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Subject: Economics

  • A clean energy transition plan for India

    Context

    India has a long way to go in providing electricity security to its people since its per capita electricity consumption is still only a third of the global average.

    Ensuring energy security and role of coal

    • Energy security warrants the uninterrupted supply of energy at affordable prices.
    •  Thanks to the Electricity Act of 2003, the installed coal-fired thermal power plant (TPP) generation capacity in India more than doubled from 94 GW to 192 GW between March 2011 and 2017.
    • This sharp increase in the installed capacity has enabled the government to increase per capita electricity consumption by 37% while reducing peak demand deficit from 9.8% (2010-11) to 1.6% (2016-17). 
    • TPPs contributed 71% of the 1,382 billion units (BU) of electricity generated by utilities in India during FY 2020-21 though they accounted for only 55% of the total installed generation capacity of 382 GW (as of March 2021).
    • Coal, therefore, plays a vital role in India’s ongoing efforts to achieve Sustainable Development Goal 7, which is “to ensure access to affordable, reliable, sustainable and modern energy for all”.

    Renewable energy utilisation issue and implications for consumers

    • While variable renewable energy (VRE) sources (primarily, wind and solar) account for 24.7% of the total installed generation capacity, as of March 2021, they contributed 10.7% of the electricity generated by utilities during FY 2020-21.
    • However, the ramp-up of VRE generation capacity without commensurate growth in electricity demand has resulted in lower utilisation of TPPs whose fixed costs must be paid by the distribution companies (DISCOMs) and passed through to the final consumer.
    • The current level of VRE in the national power grid is increasing the cost of power procurement for DISCOMs, leading to tariff increases for electricity consumers. 
    • Therefore, India must implement a plan to increase energy efficiency and reduce the emissions of carbon dioxide (CO2) and airborne pollutants from TPPs without making power unaffordable to industries that need low-cost 24×7 power to compete in the global market.

    Way forward: time-bound transition plan

    • Phasing out: The plan should involve the progressive retirement of TPPs(unit size 210 MW and below) based on key performance parameters such as efficiency, specific coal consumption, technological obsolescence, and age.
    • Increasing utilisation: The resulting shortfall in baseload electricity generation can be made up by increasing the utilisation of existing High-Efficiency-Low-Emission (HELE) TPPs that are currently under-utilised to accommodate VRE and commissioning the 47 government-owned TPPs.
    • In addition, the Nuclear Power Corporation of India Limited (NPCIL) is also constructing 11 nuclear power plants with a total generation capacity of 8,700 MW that will supply 24×7 power without any CO2 emissions.
    • The combined thermal (220 GW) and nuclear (15 GW) capacity of 235 GW can meet the baseload requirement (80% of peak demand) during the evening peak in FY 2029-30 without expensive battery storage.
    • The optimal utilisation of existing and under-construction HELE TPPs with faster-ramping capabilities and lower technical minimums also facilitates VRE integration.
    • Since HELE TPPs minimise emissions of particulate matter (PM), SO2, and NO2, the transition plan offers operational, economic, and environmental benefits including avoidance of sustenance Capex and FGD costs in the 211 obsolete TPPs to be retired besides savings in specific coal consumption and water requirement leading to reductions in electricity tariffs and PM pollution.

    Conclusion

    The implementation of transition plan will enable India to safeguard its energy security and ensure efficient grid operations with lower water consumption, PM pollution, and CO2 emissions.

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  • India’s gig economy

    Since the pandemic, there is a growing concern about the pay-out and job-securities of the delivery persons and other gig workers of the e-commerce companies.

    E-com boom in India

    • E-commerce in India is a nascent industry that is probably less than 13 years old.
    • In this short period, it has captured the collective imagination of the nation.
    • The covid-19 crisis has accelerated its adoption, and even die-hard fans of shopping at a physical store have switched to shopping online.

    Various issues faced by the gig workers

    • Harsh working conditions
    • Quality of work and the temporary nature of engagement
    • Absence of a social security net
    • Long hours
    • Delayed pay-outs
    • Pressure to maximize speed of delivery (at the risk of road accidents)

    E-coms under scanner

    The bigger an industry gets, and the more successful it is perceived to be, the more responsible and thoughtful it needs to be in everything it does.

    • Fairness in employment: Some of the concerns are fair and call for introspection on the part of e-commerce companies.
    • Premature regulation: There is a rising demand for regulation of the gig economy created by them.

    Significance of e-commerce sector

    Anyone complaining about the quality of jobs being created by the e-commerce industry probably needs to spend some time understanding the history of job creation in India.

    An attractive sector for India’s ‘jobs problem’

    • Ample workforce: India is a demographically youthful nation, and every year between 17 and 20 million people look for jobs.
    • Attractive sector: This includes around 5 million people who are abandoning highly exploitative and less remunerative farm jobs every year to find employment in other sectors, mostly in the nearest urban districts.
    • Limited success of service sector: The IT and business process outsourcing industry has less than 200,000 jobs a year during its 25 years of existence. This is just a minuscule 1% of the total number of jobs that need to be created.

    Data justifying un-steady flow of income

    • According to CSO, only about 17% of India’s workers are regular wage earners and less than 23% of Indian households have a regular wage earner.
    • In other words, 77% of our households did not have a steady flow of income.
    • Self-employed (46%) and casual labour (33%) together account for nearly 80% of the workforce and claimed to earn less than ₹10,000 per month.
    • These are the realities that cannot be ignored.

    E-commerce: A game-changer

    • The new-age platforms have done is nothing short of a miracle both in terms of creating jobs as well as paying a fair wage.
    • It can be well established that it has provided a better remedy for unemployment in India.

    Why do e-marketplaces matter?

    • Failure of Skills: Neither skill nor knowledge is enough to ensure one generates income.
    • Technology dependency and free market: Efficient marketplace which are enabled by technology, matters.
    • Common platform: A startup such as the Urban Company is an example of a technology-powered marketplace for common services such as plumbing, carpentry, beauty, and house-cleaning, among others.
    • Single marketplace: They brought consumers and suppliers of services (based on skills) on a common platform and made the whole process of matching demand and supply pretty seamless.

    Benefits offered

    • Decent pay: A consumer of a service is willing to pay more for better quality of service if there is a consistent and reliable process of evaluating the capability of service providers.
    • Self-employment: Most of these workers are always self-employed and even with these platforms, they operate in a gig mode which isn’t structurally different.
    • Better livelihood: Youth from rural India had been joining the Ola and Uber platforms in large numbers, many of whom were either unemployed or heavily under-employed.
    • No skill-compulsion: When skilling is voluntary and driven by a free market mechanism, the outcomes are magical.
    • Industrializing the services: These platforms did ‘industrialize’ the services—industrialization allowed effortless consumption and created structured mechanisms to scale services and service capabilities.
    • New consumption pattern: The technology enabled markets resulted in ‘new consumption’ which, in turn, led to creation of more goods and service providers.

    Way forward

    • As far as the e-commerce industry is concerned, there are several obvious lessons that can contribute towards its growth, going ahead.
    • Also it is not fair to paint the entire industry as exploitative or be unduly critical of the gig model which is actually a very good model.
    • Many of the gig workers themselves would be reluctant to take up full time and fixed salaried jobs. Pushing for premature regulation could be lethal.
    • And finally, it is unrealistic to expect the e-commerce industry to create jobs that are probably as well paying like the IT industry.

    Conclusion

    • Creating high-paying jobs was never easy and will never be easy.
    • Nor is it realistic that everyone, or even a majority of the 20 million, will be employed in high-paying jobs.

     

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  • Global Agricultural Productivity Report, 2021

    Global agricultural productivity (GAP) is not growing as fast as the demand for food, amid the impact of climate change, according to a new report.

    GAP Report

    • The GAP Report is released by Virginia Tech’s College of Agriculture and Life Sciences.
    • It urges the acceleration of productivity growth from smallholders to large-scale farmers to meet consumers’ needs and address current and future threats to human and environmental well-being.

    Key indicator: Total factor productivity (TFP)

    • In agriculture, productivity is measured as Total Factor Productivity or TFP.
    • An increase in TFP growth indicates that more crops, livestock, and aquaculture products were produced with the same amount (or less) land, labor, fertilizer, machinery, feed, and livestock.
    • TFP grows when producers increase output using improved technologies and practices, such as advanced seed varieties, precision mechanization, efficient nutrient and water management techniques, and improved animal care practices.
    • Using agricultural inputs efficiently to generate more output reduces agriculture’s environmental impact and lowers costs for producers and consumers.

    Highlights of the report

    • Total factor productivity (TFP) is growing at an annual rate of 1.36 per cent (2020-2019).
    • This is below the annual target of 1.73 per cent growth to sustainably meet the needs of consumers for food and bioenergy in 2050.
    • Climate change has already reduced productivity growth globally by 21 per cent since 1961, the report said.
    • In the drier regions of Africa and Latin America, climate change has slowed productivity growth by as much as 34 per cent.
    • The report noted that middle-income countries including India, China, Brazil and erstwhile Soviet republics continued to have strong TFP growth rates.

    Agricultural productivity in India

    • India has seen strong TFP and output growth this century.
    • The most recent data shows an average annual TFP growth rate of 2.81 per cent and output growth of 3.17 per cent (2010–2019).

    Key recommendations

    • The report urged accelerating investments in agricultural R&D to increase and preserve productivity gains, especially for small farmers.
    • It identified six strategies and policies that would create sustainable agricultural growth at all scales of production:
    1. Invest in agricultural research and development
    2. Embrace science-and-information-based technologies
    3. Improve infrastructure for transportation, information and finance
    4. Cultivate partnerships for sustainable agriculture, economic growth and improved nutrition
    5. Expand and improve local, regional and global trade
    6. Reduce post-harvest loss and food waste

     

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  • Trade Protectionism in India

    Context

    India’s efforts for deepening India’s trade ties with several countries could be scuttled by rising trade protectionism at home.

    Increasing protectionism by India

    • Increase in average tariffs: As Arvind Panagariya has argued, the simple average of India’s tariffs that stood at 8.9 per cent in 2010-11 has increased by almost 25 per cent to 11.1 per cent in 2020-21.
    • These increases in tariff rates have reversed the political consensus on tariff liberalisation that India followed since 1991.
    • Initiator of anti-dumping measures: India is the highest initiator of anti-dumping measures aimed at shielding domestic industry from import competition.
    • According to the WTO, from 2015 to 2019, India initiated 233 anti-dumping investigations, which is a sharp increase from 82 initiations between 2011 and 2014 (June).
    • The anti-dumping initiations by India from 1995 (when the WTO was established) till 2020 stand at 1,071.
    • Expanding the scope of Article 11(2)(f): India recently amended Section 11(2)(f) of the Customs Act of 1962, giving the government the power to ban the import or export of any good (not just gold and silver, as this provision applied earlier) if it is necessary to prevent injury to the economy. 
    • Expanding the scope of Article 11(2)(f) to cover any good is inconsistent with India’s WTO obligations.
    • WTO allows countries to impose restrictions on imports in case of injury to domestic industry, not to the “economy”.
    • Restrictive rules of origin: Finance Minister in her budget speech of 2020 said that undue claims of FTA benefits pose a threat to the domestic industry.
    •  Subsequently, India amended the rules of origin requirement under the Customs Act.
    • Rules of origin determine the national source of a product.
    • This helps in deciding whether to apply a preferential tariff rate (if the product originates from India’s FTA partner country) or to apply the most favoured nation rate (if the product originates from a non-FTA country).
    • But India has imposed onerous burdens on importers to ensure compliance with the rules of origin requirement.
    • The intent appears to be to dissuade importers from importing goods from India’s FTA partners.
    • Impact of vocal for local: The clarion call given by Prime Minister Narendra Modi to be “vocal for local” is creating an ecosystem where imports are looked at with disdain, upsetting competitive opportunities and trading partners.

    What are the implications?

    • Protectionist steps are justified on the ground that they would help domestic companies grow into viable competitors.
    • But the fact is that protectionism does not benefit the domestic economy.
    • It rather encourages inefficiency of domestic manufacturers.
    • It is likely to hurt exports, make domestic goods costlier and reduce benefits to consumers from increased competition.
    • So in the long term, protectionism is likely to have only a negative effect on industry’s ability to compete globally.
    • For India to reap the benefits of the summits and partnerships like Quad, there needs to be a fundamental shift in policy.
    • Amore pragmatic approach in line with the recent initiatives to reverse the retrospective tax legislation and provide support to the flailing telecom sector must be expanded.

    Conclusion

    India can’t maximise its interests at the expense of others. Its experiment with trade protectionism in the decades before 1991 was disastrous. We should recall Winston Churchill’s warning: “Those who fail to learn from history are condemned to repeat it.”

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  • Need for Strategic Reserves of Coal and Gas

    The Centre has stressed the need to build strategic reserves of imported coal and gas as was being done for petroleum products.

    Why need strategic reserves for Coal and Gas?

    • Many countries have started keeping strategic reserves, because when it comes to a crunch, every country will meet its needs first.
    • Russia has curtailed gas supply to Europe because they want more gas to be consumed within their country.
    • There is a surge in power demand combined with a fall in imports due to high global coal prices have led to supply disruptions.

    Do you know?

    In 1998, the AB Vajpayee administration proposed building petroleum reserves as a long-term solution to managing the oil market.

    What are Strategic Reserves?

    • Indian refiners maintain 64.5 days of crude storage, so India has overall reserve oil storage of 74 days
    • Indian Strategic Petroleum Reserves Limited (ISPRL) is an Indian company responsible for maintaining the country’s strategic petroleum reserves.
    • ISPRL is a wholly-owned subsidiary of the Oil Industry Development Board (OIDB), which functions under the administrative control of the Ministry of Petroleum and Natural Gas.
    • It maintains an emergency fuel store of total 5.870 million cubic meters of strategic crude oil enough to provide 9.5 days of consumption.

    SPRs in India

    S. No. Location Capacity
    1 Visakhapatnam, Andhra Pradesh 1.33 million tonnes
    2 Mangalore, Karnataka 1.5 million tonnes
    3 Padur, Karnataka 2.5 million tonnes and an additional 2.5 million tonnes under construction
    4 Chandikhol, Odisha 4 million tonnes (under construction)

     

    Why were SPRs created?

    • Gulf War, 1990: It caused a sharp rise in oil prices and a massive increase to India’s imports.
    • Forex fluctuations: During the subsequent 1991 Indian economic crisis, foreign exchange reserves could barely finance three weeks’ worth of imports while the government came close to defaulting on its financial obligations.
    • Price volatility: India was able to resolve the crisis through policies that liberalized the economy. However, India continued to be impacted by the volatility of oil prices.

    How are they constructed?

    • The crude oil storages are constructed in underground rock caverns and are located on the East and West coasts of India.
    • Crude oil from these caverns can be supplied to the Indian Refineries either through pipelines or through a combination of pipelines and coastal movement.
    • Underground rock caverns are considered the safest means of storing hydrocarbons.

     

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  • Gross NPAs of Banks to Rise

    Gross Non-Performing Assets (NPAs) of banks are expected to rise to 8-9% this fiscal from 7.5% as on March 31, 2021 but they would still remain below the peak of 11.2% seen at the end of fiscal 2018.

    What are Non-Performing Assets?

    • For a bank, the loans given by the bank is considered as its assets.
    • Any asset which stops giving returns to its investors for a specified period of time is known as Non-Performing Asset (NPA).
    • So, if the principle or the interest or both the components of a loan is not being serviced to the lender (bank), then it would be considered as NPA.

    Classification of NPAs in India

    • According to the RBI, a NPA is a loan or advance for which the principal or interest payment remained overdue for a period of 90 days.
    • Banks are required to classify NPAs further into Substandard, Doubtful and Loss assets.
    1. Substandard Assets: Assets which has remained NPA for a period less than or equal to 12 months.
    2. Doubtful Assets: An asset would be classified as doubtful if it has remained in the substandard category for a period of 12 months.
    3. Loss Assets: As per RBI, loss asset is considered uncollectible and of such little value that its continuance as a bankable asset is not warranted, although there may be some salvage or recovery value.

    NPAs of Agriculture Loans

    In terms of Agriculture/Farm Loans, the NPA is defined as under:

    • For short duration crop such as paddy, Jowar, Bajra etc. if the loan (instalment/interest) is not paid for 2 crop seasons, it would be termed as an NPA.
    • For Long Duration Crops, the above would be 1 Crop season from the due date

    Reasons for NPAs in India

    Impact of NPA on Economy

    • Depositors’ loss: Depositors do not get rightful returns and many times may lose uninsured deposits.
    • High interest on lending: Banks may begin charging higher interest rates on some products to compensate NPA loan losses.
    • Trust issues: Bad loans imply redirecting of funds from good projects to bad ones. Hence, the economy suffers due to loss of good projects and failure of bad investments

    Steps taken to curb NPA

    (A) By the Govt

    • Mission Indradhanush:to make the working of public sector bank more transparent and professional in order to curb the menace of NPA in future.
    • Insolvency and Bankruptcy Code: To make it easier for banks to recover the loans from the debtors.
    • Stringent NPA recovery rules: The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act or SARFESI Act of 2002 was amended in 2016.

    (B) By RBI

    RBI introduced number of measures in last few years which include:

    • Corporate Debt Restructuring (CDR) mechanism,
    • Setting up a Joint Lenders’ Forum, providing banks to disclose the real picture of bad loans, asking them to increase provisioning for stressed assets,

    Other terms related to NPAs

    Write-off effect

    • A loan write-off is a tool used by banks to clean up their balance-sheets.
    • If a loan turns bad on the account of the repayment defaults for at least three consecutive quarters, the exposure (loan) can be written off.
    • A loan write-off sets free the money parked by the banks for the provisioning of any loan.

    Twin Balance Sheet

    • It deals with two balance sheet problems. One with Indian companies and the other with Indian Banks.
    • Debt accumulation on companies is very high and thus they are unable to pay interest payments on loans.

    Four Balance Sheet Challenge

    • In his paper named ‘India’s Great Slowdown’, Arvind Subramanian (former Chief Economic Advisor) mentions the new ‘Four balance sheet challenge’.
    • It includes the original two sectors – infrastructure companies and banks, plus NBFCs and real estate companies.

     

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  • World Economic Outlook (WEO) Report by IMF

    The International Monetary Fund (IMF) has unveiled its 2nd World Economic Outlook (WEO) Report.

    About WEO Report

    • The WEO is a report by the IMF that analyzes key parts of the IMF’s surveillance of economic developments and policies in its member countries.
    • It also projects developments in the global financial markets and economic systems.
    • The report comes out twice every year — April and October.
    • It is based on a wide set of assumptions about a host of parameters — such as the international price of crude oil — and set the benchmark for all economies to compare one another with.

    Key takeaways from the October 2021 WEO

    • The central message was that the global economic recovery momentum had weakened due to the pandemic-induced supply disruptions.
    • It is the increasing inequality among nations that IMF was most concerned about.
    • The dangerous divergence in economic prospects across countries remains a major concern.

    Reasons for the slowdown

    There are two key reasons:

    1. Large disparities in vaccine access
    2. Differences in policy support

    What about Employment?

    Ans. There is a lag.

    • Employment around the world remains below its pre-pandemic levels.
    • This reflects a mix of negative output gaps, worker fears of on-the-job infection in contact-intensive occupations, childcare constraints, labour demand changes due to automation etc.
    • The main concern is the gap between recovery in output and employment which is likely to be larger in emerging markets and developing economies than in advanced economies.
    • Further, young and low-skilled workers are likely to be worse off than prime-age and high-skilled workers, respectively.

    Implications for India

    Ans. Reduce India’s growth momentum

    • IMF has suggested that India’s economic recovery is gaining ground.
    • Some sectors such as the IT-services sectors have been practically unaffected by Covid, while the e-commerce industry is doing brilliantly.
    • However, the recovery in unemployment is lagging the recovery in output (or GDP).
    • This matters immensely for India as it reflects jobless growth.
    • India was already facing a deep employment crisis before the Covid crisis, and it became much worse after it.
    • Lack of adequate employment levels would again drag down overall demand and affect the growth momentum.

    Threats to growth momentum

    • Usual unemployment: Even before the pandemic, India already had a massive unemployment crisis.
    • Sector-wise recovery: India is witnessing a K-shaped recovery. That means different sectors are recovering at significantly different rates.
    • Unorganized sector: A weak recovery for the informal/unorganized sectors implies a drag on the economy’s ability to create new jobs or revive old ones.
    • Contact-based services: Such services which can create many more jobs, are not seeing a similar bounce-back.

    How informal is India’s economy?

    • A NSO report titled ‘Measuring Informal Economy in India’ gives a detailed account of informal Indian economy.
    • It shows the share of different sectors of the economy in the overall Gross Value Added and the share of the unorganised sector therein.
    • The share of informal/unorganised sector GVA is more than 50% at the all-India level, and is even higher in certain sectors.
    • It creates a lot of low-skilled jobs such as construction and trade, repair, accommodation, and food services.

    This is why India is more vulnerable.

     

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  • EU food recalled over alleged GM rice exports from India

    The European Union has recalled some packaged food items which were made up of Indian GMO.

    GM crops in India

    The Genetic Engineering Appraisal Committee (GEAC) under Environment Ministry oversees the approval of GM Crops in India.

    • Bt cotton: It is the only GM crop that has been approved for commercial cultivation in 2002.
    • Bt Brinjal: Resistant to brinjal shoot fly, it was approved by GEAC in 2009. However due to 10 years moratorium imposed on GM crops by the Technical Expert Committee (TEC) appointed by the Supreme Court of India, its commercialization has stalled.
    • GM Dhara Mustard Hybrid 11: DMH 11 developed by Delhi University is pending for commercial release as GEAC has advised to generate complete safety assessment.

    However, unauthorized HtBt Cotton and Bt Brinjal are being grown commercially, with hundreds of growers blatantly defying the governmental ban.

    What about GM Rice?

    • GM rice is not grown commercially in India.
    • However, multiple GM rice varieties have been approved for confined field trials.
    • There seems a possibility of cross-contamination from such field trials directly or through seed leakages.

    India’s rice exports

    • India’s annual rice exports amount to 18 million tonnes worth ₹65,000 crore, and reach more than 75 countries.

    What is the EU move?

    • A European candy has recalled several batches of its product from the market due to the use of rice flour with genetically modified (GM) contamination that allegedly originated in India.
    • The EU notification has identified the product as ‘Unauthorised genetically modified (p35S and tNos) rice flour from India’.

    Impact of the EU move

    • This has led to the loss of reputation of India and its agricultural market.
    • With such a move by the EU, it is Indian farmers and exporters who have much to lose.

    Threats posed by GM crops

    • It is believed that consumption of genetically engineered foods can cause the development of diseases which are immune to antibiotics.
    • Besides, as these foods are new inventions, not much is known about their long term effects on human beings.
    • Genetically modified rice may potentially cause serious public health and environmental problems.
    • Two major issues about GM rice are their tendencies to provoke allergic reactions and the uncertainty of gene transfers.

    What can be done to reverse this?

    • Ban on field trials of GM crops
    • Slapping liability for illegal release of GMOs into the environment on developers
    • Probe to identify the source of the GM rice contamination

    Try answering this PYQ:

    With reference to the Genetically Modified mustard (GM mustard) developed in India, consider the following statements:

    1. GM mustard has the genes of a soil bacterium that give the plant the property of pest-resistance to a wide variety of pests.
    2. GM mustard has the genes that allow the plant cross-pollination and hybridization.
    3. GM mustard has been developed jointly by the IARI and Punjab Agricultural University.

    Which of the statements given above is/are correct?

    (a) 1 and 3 only

    (b) 2 only

    (c) 2 and 3 only

    (d) 1, 2 and 3

     

    [wpdiscuz-feedback id=”zieaak7yfu” question=”Please leave a feedback on this” opened=”1″]Post your answers here.[/wpdiscuz-feedback]

     

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  • Lessons from the coal shortage

    Context

    Normally, the power-generating companies maintain around 30 days of inventory of coal, but, currently, this has come down to three days.

    Factors responsible for the crisis

    • Supply side issue: On the supply side, because of low investment, coal cannot be mined more than the capacity which exists today. Hence, the increase in supplies will be gradual.
    • High global prices: The global coal crisis has led to higher prices.
    • Here, too, a sudden resurgence in demand after the pandemic has exposed the supply limitations.
    • The international price has gone up by almost 40 per cent in the last month.
    • China factor: China – a major producer and consumer – has also faced this problem as it has tried to save coal for the future and imposed restrictions on mining to go green.
    • Emphasis on lowering the dependence on import:  In India, coal imports have been traditionally high.
    • Under its atmanirbharta drive, the government has voiced concerns on this issue and asked generators to be more self-reliant.
    • Coal dependency came down over time, which also coincided with a lower phase of economic growth.
    • The same has happened in China where the government has taken the greening concept seriously and asked coal producers to control production and power generators and move over to other greener fuels.
    • This has made coal producers less willing to increase investment.

    Why power companies are reluctant to import coal?

    • Ideally, power companies should import coal.
    • But that increases the cost of power production and power tariffs cannot be revised easily, like in the case of crops.
    • The power sector, however, already has its woes.
    • Distribution companies have been running losses due to their inability to cut down on transmission losses or increase tariffs.
    • As their losses mount, the amount overdue to the generators increases.
    • Therefore, the producers are not willing to increase their costs.

    How it would impact the economy?

    • The economy has been showing signs of recovering and the October-December period is crucial because there are expectations of pent-up demand helping to accelerate growth.
    • Any disruption in the power supply can push back this process.
    • The challenge is that today all the three sectors, agriculture, industry and households, are equally important.
    • A lot of business is being conducted from home after the pandemic, and power disruptions will come in the way of work.
    • If power companies start revising their tariffs, inflation will shoot up.

    Conclusion

    The coal shortage problem is very serious as it affects power supply, which is the backbone of all economic activity. All stakeholders – the Centre, states, miners and power generators – must work together and plan the strategy going ahead.

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  • Improving livestock breeding

    Context

    The revised version of the Rashtriya Gokul Mission and National Livestock Mission (NLM) proposes to bring focus on entrepreneurship development and breed improvement in cattle, buffalo, poultry, sheep, goat, and piggery.

    Livestock breeding and challenges

    • Unorganised in nature: Livestock breeding in India has been largely unorganised.
    • Lack of linkages: Because of this unorganised nature there have been gaps in forward and backward integration across the value chain.
    • Impact on quality: The above scenario impacts the quality of livestock that is produced and in turn negatively impacts the return on investment for livestock farmers.
    • Roughly 80% bovines in the country are low on productivity and are reared by small and marginal farmers.

    Entrepreneurship development through NLM and Rashtriya Gokul Mission

    • The revised version of the Rashtriya Gokul Mission and National Livestock Mission (NLM) proposes to bring focus on entrepreneurship development.
    • Breed improvement infrastructure: It seeks to provide incentives to individual entrepreneurs, farmer producer organisations, farmer cooperatives, joint liability groups, self-help groups, Section 8 companies for entrepreneurship development and State governments for breed improvement infrastructure.
    • The breed multiplication farm component of the Rashtriya Gokul Mission is going to provide for capital subsidy up to ₹200 lakh for setting up breeding farm with at least 200 milch cows/ buffalo using latest breeding technology. 
    •  Moreover, the strategy of incentivising breed multiplication farm will result in the employment of 1 lakh farmers.
    • The grassroots initiatives in this sphere will be further amplified by web applications like e-Gopala that provide real-time information to livestock farmers.
    • Poultry: The poultry entrepreneurship programme of the NLM will provide for capital subsidy up to ₹25 lakh for the setting up of a parent farm with a capacity to rear 1,000 chicks.
    • Under this model, the rural entrepreneur running the hatchery will be supplying chicks to the farmers.
    • This is expected to provide employment to at least 14 lakh people.
    • Sheep and goat entrepreneurship: In the context of sheep and goat entrepreneurship, there is a provision of capital subsidy of 50% up to 50 lakh.
    • An entrepreneur under this model shall set up a breeder farm, develop the whole chain will eventually sell the animals to the farmers or in the open market.
    • This model is projected to generate a net profit of more than ₹33 lakh for the entrepreneur per year.
    • Piggery: For piggery, the NLM will provide 50% capital subsidy of up to ₹30 lakh.
    •  Each entrepreneur will be aided with establishment of breeder farms with 100 sows and 10 boars, expected to produce 2,400 piglets in a year.
    • This model is expected to generate a profit of ₹1.37 crore after 16 months and 1.5 lakh jobs.

    Conclusion

    The revised scheme of NLM coupled with the Rashtriya Gokul Mission and the Animal Husbandry Infrastructure Development Fund has the potential to dramatically enhance the productivity and traceability standards of our livestock.

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