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Subject: Economics

  • Adjusted Gross Revenue (AGR) in Telecom Sector

    The Centre and telcos assured the Supreme Court that they would not conduct any re-assessment or re-calculation of the Adjusted Gross Revenue (AGR) dues, which now stands at ₹1.6 lakh crore.

    Try this question for mains:

    Q.What are the various challenges faced by India’s telecom before the upgradation to 5G technology?

    What is AGR?

    • Adjusted Gross Revenue (AGR) is the usage and licensing fee that telecom operators are charged by the Department of Telecommunications (DoT).
    • It is divided into spectrum usage charges and licensing fees, pegged between 3-5 per cent and 8 per cent respectively.

    What is the issue?

    • The Bench observed that 15 or 20 years was not a reasonable time period and the telcos must come forward with an appropriate time frame.
    • The Centre had earlier urged the court that up to 20 years be given to the firms for the payments.
    • The telcos said they were in no position to give fresh bank guarantees for the payments.

    Why is AGR important?

    • The definition of AGR has been under litigation for 14 years.
    • While telecom companies argued that it should comprise revenue from telecom services, the DoT’s stand was that the AGR should include all revenue earned by an operator, including that from non-core telecom operations.
    • The AGR directly impacts the outgo from the pockets of telcos to the DoT as it is used to calculate the levies payable by operators.

    Read the complete issue here at:

    https://www.civilsdaily.com/news/explained-adjusted-gross-revenue-agr-in-telecom-sector/

  • Exporting agri-inputs

    Some changes could make India exporter of agri-inputs. The article examines bottlenecks that holds India back and suggests the policy changes in key agri-inputs-seeds, fertilisers and machinery.

    Context

    In the following 3 key agri-inputs India has the untapped potential. What is needed is policy changes.

    1) Seeds

    • India can emerge as an important seed producer and a large exporter of seeds to many developing countries in South and South-east Asia as well as Africa.
    • The country can produce very competitively-priced seeds for hybrid rice, hybrid corn, hybrid Bt HT cotton, and several vegetables including tomato, potato and okra.
    • For this to happen, we have to set our regulatory system right.
    • Let’s use the case of cotton.
    • India’s decision in March 2002 to allow Bt cotton made India the largest producer of cotton in the world and the second-largest exporter of cotton by 2013-14.
    • But due to policy changes since 2014-15 and issues such as trait fees companies stopped the introduction of new generation of seeds
    • Now there is an “illegal” spread of Bt HT cotton in Maharashtra.
    • This is partly because our regulatory system is complex.
    • And more so because the present government has ideological blinkers against modern science.
    • This is the biggest bottleneck holding India back from becoming the seed capital of the developing world.

    2) Fertilisers

    • India has been a net importer of fertiliser nutrients (NPK) for almost two decades.
    • In 2019-20, India imported fertilisers worth $6.7 billion, topping the list is urea $2.9 billion.
    • We are totally dependent on imports and likely to remain so in case of MOP and in the case of DAP.
    •  In the case of urea, India wants to be atmanirbhar by opening up five new urea plants in the public sector with a total capacity of 6.35 MMT.
    • Almost 70 per cent of the gas being used in urea plants is imported at a price much higher than the price of domestic gas.
    • The cost is going to be more than $400/tonne when the international price generally hovers between $250-300/tonne.
    • The government should allow existing private sector urea plants to expand and produce at a much lower cost.
    • The best way to achieve self-reliance in fertilisers is to change the system of fertiliser subsidies.

    Suggestion on changes in fertiliser subsidies

    • 1) Deposit equivalent cash directly into farmers’ accounts, calculated on a per hectare basis.
    • 2) Free up fertiliser prices.
    • 3) Allow the private sector plants to compete and expand urea production in a cost-competitive manner.

    3) Farm machinery

    • Before the Green Revolution, India produced only 880 tractor units.
    • It increased to about 9,00,000 units in 2018-19.
    • So, India is the largest tractor manufacturer in the world.
    • India also exported almost 92,000 tractors, largely to African and ASEAN countries.
    • Though Green Revolution gave tractor production a push, the real break-through came after de-licensing in 1991.
    • The new class of entrepreneurs and start-ups are coming up with special apps for “Uberisation of tractor services”.
    • In an economy of small landholders, owning a tractor is a high-cost proposition as it is not fully utilised.
    • This needs to be made more efficient by creating a market for tractor services.

    Consider the question “Despite having the potential to transform itself into the exporter of agri-inputs, India ends up being the importer of some of them. In light of this examine India’s potential to become the exporter of agri-input products and suggest the measures to achieve this.”

    Conclusion

    The private sector is our strength. The only thing the government has to do is to unshackle them from the chains of controls and webs of unnecessary regulations. They will make an Atmanirbhar Bharat.

  • Godhan Nyay Yojana to boost rural economy

    Chhattisgarh is set to launch ‘Godhan Nyay Yojana’. The scheme aims to put money in the pockets of people living in rural areas and also solve the problem of stray cattle.

    Try this question from CSP 2019:

    Consider the following statements

    1. Agricultural soils release nitrogen oxides into the environment.
    2. Cattle release ammonia into the environment.
    3. Poultry industry releases reactive nitrogen compounds into the environment.

    Which of the statements given above is/are correct?

    (a) 1 and 3 only

    (b) 2 and 3 only

    (c) 2 only

    (d) 1, 2 and 3

    Godhan Nyay Yojana

    • Under the scheme, the Chhattisgarh government will purchase cow dung at the rate of Rs 2 per kg.
    • This scheme will turn cow dung into a profitable commodity.
    • The scheme also aims to make cow rearing economically profitable and to prevent open grazing in the state, as well as help with the problem of stray animals on roads and in urban areas.

    How will the scheme help the rural economy?

    • The scheme will generate additional income and increase employment opportunities.
    • The government will procure cow dung and prepare vermicompost in order to move towards organic farming.
    • There is a huge market for organic farming. Vermicompost will be sold by cooperative societies.
    • Distribution of vermicompost fertilizer to farmers will be done as a commodity loan by cooperative societies, banks.

    Preventing strays in urban areas

    • In urban areas, the scheme will prevent movement of stray animals on roads and highways, and also improve urban sanitation with proper disposal of waste produced by cattle.
    • Cattle will be tagged with the owner’s name, address, mobile number to the neck of each animal after the survey to ensure accountability of cattle owners if their cattle are found in the open.

  • Issue of Food subsidy in India

    Solutions to Problems in Food Subsidy Delivery

    The following solutions will help in addressing problems associated with PDS.

    1. Replacing Targeted Public Distribution System (TPDS) with Direct Benefit Transfer (DBT) of food subsidy. National Food Security Act (NFSA) states that the centre and states should introduce schemes for cash transfers to beneficiaries.Cash transfers seek to increase the choices available with a beneficiary, and provide financial assistance.  It has been argued that the costs of DBT may be lesser than TPDS, owing to lesser costs incurred on transport and storage.  These transfers may also be undertaken electronically. As per a report given by a high level committee of Food Corporation of India, DBT would reduce Government subsidy bills by more than Rs 30,000 crores.
    2. Automation at the Fair Price Shops is another important step taken to address the problem in PDS. Currently more than 4.3 lakh (82%) Fair Price Shops have been automated across the country. Automation involves installation of Point of Sale (PoS) devices, for authentication of beneficiaries and electronic capturing of transactions.
    3. Aadhar and introduction of Biometrics was recommended to plug leakages in PDS. Such transfers could be linked to Jan Dhan accounts, and be indexed to inflation. It  facilitates the removal of bogus ration cards, check leakages and ensure better delivery of food grains. In February 2017, the Ministry made it mandatory for beneficiaries under NFSA to use Aadhaar as proof of identification for receiving food grains.
    4. 100% ration cards had been digitised.
    5. Between 2016 and 2018, seeding of Aadhaar helped in detection of 1.5 crore fake, duplicate and bogus ration cards and these cards were deleted.
    6. Increase the procurement undertaken by states known as Decentralised Procurement (DCP), and reduce the expenditure on centralised procurement by the Food Corporation of India (FCI). This would drastically reduce the transportation cost borne by the government as states would distribute the food grains to the targeted population within their respective states. As of December 2019,17 states have adopted decentralised procurement.
    7. The Fair Price shops operate at very low margins as per findings of the Government. Hence the fair price shops should be allowed to sell even non-PDS items and make it economically viable. This will motivate them to not to resort to unfair practices in the distribution of Government subsidized food grains meant for beneficiaries of Government schemes.
    8. A greater and more active involvement of the panchayats in the PDS can significantly improve access at the village level.
    9. There is also an urgent need to set up a proper and effective grievances redressal system for both the fair price shops as well as beneficiaries

  • [pib] ASPIRE Portal

    The International Centre for Automotive Technology (ICAT) is developing a technology platform for the automotive industry called ASPIRE – Automotive Solutions Portal for Industry, Research and Education.

    Try this MCQ:

    Q.The recently launched ASPIRE Portal deals with:

    a) Aspirational Districts

    b) Primary Education

    c) Industrial Clusters

    d) Automotive Technology

    ASPIRE Portal

    • The key objective of this portal is to facilitate the Indian Automotive Industry to become self-reliant by assisting in innovation and adoption of global technological advancements.
    • It aims to bring together the stakeholders from various associated avenues.
    • This includes bringing together the automotive OEMs, Tier 1 Tier 2 & Tier 3 companies, R&D institutions and academia (colleges & universities) on matters involving technology advancements.
    • The activities would include R&D, Product Technology Development, Technological Innovations, Technical and Quality Problem Resolution for the industry, Manufacturing and Process Technology Development etc.
    • Apart from acting as a solution and resource platform, the portal will also host grand challenges in line with the need of the industry as will be identified from time to time, for development of key automotive technologies.

    About ICAT

    • International Centre for Automotive Technology (ICAT) is located at Manesar in Gurugram district of Haryana.
    • It is a govt entity owned by the Ministry of Heavy Industries.
    • It has facilities for vehicle homologation and also testing laboratories for noise, vibration and harshness (NVH) and passive safety.
    • It also includes a powertrain laboratory, engine dynamometers, emission laboratory with Euro-V capability, a fatigue laboratory, passive safety laboratory, and vehicle test tracks.

  • A demand problem contributing to lower imports

    India registered a trade surplus after almost two decades. But this is not the result of a sudden rise in India’s export. It is due to subdued import indicating the low demand.

    What latest data indicate

    • Data released by the commerce ministry indicate a contraction in exports observed over the past few months easing slowly.
    • But the continuing contraction in import which indicates low demand is worrying.
    • This is trend is leading to the growing gap between import and export.

    India registered a trade surplus: what it indicates

    • This growing gap led to India registering a trade surplus of nearly $800 million in June.
    • This is the first time in almost two decades that the country has registered a trade surplus.
    • But does this mean that India’s exports have grown drastically?
    • No. It is a sign of collapse in domestic demand.

    Merchandise exports growing trends

    • India’s merchandise exports continue to witness an upward swing.
    • The pace of contraction fell to 12.4 per cent in June, from 36.2 per cent in May and 60 per cent in April.
    • Exports of items such as iron ore, drugs and pharmaceuticals, chemicals and various agricultural commodities saw an expansion in June.

    What growing exports and falling import indicate

    • An upswing in exports could be indicative of a faster recovery of India’s export partners.
    • Restrictions on economic activities in some of these countries had eased earlier.
    • Other reason could be the rush by Indian exporters to ship out orders to meet their seasonal deadlines.
    • Imports continue to remain deep in negative territory.
    • The contraction in non-oil exports has actually worsened with decline observed in both consumer and investment/industrial goods imports.
    • Some movement is visible in imports of electronic goods.
    •  But the import of machinery and transport equipment has not moved significantly.
    • Of the 30 main import items, only four registered mildly positive growth in June — this indicates the pace of the domestic slowdown.

    Conclusion

    Economic activities across the world will take time to return to normalcy, India’s exports will take time to reach pre-COVID levels. It seems that the chasm between exports and imports could persist, given the plateauing of the post-lockdown spurt in demand/production.

  • [pib] India Energy Modeling Forum (IEMF)

    In the joint working group meeting of the Sustainable Growth Pillar of the India-US partnership, an India Energy Modeling Forum was launched.

    Note the following things about IEMF:

    1. It is a bilateral forum.

    2. It is not associated with any International Agency say UN, IEA, IAEA etc.

    3.On March15 last year, the idea was incepted and only a formal workshop was organized on IEMF (it wasn’t launched).

     

    UPSC can puzzle you along these 3 points in a statements-based MCQ.

    India Energy Modeling Forum (IEMF)

    • The IEMF seeks to provide a platform for policy makers to study important energy and environmental issues and ensure induction of modelling and analysis in informed decision making process.
    • The Forum aims to improve cooperation and coordination between modeling teams, the GoI, knowledge partners and think-tanks, build capacity of Indian institutions, and identify issues for joint modeling activities and future areas of research.

    What is Energy Modelling?

    • Energy modeling or energy system modeling is the process of building computer models of energy systems in order to analyze them.
    • There exists energy modelling forums in different parts of the World.
    • Such models often employ scenario analysis to investigate different assumptions about the technical and economic conditions at play.
    • Outputs may include the system feasibility, greenhouse gas emissions, cumulative financial costs, natural resource use, and energy efficiency of the system under investigation.
    • Governments maintain national energy models for energy policy development.

    Outcomes of the forum

    • Discussions on energy modelling in India and the world explored how energy modelling can play an important role in decision-making.
    • The panelists laid focus on bridging the rural-urban divide and factoring in energy pressures from the informal economy within models.
    • Deliberations included a spotlight on how the impact of the evolving character of India’s cities, industries and especially the transport sector should be included in the any India-centric models.
    • The shift towards electric mobility, an increasing emphasis on mainstreaming of renewable energy options and overarching environmental concerns were also stated as key factors for determining India’s energy future.

  • Private trains on Indian Railways network and its implications

    The article analyses the implications and issues with the Indian Railways recent move to allow the private investors to operate the passenger trains on selected routes.

    Let’s understand the structure of IR’s passenger business

    • It operated a daily average of 13,523 passenger trains in 2018-19.
    • It includes 3,695 inter-city mail and express services.
    • 3,947 ordinary short-distance-stopping “regional” trains.
    • 5,881 electrical multiple units operated on suburban sections for intra-city passengers.
    • The regional/sectional trains, with multiple stops, cater to short-distance journeys (an average of 111 km in 2018-19) and contribute maximum loss in passenger business.
    • The inter-city mail and express services constitute IR’s core passenger business.
    • It needs to be duly nurtured and developed.
    • Within this category, only the upper-class portion will be of interest to private operators, due to flexibility in fixing fares.

    Now, let’s analyse the implications of privatisation decision

    The stated objectives are-

    • 1) Reducing the supply-demand deficit.
    • 2) Encouraging modal shift from air to rail.
    • 3) Significantly reducing transit time.

    Let’s analyse the issues with the objectives

    1) Reducing the supply-demand deficit

    • Passenger ridership on railways has almost been stagnant at 8,354 million in 2018-19.
    • The Railways’s endemic capacity constraint has kept its share in the nation’s transport market steadily decreasing.
    • Despite the demand for more trains, its seven high-density corridors stretched over 10,500 km remain clogged.
    • Its stations and maintenance wherewithal are over-stretched.
    • Speeds remain low and services far less than satisfactory.
    • Rail travel demand far outstrips supply and remains set to further grow substantially.
    • The steadily growing services sector continues to trigger high mobility and demand for passenger travel, generally in the upper classes.

    2) Modal shift from air to rail

    • Transfer of traffic to rail will depend on-
    • 1) reduced journey time
    • 2) the frequency of rail services
    • 3) offering accommodation on demand.
    •  Rail travel needs to appropriately match air and road services in terms of pre-board and onboard convenience, reliability, and speed.
    • As it faces competition from budget airlines, high-capacity buses, and personal cars, IR needs to craft a concerted strategy to expand, accelerate and modernise its inter-city passenger services.

    3) Reducing transit time

    •  Freight, as well as passenger trains across the network, have remained stuck in slow tracks over decades.
    • The “pilot project” of IRCTC-operated upscale “Tejas” train-sets clock virtually the same travel time as the older Shatabdis on these routes.
    • On completion of the two ongoing DFCs by December 2021, and the contemplated up-gradation of existing Delhi-Mumbai and Delhi-Kolkata rail routes will see trains running at 160 km/h.
    • Most other paths with mixed freight and passenger trains jostling for space and constrained by speed limits.
    • This will lead to the new train-sets to be substantially under-utilised in terms of their potential, and at far below expectations of customers for faster and frequent services.

    Issues

    1) Absence of regulator

    • An autonomous regulator, vital for the equitable and effective functioning of the private operators.
    • It is not without a challenge that the private train operators will strive to provide value for money to passengers and ensure their profitability in an environment of a price war.
    • So, the absence of an autonomous regulator is essential.
    • Experience of the licensed container train operators with the Railways alone driving policy and settling disputes has not been encouraging.

    2) Concessions issue

    • A 35-year concession in an age of rapidly evolving technologies impacting design contours of train-sets as much as customer expectations raise plausible questions.
    • Taking a plunge in 100 paths without first testing the waters on few selected sections is could also give rise to issues.

    Suggestions

    •  Some structural shifts in IR’s business management are now a clear imperative:
    • 1) Segregating its passenger and freight businesses for focussed attention.
    • 2) Restructuring the tariffs rationally and urgently.
    • 3) Developing terminal infrastructure.
    • 4) Leapfrogging the conversion of the existing dual-use high demand trunk routes into semi high-speed corridors.

    Consider the question “What are the objectives of the recent move of the India Railways to invite the private investors to operate some passenger trains on selected routes? What are the issues railway’s passenger service faces? Suggest the measures to deal with the issues.

    Conclusion

    The result of the move would suggest the future path for the operation for railways. But it must ensure the level playing field to the private players to test the efficacy of the move.

    Source:

    https://www.financialexpress.com/infrastructure/railways/private-trains-on-indian-railways-network-why-one-cant-ignore-several-red-flags/2025432/

  • Skill India For Atmanirbhar Bharat

    As India embarks on the path of self-reliance through Atmanirbhar Bharat Abhiyan, it has to nurture the skilled workforce. This article highlights the need to upgrade the skills or upskill the youth to meet the employment needs of technology-driven 21st century.

    Context

    • The effects of the pandemic are expected to have a lasting impact on every sphere of activity.
    • Considering this impact, India announced the Atmanirbhar Bharat Abhiyan to propel the country on the path of self-sustenance.

    Objectives

    • Atmanirbhar Bharat has twin objectives- short term and long term.
    • 1) Reviving different spheres of the economy in the short term.
    • 2) Insulating India from any future global economic downturn, by making it robust in the long run.
    • The Abhiyan seeks to build capacities across sectors and promote local products.
    • Further, it would focus on scaling up manufacturing, accelerating infrastructure development, attracting investments and promoting a consumption-led growth.

    Youth: Strength of India

    • About 65 per cent of India’s population is below 35 years and 50 per cent is below 25 years.
    • With a huge, educated young population, India is uniquely poised to realise its demographic potential.
    • The fact that Indians are heading several MNCs shows that there is no dearth of knowledge and talent in the country.
    • However, we need to upgrade the skills or upskill the youth to meet the employment needs of technology-driven 21st century.

    Opportunities and challenges

    • Pandemic and is being seen by many as an opportunity to upgrade their knowledge and acquire new skills.
    • The fourth industrial revolution has triggered a paradigm change in which digital technology drives the job market.
    • Remote working with increasing adoption of digital technology might continue to be dominant mode of working for the near future.
    • It is estimated that nearly 70 per cent of the world’s learners are affected by school closures due to pandemic across education levels.
    • Artificial intelligence, machine learning, data science, cloud computing and Internet of Things will be area of interest for companies.
    • With people opting to online buying, companies will seek to adopt new online marketing strategies.
    • Another important issue that needs to be addressed is ensuring equitable employment through higher participation of women in the workforce.

    Way forward for Atmanirbhar Bharat

    1) Local to glocal

    • There have been some reassuring developments with an accent on “local to glocal”
    • The production of several lakh PPE kits, a collaboration of automobile industries to produce ventilators, manufacture of more than 70 Made in India products by the DRDO are just a few examples of the capability of Indian scientists, IT professionals and technocrats.

    2) Reducing import

    • We must aim to gradually reduce imports in every sector from crude oil to heavy machinery.
    • This reduction should be based on the locally available resources, talent, and skills of the human capital.

    3) Globally competitive product

    • While remaining vocal about local, we must aim at making Indian products to be globally competitive. 
    • We should try to stay ahead in the innovation-led knowledge economy.
    • PSUs and the private sector should not only complement but collaborate wherever feasible.
    • The private sector must massively step up investments R&D. PSUs too need to modernise in terms of technology.

    Consider the question “Atmanirbhar Bharat Abhiyan has the aim of reviving the Indian economy. Examine its objective and how it seeks to revive the economy”

    Conclusion

    To remain globally competitive with a well-assured future, we need to focus on “skills, scale and speed”. India has the potential to emerge as the global hub for providing skilled manpower to other nations.

  • [pib] India’s first trans-shipment hub – Vallarpadam Terminal of Cochin Port

    The Ministry of Shipping has reviewed the development activities of the Vallarpadam Terminal of Cochin Port, envisaged as first trans-shipment port of India.

    Try this question from CSP 2016:

    Q.Recently, which of the following States has explored the possibility of constructing an artificial inland port to be connected to the sea by a long navigational channel?

    (a) Andhra Pradesh

    (b) Chhattisgarh

    (c) Karnataka

    (d) Rajasthan

    Vallarpadam Terminal

    • The Kochi International Container Trans-shipment Terminal (ICTT), locally known as the Vallarpadam Terminal is located strategically on the Indian coastline.
    • It is the terminal at the port which handles containers, stores them temporarily and transfers them to other ships for the onward destination.
    • It is proposed to be developed as the most preferred gateway for South India and leading transhipment hub of South Asia.

    It successfully fulfils all the criteria which are needed to develop it as trans-shipment hub which include:

    • It is best positioned Indian port with regard to proximity to International sea routes;
    • It is located at least average nautical distance from all Indian feeder ports;
    • It entails connectivity which has multiple weekly feeder connections to all ports on West & East Coast of India, From Mundra to Kolkata;
    • It has proximity to key hinterland markets of India;
    • It has the infrastructure to manage large ships and capacity to scale it up as per requirement.