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Subject: Economics

  • Natural Gas: The energy future of India

    Natural GasContext

    • The announcement at the end of August by the ministry of petroleum that they had constituted a committee, headed by energy expert Kirit Parikh, to review the domestic natural gas pricing regime.

    Background

    • Prime Minister Narendra Modi wants to raise the share of gas in India’s energy mix to 15% by 2030 from 6.2%, helping it progress towards meeting a 2070 net zero carbon-emission goal.

    What is Natural Gas?

    • Natural gas is a fossil fuel source consisting primarily of methane. It is the cleanest fossil fuels among the available fossil fuels.
    • It is used as a feedstock in the manufacture of fertilizers, plastics and other commercially important organic chemicals as well as used as a fuel for electricity generation, heating purpose in industrial and commercial units.
    • Natural gas is also used for cooking in domestic households and a transportation fuel for vehicles.

    Natural GasWhy Natural gas is Important?

    • Energy Efficient:Natural gas produces more energy than any of the fossil fuels in terms of calorific value.
    • Cleaner fuel: Natural gas is a superior fuel as compared with coal and other liquid fuels being an environment-friendly, safer and cheaper fuel.
    • Economy of use: Natural Gas (as CNG) is much cheaper compared with petrol or Diesel.
    • Emission commitments: India made a commitment to COP-21 Paris Convention in December 2015 that by 2030, it would reduce carbon emission by 33%-35% of 2005 levels.
    • Diverse applications: Natural gas can be used as domestic kitchen fuel, fuel for the transport sector as well as a fuel for fertilizer industries and commercial units.
    • Supply chain convenience: Natural Gas is supplied through pipelines just like we get water from the tap. There is no need to store cylinders in the kitchen and thus save space.
    • Pacing up the progress line: On the global front,switching to natural gas is bringing commendable results.The latest report released by IEA shows that the electricity produced by natural gas worldwide was more than that of coal for the first time ever.

    Natural gas scenario in India

    • Domestic Gas Sources: The domestic gas in the country is being supplied from the oil & gas fields located at western and southeastern areas viz. Hazira basin, Mumbai offshore & KG basin as well as North East Region (Assam & Tripura).
    • Import of Liquefied Natural Gas (LNG): In order to meet the gas demand, LNG is imported through the Open General License (OGL) in the country.  At present, India is having six operational LNG regasification terminals at Dahej, Kochi, Mundra, Ennore etc.
    • Gas Pipelines :
    • Gas Pipeline infrastructure is an economical and safe mode of transporting natural gas by connecting gas sources to gas-consuming markets.
    • An interconnected National Gas Grid has been envisaged to ensure the adequate availability and equitable distribution of natural gas in all parts of the country.
    • Pricing:
    • To incentivise gas producers and boost local output, since 2014 India has linked local gas prices to a formula tied to global benchmarks, including Henry Hub, Alberta gas, NBP and Russian gas.
    • In 2016, the country began fixing the ceiling prices of gas produced from ultra-deep water and challenging fields and allowed marketing freedom to the operators of these fields.

    Natural asStatistics of Natural gas in India

    • Current consumption: India’s natural gas consumption is expected to grow by eight per cent year-on-year to around 34,949 million standard cubic meters (MSCM) in the current calendar year aided by expanding infrastructure, strong GDP growth projections, and supportive government policy.
    • 2021 Consumption: In the 2021 calendar year (CY), the country’s natural gas demand stood at 32,360 MSCM. The share of domestic gas and imported RLNG was about 48% & 52% respectively. The City Gas Distribution (CGD) accounts for the largest consumption of natural gas followed by fertilizers, power and other industrial sectors
    • High prices: The state-set local gas prices and ceiling rates are at a record high and are expected to rise further due to a surge in global gas prices triggered by the Ukraine-Russia conflict.

    Kirit Parikh Committee

    • Objective: Ensuring fair prices to end consumers, and to suggest a market oriented, transparent and reliable pricing regime for India’s long term vision for ensuring a gas based economy.
    • Members: The committee,headed by energy expert Kirit Parikh, will include members from the fertiliser ministry, as well as gas producers and buyers.Four of the six members are from the public sector.

    Natural GasWhat are the problems facing India’s natural gas reserves?

    • Harsh topography: IHS CERA has estimated India has undiscovered gas resources of approximately 64 TCF The bulk of this is, however, in harsh topography and complex geology. These reserves are difficult to locate.
    • Distant from the market:Even if located,they are difficult to bring to market on economically viable terms. This is because the cost of creating the development and production infrastructure is massive.
    • Heavy Budget: The reality is India is a high-risk exploration play. There are inherent geologic, technical, and economic obstacles to achieving commercial success.
    • Administered Pricing: Constraint of administered pricing petroleum companies have reduced their exploration budgets under pressure to shift away from fossil fuels.

    What can be done?

    • Pricing freedom: It should clear up the existing complexity and, other than for producers of gas from nomination blocks, permit all producers of gas to determine prices through arms length,direct and transparent negotiations with different consumer segments.
    • Subsidies: There are no liquefaction facilities for the export of LNG in India. Subsidies may have to be provided but if so,they should be given directly by the government,through the exchequer. The gas producers must not be asked to bear that brunt.

    Conclusion

    • In the wake of the Ukraine crisis, the international energy market has undergone a profound transformation.India has made impressive progress towards clean energy. It has,however, a long way to go before it can fully wean itself off fossil fuels.

    Mains Question

    Q. It is evident that clean energy transitions are underway and it’s also a signal that we have the opportunity to meaningfully move the needle on emissions through more ambitious policies and investments in natural gas regime. Comment

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  • How Tokenization will change your online purchase?

    token

    The RBI’s deadline for tokenization of cards used in online payments passed on 30 September.

    What is Tokenization?

    • Tokenisation refers to the replacement of credit and debit card details with an alternative code called a ‘token’.
    • This token is unique for a combination of card, token requestor (the entity that accepts a request from the customer for tokenization of a card and passes it on to the card network to issue a token) and the device.

    How does it work?

    • Tokenizing credit and debit cards is a way to reduce the number of places where your card data can be found.
    • For instance, payments on Uber showed a warning that your card data will be saved with payment gateways such as Visa and Mastercard.
    • What it is saying is that a merchant like Uber will have to work with payment networks like Visa to convert the card details into a digital token, which is then used to validate transactions.
    • As a result, the card details you enter on the Uber app, or any online platform, are not stored on the company’s cloud servers, and are hence more secure.

    What is the digital token being used?

    • The digital token is a randomized string, usually alphanumeric. So, a 16-digit card number gets converted to something like 8f9%yf57ljTa.
    • It is generated by computer programmes, and the card network tags the token to your actual card details, and relays the token to the merchant.
    • When payments are to be requested, the merchant sends this token to the card network, which matches it against the saved details and validates the transaction.
    • A third party accessing the token won’t have use for it, since tokens will be unique across combinations of card, token requestor and merchants.

    Who can offer tokenization services?

    • Tokenisation can be performed only by the authorised card network and recovery of original Primary Account Number (PAN) should be feasible for the authorised card network only.
    • Adequate safeguards have to be put in place to ensure that PAN cannot be found out from the token and vice versa, by anyone except the card network.
    • RBI has emphasised that the integrity of the token generation process has to be ensured at all times.

    Benefits of Tokenization

    • Transaction safety: Tokenization reduces the chances of fraud arising from sharing card details.
    • Easy payments: The token is used to perform contactless card transactions at point-of-sale (PoS) terminals and QR code payments.
    • Data storage: Only card networks and card-issuing banks will have access to and can store any card data.

    How were the transactions processed?

    token

    • There are many players involved in processing one card transaction today:
    1. Merchant
    2. Payment aggregator
    3. Issuing bank
    4. Card network
    • When a transaction happens on a merchant platform, the data is sent to the payment aggregator (PA).
    • The PA next sends the details to either the issuing bank or the card network.
    • Then issuing bank sends an OTP and the transaction flows back.

    How will tokenization prevent online fraud?

    • Card details saved on an app are stored in cloud servers, which if hacked, can give the hacker access to information like card numbers, expiry dates, name of holder etc.
    • Though most merchants put special mechanisms to store card details in an obfuscated manner, it’s much more difficult to hack a bank or a Visa than it is to hack websites and apps.

    How does it differ from encryption?

    • The primary difference is that the token cannot lead one to the card details.
    • In encryption, a computer program obfuscates data using an encryption key, and this key can turn the data back to its original form.
    • In tokenization, however, there is no way to know what data a token represents unless one has access to the databases of the actual issuer of that token.
    • In many cases, laws don’t consider tokens as “sensitive data”, and hence, companies don’t have to ensure the same compliance to protect them.

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  • Forex Reserves to dip by $23 billion by Dec

    India’s depleted foreign exchange reserves are likely to drop further, falling to their lowest level in more than two years by end-2022.

    Forex to dip

    • In a battle that has so far failed to staunch the rupee’s fall to a record low against the greenback, the RBI has drawn down its foreign exchange reserves by close to $100 billion, to $545 billion.
    • Those reserves are forecast to fall another $23 billion to $523 billion by the end of this year.

    What is Foreign Exchange (Forex) Reserve?

    • Foreign exchange reserves are important assets held by the central bank in foreign currencies as reserves.
    • They are commonly used to support the exchange rate and set monetary policy.
    • In India’s case, foreign reserves include Gold, Dollars, and the IMF’s quota for Special Drawing Rights.
    • Most of the reserves are usually held in US dollars, given the currency’s importance in the international financial and trading system.
    • Some central banks keep reserves in Euros, British pounds, Japanese yen, or Chinese yuan, in addition to their US dollar reserves.

    India’s forex reserves cover:

    • Foreign Currency Assets (FCAs)
    • Special Drawing Rights (SDRs)
    • Gold Reserves
    • Reserve position with the International Monetary Fund (IMF)

    Countries with the highest foreign reserves

    Currently, China has the largest reserves followed by Japan and Switzerland. India has overtaken Russia to become the fourth largest country with foreign exchange reserves. (Data from August 2022)

    1. China – $3,349 Billion
    2. Japan – $1,376 Billion
    3. Switzerland – $1,074 Billion
    4. India – $612.73 Billion
    5. Russia – $597.40 Billion

    Why are these reserves so important?

    • All international transactions are settled in US dollars and, therefore, required to support India’s imports.
    • More importantly, they need to maintain support and confidence for central bank action, whether monetary policy action or any exchange rate intervention to support the domestic currency.
    • It also helps to limit any vulnerability due to sudden disturbances in foreign capital flows, which may arise during a crisis.
    • Holding liquid foreign currency provides a cushion against such effects and provides confidence that there will still be enough foreign exchange to help the country with crucial imports in case of external shocks.

    Initiatives taken by the government to increase forex

    • To increase the foreign exchange reserves, the Government of India has taken many initiatives like AatmaNirbhar Bharat, in which India has to be made a self-reliant nation so that India does not have to import things that India can produce.
    • Other than AatmaNirbhar Bharat, the government has started schemes like Duty Exemption Scheme, Remission of Duty or Taxes on Export Product (RoDTEP), Nirvik (Niryat Rin Vikas Yojana) scheme, etc.
    • Apart from these schemes, India is one of the top countries that attracted the highest amount of Foreign Direct Investment, thereby improving India’s foreign exchange reserves.

     

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  • Advantage of Market Based Economic Dispatch

    Market Based Economic DispatchContext

    • The game changing scheme is being proposed by the central government in power sector governance. The scheme under consideration is the market-based economic dispatch (MBED). When it comes to any drastic change in the power sector, a clash between the Centre and the states is inevitable.

    What is Market Based Economic Dispatch (MBED)?

    • Market Based Economic Dispatch (MBED) is new approach towards power distribution to help distribution companies save costs and transition to a new form of power market.
    • It is a shift to a centralised framework, marks a radical departure from the current decentralised, voluntary pool-based electricity market.

    Market Based Economic DispatchWhat is the framework under MBED?

    • The cheapest power from across the country will be dispatched to meet the system wide demand. The architecture would also lead to a “Market clearing price”.
    • Sellers and buyers will place their bids for the day market, and an outcome of this will be the discovery of the market clearing price.
    • This process is expected to generate significant savings for consumers.

    What is the Present system of power Distribution?

    • Under the present regime, each distribution company (Discom) is bound by the power purchase agreements (PPAs) that it holds.
    • It can schedule power only from its own PPAs, starting from the cheapest PPA and then moving up; it cannot schedule power from the PPA of some other distribution company.

    Market Based Economic DispatchWhat are the drawbacks of present system?

    • Financial Burdon:
    • The Indian government responded to COVID-19’s economic shock with a stimulus package of Rs.20-lakh crore, out of which Rs.90,000 crore was earmarked for discoms (later upgraded to Rs.1,25,000 crore). While it was called a stimulus, it is really a loan, meant to be used by discoms to pay off generators.
    • Discoms owe one lakh crore rupees to generators, and without such an infusion the chain will collapse.
    • States are defaulters:
    • State governments are the biggest defaulters, responsible for an estimated a third of trade receivables, besides not paying subsidies in full or on time.
    • On an annual cash flow basis, the shortfall in subsidy payments appears very low, only about 1% but cumulative unpaid subsidies, with modest carrying costs, make discoms poorer by over Rs.70,000 crore just over the last 10 years.

    Market Based Economic DispatchWhat will be the Advantages of MBED?

    • Centralized approach: The centralised dispatch will be done with the assistance of electricity exchanges. Each discom and each generator will place a bid in the day-ahead market of the electricity exchanges, which will indicate how much power is being demanded/ supplied at what price.
    • Pan India market: These bids will enable the load dispatcher to construct a pan India demand and supply curve, the intersection of which will determine the market clearing price (MCP). All generators whose variable cost of generation is below the MCP will be asked to dispatch and all of them will receive the same MCP irrespective of what they had bid. Generators whose variable cost is higher than the MCP will sit idle.
    • No loss to discom: The MBED is so devised that its operation will not affect the current finances of either the discoms or the generators for the following reasons.
    • First, the fixed cost of the generators will still be paid by the discoms outside the market as determined by the regulator.
    • Second, if the MCP comes out to be Rs 3 per unit, and if in the case of any PPA, the variable cost is Rs 2.75 per unit, then the generator will compensate the discom to the extent of Rs 0.25 per unit. Similarly, if the MCP so determined is Rs 2.50 per unit, then the discom will compensate the generator to the extent of Rs 0.25 per unit.
    • Increasing efficiency: The logic is that by adopting MBED, only the relatively efficient plants will generate, without affecting the revenues of either the discoms or generators. Hence, the total cost of generation under the MBED system would be less.
    • Less pollution: There would be less coal consumption and less carbon dioxide injected into the atmosphere.
    • Easy integration with renewable: It would also mean less movement of coal leading to decongestion of railway tracks. Further, there would be enhanced renewable integration since the balancing area would shift from state to national level.
    • Single market clearing price (MCP): Incidentally, since there are three electricity exchanges in operation today, there would be three different MCPs determined. What we need is a single MCP for which there will be an institution called the “market coupler”. It will be the job of the coupler to determine a national MCP based on what has arrived at the three different exchanges.

    Why states are opposing?

    • High generation cost: The reason is the state-owned generators are relatively inefficient and may have to sit idle as their variable cost of generation is likely to be more than the MCP.
    • Political backlash: Today, the states are operating their own generators to the hilt, even though they are inefficient, and drawing only the balance from the more efficient interstate generating stations. Keeping state generators idle has its own political implications and no state would be enamoured of this idea.

    Conclusion

    • Power distribution companies (discom) are sinkhole of government finances. Every year budgetary support is needed to this loss-making companies , With due consultation, all states and union territories need to adopt and implement the MBED and save the resources for other development activities.

    Mains Question

    Q. India has became the power surplus nation, however power distribution and financial unsustainability is still a nightmare for union and states. Elaborate.

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  • Urban planning can change the future of cities to happy cities

    Urban planningContext

    • In the recent few years, the growth of the economy and urbanization have accelerated. Rapid unplanned urbanization has put extreme pressure on natural resources.
    • Unplanned urbanization, however, exerts great strain on our cities. In fact, the Covid-19 pandemic has revealed the dire need for the planning and management of our cities.

    What does urban planning mean?

    • Urban planning, also known as regional planning, town planning, city planning is a technical and political process that is focused on the development and design of land use and the built environment, including air, water, and the infrastructure passing into and out of urban areas, such as transportation, communications, and distribution networks and their accessibility.

    What are ‘Happy Cities’?

    • A term that follows the Green City, Sustainable City, Liveable City, in the lingo of urban planning

    What is a smart city?

    • A smart city is one that uses information and communication technologies to enhance citizen engagement. It is a neo-vision which seeks to improve the delivery of services in urban areas. The following story maps out the steps being taken by India to explore this concept in practice.

    What is the Smart Cities Mission?

    • Sustainable cities: The Smart Cities Mission aims at developing 100 cities, which were shortlisted, into self-sustainable urban settlements.
    • Chronology: The mission was launched on June 25, 2015 and was projected as one aimed at transforming the process of urban development in the country.
    • Comprehensive revamp: Among its strategic components is ‘area-based development’, which includes city improvement (retrofitting), city renewal (redevelopment) and city extension (Greenfield development), plus a pan-city initiative in which ‘smart solutions’ are applied covering larger parts of the city.

    Fast Facts – Urbanization in India

    • Most Urbanized States: Tamil Nadu 43.9%; Maharashtra 4%; Gujarat  37.4%
    • 3 out of world’s 21 mega cities: Mumbai (19 mill); Delhi (15 mill); Kolkata (14 mill)

    Urban planningUrban planning challenges

    Planning

    • Many urban governments lack a modern planning framework
    • The multiplicity of local bodies obstructs efficient planning and land use
    • Rigid master plans and restrictive zoning regulations limit the land available for building, constricting cities’ abilities to grow in accordance with changing needs.

    Housing

    • Building regulations that limit urban density – such as floor space indexes – reduce the number of houses available, thereby pushing up property prices
    • Outdated rent control regulations reduce the number of houses available on rent – a critical option for the poor
    • Policy, planning, and regulation deficiencies lead to a proliferation of slums

    Service delivery

    • There is a strong bias towards adding physical infrastructure rather than providing financially and environmentally sustainable services

    Infrastructure

    • Most urban bodies do not generate the revenues needed to renew infrastructure, nor do they have the creditworthiness to access capital markets for funds
    • Urban transport planning needs to be more holistic – there is a focus on moving vehicles rather than meeting the needs of the large numbers of people who walk or ride bicycles in India’s towns and cities.

    Environment:

    • The deteriorating urban environment is taking a toll on people’s health and productivity and diminishing their quality of life.

    Urban planningSolution offered by NITI ayog committee report on urban planning

    • Demystifying Planning and Involving Citizens: While it is important to maintain the master plans’ technical rigour, it is equally important to demystify them for enabling citizens’ participation at relevant stages. Therefore, the committee strongly recommends a ‘Citizen Outreach Campaign’ for demystifying urban planning.
    • Steps for Enhancing the Role of Private Sector: The report recommends that concerted measures must be taken at multiple levels to strengthen the role of the private sector to improve the overall planning capacity in the country.
    • Revision of Town and Country Planning Acts: Most States have enacted the Town and Country Planning acts, that enable them to prepare and notify master plans for implementation. However, many need to be reviewed and upgraded.
    • Revision of Town and Country Planning Acts: Most States have enacted the Town and Country Planning Acts, that enable them to prepare and notify master plans for implementation. However, many need to be reviewed and upgraded.

    Interesting fact

    India is home to 11% of the total global urban population.

    Government initiatives

    • Atal Mission for Rejuvenation and Urban Transformation (AMRUT);
    • Pradhan Mantri Awas Yojana (PMAY) – Housing for all (Urban),
    • Smart Cities Mission (SCM),
    • Swachh Bharat Mission (SBM),
    • Heritage City Development and Augmentation Yojana (HRIDAY);
    • Deen Dayal Antyodaya Yojana – National Urban Livelihoods Mission (DAY-NULM).

    Conclusion

    • What is now increasingly understood, is that urban planning and design can be a powerful contributor to the happiness of citizens. The structure and layout of our streets, the availability of green spaces, the possibility of using urban spaces freely, the inclusion of beauty in public space.
    • It is safe to assume that when there are avenues for a community to come together in a pleasant environment, which is accessible to everyone, it can only increase well-being.

    Mains question

    Q. Can urban planning and design change Indian cities to be happy cities? Express your views by addressing the roadblocks in the same.

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  • Process of sustainable tourism should be holistic and inclusive

    To other Country, I may go as a tourist. But to India I come as a pilgrim”, the words of Martin Luther King says a lot about India’s wisdom and tourism potential.

    Context

    • The three-day National Conference of State Tourism Minister was held at Dharamshala , a first of its kind meeting aimed  to discuss, debate and deliberate on modes and mechanisms to develop tourism in India .
    • The three-day National Conference concluded with the adoption of “Dharamshala Declaration” which affirms commitment toward developing “sustainable and responsible tourism” and positions India as a “global leader in the tourism sector by 2047”.

    What is tourism?

    • Tourism is travel for pleasure or business; also the theory and practice of touring, the business of attracting, accommodating, and entertaining tourists, and the business of operating tours.

    Types of tourism

    • Domestic tourism: Refers to activities of a visitor within their country of residence and outside of their home (e.g. a Indian visiting other parts of India)
    • Inbound tourism: Refers to the activities of a visitor from outside of country of residence (e.g. a Spaniard visiting Britain).
    • Outbound tourism: Refers to the activities of a resident visitor outside of their country of residence (e.g. an Indian visiting an overseas country).

    tourismWhat does sustainable tourism mean?

    • Sustainable tourism is defined by the UN Environment Program and UN World Tourism Organization as “tourism that takes full account of its current and future economic, social and environmental impacts, addressing the needs of visitors, the industry, the environment and host communities.”

    What is the main importance of tourism?

    • Tourism boosts the revenue of the economy, creates thousands of jobs, develops the infrastructures of a country, and plants a sense of cultural exchange between foreigners and citizens.

    tourismWhy tourism is needed?

    • Tourism is not a fad. It is a compulsion driven by the urge to discover new places. Because we have this compulsion to venture into the unknown, we need each other. When humans travel, meet and exchange ideas, civilization flourishes.

    What is “The Dharamshala Declaration” is all about?

    • Aim of the declaration: The Dharamshala Declaration aims to recognise India’s role in contributing towards global tourism as well as focusing on recovery by also promoting domestic tourism.
    • Action plan: In the declaration, the Tourism Ministry has come up with a with a action plan to encourage more Indians to travel domestically and explore India’s natural, cultural, and spiritual beauty while simultaneously reaching the goal of an ‘Ek Bharat Shrestha Bharat’ (interaction and mutual understanding).
    • Strategy: The Tourism Ministry has also been working with the Ministry of External Affairs to identify 20 Indian missions abroad with the highest tourist footfalls to India and build country-specific strategies to attract foreign tourists.
    • Plan according to G-20: The Dharamshala Declaration affirms the plan to position India as a major tourism destination during its presidency of G-20 next year. India’s age-old dictum of ‘Atithi Devo Bhava’ will come to the fore as it welcomes delegates from the 20 countries/European Union.
    • Necessary steps: The Ministry of Tourism also plans to work with other Ministries to bring in necessary interventions such as visa reforms, ease of travel, travel-friendly and improved immigration facilities at airports.
    • National Tourism policy: Drafted with a holistic vision and strategy to revive India’s tourism and targets to contribute USD 1 trillion to the GDP by 2047.

    tourismA draft on National Tourism Policy 2022

    • Framework:
    • Draft on National Tourism Policy 2022 aims at improving the framework conditions for tourism development in the country.
    • Supporting tourism industries, strengthening tourism support functions and developing tourism sub-sectors.
    • Impetus to digitalisation, innovation and technology through the National Digital Tourism Mission and skilling through the Tourism and Hospitality Sector Skill Mission.
    • The policy also gives a special impetus to private sector participation through public-private-partnerships (PPP)
    • Guiding Principles :
    • Promoting sustainable, responsible and inclusive tourism in line with our civilisational ethos From Gautama to Gandhi, India has always spoken about the inherent need to live harmoniously with nature and within our means.
    • The National Green Tourism Mission aims at institutionalising green approach.

    tourismTourism Potential in India

    • Employement generation: India has huge tourism potential. If capitalised properly it can emerge as one of the leading sectors to contribute to GDP and also has the potential to augment employment.
    • The Pandemic cost and recovery: The pandemic has caused conspicuous losses for this sector but over the past few months, all the major tourism indices such as domestic air passenger traffic, hotel occupancy and tourist footfalls have shown signs of recovery and are going back to pre-pandemic levels.
    • Short term estimate: By 2024, in short term the country is estimated to contribute USD 150 billion to the GDP from tourism, USD 30 billion in Foreign Exchange earnings and can get 15 million foreign tourist arrivals..
    • Medium term by 2030: It is estimated to grow at seven to nine per cent Compound Annual Growth Rate in the coming decade. In the medium term, that is 2030, the tourism-related goals are USD 250 billion GDP contribution; 137 million jobs, 56 million foreign tourist arrivals and USD 56 billion in foreign exchange earnings.
    • Visionary schemes: The visionary schemes like Swadesh Darshan or Dekho Apna Desh have the potential to increase tourism value while maintaining cultural integrity and ecological sustainability of the places.
    • Dekho Apna Desh: Dekho apna desh rolled out in 2020 envisages encouraging domestic tourism, urging people to visit places in India. India is a land of rich cultural heritage.

    Conclusion

    • If the goal of positioning of India as one of the world’s best tourism destinations by 2047, there is need to integrate various schemes of different ministries. Need to involve various stakeholders, and local communities; necessary interventions at urban and rural level should be a priority.

    Mains Question

    Q.Since the positive and negative outcomes of tourism depend on human factors, including the attitude and behavior of both tourists and hosts, in this context discuss India’s potential to become a global leader in tourism sector.

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  • Why our urban centres need to be better planned

    urban centres Context

    • Indian urban centres need to plan for migration, climate change. Healthcare, affordable housing, sustainability and inclusion hold the key reimagining them.

    What does urban planning mean?

    • Urban planning encompasses the preparation of plans for and the regulation and management of towns, cities, and metropolitan regions. It attempts to organize socio-spatial relations across different scales of government and governance.

    What are ‘Happy Cities’?

    • A term that follows the Green City, Sustainable City, Liveable City, in the lingo of urban planning

    urban centres What is a smart city?

    • A smart city is one that uses information and communication technologies to enhance citizen engagement. It is a neo-vision which seeks to improve the delivery of services in urban areas. The following story maps out the steps being taken by India to explore this concept in practice.

    Fast Facts -Urbanization in India

    Most Urbanized States: Tamil Nadu 43.9%; Maharashtra 4%; Gujarat  37.4%.

    3 out of world’s 21 mega cities: Mumbai (19 mill); Delhi (15 mill); Kolkata (14 mill)

    Global best practices in urban planning

    • The Garden City movement: In the West, the Garden City movement (initiated by Ebenezer Howard in 1898) sought to decentralise the working environment in the city centre with a push for providing healthier living spaces for factory workers. The ideal garden city was planned on a concentric pattern with open spaces, public parks and boulevards, housing 32,000 people on 6,000 acres, linked to a central city with over 50,000 people. Once a garden city reached maximum capacity, another city would be developed nearby.
    • Neighbourhood concept: In the US, the garden city movement evolved into the neighbourhood concept, where residential houses and streets were organised around a local school or community centre, with a push for lowering traffic and providing safe roads. London has a metropolitan green belt around the city, covering 5,13,860 hectares of land, to offset pollution and congestion and maintain biodiversity. Why can’t Indian cities have something similar, instead of ring roads and urban sprawls?
    • La ville du quart d’heure: Paris has taken this forward with the “15-minute city” (‘la ville du quart d’heure’). The idea is rather simple, every Parisian should be able to do their shopping, work, and recreational activities and fulfil their cultural needs within a 15-minute walk or bike ride this means that the number of vehicular trips gets reduced significantly.
    • Investment in pedestrian infrastructure and non-motorised transport zones: A city would then be planned for pedestrians, instead of cars and motors. This requires an extensive usage of mixed-use developments, along with investment in pedestrian infrastructure and non-motorised transport zones. Instead of widening highways, this approach would push for widening pedestrian walkways.

    urban centres

    What should be adopted for India?

    • Every Indian city should ideally have a Master Plan: A strategic urban planning document which would be updated every decade or two. The document would entail how a city is supposed to grow, vertically and horizontally, across zones, while offering a high quality of life in a sustainable manner. Such plans would also consider poverty mitigation, affordable housing and liveability for urban migrants.
    • Urban land use needs to be better: One look at satellite map imagery will show that India’s urban growth is increasingly haphazard, with informal, unplanned and sprawling neighbourhoods developing in paddy fields and along linear infrastructure (arterial roads, open spaces). India’s hidden urbanisation, driven partly by our stringent definition of the word, along with weak enforcement of building codes, has meant that the local government is often playing catch-up, unable to provide urban services and infrastructure to keep up with growth.
    • Public land availability: Meanwhile, in places where there are formally recognised towns and urban neighbourhoods, outdated planning practices have meant that land utilisation is poor. Consider the case of Mumbai, where almost 1/4th of the land is open public space while over half of it is the underutilised space around buildings, which is enclosed by walls and hived off from public access. Such open spaces, if available, would help cities like Mumbai achieve similar ratios as globally benchmarked cities (Amsterdam, Barcelona) in public land availability (typically above 40 per cent).
    • India’s urban density will also need to be thought through: Dense construction on the peripheries of our major cities (for instance, dense construction in Delhi’s suburbs, like Noida and Gurugram) will inevitably mean that public services are stretched and emissions (due to transportation to the main city) remain high. Such urbanisation will unavoidably lock India into a high emissions future while making our cities prone to extreme heat and flooding.
    • Then there is climate change: According to the World Bank, climate change may reduce India’s GDP by 3 per cent, while depressing the living standards of its citizens by 2050. Many urban experts cite technological solutions that may save our cities a chain of sea walls, river embankments and reclamations, for instance from such potential calamities. However, structural engineering simply may not be an economically and environmentally feasible option everywhere instead, our focus must be on conservation.
    • Climate resilience perspective Bengaluru, with its network of interconnected lakes, could have considered Bangkok-style ferries instead of draining out its lakes. All ongoing and upcoming urban infrastructure projects must be reconsidered from a future climate resilience perspective does the ongoing sea reclamation for the upcoming coastal road in Mumbai make sense if sea levels are rising?
    • Establishing a sense of cityhood: By making a push for a city as a co-created space will also require building up institutional capacity.
    • Addressing lack of town planning education: India would ideally require 3,00,000 town and country planners by 2031 (there are just 5,000 town planners currently). Much of this problem is fundamentally due to a lack of town planning education in the country there are just 26 institutes that provide this course, producing 700 town planners each year. We already have a shortage of 1.1 million planners. More schools are needed, with a push for local IITs and NITs to have a standalone planning department. With over 8,000 towns and cities, there is a clear unmet need.

    urban centresConclusion

    • Our policymakers also need to be cognisant of the historical context of our urban development a push for glass buildings or utilising granite may not always be suitable for our cities. Why can’t our cities look distinctly Indian, inspired by our historical architecture? Renewing our cities will require us to rethink various urban topics, including urban design, urban healthcare, affordable housing, sustainability and inclusion among others. Our urban future depends on getting this right.

    Mains question 

    Q. Renewing our cities will require us to rethink various urban topics, including urban design, urban healthcare, affordable housing, sustainability and inclusion among others. Elaborate.

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  • Sustainable port development promises blue economy to bloom

    Context

    • It is politically hard, but developmentally critical, to run port development projects with coastal management sustainably.

    portWhat is a port?

    • A port is a maritime facility comprising one or more wharves or loading areas, where ships load and discharge cargo and passengers. Although usually situated on a sea coast or estuary, ports can also be found far inland, such as Hamburg, Manchester and Duluth; these access the sea via rivers or canals.

    What is meant by port management?

    • A port management analysis involves an understanding of the port conditions, including intra-port distribution, and routes and hinterland connections outside the port.

    Why ports are important?

    • Ports infrastructure is key to the development of any nation. India has a coastline spanning about 7,500 km. around 90 percent of India’s external trade by volume and 70 percent by value are handled by ports.

    portWhat are concerns with port projects?

    • Displacement: Some 350 families that have lost homes to coastal erosion last year, and those living in makeshift schools and camps are just a foretaste of things to come if coastal erosion and extreme cyclones continue unabated.
    • Ecological impact: A further danger is an irreversibly destroyed ecology, triggering deadlier hazards of nature. Ports without adequate safeguards in a highly delicate ecology unleash destruction on marine life and the livelihoods of the local population.
    • Coastal erosion: Visakhapatnam and Chennai show how siltation, coastal erosion and accretion can be exacerbated by deepening of harbour channels in ecologically sensitive areas.
    • Oil spills: During the operation of ports, spillage or leakages from the loading and unloading of cargo and pollution from oil spills are common due to poor adherence to environmental laws and standards.
    • Ecosystem threat: The water discharged during the cleaning of a ship and the discharge of ballast water is a threat to marine ecosystems
    • Impact on fisheries: Dredging cause’s environmental problems (increased sedimentation) affecting local productivity of the local waters and its fisheries

    Value addition example

    A just published study shows that during 2006-20, the sea gobbled some 2.62 square kilometres or close to 650 acres from the Thiruvananthapuram coast alone.

    portSteps to take

    • Compensation: The first order of business, as in infrastructure projects worldwide, is that the project provides compensation to the displaced people and restores their rights.
    • Reversing marine damage: Second, the gross neglect of the damage to invaluable marine biodiversity must be redressed with an acceptable EIA, including inputs from experts in biology, ecology, and oceanography.
    • Safeguard to place: Third, there needs to be an independent assessment of safeguards that port authorities must put in place as a precondition for any further construction.
    • Blue Economy:Blue Economy as a concept includes all the economic activities related to oceans, seas, and coastal areas and emerges from a need for integrated conservation and sustainability in the management of the maritime domain.

    Way forward

    • Master plan: Countries should adopt a National Long-term Mater plan addressing the aspects of smarter, greener, safer sustainable port development and productivity improvement.
    • Planning: Port development and investment should be driven by setting specific and realistic goals, such as building a stable infrastructure focused on reducing trade costs and contribute to achieving sustainable transport.
    • Cooperation of multiple sectors: In order to establish a comprehensive port development master plan, cooperation with financial, environmental, technical, energy, transportation and urban development authorities is essential and must reflect the needs of users, including shippers and shipping lines.

    Conclusion

    • To address existing challenges, we should provide research, analysis and technical assistance to help ports and the maritime transport sector especially in developing countries to improve operations and become more sustainable and resilient to crises, including climate change.

    Mains question

    Q. What do you understand by sustainable port development and port productivity? Discuss the challenges in achieving the same along with way forward.

     

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  • Foreign Trade Policy

    The government has extended the launch of new Foreign Trade Policy (FTP) (2022-27) by six more months and would continue with the existing one.

    Why such delay in Foreign Trade Policy?

    • Geopolitical uncertainty: The geo-political situation is not suitable for long-term foreign trade policy, said Union Commerce Minister.
    • Global recession: Currently, fears of a recession in major economies like the US and Europe have escalated a panic among investors.
    • Decline in USD inflows: Foreign investors have begun to pull back their money from equities.
    • Rupee depreciation: The US Dollar is at a 22-year high, while the Rupee hit a new all-time low of $81.6.
    • Huge trade deficit: The trade deficit widened by more than 2-folds to $125.22 billion (April – August 2022) compared to $53.78 billion in the same period last year.

    What is a Foreign Trade Policy?

    • India’s Foreign Trade Policy (FTP) is a set of guidelines for goods and services imported and exported.
    • These are developed by the Directorate General of Foreign Trade (DGFT), the Ministry of Commerce and Industry’s regulating body for the promotion and facilitation of exports and imports.
    • FTPs are enforceable under the Foreign Trade Development and Regulation Act 1992.

    What is India’s Foreign Trade Policy?

    • In line with the ‘Make in India,’ ‘Digital India,’ ‘Skill India,’ ‘Startup India,’ and ‘Ease of Doing Business initiatives, the Foreign Trade Policy (2015-20) was launched on April 1, 2015.
    • It provides a framework for increasing exports of goods and services, creating jobs, and increasing value addition in the country.
    • The FTP statement outlines the market and product strategy as well as the steps needed to promote trade, expand infrastructure, and improve the entire trade ecosystem.
    • It aims to help India respond to external problems while staying on top of fast-changing international trading infrastructure and to make trade a major contributor to the country’s economic growth and development.

    Issues with FTP (2015-2020)

    • Acting on Washington’s protest, a WTO dispute settlement panel ruled in 2019 that India’s export subsidy measures are in violation of WTO norms and must be repealed.
    • Tax incentives under the popular Merchandise Exports from India Scheme (MEIS) (now renamed as RODTEP Scheme)and Service Exports from India Scheme (SEIS) programmes were among them.
    • The panel found that because India’s per capita gross national product exceeds $1,000 per year, it may no longer grant subsidies based on export performance.

    Way forward

    • WTO-compliance: With incentives under MEIS and SEIS in the cloud, WTO-compliant tax benefits are a must.
    • Access to credit: Credit availability has long been a need of exporters, particularly MSMEs.
    • Infrastructure upgrade: China’s network of ports, motorways, and high-speed trains, which are among the greatest in the world, is one of the reasons it is a manufacturing and export powerhouse.
    • Digitization and e-commerce boost: India requires innovative trading procedures as a result of Covid-19 breaking old supply channels.

     

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  • Electricity Amendment Bill 2022 – Addressing the transition and equity

    electricityContext

    • Concerns of states on some provisions of the new Electricity Bill are justified. But the legislation proposes welcome correctives to longstanding problems of the power sector.

    Important provisions of the bill

    • Payment security: The Bill provides that electricity will not be scheduled or despatched if adequate payment security is not provided by the discom.   The central government may prescribe rules regarding payment security.
    • Contract enforcement: The Bill empowers the CERC and SERCs to adjudicate disputes related to the performance of contracts.  These refer to contracts related to the sale, purchase, or transmission of electricity.  Further, the Commissions will have powers of a Civil Court.
    • Renewable purchase obligation: The Act empowers SERCs to specify renewable purchase obligations (RPO) for discoms.  RPO refers to the mandate to procure a certain percentage of electricity from renewable sources.  The Bill adds that RPO should not be below a minimum percentage prescribed by the central government.  Failure to meet RPO will be punishable with a penalty between 25 paise and 50 paise per kilowatt of the shortfall.
    • Selection committee for SERCs: Under the Act, the Chairperson of the Central Electricity Authority or the Chairperson of the CERC is one of the members of the selection committee to recommend appointments to the SERCs.  Under the Bill, instead of this person, the central government will nominate a member to the selection committee.  The nominee should not be below the rank of Additional Secretary to the central government.
    • Composition of Commissions and APTEL: The Bill increases the number of members (including the chairperson) in SERCs from three to four.  Further, at least one member in both the CERC and SERCs must be from law background.  Under the Act, Appellate Tribunal for Electricity (APTEL) consists of a chairperson and three other members.  The Bill instead provides that the APTEL will have three or more members, as may be prescribed by the central government.

    State apprehensions of the bill

    • Multi state license: The clause pertaining to applicants seeking a distribution licence in more than one state. It states that the Central Electricity Regulatory Commission (CERC), and not the SERC, will grant the licence. This is problematic because a SERC is likely to be more aware of the field-level conditions in a state than its central counterpart.
    • Centre can bypass state: The Bill has a provision empowering the Centre to give directions directly to the SERCs. Till now, the CERC received instructions from the Centre and the SERCs were under the state. The new Bill enables the Centre to bypass state governments. It’s not surprising that this is a matter of concern for the states.
    • Direct appointment by centre: The Bill states that the SERC chairperson will now be a nominee of the central government and will be an additional secretary-level official. This gives the impression that the Centre is trying to control the appointments to the SERCs.

    electricity

    Why the bill is important?

    • Compensation clause: The Bill states that if power purchase agreement PPAs are renegotiated, the affected party has to be compensated within 90 days from the date of submission of the petition.
    • Uniformity in tariffs revision: New tariffs have to be made applicable from the beginning of the financial year. New tariffs often come into force in the middle of the financial year (due to delays in the issuing of orders by SERCs). This means that discoms do not earn their full revenues leading to cash flow problems.
    • Easy tariff petition processing now: The Bill has proposed a reduction in the time for processing tariff petitions from 120 days to 90 days.
    • Suo moto jurisdiction: Regulatory commissions have been given suo motu jurisdiction if tariff petitions are not filed within 30 days of the stipulated time. This too is a step in the right direction.
    • More teeth to load dispatcher: the Bill proposes to give more teeth to the national load dispatcher. We need to strengthen the load dispatcher for the smooth functioning of the grid, especially with a huge renewable capacity where intermittency of generation is a major issue in the offing.

    Conclusion

    • The rollout of the proposed amendments through a consensus-based approach would go a long way in overhauling the weakest link in the nation’s power supply chain.

    Mains question

    Q. Electricity Bill 2022 is a remedy worse than the disease afflicting India’s power sector. Critically analyse.

     

     

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