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Subject: Economics

  • Fertilizer Subsidy to cost 62% more on input costs

    An unprecedented spike in natural gas prices and other raw materials is set to inflate the fertilizer subsidy bill by a whopping 62% or ₹50,000 crores to ₹1,30,000 crore this fiscal.

    Fertilizer Subsidy in India

    • Fertilizer subsidy is purchasing by the farmer at a price below MRP (Maximum Retail Price), that is, below the usual demand-and-supply-rate, or regular production and import cost.
    • Subsidy as a concept originated during the Green Revolution of the 1970s-80s.

    How does it work?

    • Fertilizer subsidy ultimately goes to the fertilizer company, even though it is the farmer that benefits.
    • Before 2018, companies were reimbursed after the material was dispatched and received by the district railhead or designated godown.
    • 2018 saw the beginning of DBT (Direct Benefit Transfer), which would transfer money directly to the retailer’s account.
    • However, the companies will be paid only after the actual sale to the farmer.
    • With the DBT system, each retailer — there is over 2.3 lakh of them across India — now has a point-of-sale (PoS) machine linked to the Department of Fertilizers’ e-Urvarak DBT portal.

    What about non-urea fertilizers?

    • Decontrolled system: The non-urea fertilizer is decontrolled or fixed by the companies.
    • The non- urea fertilizers are further divided into two parts, DAP (Diammonium Phosphate) and MOP (Muriate of Phosphate).

    Issues with such subsidies

    • Flawed subsidy policy: This is harmful not just to the farmer, but to the environment as well.
    • No permanent remedy: Indian soil has low Nitrogen use efficiency, which is the main constituent of Urea.
    • Excessive use: Consequently, excess usage contaminates groundwater.
    • Emission: The bulk of urea applied to the soil is lost as NH3 (Ammonia) and Nitrogen Oxides causing emissions.
    • Health hazards: For human beings, “blue baby syndrome” is a common side ailment caused by Nitrate contaminated water.

    Post your answers in the comment box for this PYQ:

    Q.What are the advantages of fertigation in agriculture? (CSP 2020)

    1. Controlling the alkalinity of irrigation water is possible.
    2. Efficient application of Rock Phosphate and all other phosphatic fertilizers is possible.
    3. Increased availability of nutrients to plants is possible.
    4. Reduction in the leaching of chemical nutrients is possible.

    Select the correct answer using the code given below:
    (a) 1, 2 and 3 only

    (b) 1,2 and 4 only

    (c) 1,3 and 4 only

    (d) 2, 3 and 4 only

     

    [wpdiscuz-feedback id=”o1qmt4t9o8″ question=”Please leave a feedback on this” opened=”1″]Post your answers here.[/wpdiscuz-feedback]

     

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  • Challenges facing cooperative sector in India

    Context

    The article delved into the past of the cooperative movement and give some suggestions to resolve the issues facing cooperatives in India.

    Background of cooperatives

    • Friedrich Raiffeisen, who along with compatriot Schulze-Delitzsch in Germany, and Luzzatti of Italy, pioneered cooperatives in Europe.
    • Cooperatives in India: The Governor of the Madras Presidency, Lord Wenlock, was the first to seriously attempt replicating European cooperatives in India.
    • Principles: Raiffeisen based them on the principles of self-help, self-governance, and self-responsibility.
    • Nicholson wrote that the ‘future of rural credit lies with those who being of the people, live among the people, and yet by their intelligence, prescience and energy, are above the people’.
    •  Plunkett, in his foreword to Eleanor Hough’s The Cooperative Movement in India (1932), commented that what India had was not a movement, but a policy.
    • It was ‘created by ‘resolutions of the Central Government’ unlike Europe.
    • Increasing government control: John Matthai wrote in 1925 that the challenge was to loosen government grip on cooperation over the years.
    • But, government control has only increased, violating a core cooperative principle of political neutrality.
    • This reflects a collective failure of the political class.

    Challenges facing cooperatives

    • After Independence, cooperative institutions became an instrument of planning and state action.
    • Not surprisingly, successful Indian cooperatives such as the Gujarat Cooperative Milk Marketing Federation Ltd (GCMMF)/Amul, Indian Farmers Fertiliser Cooperative Limited (IFFCO) and Krishak Bharati Cooperative Limited (KRIBHCO), are outside government control.
    • Globally, seven of the top 10 cooperatives by asset size are from the financial sector.
    • The Indian financial sector is nowhere in the picture going by asset size.
    •  Cooperatives have also become avenues for regulatory arbitrage, circumventing lending and anti-money laundering regulations.
    •  The committees which examined cooperative banking suffered from the top-down quality that Plunkett and others frowned upon.
    • Recent initiatives such as an umbrella organisation for urban cooperatives and a new Ministry of Cooperation at the Centre threaten to further this approach in the absence of safeguards.

    Suggestions

    • First, the powers of the RCS need to be scaled back.
    •  In almost all States, the RCS has become an instrument of inspection and domination, one which imposes uniform by-laws, and amends them when individual societies do not fall in line.
    •  There is a need to transfer work from the RCS to cooperative federations — as in Singapore.
    • Second, the rural-urban dichotomy in the regulatory treatment of cooperatives is specious and outdated.
    • Such differences are immaterial when regulation is to be based on the cooperative nature of organisations.
    • Third, the regulation and the supervision of cooperative banks should move to a new body from the Reserve Bank of India (RBI) for urban banks and the National Bank for Agriculture and Rural Development (NABARD) for rural banks.
    • Fourth, lessons from the Netherlands, where cooperative banks owe their success to a segmented market, are pertinent.
    • In India, adopting a multi-agency approach, especially after bank nationalisation, has affected the efficiency of both commercial and cooperative banks.
    • Commercial bank-cooperative sector linkages at various levels could alternatively provide better synergies.

    Conclusion

    The cooperative sector in India faces challenges on various fronts. There is a need for implementing the changes suggested above to play an important role expected from it in the economy.

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  • How is Gold Hallmarking being implemented?

    The Government has made it mandatory for the introduction of a Hallmark Unique Identification (HUID) number in every piece of jewellery.

    What is HUID?

    • HUID is a six-digit alphanumeric code, or one that consists of numbers and letters. It is given to every piece of jewellery at the time of hallmarking and is unique for each piece.
    • It is being implemented by the Bureau of Indian Standards (BIS) in a phased manner.
    • Hallmarking & HUID are mandatory for 14-, 18- and 22-carat gold jewellery and artefacts.
    • Before buying any piece of gold jewellery, the buyer should check all these three symbols.

    Implementation of HUID

    • Symbols: The hallmark consists of three symbols which give some information about the jewellery piece. The first symbol is the BIS logo; the second indicates purity and fineness; and the third symbol is the HUID.
    • A&H centre: Jewellery is stamped with the unique number manually at the Assaying & Hallmarking centre.

    Why is it being introduced?

    • Authentication: HUID gives a distinct identity to each piece of jewellery enabling traceability.
    • Credibility: It is critical to the credibility of hallmarking and to help address complaints against adulteration.
    • Registration: In HUID-based hallmarking, registration of jewellers is an automatic process with no human interference.
    • Prevents malpractice: It also helps check malpractice by members of the trade.
    • Data privacy: It is a secure system and poses no risk to data privacy and security.
    • Financial tracking: HUID provides traceability and financial tracking of purchases.

    Issues with HUID

    • Time-consuming: It is cumbersome to number each piece of jewellery
    • Intricate jewellery: HUID cannot be engraved in tiny pieces.
    • Unnecessary expense: Also it will increase cost for consumers.
    • Infrastructural issues: there needs to be ample AH Centres.

    What does this mean for the consumer?

    • Consumer protection: Given that gold plays a big role in the lives of Indians, mandating gold hallmarking is aimed at protecting consumer interests.
    • Assurance of quality: It provides ‘third-party assurance’ to consumers on the purity of gold jewellery.

    Conclusion

    • HUID concept is innovative, out-of-the-box thinking and more than makes up for stepping in late with mandatory hallmarking.
    • It is the sort of global leadership India has and needs to show in gold-related reforms.

     

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  • A white touch to a refreshed green revolution

    Context

    November 26, 2021 was celebrated in Anand, Gujarat as the 100th birth anniversary of Verghese Kurien, the leader of India’s ‘white revolution’.

    Analysing the Green revolution

    • Purpose of green revolution: The purpose of the green revolution was to increase the output of agriculture to prevent shortages of food.
    • Technocratic enterprise: The green revolution was largely a technocratic enterprise driven by science and the principles of efficiency.
    • It required inputs, like chemical fertilizers, to be produced on scale and at low cost.
    • Therefore, large fertilizer factories were set up for the green revolution. And large dams and irrigation systems were also required to feed water on a large scale.
    • Monocropping on fields was necessary to apply all appropriate inputs — seeds, fertilizer, water, etc., on scale.
    •  Monocropping increased the efficiency in application of inputs.
    • Thus, farms became like large, dedicated engineering factories designed to produce large volumes efficiently.
    •  Diversity in the products and processes of large factories creates complexity.
    • Therefore, diversity is weeded out to keep the factories well-focused on the outputs they are designed for.

    The contrast between White and Green revolution

    • The contrast between the two revolutions provides valuable insights. Their purposes were different.
    • Purpose of white revolution: The purpose of the white revolution was to increase the incomes of small farmers in Gujarat, not the output of milk.
    • The white revolution was a socio-economic enterprise driven by political leaders and principles of equity.

    Understanding the success of Amul

    • Amul has become one of India’s most loved brands, and is respected internationally too for the quality of its products and the efficiency of its management.
    • The fledgling, farmer-owned, Indian enterprise had many technological problems to solve.
    • That is why they enrolled Kurien, who had studied engineering in the United States.
    • Indigenous solutions: Kurien and his engineering compatriots in the organisation were compelled to develop solutions indigenously when Indian policy makers, influenced by foreign experts, said Indians could not make it.
    • The enterprise achieved its outcome of empowering farmers because the governance of the enterprise to achieve equity was always kept in the foreground, with the efficiency of its production processes in the background as a means to the outcome.

    Increasing productivity and issues with it

    • ‘Productivity’, when defined as output per worker, can be increased by eliminating workers.
    • This may be an acceptable way to measure and increase productivity when the purpose of the enterprise is to increase profits of investors in the enterprise.
    • It is a wrong approach to productivity when the purpose of the enterprise is to enable more workers to increase their incomes, which must be the aim of any policy to increase small farmers’ incomes.
    • The need for new solutions to increase farmers’ incomes has become imperative.
    • Moreover, fundamental changes in economics and management sciences are necessary to reverse the degradation of the planet’s natural environment that has taken place with the application of modern technological solutions and management methods for the pursuit of economic growth.

    Suggestions to increase inclusion and improve environmental sustainability

    • Ensure inclusion and equity: Increase in the incomes and wealth of the workers and small asset owners in the enterprise must be the purpose of the enterprise, rather than production of better returns for investors.
    • Social side: The ‘social’ side of the enterprise is as important as its ‘business’ side.
    • Therefore, new metrics of performance must be used, and many ‘non-corporate’ methods of management learned and applied to strengthen its social fabric.
    • Local solution: Solutions must be ‘local systems’ solutions, rather than ‘global (or national) scale’ solutions.
    • The resources in the local environment (including local workers) must be the principal resources of the enterprise.
    • Practical use of science: Science must be practical and useable by the people on the ground rather than a science developed by experts to convince other experts.
    • Moreover, people on the ground are often better scientists from whom scientists in universities can learn useful science.
    • Sustainable solution through evolution: Sustainable transformations are brought about by a steady process of evolution, not by drastic revolution.
    • Large-scale transformations imposed from the top can have strong side-effects.

    Consider the question “Contrast the differences between the White Revolution and Green Revolution in India. What lessons can be applied to Indian agriculture from the success of the White Revolution in India?”

    Conclusion

    The essence of democratic economic governance is that an enterprise must be of the people, for the people, and governed by the people too.

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  • India’s electric vehicle push will lead to brighter, greener future

    Context

    The transition to electric mobility is a promising global strategy for decarbonising the transport sector.

    Electricity mobility revolution

    • The global electric mobility revolution is today defined by the rapid growth in electric vehicle (EV) uptake.
    • This phenomenon is today defined by the rapid growth in EV uptake, with EV sales for the year 2020, reaching 2.1 million.
    • Falling battery costs and rising performance efficiencies are fueling the demand for EVs globally.

    Significance of India’s transition to electric mobility

    • India is the fifth largest car market in the world and has the potential to become one of the top three in the near future.
    • India is among a handful of countries that supports the global EV30@30 campaign, which aims for at least 30 per cent new vehicle sales to be electric by 2030.
    • Part of global climate agenda: The push for EVs is driven by the global climate agenda established under the Paris Agreement to reduce carbon emissions in order to limit global warming.
    • Ensuring energy security: It is also projected to contribute in improving the overall energy security situation as the country imports over 80 per cent of its overall crude oil requirements, amounting to approximately $100 billion.
    • Job creation: The push is also expected to play an important role in the local EV manufacturing industry for job creation.
    • Strengthen grid operation: Through several grid support services, EVs are expected to strengthen the grid and help accommodate higher renewable energy penetration while maintaining secure and stable grid operation.

    Battery storage: Opportunities and challenges

    • Promoting sustainable development: With recent technology disruptions, battery storage has great opportunity in promoting sustainable development in the country, considering government initiatives to promote e-mobility and renewable power (450 GW energy capacity target by 2030).
    • Economic opportunity: With rising levels of per capita income, there has been a tremendous demand for consumer electronics in the areas of mobile phones, UPS, laptops, power banks etc. that require advanced chemistry batteries.
    • This makes manufacturing of advanced batteries one of the largest economic opportunities of the 21st century.
    • Concern of absence of manufacturing base: It is estimated that by 2020-30 India’s cumulative demand for batteries would be approximately 900-1100 GWh, but there is concern over the absence of a manufacturing base for batteries in India, leading to sole reliance on imports to meet rising demand.

    Government schemes to promote EV ecosystem

    • To develop and promote the EV ecosystem in the country, government has remodeled Faster Adoption and Manufacturing of Electric Vehicles (FAME II) scheme (Rs 10,000 crore) for the consumer side.
    • It has also launched production-linked incentive (PLI) scheme for Advanced Chemistry Cell (ACC) ( Rs 18,100 crore) for the supplier side.
    • Finally the recently launched PLI scheme for Auto and Automotive Components (Rs 25,938 crore) for manufacturers of electric vehicles was launched.
    • All these forward and backward integration mechanisms in the economy are expected to achieve robust growth in the coming years and will enable India to leapfrog to the environmentally cleaner electric vehicles and hydrogen fuel cell vehicles.

    Benefits of EV ecosystem

    • This will not only help the nation conserve foreign exchange but also make India a global leader in manufacturing of EVs and better comply with the Paris Climate Change Agreement..
    • Battery demand creation: All three schemes cumulatively expect an investment of about Rs 1,00,000 crore which will boost domestic manufacturing and also facilitate EVs and battery demand creation along with the development of a complete domestic supply chain and foreign direct investment in the country.
    • Reduction of oil import bill: The programme envisages an oil import bill reduction of about Rs 2 lakh crore and import bill substitution of about Rs 1.5 lakh crore.

    Conclusion

    India’s push for EV ecosystem is in line with the country’s climate change commitments, will help boost manufacturing sector and also help ensure energy security.

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  • Government-owned Contractor-operated (GOCO) Model

    The Army’s ambitious plan for modernization of the Army Base Workshops (ABWs) and implementation of the ‘Government-owned, contractor-operated (GOCO)’ model is delayed, the Comptroller and Auditor General (CAG) said in its report.

    What is GOCO Model?

    • The GOCO model was one of the recommendations of the Lt. Gen. DB Shekatkar (Retd.) committee to enhance combat capability and re-balancing defence expenditure.
    • In GOCO model, the assets owned by the government will be operated by the private industries.
    • Under the GOCO model, the private companies need not make investments on land, machinery and other support systems.

    What is the current system?

    • Maintenance, repair and overhaul (MRO): The Army follows the traditional ‘womb to tomb’ life cycle support management for maintenance, repair and overhaul (MRO) of its costly equipment.
    • Corps of Electronics and Mechanical Engineers (EME): It is responsible for the MRO system.

    Need for GOCO Model

    • High end technologies: In the last three decades, there has been a quantum jump in military technology and the MRO of military equipment has become very complex.
    • Lack of infrastructure: However, some repairs and overhauls have run into problems on account of lack of infrastructure, spares and expertise.
    • Poor performance of Corps: The infrastructure, expertise and work culture has not kept pace with time, leading to below par and inefficient performance.

     Benefits offered by the GOCO Model

    • Time savings: The main advantage of the model is that the targets are achieved in lesser time frame.
    • Competitiveness: Also, it will boost competitiveness among the private entities paving way to newer technologies.
    • Efficiency: The GOCO model will bring in corporate culture, leading to efficiency and accountability.
    • Expertise: Private operators can easily go into partnership with Original Equipment Manufacturer (OEM), both for expertise and spares.
    • Manpower saving: The government can save on manpower — 12,500 personnel workforce of the ABWs.
    • Technical training: This model also opens avenues for absorbing trained retired personnel, which can be built into the contract.

    Major issues with GOCO

    • Costly affair: The corporate world is driven by market forces, which means the GOCO model will be more costly. In most cases, private operators will want better infrastructure, which would have to be upgraded or replaced at government cost.
    • Corporate management: Private operators may not have the expertise to deal with military equipment; they are also unlikely to absorb the existing manpower and will want a younger and better-trained workforce.

     

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  • [pib] Soil Health Card Scheme

    National Productivity Council (NPC) has carried out a study on ‘Soil Testing Infrastructure for Faster Delivery of Soil Health Card in India’ in 2017.

    What did the study find?

    • In the study it was found that application of fertilizer and micronutrients based on Soil Health Card (SHC) recommendations resulted in 8-10% of savings.
    • It has led to an overall increase in the yield of crops to the tune of 5-6% reported by adopting the SHC recommendations.

     About Soil Health Card Scheme

    • Soil Health Card (SHC) scheme is promoted by the Department of Agriculture & Co-operation under the Ministry of Agriculture and Farmers’ Welfare.
    • An SHC is meant to give each farmer soil nutrient status of his/her holding and advice him/her on the dosage of fertilizers and also the needed soil amendments, that s/he should apply to maintain soil health in the long run.
    • SHC is a printed report that a farmer will be handed over for each of his holdings.
    • It will be made available once in a cycle of 2 years, which will indicate the status of soil health of a farmer’s holding for that particular period.
    • The SHC given in the next cycle of 2 years will be able to record the changes in the soil health for that subsequent period.

    Parameters of SHC:

    • N, P, K (Macro-nutrients)
    • Sulfur (S) (Secondary- nutrient)
    • Zn, Fe, Cu, Mn, Bo (Micronutrients)
    • pH, EC (Electrical conductivity) , OC (Organic content)

    Try this PYQ:

    Q. The nation-wide ‘Soil Health Card Scheme’ aims at:

    1. expanding the cultivable area under irrigation.
    2. enabling the banks to assess the quantum of loans to be granted to farmers on the basis of soil quality.
    3. checking the overuse of fertilizers in farmlands.

    Which of the above statements is/are correct?

    (a) 1 and 2 only

    (b) 3 only

    (c) 2 and 3 only

    (d) 1, 2 and 3

     

    [wpdiscuz-feedback id=”2l7krk8ive” question=”Please leave a feedback on this” opened=”1″]Post your answers here.[/wpdiscuz-feedback]

     

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  • Risks involved in investment in cryptocurrencies

    Context

    We are witnessing the change where the cult of savers has changed into investors. They are looking for a good return and willing to take the risk.

    Changing the behaviour of the savers

    • There is a new wave of savings and investments in the country that is evolving quite fast.
    • Crypto exchanges assure you that they are safe.
    • But it is the exchange that is safe, not the value of the coin, which will be driven by the market.
    • The equity boom is on, and all the unicorns have delivered excellent results.
    • That’s why bank deposits are no longer on our plates.
    • Banks discouraging deposits: Interestingly, banks today are discouraging deposits with low rates as this is the only way they can manage their balance sheets.
    • Low-interest rate: There are few deployment avenues and paying 5 per cent interest to savers and investing the deposits at 3.35 per cent in the reverse repo auction is a sub-optimal game.

    How safe is investment in cryptocurrencies?

    • From equities, there has been a swift shift to cryptos, which is still a grey area.
    • The regulators/government are wondering what to do. The issue will be discussed in the winter session of Parliament.
    • But investments have been made and there is no stopping this global wave.
    • Currency with no underlying asset: Making money on a currency that has no underlying asset like a metal or other currency and is traded on faith is unique; especially Bitcoin, whose originator is not known by face but by just a name.

    Gaming as a skill

    • There is another door to a new kind of gaming where you make money by making teams and following the matches.
    • The law was first silent, and then confused.
    • But it finally accepted gaming as a skill.
    • Logically, soon we should be able to bet on matches too, if all this is in order.

    Conclusion

    We are witnessing a change in the pattern of holding onto money, where savings get transformed to investment and risk appetite changes from conservative to aggressive. Will this change? Probably not, in the near future, as long as conventional deposits continue to give inferior returns.

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  • UNCITRAL Model for Cross Border Insolvency

    The Ministry of Corporate Affairs (MCA) has published a draft framework for cross-border insolvency proceedings based on the UNCITRAL (United Nations Commission on International Trade Law) model under the Insolvency and Bankruptcy Code.

    About Insolvency and Bankruptcy Code (IBC)

    • The IBC, 2016 is the bankruptcy law of India that seeks to consolidate the existing framework by creating a single law for insolvency and bankruptcy.
    • It is a one-stop solution for resolving insolvencies which previously was a long process that did not offer an economically viable arrangement.
    • The code aims to protect the interests of small investors and make the process of doing business less cumbersome.

    Cross border insolvency proceedings

    • Cross-border insolvency proceedings are relevant for the resolution of distressed companies with assets and liabilities across multiple jurisdictions.
    • A framework for cross-border insolvency proceedings allows for the location of such a company’s foreign assets, the identification of creditors and their claims.
    • This helps establishing payment towards claims as well as a process for coordination between courts in different countries.

    Current status of foreign stakeholders and courts in other jurisdictions under IBC

    • While foreign creditors can make claims against a domestic company, the IBC currently does not allow for automatic recognition of any insolvency proceedings in other countries.
    • Current provisions under the IBC do not allow Indian courts to address the issue of foreign assets of a company being subjected to parallel insolvency proceedings in other jurisdictions.

    The UNCITRAL model

    • The UNCITRAL model is the most widely accepted legal framework to deal with cross-border insolvency issues.
    • It has been adopted by 49 countries, including the UK, the US, South Africa, South Korea and Singapore.
    • The law allows automatic recognition of foreign proceedings and rulings given by courts in cases where the foreign jurisdiction is adjudged.
    • Recognition of foreign proceedings and reliefs is left to the discretion of domestic courts when foreign proceedings are non-main proceedings.
    • The model law deals with four major principles of cross-border insolvency:
        • Direct access to foreign insolvency professionals and foreign creditors to participate in or commence domestic insolvency proceedings against a defaulting debtor.
        • Recognition of foreign proceedings & provision of remedies.
        • Cooperation between domestic and foreign courts & domestic and foreign insolvency practitioners.
        • Coordination between two or more concurrent insolvency proceedings in different countries. The main proceeding is determined by the concept of Centre of Main Interest (COMI).
          • The COMI for a company is determined based on where the company conducts its business on a regular basis and the location of its registered office.
      • It is designed to assist States in reforming and modernizing their laws on arbitral procedure so as to take into account the particular features and needs of international commercial arbitration.

    Issues with Indian framework

    • The framework for cross-border insolvency adopted in India may require reciprocity from any country which seeks to have its insolvency proceedings recognized by Indian courts.
    • This would allow Indian proceedings for foreign corporate debtors to be recognized in foreign jurisdictions.

    Back2Basics: UNCITRAL

    • It is an affiliate organization to the UN made up of business and legal professionals.
    • This group develops model standards and procedures for dealing with issues affecting international business.
    • Perhaps most notably, UNCITRAL promulgated the Convention on International Sale of Goods (CISG).
    • The CISG is a model law commonly used as the governing provisions in contracts between parties from different nations.

     

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  • Jaitapur Nuclear Power Project

    If built on time, Jaitapur Project in Maharashtra would be the largest nuclear power generating station in the world by net generation capacity, at 9,900 MW.

    Jaitapur Nuclear Power Project

    • Jaitapur Project is a proposed nuclear power plant in India.
    • The power project is proposed by Nuclear Power Corporation of India (NPCIL) and would be built at Madban village of Ratnagiri district in Maharashtra.
    • It is being built with technical cooperation from France.

    Project description

    • It is proposed to construct 6 European Pressurized Reactors designed and developed by Framatome (former Areva) of France, each of 1650 MW, thus totaling 9900 MW.
    • These are the third generation pressurized water reactors (PWR).
    • The cost of building the plant is about ₹20 crore (US$2.7 million) per MW electric power compared with ₹5 crore (US$660,000) per MW electric power for a coal power station.
    • A consortium of French financial institutions will finance this project as a loan. Both French and Indian government will give sovereign guarantee for this loan.

    Issues with the project

    (I) Liability for nuclear damage

    • The lack of clarity on the Civil Liability for Nuclear Damage Bill 2010 passed in Indian Parliament in August 2010 is a hurdle in finalizing deal.
    • This Civil Liability for Nuclear Damage Bill 2010 has a clause that deals with the legal binding of the culpable groups in case of a nuclear accident.
    • It allows only the operator (NPCIL) to sue the manufacturers and suppliers. Victims will not be able to sue anyone.

    (II) Clearance issue

    • Environmental effects of nuclear power and geological issues have been raised by anti-nuclear activists of India against this power project.
    • Even though the Maharashtra state govt completed land acquisition in 2010, only few people had accepted compensation cheques.

    (III) Seismicity of the area

    • Since Jaitapur is a seismically sensitive area, the danger of an earthquake has been foremost on the minds of people.
    • According to the Earthquake hazard zoning of India, Jaitapur comes under Zone III. This zone is called the moderate Risk Zone and covers areas liable to MSK VIII.
    • The presence of two major creeks on the proposed site has been ignored while clearing the site.

    (IV) Nuclear waste disposal

    • It is not clear where the nuclear waste from the site will be shipped for recycling or removed for disposal.
    • The plant is estimated to generate 300 tonnes of used nuclear fuel each year.

     

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