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Subject: Economics

  • Turmeric Cultivation in India

    Turmeric (Curcuma longa), native to India, has been studied extensively for its effects against viral diseases in recent decades, but the COVID-19 pandemic has renewed interest.

    About Turmeric

    • Turmeric (Curcuma longa) is used as a condiment, dye, drug and cosmetic in addition to its use in religious ceremonies.
    • India is a leading producer and exporter of turmeric in the world.
    • The top five turmeric-producing states of India in 2020-21 are Telangana, Maharashtra, Karnataka, Tamil Nadu and Andhra Pradesh.

    Climate and Soil

    • Turmeric can be grown in diverse tropical conditions from sea level to 1500 m above sea level.
    • It requires a temperature range of 20-35 C with an annual rainfall of 1500 mm or more, under rainfed or irrigated conditions.
    • Though it can be grown on different types of soils, it thrives best in well-drained sandy or clay loam soils with a pH range of 4.5-7.5 with good organic status.

    Varieties

    • A number of cultivars are available in the country and are known mostly by the name of locality where they are cultivated.
    • Some of the popular cultivars are Duggirala, Tekkurpet, Sugandham, Amalapuram, Erode local, Salem, Alleppey, Moovattupuzha and Lakdong.

    Preparation of land

    • The land is prepared with the receipt of early monsoon showers.
    • The soil is brought to a fine tilth by giving about four deep ploughings.
    • Planting is also done by forming ridges and furrows.

    Plantation

    • Whole or split mother and finger rhizomes are used for planting and well-developed healthy and disease-free rhizomes are to be selected.

    Why turmeric?

    • Post pandemic, turmeric is one of the fastest-growing dietary supplements.
    • The global curcumin market, valued at $58.4 million in 2019, is expected to witness a growth of 12.7 percent by 2027.
    • As the world’s largest producer, consumer and exporter of turmeric, India stands to gain from this.

    Global standing

    • India produces 78 per cent of the world’s turmeric.
    • The country’s turmeric production saw a near consistent growth since Independence till 2010-11 after which it started fluctuating.
    • The pandemic has given a boost to the crop, with the production witnessing a rise of 23 per cent.
    • Though the production and export of turmeric has risen, farmers have not benefitted from its pricing.

    Try this PYQ from CSP 2020:

    With reference to the current trends in the cultivation of sugarcane in India, consider the following statements:

    1. A substantial saving in seed material is made when ‘bud chip settlings are raised in a nursery and transplanted in the main field.
    2. When direct planting of setts is done, the germination percentage is better with single-budded setts as compared to setts with many buds.
    3. If bad weather conditions prevail when setts are directly planted, single-budded setts have better survival as compared to large setts.
    4. Sugarcane can be cultivated using settlings prepared from tissue culture.

    Which of the statements given above is/are correct?

    (a) 1 and 2 only

    (b) 3 only

    (c) 1 and 4 only

    (d) 2,3 and 4 only

     

    [wpdiscuz-feedback id=”0ncc9i9l5p” question=”Please leave a feedback on this” opened=”1″]Post your answers here.[/wpdiscuz-feedback]

     

     

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  • Principles of Responsible Banking (PRBs)

    Global banks are pledging to report annually on the carbon emissions linked to the projects they lend to in an extension to the Principles for Responsible Banking (PRBs).

    What are PRBs?

    • The PRBs are a unique framework for ensuring that signatory banks’ strategy and practice align with the vision society has set out for its future in the SDGs and the Paris Climate Agreement.
    • It was created in 2019 through a partnership between founding banks and the United Nations.
    • The framework consists of 6 Principles designed to bring purpose, vision and ambition to sustainable finance.
    • Signatory banks commit to embedding these 6 principles across all business areas, at the strategic, portfolio and transactional levels:

    Note: India’s YES BANK Limited is the only Indian signatory to this framework.

    Significance of the PRBs

    • Banks can contribute to solving the climate crisis from two angles: their lending and their investments.
    • Many bank policies concentrate their investments on securities that were focused on sustainability.

    Issues with PRB

    • Being a signatory to the PRBs is a limited commitment.
    • Signatories have four years to comply with the principles.
    • Even then, everything is voluntary and non-binding, so signatories are not penalized or even named and shamed for failing to live up to the principles.

    Way forward

    • When signatories to the PRBs are lending money, they are supposed to carry out environmental impact assessments and to measure the greenhouse gas emissions of projects.
    • This is not a minor issue considering that such work is beyond the traditional competencies of banks and will significantly affect their operational costs.
    • Signatories are also supposed to ensure that loans go to projects that are carbon neutral.

     

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  • India’s power discoms are at a critical point

    Context

    The power sector in India is at an inflection point. Three developments are triggering a shift across the power chain, generation and distribution in particular, and are in the process deepening existing faultlines, and exacerbating the distress.

    Three changes driving the shift in power sector

    1) Central government’s approach towards distribution segment

    • Till recently, the Centre had preferred to incentivise states, nudging them to address the issue that lies at the heart of the power sector’s woes — turning around the operational performance and financial position.
    • However, despite multiple attempts, not much has changed.
    • But over the past few months, the Centre appears to have changed tack.
    • The Centre no longer appears content to simply nudge states into acting.
    • This change in stance is evident from enforcing the tripartite agreement to recover the dues owed to power producers like NTPC by discoms in Jharkhand, Tamil Nadu and Karnataka to now regulating coal supplies to states where power generating companies have been delaying payments.

    2) Covid impact on government finances and ability to support discoms

    • Notwithstanding buoyant tax revenues this year, Covid has wreaked havoc on government finances.
    • The general government debt stands at 90 per cent of GDP.
    • Add to this demands for greater welfare spending, uncertainty over state government finances once the five year GST compensation period ends next year, and the limits to which states can continue to support discoms will increasingly be tested.
    • To what extent accounting jugglery can be used once again to clean up discom debt is debatable.
    • After all, even the liquidity facility arranged by the Centre to help discoms pay off their obligations will have to be paid back.

    3) Loss of monopoly and shift towards renwable

    • Until now, consumers had little recourse to alternate sources of supply.
    • Consequently, discoms, which are essentially geographical monopolies, were able to charge higher tariffs from commercial and industrial consumers to cross-subsidise agricultural and low-income households.
    • But the situation appears to be changing.
    • Migration of high tariff paying consumers through open access and investments in captive power plants is gaining traction, driven in large part by the emergence of solar as an alternative at seemingly competitive tariffs.
    • This reduced reliance of high tariff paying consumers on discoms will only exacerbate their already precarious financial position.
    • The pace at which this transition is occurring will only accelerate in the coming years.
    • On the supply side, at the global and the national level, there is a push towards cleaner fuel, solar in particular.
    • Flowing from this — though with debatable relevance given the current levels of per capita emissions — is the domestic policy thrust towards renewables.
    • Solar, in particular, benefits from both explicit and implicit subsidies — land at concessional rate, exemption from interstate transmission charges, discounted wheeling charges, cross-subsidies for open access, SECI taking on counterparty risk, and others.
    • It also enjoys “Must Run” status.
    • On the demand side, at current tariffs, solar is emerging as an attractive alternative for the high tariff paying commercial and industrial consumers.
    • On their part, discoms are trying to salvage a losing situation.
    • To stem the flow of high paying customers, some have begun levying an additional surcharge on whoever opts for open access to lower the cost differential.
    • Others are shifting from net metering to gross metering — essentially charging consumers higher tariffs — above particular consumption levels.

    Conclusion

    Continuously subsidising discoms for their AT&C losses (operational inefficiencies), and for not supplying power at commensurate tariffs to low-income households and agricultural customers (for political considerations) will become fiscally untenable.

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  • Charting a trade route after the MC12

    Context

    The World Trade Organization (WTO)’s 12th Ministerial Conference (MC12) is being convened in Geneva, Switzerland at the end of this month.

    Ministerial Conferences

    • The topmost decision-making body of the WTO is the Ministerial Conference, which usually meets every two years. It brings together all members of the WTO, all of which are countries or customs unions.
    • The Ministerial Conference can take decisions on all matters under any of the multilateral trade agreements

    The task ahead for MC12

    • Recent WTO estimates show that global trade volumes could expand by almost 11% in 2021, and by nearly 5% in 2022, and could stabilise at a level higher than the pre-COVID-19 trend.
    • The MC12 needs to consider how in these good times for trade, the economically weaker countries “can secure a share in the growth in international trade commensurate with the needs of their economic development’, an objective that is mandated by the Marrakesh Agreement Establishing the World Trade Organization.
    • Some of the areas are currently witnessing intense negotiations, these include adoption of WTO rules on electronic commerce, investment facilitation, and fisheries subsidies.

    Following issues will form the basis of MC12 discussions

    1) IPR waiver for Covid-19 related technologies

    • Pharmaceutical companies have used monopoly rights granted by their IPRs to deny developing countries access to technologies and know-how, thus undermining the possibility of production of vaccines in these countries.
    • To remedy this situation, India and South Africa had tabled a proposal in the WTO in October 2020, for waiving enforcement of several forms of IPRs on “health products and technologies including diagnostics, therapeutics, vaccines, medical devices.
    •  This proposal, supported by nearly two-thirds of the organisation’s membership, was opposed by the developed countries batting for their corporates.
    • The unfortunate reality of the current discussions is that an outcome supporting affordable access to COVID-19 vaccines and medicines looks distant.

    2) Fisheries subsidies

    • Discussions on fisheries subsidies have been hanging fire for a long time, there is considerable push for an early conclusion of an agreement to rein in these subsidies.
    • The current drafts on this issue do not provide the wherewithal to rein in large-scale commercial fishing.
    • Large scale commercial fishing is depleting fish stocks the world over, and at the same time, are threatening the livelihoods of small fishermen in countries such as India.

    3) E-commerce

    • Discussions on e-commerce are being held in the WTO since 1998, wherein WTO members agreed to “continue their practice of not imposing customs duties on electronic transmissions”.
    • The more substantive outcome was the decision to “establish a comprehensive work programme” taking into “account the economic, financial, and development needs of developing countries”.
    • However, in 2021, a key focus of the 1998 e-commerce work programme, namely “development needs of developing countries”, is entirely missing from the text document that is the basis for the current negotiations.
    • On the negotiating table are issues relating to the liberalisation of the goods and services trade, and of course guarantee for free flow of data across international boundaries, all aimed at facilitating expansion of businesses of e-commerce firms.
    • In fact, the decision on a moratorium on the imposition of import duties agreed to in 1998 has become the basis for a push towards comprehensive trade liberalisation — a perfectly logical way forward, given that the sole objective of the negotiations on e-commerce is to facilitate expansion of e-commerce firms.

    4) Investment facilitation

    • Inclusion of substantive provisions on investment in the WTO has been one of the more divisive issues.
    • In 2001, the Doha Ministerial Declaration had included a work programme on investment, but developing countries were opposed to its continuation because the discussions were geared to expanding the rights of foreign investors through a multilateral agreement on investment.
    • An investment facilitation has reintroduced the old agenda of concluding such an investment agreement.

    Issues with the negotiations

    • The negotiations on e-commerce and investment facilitation are being conducted not by a mandate given by the entire membership of the WTO in a transparent manner.
    • Instead, these negotiations owe their origins to the so-called “Joint Statement Initiatives” (JSI) in which a section of the membership has developed the agenda with a view to producing agreements in the WTO.
    •  This entire process is “detrimental to the very existence of a rule-based multilateral trading system under the WTO”, as India and South Africa have forcefully argued in a submission against the JSIs early this year.

    Conclusion

    Current favourable tidings provide an ideal setting for the Trade Ministers from the WTO member-states to revisit trade rules and to agree on a work programme for the organisation, which can help maintain the momentum in trade growth.

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  • Infrastructure Investment Trusts (InvITs)

    The National Highway Authority of India’s first infrastructure investment trust has raised more than Rs 5,000 crore, informed the Ministry of Road Transport and Highways of India.

    What are InvITs?

    • InvITs are like a mutual fund, which enables direct investment of small amounts of money from possible individual/institutional investors in infrastructure to earn a small portion of the income as return.
    • They work like mutual funds or real estate investment trusts (REITs) in features.
    • They can be treated as the modified version of REITs designed to suit the specific circumstances of the infrastructure sector.

    How are they notified in India?

    • SEBI notified the Sebi (Infrastructure Investment Trusts) Regulations, 2014 on September 26, 2014, providing for registration and regulation of InvITs in India.
    • The objective of InvITs is to facilitate investment in the infrastructure sector.

    Their structure

    • InvITS are like mutual funds in structure. InvITs can be established as a trust and registered with Sebi.
    • An InvIT consists of four elements:
    1. Trustee: He inspects the performance of an InvIT is certified by Sebi and he cannot be an associate of the sponsor or manager.
    2. Sponsor(s): They are people who promote and refer to any organisation or a corporate entity with a capital of Rs 100 crore, which establishes the InvIT and is designated as such at the time of the application made to SEBI, and in case of PPP projects, base developer.
    3. Investment Manager: It is an entity or limited liability partnership (LLP) or organisation that supervises assets and investments of the InvIT and guarantees activities of the InvIT.
    4. Project Manager: It is the person who acts as the project manager and whose duty is to attain the execution of the project and in case of PPP projects.

     

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  • Centre cuts Excise Duty on Petrol and Diesel

    The Government has finally reduced fuel prices by slashing excise duties on petrol and diesel by ₹5 and ₹10 per litre respectively.

    What is Excise Duty?

    • Excise duty is a form of tax imposed on goods for their production, licensing and sale.
    • It is the opposite of Customs duty in sense that it applies to goods manufactured domestically in the country, while Customs is levied on those coming from outside of the country.
    • At the central level, excise duty earlier used to be levied as Central Excise Duty, Additional Excise Duty, etc.
    • Excise duty was levied on manufactured goods and levied at the time of removal of goods, while GST is levied on the supply of goods and services.

    Purview of excise duty

    • The GST introduction in July 2017 subsumed many types of excise duty.
    • Today, excise duty applies only on petroleum and liquor.
    • Alcohol does not come under the purview of GST as exclusion mandated by constitutional provision.
    • States levy taxes on alcohol according to the same practice as was prevalent before the rollout of GST.
    • After GST was introduced, excise duty was replaced by central GST because excise was levied by the central government.
    • The revenue generated from CGST goes to the central government.

    Types of excise duty in India

    Before GST, there were three kinds of excise duties in India.

    (1) Basic Excise Duty

    • Basic excise duty is also known as the Central Value Added Tax (CENVAT).
    • This category of excise duty was levied on goods that were classified under the first schedule of the Central Excise Tariff Act, 1985.
    • This duty applied on all goods except salt.

    (2) Additional Excise Duty

    • Additional excise duty was levied on goods of high importance, under the Additional Excise under Additional Duties of Excise (Goods of Special Importance) Act, 1957.
    • This duty was levied on some special category of goods.

    (3) Special Excise Duty

    • This type of excise duty was levied on special goods classified under the Second Schedule to the Central Excise Tariff Act, 1985.
    • Presently the central excise duty comprises of a Basic Excise Duty, Special Additional Excise Duty and Additional Excise Duty (Road and Infrastructure Cess) on auto fuels.

    Present taxation of Fuels

    • Currently, taxes on petroleum products are levied by both the Centre and the states.
    • While the Centre levies excise duty, states levy value-added tax (VAT).
    • For instance, VAT on petroleum products is as high as 40% in Maharashtra, contributing over ₹25,000 crores annually.
    • By being able to levy VAT on these products, the state governments have control over their revenues.
    • When a national GST subsumed central taxes such as excise duty and state levies like VAT on July 1, 2017, five petroleum goods – petrol, diesel, ATF, natural gas and crude oil – were kept out of its purview.

     

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  • Ensuring that policy outcome matches the intent

    Context

    Policy differences between parties and coalitions arouse heated debates in legislatures and at political rallies. But relatively scant attention is paid to whether the stated policy or enacted law — of any persuasion — delivered the intended outcomes/results.

    Issues with annual budget modalities

    • There are limitations in the structural design of the Union and the state governments of India, which either cause or enable inefficient translation of policy intent to semi-realised outcomes.
    • Nowhere is this more obvious than in the annual budget modalities followed by the Union and state governments.
    • The final accounts (FA) for a financial year are generally presented to the legislative body between 18 and 24 months after that year’s budget is approved, most often as a minor artefact along with the main attraction of the budget for the upcoming year and the minor attraction of the Revised Estimate (RE) for the year in progress.
    • In effect, a small fraction of the attention paid to intent (budget) is paid to the outcome (FA) which is only known many months after the year is over.
    • Governments in India adhere to the archaic cash accounting as opposed to accrual accounting, which is the norm for most companies and governments which introduces some strange incentives and behaviours, especially towards the end of the year.
    • As a result, even the final account is not what it seems, with the possibility that significant funds which have been presented to the legislature as spent are still held in off-balance-sheet accounts not visible to the government’s finance department.

    Way forward: Lessons from Tamil Nadu government

    • This structural limitation was the basis for the initiative to identify and retrieve unutilised funds that the Tamil Nadu government.
    • New procedures and systems will ensure that such moving/parking of funds (especially as the year ends) cannot happen outside of the finance department’s oversight.
    • On another front, the data-integrity project undertaken to support (among other reasons) the crop and jewel loan waiver poll promise has also produced remarkable results.
    • Many instances of ghost pension recipients and free-rice-entitled category of ration card holders and malfeasance in crop and jewel loan sanctioning have come to light.
    • The rectification of such anomalies will save the government a significant amount of funds, but, more importantly, enable fairer societal outcomes.
    • Tamil Nadu is diligently following the five-step approach: Collect and analyse data to develop a deeper understanding, disseminate results into the public domain and generate a public debate, receive feedback from the debate and inputs from experts, use these inputs to design policies and put into execution, constantly seek feedback and course correct when needed.

    Conclusion

    We need the thoughtful design of policies and schemes, and their execution, which are vital to achieving our intended goal of benefiting all citizens in a fair and inclusive manner.

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  • RBI issues revised Prompt Corrective Action (PCA) framework

    The RBI has issued a revised Prompt Corrective Action (PCA) framework for banks to enable supervisory intervention at “appropriate time” and also act as a tool for effective market discipline.

    What is the PCA framework?

    • Prompt Corrective Action Framework refers to the central bank’s watchlist of weak banks.
    • The regulator imposes restrictions like curbs on lending on such banks.
    • The PCA Framework applies only to commercial banks and does not cover cooperative banks and non-banking financial companies.

    When was PCA introduced?

    • The RBI’s PCA Framework was introduced in December 2002 as a structured early intervention mechanism along the lines of the US Federal Deposit Insurance Corporation’s PCA framework.
    • The last PCA Framework was issued by the RBI on April 13, 2017, and implemented with respect to banks’ financials as of March 31, 2017.

    Latest PCA norms

    • The revised PCA framework will be effective from January 1, 2022.
    • Capital, asset quality and leverage will be the key areas for monitoring in the revised framework.
    • That apart, RBI has also revised the level of shortfall in total capital adequacy ratio that would push the lender to “risk threshold three” category.

    When exactly does a bank fall into this list?

    • The RBI has specified certain regulatory trigger points with respect to three parameters for the initiation of the process:
    • Capital-to-risk weighted assets ratio (CRAR): It is a measure of a bank’s capital to ensure that it can absorb a reasonable amount of loss and complies with statutory Capital requirements.
    • Net Non-Performing Assets (NPA)
    • Return on assets (RoA): It is an indicator of how well a company utilizes its assets in terms of profitability.

    What are the trigger points on capital and how does a breach invite action?

    1. CRAR

    • If CRAR falls to less than 9 percent, the RBI asks banks to submit a capital restoration plan, restricts new businesses and dividend payments.
    • The RBI also orders recapitalisation, restrictions on borrowings from the inter-bank market, reduction of stake in subsidiaries and reduction of exposure to sensitive sectors.
    • Such sectors include the capital markets, real estate or investments in non-statutory liquidity ratio securities.
    • If CRAR is less than 6 percent but equal to or more than 3 percent, the RBI could take additional steps if the bank fails to submit a recapitalisation plan.

    2. NPA levels

    • If net NPAs rise beyond 10 percent but are less than 15 percent, a special drive to reduce bad loans and contain the generation of fresh NPAs begins.
    • The RBI reviews the bank’s loan policy and takes steps to strengthen credit-appraisal skills.

    3.Return on assets

    • If RoA is less than 0.25 percent, restrictions on accessing/renewing costly deposits and CDs kick in and the RBI bars the bank from entering new lines of business.
    • The bank’s borrowings from the inter-bank market, making dividend payments and increasing staff will be restricted.

    Significance of PCA

    • The financial health of a bank: Essentially PCA helps RBI monitor key performance indicators of banks, and taking corrective measures, to restore the financial health of a bank.
    • Averting a crisis: PCA is intended to help alert the regulator as well as investors and depositors if a bank is heading for trouble. The idea is to head off problems before they attain crisis proportions.

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  • Mixed signals on growth-inflation dynamics

    Context

    We are now at that point in the cycle where all central banks — the RBI, the US Fed, the European Central Bank, Bank of England and others — have begun to signal, a process of normalisation from the unprecedented loose monetary policy stimulus post the onset of the pandemic in early 2020.

    Recovery momentum

    • Surveys and data prints are now signalling that the recovery momentum in the first half of 2021 is decelerating in many countries, although the direction and momentum may vary.
    • The RBI Governor notes that “the external environment, which had been supportive of aggregate demand over the past few months, may lose momentum for a variety of reasons”.
    • China — its policy and economy — is the most salient risk for a sustained global recovery.
    • The Chinese authorities’ seeming determination to push ahead with structural reforms, de-carbonising initiatives, and curbs on real estate appear designed to sacrifice some short-term growth for medium-term efficiencies, and reduce financial risks and inequality.
    • Inflation in almost all major economies continues to remain high.
    • The US Personal Consumption Expenditure (PCE) survey measure of core inflation is running over 4 per cent.
    • The story is similar in Europe.

    Assessing India’s growth recovery

    • India’s growth–inflation dynamics are also becoming favourable, but are still subject to multiple risks.
    • In assessing India’s growth recovery, a risk of the global economy going into “stagflation”, going by US signals seems to be that if at all, it is likely to be mild.
    • The recovery of economic activity continues, although the high-frequency indicators we track suggest that the momentum observed in July and August has moderated.
    • Electricity consumption growth is also down from August levels, but part of this can be explained by both cooler, rainy weather, as well as coal shortage related cutbacks in many electricity-intensive manufacturing.
    • The residential real estate is reportedly doing exceptionally well, with low-interest rates on home loans, cuts in stamp duty and registration charges, and indeed behavioural shifts towards own home ownerships with hybrid and work from home shifts.
    • Even the commercial real estate sector is reviving.
    • The Union government also has large unspent cash balances, which can be judiciously deployed to boost both capex and consumption.
    • The overall inflation trajectory suggests a gradual glide path towards the 4 per cent target by March 2023 or a bit beyond.
    • There are risks of overshooting this forecast trajectory, despite a benign outlook on food prices.
    • This emanates from global metals, minerals, crude oil prices, and from supply bottlenecks persisting till well into 2022.

    Conclusion

    In summary, the growth–inflation signals remain mixed. Multiple episodes of global spillovers in the past couple of decades have taught us that imminent normalisation will have implications for all emerging markets.

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  • Why India needs a Ministry of Energy?

    Context

    The blame cannot be placed on the doors of any one entity or ministry for the shortage of coal.

    Ministries linked with coal shortage issue

    • The Ministry of Coal and Coal India must certainly accept that they slipped up somewhere — whether in managing the production process, planning supplies or leaving vacant crucial leadership positions.
    • The Ministry of Power/NTPC should also accept responsibility as they allowed coal inventories to fall below the recommended minimum in an effort to better manage their working capital.
    • But they can claim they had no other option because the state government electricity distribution companies do not pay their dues on time or fully.
    • The discoms will point a finger at their political bosses, who compel them to sell electricity to residential and agricultural sector consumers at subsidised tariffs.

    Structural issues

    • There is no one public body at the central or state government level with executive oversight, responsibility and accountability for the entirety of the coal value chain.
    • This is a lacuna that afflicts the entire energy sector.
    • It will need to be filled to not only prevent a recurrence of another coal crisis but also for the country to realise its “green” ambition.
    • The word “energy” is not part of the political or administrative lexicon.
    • At least not formally. As a result, there is no energy strategy with the imprimatur of executive authority.
    • The NITI Aayog may well challenge this statement.
    • For they have produced an energy strategy.

    Suggestions

    • Energy act: The government should pass an Act (possibly) captioned “The Energy Responsibility and Security Act.”
    • This Act should elevate the significance of energy by granting it constitutional sanctity; it should embed in law, India’s responsibility to provide citizens access to secure, affordable and clean energy.
    • The law should lay out measurable metrics for monitoring the progress towards the achievement of energy independence, energy security, energy efficiency and “green” energy.
    • Ministry of energy: Towards the fulfillment of this mandate, the government should redesign the existing architecture of decision-making for energy.
    • Preference would be for the creation of an omnibus Ministry of Energy to oversee the currently siloed verticals of the ministries of petroleum, coal, renewables and power.
    • The department would have a narrower remit than the other energy departments but by virtue of its location within the PMO, it would, de facto, be the most powerful executive body with ultimate responsibility for navigating the “green transition”.

    Benefits

    • It is important to stress the positive impact the above redesign will have on investor sentiment.
    • Several corporates have signaled their intent to invest mega bucks in clean energy.
    • Reliance has committed $10 billion, Adani $ 70 billion over 10 years; Tata Power, ReNew Power and Acme Solar have also placed their stakes in the ground.

    Conclusion

    Energy sector will be immensely benefited if the current fragmented and opaque regulatory, fiscal and commercial systems and processes were replaced by a transparent and single-point executive decision-making body for energy.

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