy

    From the beginning: The Blue economy

    • Origin of the concept: Gunter Pauli’s book, “The Blue Economy: 10 years, 100 innovations, 100 million jobs” (2010) brought the Blue Economy concept into prominence.
    • A project to find best nature inspired and sustainable technologies: Blue Economy began as a project to find 100 of the best nature-inspired technologies that could affect the economies of the world. While sustainably providing basic human needs potable water, food, jobs, and habitable shelter.
    • Inclusive approach and objective: This is envisaged as the integration of Ocean Economy development with the principles of social inclusion, environmental sustainability and innovative, dynamic business models
    • Environment friendly maritime infrastructure: It is creation of environment-friendly infrastructure in ocean, because larger cargo consignments can move directly from the mothership to the hinterland through inland waterways, obviating the need for trucks or railways

    Blue economy

    Significance of Maritime transport

    • One of the largest employers within ocean-related activities: Maritime transport plays a big role in the globalised market in the form of containerships, tankers, and ports, coastal tourism is the largest employer within ocean-related activities.
    • Eighty percent trade happens on the seas: Eighty per cent of world trade happens using the seas, 40 per cent of the world’s population live near coastal areas, and more than three billion people access the oceans for their livelihood.
    • Annual value makes up equivalent to seventh largest GDP: A healthy marine environment is essential for a sustainable future for people and the planet. Its value is estimated to be over $25 trillion, with the annual value of produced goods and services estimated to be $2.5 trillion per year, equivalent to the world’s seventh largest economy in gross domestic product (GDP) terms.
    • Ensures food security: The oceans, seas and coastal areas contribute to food security and economic viability of the human population. The ocean is the next big economic frontier, with the rapidly growing numerous ocean-based industries.

    What are the concerns?

    • Human induced Oceanic pollution: Marine activities have brought in pollution, ocean warming, eutrophication, acidification and fishery collapse as consequences on the marine ecosystems.
    • Oceans are rarely financial institutions: The ocean is uncharted territory, and rarely understood by financial institutions. Hence preparedness of these institutions in making available affordable long-term financing at scale is nearly zero.
    • Developing nations pay heavy price: In this journey of achieving blue economy goals, it is developing nations that pay a heavy economic price.
    • Lack of capacity is a critical hindrance: Many of the developing nations have high levels of external debt. Lack of capacity and technology for transition between agri economy and marine economy is also a critical hindrance.
    • Not having a elaborative guiding principles is a major concern: There is concern that without the elaboration of specific principles or guidance, national blue economies, or sustainable ocean economies, economic growth will be pursued with little attention paid to environmental sustainability and social equity.

    Blue economy

    What should be the approach towards achieving Blue economy?

    • Inclusive discussion and participation is must: The blue economy is based on multiple fields within ocean science and, therefore, needs inter-sectoral experts and stakeholders. It is imperative to involve the civil society, fishing communities, indigenous people and communities for an inclusive discussion.
    • SDG-14 journey cannot undermine the other SDGs: The UN stresses that equity must not be forgotten when supporting a blue economy. Land and resources often belong to communities, and the interests of communities dependent on the ocean are often marginalised, since sectors such as coastal tourism are encouraged to boost the economy.
    • Integrated marine spatial planning with national and global expertise is necessary: Developing the blue economy should be based on national and global expertise. It is important that any blue economy transformation should include using integrated marine spatial planning. This would provide collaborative participation of all stakeholders of the oceans, and would make room for debate, discussion and conflict resolution between the stakeholders.

    Where does India stand at this hour?

    • Suitable natural geography: Vast coastline of almost 7,500 kilometres, with no immediate coastal neighbours except for some stretches around the southern tip. In some sense, India has the advantage of its natural geography
    • Opportunity on G20 presidency: It is an opportunity for India to use its G20 Presidency to ensure environmental sustainability, while providing for social equity.
    • Rising role and significance: India’s engagement in the blue economy has been rising, with its active involvement in international and regional dialogues, and maritime/marine cooperation.

    Conclusion

    • Achieving the Blue economy goal would need tremendous human effort, and would call for global cooperation through various legal and institutional frameworks. This also includes the need to develop newer sectors such as renewable ocean energy, blue carbon sequestration, marine biotechnology and ex-tractive activities, with due attention paid to the environmental impacts.

    Mains question

    Q. What do you understand by mean Blue economy? Highlight the importance of maritime transport and discuss what need to be done to achieve blue economy in a true sense?

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