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Subject: Economics

  • Reforms-based and Results-linked, Revamped Distribution Sector Scheme: Ensuring sustainable turnaround in financial health of discoms

    Context

    In its budget 2021-22, the Union government had announced the launch of a “reforms-based and results-linked” scheme for the distribution sector.

    Precarious financial condition of discoms

    • Their overall debt burden, despite the implementation of the UDAY scheme, is estimated to increase to around Rs 6 lakh crore in the ongoing financial year.
    • Moreover, their annual cash losses are estimated to be about Rs 45,000-50,000 crore (excluding UDAY grants and regulatory income).
    • Due to highly subsidised nature of power tariffs towards agriculture and certain sections of residential consumers, the overall subsidy dependence is likely to be roughly Rs 1.30 lakh crore this year at the all-India level.

    Revamped Distribution Sector Scheme

    • In its budget 2021-22, the Union government had announced the launch of a “reforms-based and results-linked” scheme for the distribution sector.
    • Subsequently, the Revamped Distribution Sector Scheme was notified in July with an overall outlay of Rs 3.03 lakh crore. 
    • Under the scheme, AT&C losses are sought to be brought down to 12-15 per cent by 2025-26, from 21-22 per cent currently.
    • Operational efficiencies of discoms are to be improved through smart metering and upgradation of the distribution infrastructure, including the segregation of agriculture feeders and strengthening the system.
    • The scheme has two parts — Part A with an outlay of Rs 3.02 lakh crore, pertains to the upgradation of the distribution infrastructure and metering related works.
    • Part B, with an outlay of Rs 1,430 crore, is for training and capacity building, besides other enabling and support activities.
    • Discoms and their state governments will have to sign a tripartite agreement with the central government in order to avail benefits under the scheme.
    • Only those discoms that meet all the pre-qualifying criteria will be eligible for the release of funds.
    • A loss-making discom will not be eligible unless it draws up plans to reduce its losses, approved by the state government and filed with the central government.
    • As far as the agricultural sector is concerned, the use of solar power projects to supply electricity to these consumers through the agriculture feeder route is likely to result in savings.
    • This is because of a combination of high tariff competitiveness offered by solar power, lower technical losses due to proximity to load centres, and the ability to meet demand during the day when sunlight is available.
    • In addition, the delicencing initiative proposed by the central government can effect significant changes in the distribution segment, facilitating competition and placing emphasis on the quality and reliability of power supply and consumer services.

    Issue of tariff determination

    • A continuing area of concern affecting discom finances is the significant delay in the process of tariff determination in many states.
    • As of now, only 19 out of 28 states have issued tariff orders for 2021-22, indicating sluggish progress.
    • Further, there is upward pressure on the cost of power supply for distribution utilities, considering the dominant share (around 70 per cent) of coal in the fuel mix for energy generation, the strengthening of imported coal prices and the possibility of domestic coal price revisions by Coal India.
    • As a consequence, a cost-reflective tariff determination process, coupled with the timely pass-through of power purchase costs, remains critical for the utilities.

    Consider the question “Examine the factor that explains the continuing financial woes of state-owned discoms despite implementing several schemes. How Revamped Distribution Sector Scheme seeks to address the issue?”

    Conclusion

    On the whole, while the focus on improving the operational efficiency, and ensuring the financial sustainability of discoms is indeed welcome, timely implementation of the reforms is critical to achieving the milestones.

     

  • [pib] Nutrient Based Subsidy (NBS) for P&K Fertilizers

    The Cabinet Committee on Economic Affairs has approved the proposal of the Department of Fertilizers for fixation of Nutrient Based Subsidy Rates for P&K Fertilizers for the year last quarter of the year 2021-22.

    An aspirant from rural agrarian background is quite habitual to hear about NPK 10-26-26, 20-20-0-13 & 12-32-16. They often get to find the plastic gunny bags mentioning this!

    Nutrient Based Subsidy (NBS)

    • The NBS Scheme for fertilizer was initiated in the year 2010 and is being implemented by the Department of Fertilizers.
    • Under the scheme, a fixed amount of subsidy decided on an annual basis is provided on each grade of subsidized P&K fertilizers, except for Urea based on the nutrient content present in them.
    • It is largely for secondary nutrients like N, P, S and K and micronutrients which are very important for crop growth and development.
    • In India, urea is the only controlled fertilizer and is sold at a statutory notified uniform sale price.

    What is NPK?

    • So now that you know what the numbers on fertilizer mean, you need to know why NPK is important to your plants.
    • All plants need nitrogen, phosphorus, and potassium to grow. Without enough of any one of these nutrients, a plant will fail.
    1. Nitrogen (N): It is largely responsible for the growth of leaves on the plant.
    2. Phosphorus (P): It is largely responsible for root growth and flower and fruit development.
    3. Potassium (K): It is a nutrient that helps the overall functions of the plant perform correctly.
    • Knowing the NPK values of fertilizer can help you select one that is appropriate for the type of plant you are growing.

    What NBS provides?

    • Fixing MRP of NPK fertilizers: The scheme allows the manufacturers, marketers, and importers to fix the MRP of the Phosphatic and Potash fertilizers at reasonable levels.
    • Maintaining stock level: The MRP will be decided considering the domestic and international prices of P&K fertilizers, inventory level in the country and the exchange rates.
    • Inflation control: The NBS ensures that an adequate quantity of P&K is made available to the farmers at a statutory controlled price.

    Issues with NBS

    • Leaves urea: Urea which the most widely used, is left-out in the scheme and hence it remains under price control as NBS has been implemented only in other fertilizers.
    • Cost on exchequer: Fertilizer subsidy is the second-biggest subsidy after food subsidy.
    • Costs on Economy and Environment: The NBS policy is not only damaging the fiscal health of the economy but also proving detrimental to the soil health of the country.
    • Black marketing: Subsidised fertilizers is getting diverted to bulk buyers/traders or even non-agricultural users such as plywood and animal feed makers.

    Back2Basics: Soil Health Card (SHC)

    • 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:

    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=”i15sf2a7rw” question=”Please leave a feedback on this” opened=”1″]Post your answers here.[/wpdiscuz-feedback]

     

     

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  • RBI’s monetary policy statement

    Context

    The Monetary Policy Committee of the RBI kept the benchmark policy rates unchanged, and retained the accommodative stance in its October review.

    Factors playing part in monetary policy decisions

    • It’s important to remember that monetary policy these days is influenced by both local macroeconomic developments and the global monetary policy direction, with the former playing a dominant role.
    • Locally, after the second wave of the pandemic, a variety of indicators such as the Purchasing Managers Index (manufacturing and services), mobility indicators, government tax collections, exports and imports are pointing at an improvement in economic activity.
    • Then there is the good news on the monsoon front. With a late pick-up in rains, the cumulative deficiency in this monsoon season has come down to just 1 per cent of the long-period average (LPA).
    • Since the MPC’s August 2021 policy review, Covid-19 cases have trended down and there has been admirable progress on the vaccination front.
    • Also, despite high year-on-year growth numbers, the level of economic activity this fiscal will only be 1.5 per cent above 2019-2020.

    Trends emerging from the economic recovery

    • Role of government: Capital expenditure of both the Centre and states is on track to meet the budgetary commitment, supported by healthy tax collections.
    • Large companies on recovery path: Large companies in industrial sectors such as steel, cement, non-ferrous metals are operating at healthy utilisation levels, and have deleveraged their balance sheets.
    • Policy support for smaller companies: The going is not so good for the smaller ones.
    • Clearly, smaller companies need policy support. The extension of the Emergency Credit Line Guarantee Scheme is a recognition of that.
    • Private consumption is not broad-based either.
    • Even in goods consumption, which is faring better than services, the nature of demand seems skewed towards relatively higher-value items such as cars and utility vehicles.
    • This probably reflects the income dichotomy spawned by the pandemic.
    • Inflation: Its fall to 5.3 per cent in August offers only limited comfort for two reasons.
    • One, core and fuel inflation, which have 54 per cent weightage in CPI, remain stubbornly high.
    • Second, food prices have nudged down overall inflation.
    • Domestic growth-inflation dynamics suggest that the RBI has little option but to remain more tolerant of persistent price pressures, and hope that these will eventually prove transitory because they have been primarily driven by supply shocks caused by the pandemic.

    Global monetary policy environment

    • Globally, the monetary policy environment is veering towards normalisation/tapering/interest-rate rise largely due to an upward surprise in inflation, or because some central banks feel the objectives of quantitative easing have been met.
    • Central banks in advanced economies such as Norway, Korea and New Zealand have recently raised rates.
    • The two systemically important central banks — the US Federal Reserve (Fed) and the European Central Bank (ECB) — view the current spike in inflation as fleeting and have communicated greater tolerance for it for a longer period.

    Conclusion

    The process of mopping up excess liquidity will slowly gain pace over the next few months, followed by a policy rate hike sometime around early 2022. By then, there should be enough clarity on the third wave and the stance of the Fed and the ECB.

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  • WTO raises 2021 goods trade outlook

    The World Trade Organization (WTO) has upgraded its world merchandise trade growth outlook to nearly 11 percent for this year, higher than 8% estimated in March.

    About WTO

    • The World Trade Organization (WTO) is an intergovernmental organization that regulates and facilitates international trade between nations.
    • Governments use the organization to establish, revise, and enforce the rules that govern international trade.
    • It officially commenced operations on 1 January 1995, pursuant to the 1994 Marrakesh Agreement, thus replacing the General Agreement on Tariffs and Trade (GATT) that had been established in 1948.
    • The WTO is the world’s largest international economic organization, with 164 member states representing over 96% of global trade and global GDP.
    • The WTO facilitates trade in goods, services and intellectual property among participating countries.
    • It prohibits discrimination between trading partners, but provides exceptions for environmental protection, national security, and other important goals.

    Report on Global trade

    • According to a WTO, global goods trade is expected to grow by 10.8 per cent compared to the forecast of 8 per cent in March, but with varied recovery, depending on the region.
    • The report said export volume growth in 2021 will be 8.7 per cent in North America, 7.2 per cent in South America, 9.7 per cent in Europe, 7 per cent in Africa, 5 per cent in West Asia and the highest for Asia at 14.4 per cent.
    • On the other hand, imports are expected to grow at a faster pace as compared to exports. Inbound shipments into North America are set to grow by 12.6 per cent.
    • It will be 19.9 per cent in South America, 9.1 per cent in Europe, 13.1 per cent in CIS, 11.3 per cent in Africa, 9.3 per cent in West Asia and 10.7 per cent in Asia.

    Key highlights for India

    • Exports from India have been rising consistently over the last few quarters, after plummeting for a few months as the outbreak of Covid-19 disrupted global trade.
    • India’s exports to its top trading partners such as the US, European Union, nations in West Asia, among others, are expected to rise.
    • Exports data during the first six months of the current fiscal year is emblematic of the fact that external demand has been robust.
    • Besides, supply-side disruptions can also be exacerbated by the rapid and unexpectedly strong recovery of demand in advanced and many emerging economies.

    Competing with China

    • Experts said with rising global demand, India should be able to compete in various segments vis-a-vis China.
    • Currently, China is facing supply-side as well as demand-side issues owing to several internal challenges (energy, debt crisis).
    • Therefore, India is in a good position to increase its exports, and can become a substitute for China across various product categories or sectors.
    • India can take advantage of the increasing global demand, which can ultimately translate into demand for Indian exports.

     

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  • Air India Disinvestment Deal

    After 68 years, Air India is all set to return to the Tata fold.

    What is the deal?

    • The Tatas will own 100% stake in Air India, as also 100% in its international low-cost arm Air India Express and 50% in the ground handling joint venture, Air India SATS.
    • Apart from 141 planes and access to a network of 173 destinations including 55 international ones, Tatas will also have the ownership of iconic brands like Air India, Indian Airlines and the Maharajah.

    History of Air India

    • Prominent industrialist JRD Tata founded the airline in 1932 and named it Tata Airlines.
    • As India gained Independence, the government bought 49% stake in AI.
    • In 1946, the aviation division of Tata Sons was listed as Air India, and in 1948, the Air India International was launched with flights to Europe.
    • In 1953, Air India was nationalised and for the next over four decades it remained the prized possession for India controlling the majority of the domestic airspace.

    Why was Air India sold?

    • End of Monopoly: With economic liberalisation and the growing presence of private players, this dominance came under serious threat.
    • Govt running an airline: Ideologically too, the government running an airline did not quite gel with the mantra of liberalisation.
    • Continuous losses: By 2007, AI (which flew international flights) was merged with the domestic carrier, Indian Airlines, to reduce losses.
    • Wastage of taxpayers money: But it is the mark of how poorly the airline was run that it has never made a profit since 2007.

    Why wasn’t it sold earlier?

    Ans. Fear over Operational Freedom

    • The first attempt to reduce the government’s stake — disinvestment — was made in 2001 under the then NDA government.
    • But that attempt — to sell 40% stake — failed.
    • In 2018, the government made another attempt to sell the government stake — this time, 76%. But it did not elicit even a single response.
    • In the latest attempt started in January 2020, the government has been able to finally conclude the sale.

    So how was it managed this time?

    • Govt gives up stakes: The mere fact that the government retained a partial stake. In other words, as long as the government kept a certain shareholding of AI, private players did not seem interested.
    • Operational freedom: That’s because the mere idea of government ownership, even if it was as little as 24%, made private firms wonder if they would have the operational freedom needed.
    • Debt sharing: In the past, the government expected the bidders to pick up a certain amount of the debt. This time, the government let the bidders decide the amount of debt they wanted to pick up.

    Significance of the deal

    [A] From the government’s perspective: A success

    • Disinvestment: It underscores govt commitment to reducing the its role in the economy.
    • Easing burden on taxpayers: This claims to have saved taxpayers from paying for daily losses of AI.
    • Economic reforms: Given the historical difficulties in AI’s disinvestment, or any disinvestment at all this is a significant achievement.

    [B] Business perspective: Still a failure

    • Missing the target: Purely in terms of money, the deal does not result in as big a step towards achieving the government’s disinvestment target of the current year.
    • Unresolved bankruptcy: The assets left with the government, such as buildings, etc., will likely generate Rs 14,718 crore. But that will still leave the government with a debt of Rs 28,844 crore to pay back.

    [C] Value perspective: Success for Tatas

    • Business success: From the Tatas’ perspective, apart from the emotional aspect of regaining control of an airline that they started, AI’s acquisition is a long-term bet.
    • Investment boost: The Tatas are expected to invest far more than what they have paid the government if this bet is to work for them.

    Conclusion

    • Complete liberalization: The privatisation of Air India is a message from the Government to the markets and global investors that it has the political will to bite the reform bullet.
    • Roadmap for economic reforms: The govt had to shed the “over-conservatism” that is typical of bureaucracy.
    • Future disinvestments: A transaction as “tough and complex” as Air India’s in an open, transparent and competitive bidding process, will boost future privatisation.

    Way forward

    • Other loss-making PSUs continue to drain taxpayers’ hard-earned money and get abused and fleeced in the name of social welfare.
    • The govt should imbibe this experience gained in future disinvestment biddings.

     

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  • RBI suspends G-Sec Acquisition Programme (GSAP)

    The Reserve Bank of India (RBI) has decided to halt its bond-buying under the G-Sec Acquisition Programme (GSAP).

    Why such move?

    • The GSAP had succeeded in ensuring adequate liquidity and stabilising financial markets.
    • Coupled with other liquidity measures, it facilitated congenial and orderly financing conditions and a conducive environment for the recovery.

    What is GSAP?

    • The G-Sec Acquisition Programme (G-SAP) is basically an unconditional and a structured Open Market Operation (OMO), of a much larger scale and size.
    • G-SAP is an OMO with a ‘distinct character’.
    • The word ‘unconditional’ here connotes that RBI has committed upfront that it will buy G-Secs irrespective of the market sentiment.

    What are Government Securities?

    • These are debt instruments issued by the government to borrow money.
    • The two key categories are:
    1. Treasury bills (T-Bills) – short-term instruments which mature in 91 days, 182 days, or 364 days, and
    2. Dated securities – long-term instruments, which mature anywhere between 5 years and 40 years

    Note: T-Bills are issued only by the central government, and the interest on them is determined by market forces.

    Why G-Secs?

    • Like bank fixed deposits, g-secs are not tax-free.
    • They are generally considered the safest form of investment because they are backed by the government. So, the risk of default is almost nil.
    • However, they are not completely risk-free, since they are subject to fluctuations in interest rates.
    • Bank fixed deposits, on the other hand, are guaranteed only to the extent of Rs 5 lakh by the Deposit Insurance and Credit Guarantee Corporation (DICGC).

    Other decisions

    • The RBI, however, remained ready to undertake G-SAP as and when warranted by liquidity conditions.
    • It would also continue to flexibly conduct other liquidity management operations including Operation Twist (OT) and regular open market operations (OMOs).

    Answer this PYQ in the comment box:

    Q.Consider the following statements:

    1. The Reserve Bank of India manages and services the Government of India Securities but not any State Government Securities.
    2. Treasury bills are issued by the Government of India and there are no treasury bills issued by the State Governments.
    3. Treasury bills offer are issued at a discount from the par value.

    Which of the statements given above is/are correct?

    (a) 1 and 2 only

    (b) 3 Only

    (c) 2 and 3 only

    (d) 1, 2 and 3

     

    [wpdiscuz-feedback id=”43irc0tf58″ question=”Please leave a feedback on this” opened=”1″]Post your answers here:[/wpdiscuz-feedback]

     

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    Back2Basics: Open Market Operations (OMO)

    • OMOs is one of the quantitative monetary policy tools which is employed by the central bank of a country to control the money supply in the economy.
    • It is a part of the Market Stabilization Scheme (MSS) by the RBI.
    • OMOs are conducted by the RBI by way of sale or purchase of government securities (g-secs) to adjust money supply conditions.
    • The central bank sells g-secs to remove liquidity from the system and buys back g-secs to infuse liquidity into the system.

  • What is Palk Bay Scheme?

    The Union Government is considering increasing the unit cost of deep-sea fishing vessels under the Palk Bay scheme to make it more attractive to fisherfolk.

    Palk Bay Scheme

    • The Palk Bay Scheme is the official scheme for diversification of trawl fishing boats from Palk Strait into deep sea fishing boats.
    • It is aimed at encouraging fishermen to take up deep-sea fishing and put an end to disputes arising between the India and Sri Lanka.
    • The project helps fishermen in the Palk Straits, who are not exposed to deep-sea fishing, to venture deep into the Indian Ocean, Arabian sea and other deep-sea areas to look for fish like tuna that are in high demand.

    Why need such a scheme?

    • Bottom trawling, an ecologically destructive practice, involves trawlers dragging weighted nets along the sea-floor, causing great depletion of aquatic resources.

    Key components of the scheme

    • The project aims to replace all trawler boats and introduce over 2,000 deep sea fishing boats in a course of five years.
    • The scheme, under the aegis of Blue Revolution scheme – is funded by the Centre – 50 per cent and state government – 20 per cent for a boat costing Rs 80 lakh.
    • Of the balance 30 per cent, 10 per cent is contributed by the beneficiary (fisherman), and the remaining 20 per cent is funded by banks.

    Must read:

    [Burning Issue] India- Sri Lanka Fishermen Issues

     

     

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  • Seeding a data revolution in Indian Agriculture

    In June this year, two significant documents relating to the Indian agriculture sector were released.

    What are the reports about?

    • The first is a consultation paper on the India Digital Ecosystem of Agriculture (IDEA) and the second on Indian Agriculture: Ripe for Disruption from a private organisation, Bain and Company.
    • Through their work, these reports have depicted the agriculture reforms announced by the union government as a game-changer in the agriculture sector.

    Challenges highlighted

    The major challenges of the agriculture sector are:

    1. Food Sufficiency but Nutrition Deficiency
    2. High import of edible oil and oilseeds
    3. Yield plateaus
    4. Degrading soil, Water stress
    5. Inadequate market infra/linkages
    6. Unpredictable, volatile prices
    7. Post-harvest losses, wastages
    8. Lack of crop planning due to information asymmetry

    Key takeaway: Way for doubling farmers income

    • These reports in short argues that benefiting from the huge investments into the agri-ecosystem, doubling farmers’ income targets can be achieved in near future.
    • The Indian agriculture sector in future will encompass farm to fork and pave the way for a single national market with a national platform with better connection between producer and consumers.

    The forecast

    • The Bain report is a data-based prediction on agri-business scenarios, anchored to the agricultural set-up at present and predicting its future trajectories in another 20 years.
    • It includes targeting the production of alternative proteins, and food cell-based food/ingredients and initiating ocean farming, etc.
    • The report has a ‘today forward– future back approach’ and predicts a drastic investment opportunity development by 2025.
    • The agriculture sector (currently worth $370 billion), is estimated to receive an additional $35 billion investment.

    The two enabling conditions for such investment opportunities are:

    1. Changes in the regulatory framework, especially recent changes in the Farm Acts and
    2. Digital disruption

    The IDEA of integration

    • Digital disruption: The blueprint of “digital agriculture” is similar to the digital disruption mentioned in the Bain report.
    • Integration: Eventually, the farmer and the improvement of farmers’ livelihood is the aim of the IDEA concept and it is proposed to happen through tight integration of agri-tech innovation and the agriculture industry.
    • Enabling conditions: To be precise, the IDEA concept profounds the creation of second enabling conditions (which is described in the Bain report).
    • Openness of data: The IDEA principles explicitly talk about openness of data, which means open to businesses and farmers, indicating the kind of integration it aims at.
    • Value-added innovative services: by agri-tech industries and start-ups are an integral part of the IDEA architecture.
    • Data architecture: The services listed in the document (to be available on the platform) are equally important data for farmers and businesses.

    A thread of digital disruption

    • The IT industry has opposition to IDEA mainly due to the ethics of creating a Unique Farmer ID based on one’s Aadhaar number and also the potential for data misuse.
    • Beyond the news coverage about the prospects of achieving the goal of Doubling Farmers Income on which the present government has almost lost its hope.

    Issues with these reports

    • The Bain report has not been widely discussed — at least in the public domain.
    • The assumptions used by authors especially for its ‘future back approach’, need more or less focusing on widespread food production in controlled environments.
    • The emission, energy, and other resource footprints and sustainability issues around these techniques are not adequately studied.

    Yet these reports are important

    • The report has convincingly demonstrated the business opportunity available in supply chains between farm to APMC mandi and mandi to the customer.
    • This can be realised with the support of digital disruption and the latest agriculture reforms.
    • Both these reports heavily rely on digital disruption to improve farmers’ livelihoods, without discussing how much farmers will be prepared to benefit from the emerging business.

    An unconvincing ‘how’

    • Digital divide: The fact is that a majority of small and marginal farmers are not technology-savvy.
    • No capacity building: That most of them are under-educated for capacity building is ignored amidst these ambitious developments.
    • Unrealistic assumptions: The Bain report relies on the general assumption that more investments into the agriculture sector will benefit farmers; ‘but how’ has not been convincingly answered.
    • Overemphasis on technology: Similarly, how the technology fix will help resolve all the issues of Indian agriculture listed at the beginning of the report is unclear in the IDEA concept.
    • Reluctance by farmers: These reports ignore the protest of farmers against the reforms without considering it as a barrier or risk factor resulting in a repealing of these new farm laws.

    Way ahead: Focus on the farmer

    • A data revolution is inevitable in the agriculture sector, given its socio-political complexities.
    • However, we cannot just count on technology fixes and agri-business investments for improving farmers’ livelihoods.
    • There need to be immense efforts to improve the capacities of the farmers in India – at least until the educated young farmers replace the existing under-educated small and medium farmers.
    • This capacity building can be done through a mixed approach through FPOs and other farmers’ associations where technical support is available for farmers.

    Conclusion

    • Considering the size of the agriculture sector of the country this is not going to be an easy task but would need a separate program across the country with considerable investment.

     

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  • Coal Crisis in India

    More than half of the country’s 135 coal-fired power plants are running on fumes – as coal stocks run critically low.  They have fuel stocks of less than four days, government data shows.

    Coal shortage in India

    • In a country where 70% of the electricity is generated using coal, this is a major cause for concern as it threatens to derail India’s post-pandemic economic recovery.
    • Utilities are scrambling to secure coal supplies as inventories hit critical lows after a surge in power demand from industries and sluggish imports due to record global prices push power plants to the brink.

    How did the crisis escalate?

    • As India’s economy picked up after a deadly second wave of Covid-19, demand for power rose sharply.
    • Power consumption in the last two months alone jumped by almost 17%, compared to the same period in 2019.
    • At the same time global coal prices increased by 40% and India’s imports fell to a two-year low.
    • India is the world’s second largest importer of coal despite also being home to the fourth largest coal reserves in the world.
    • Power plants that usually rely on imports are now heavily dependent on Indian coal, adding further pressure to already stretched domestic supplies.

    What is the likely impact?

    • Experts say importing more coal to make up for domestic shortages is not an option at present.
    • India has seen shortages in the past, but what’s unprecedented this time is coal is really expensive now.
    • Businesses at the end of the day pass on these costs to consumers, so there is an inflationary impact – both direct and indirect that could potentially come from this.
    • If the crisis continues, a surge in the cost of electricity will be felt by consumers.
    • Retail inflation is already high as everything from oil to food has become more expensive.

    Other reasons for this crisis

    • In recent years, India’s production has lagged as the country tried to reduce its dependence on coal to meet climate targets.
    • Prices of power-generation fuels are surging globally as electricity demand rebounds with industrial growth, tightening supplies of coal and liquefied natural gas.
    • India is competing against buyers such as China, the world’s largest coal consumer, which is under pressure to ramp up imports amid a severe power crunch.
    • Rising oil, gas, coal and power prices are feeding inflationary pressures worldwide and slowing the economic recovery from the COVID-19 pandemic.

    Challenges posed

    • The desire to cut its reliance on heavily polluting coal burning power plants has been a major challenge for the government in recent years.
    • The question of how India can achieve a balance between meeting demand for electricity from its almost 1.4bn people has to be answered.

    What can the government do?

    • Experts advocate a mix of coal and clean sources of energy as a possible long-term solution.
    • It’s not completely possible to transition and it’s never a good strategy to transition 100% to renewables without a backup.
    • Long term investment in multiple power sources aside a crisis like the current one can be averted with better planning.
    • There is need for closer coordination between Coal India Limited – the largest supplier of coal in the country and other stakeholders.
    • For now, the government is working with state-run enterprises to ramp up production and mining to reduce the gap between supply and demand.

    Way forward

    • This is a global phenomenon, one not specifically restricted to India.
    • It is unclear how long the current situation will last.
    • With the monsoon on its way out and winter approaching, the demand for power usually falls.
    • So, the mismatch between demand and supply may iron out to some extent.

    Try answering this PYQ:

    Consider the following statements:

    1. Coal sector was nationalized by the Government of India under Indira Gandhi.
    2. Now, coal blocks are allocated on lottery basis.
    3. Till recently, India imported coal to meet the shortages of domestic supply, but now India is self- sufficient in coal production.

    Which of the statements given above is/are correct?

    (a) 1 only

    (b) 2 and 3 only

    (c) 3 only

    (d) 1, 2 and 3

     

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  • [pib] River Ranching Programme

    The Union Minister for Fisheries, Animal Husbandry & Dairying, is set to launch the River Ranching Programme in Uttar Pradesh under the Namami Gange Programme.

    What is River Ranching?

    • River Ranching is a form of aquaculture in which a population of a fish species (such as salmon) is held in captivity for the first stage of their lives.
    • They are then released, and later harvested as adults when they return from the sea to their freshwater birthplace to spawn.

    Objective

    The key objectives of the program are:

    • To sustain and conserve the biodiversity in the river.
    • Facilitate regular stocking of fingerlings of cultivable carps to enhance productivity
    • Increase fish production
    • Enhance income and livelihood opportunities to communities’ dependent on these resources

    Why need such a program?

    • River ranching helps in achieving sustainable fisheries, reducing habitat degradation, conserving biodiversity, maximising social-economic benefits and would also remove factors causing pollution.
    • In this activity, different species of fish are released in the river, which destroy factors that increase the level of nitrogen.
    • These fishes will also aid in maintaining the cleanliness of the river as they feed on organic remnants.

    Where is the scheme being launched?

    • In Uttar Pradesh, about 15 lakh fish fingerlings of native carp species shall be simultaneously released into the river in 12 districts by the department.
    • These districts include Bulandshahr/Hapur, Hardoi, Bijnor, Amroha, Fatehpur, Kanpur, Badayun, Kaushambi, Prayagraj, Mirzapur, Varanasi and Ghazipur.
    • Four other states namely Uttarakhand, Orissa, Tripura and Chhattisgarh will also witness the launching of nationwide River Ranching program.

     

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