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Type: op-ed snap

  • Russian Invasion of Ukraine: Global Implications

    Lessons from the Ukraine crisis price shock

    op-ed snap | International Relations | Mains Paper 2: Bilateral, Regional and Global Groupings and agreements involving India

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much

    Mains level: Paper 2- Lessons from Ukraine crisis

    Context

    The Russia-Ukraine conflict, now more than three months old, will cause major, long-term shifts in the global energy and commodity trade.

    Factors responsible for high prices

    • Ukraine war: Western sanctions on Russia and efforts of European nations to diversify their energy supplies are already causing market distortions and high prices.
    • Crude oil prices are at their highest level since 2014; the price of LNG is at its highest ever, fertiliser and food are up and markets for several other commodities such as nickel have been disrupted.
    • Expensive commodities are already causing distress in India’s neighbourhood, for example, in Sri Lanka and Pakistan.
    • Insufficient investment: Insufficient investment in oil and gas production in preceding years resulted in high prices, and shortages were being felt.
    • A number of European investors, such as Norway’s sovereign wealth fund, announced they would no longer invest in traditional fuels — oil, gas, coal.
    • Natural gas is used as a feedstock for fertiliser.
    • An energy shock is then inevitably followed by a food price shock.

    Future trends

    1] Strained EU-Russia relations will distort prices

    • In the immediate term, the EU is trying to source its raw materials — most critically oil and natural gas, but also fertiliser, agricultural goods and metals — from non-Russian sources.
    • This will cause distortions and price spikes for those commodities in the global market, as can already be seen in the natural gas market, up 300 per cent in the last year.

    2] Sanctions are unlikely to achieve the desired political outcome

    • The US and its allies are quick to impose sanctions — and these are rarely withdrawn, if ever.
    • Iran has been under US sanctions since 1979, and the same with Venezuela for over a decade.
    • In both cases, sanctions have failed to achieve the desired political outcome.
    • As Russia is much better placed than either of those two countries to weather sanctions, the restrictions are likely to remain for a long while.

    3] Emerging world unwilling to align with West on sanctions

    • The high price of energy and the resulting inflation shows why much of the emerging world is unwilling and unable to align with the West on the current sanctions.
    • Russia is 11 per cent of the global landmass and among the world’s top five producers and exporters of oil, gas, fertiliser and other critical commodities like nickel.
    • It is too big to be replaced as a supplier.
    • In emerging economies, it can fan public anger and political unrest, as was seen in Tunisia and other Arab countries from 2010 on.

    4] Larger emerging economies will disregard sanction

    • Larger emerging economies such as China, India and Brazil will disregard sanctions on their key economic interests, particularly food, fertilisers and energy.
    • Specifically for India, its dependence on these essentials is unlikely to reduce meaningfully over the next 15-20 years.

    Way forward for India

    • Collaborate with other economies: In the immediate future, the India should collaborate with other similar economies to ensure that Russia doesn’t get locked out of global commodity markets.
    • Work on insulating the supply chains: For the long term, it must work on insulating its supply chains from global political crises.

    Conclusion

    India needs to brace for the price shock emanating from the distortion caused by the shift in the energy policies of Europe. At the same time, India needs to collaborate with other similar economies to ensure that Russia doesn’t get locked out of global commodity markets.

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  • Coal and Mining Sector

    Coal Shortages in India

    op-ed snap | Economics | Mains Paper 3: Infrastructure: Energy, Ports, Roads, Airports, Railways Etc.

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: CERC

    Mains level: Paper 3- Power crisis

    Context

    The recent power crisis due to the coal shortage in India underscores the need for measures to avoid a repeat of episodes in the future.

    Factors contributing to power crisis

    • Spike in power demand: With the sudden early onset of summer in 2022, power demand spiked, riding on the back of the post-Covid economic recovery.
    • Increase in price due to Ukraine crisis: The matter was further exacerbated by the Ukraine conflict, which led to a sharp increase in the price of imported coal.
    • Consequently, power stations designed on imported coal stopped importing because it was no longer economical for them to generate, given their contract price with the distribution companies.
    • Availability of railway rakes: It’s not that domestic coal was not available since enough stock had been built in the mines.
    • The issue was of availability of railway rakes for transportation.

    What were the measures taken by the government ?

    • 1] Import of coal to 10 per cent: First, all generators have been asked to import coal to the extent of 10 per cent (as against 4 per cent earlier) and that half of this should be physically available by the end of June.
    • CIL as aggregator: Coal India will function as the aggregator on behalf of the generators.
    • CIL functioning as the aggregator is a better idea and it may be able to import at a cheaper cost by accumulating demand as well as standardising the coal grade to be procured.
    • Moreover, it would be easier for regulators to calculate the revised energy charge since the price at which coal was imported would be well-documented.
    • 2] Section 11 of the Electricity Act 2003 (Act) invoked: Under this section, the government directed imported coal-based plants to run at full capacity with the assurance that their enhanced cost of operation would be compensated.
    • 3] Tolling: The government invoked the concept of tolling, which allowed states to transfer their allotted coal to private generators located near the mines instead of transporting it to far away state generators.
    • This move would ease the burden on the availability of railway rakes.
    • 4] Seeking the consent of beneficiaries for hike: the government issued policy directions to the Central Electricity Regulatory Commission (CERC) overriding CERC’s regulations that made it mandatory to seek the consent of beneficiaries if the tariff went up by more than 30 per cent, if some alternate fuel is used.
    • 5]  Committee to rework the energy charge: A committee of officials was set up to rework the energy charge for imported coal-based generators.
    • 6] Additional working capital: The government is cognisant of the fact that there is a need for additional working capital and has advised REC/PFC as well as commercial banks to arrange for this.

    Issues with the measures

    • Use of Section 11: The government invoked Section 11 to give  direction to private generators to import coal at a higher cost.
    • Section 11(1) allows the government to give direction to a generation company to operate and maintain a generating station in extraordinary circumstances.
    • Section 11(2) of the Act mentions that the adverse financial impact on generating compacy due to directions referred to in sub-section (1) would be offset by the regulator.
    • Going by Section 11(2), the government should have left the job of working out the energy charge to the regulator instead of setting up a committee of officials to do so though, of course, the CERC was represented in the committee.
    • 2] No transparency: The committee has already worked out the revised energy costs for six of the plants but there is no transparency regarding the coal cost assumed, its calorific value, transportation cost, etc.
    • 3] Additional rakes: We have to bear in mind that the coal problem arose because of the non-availability of rakes.
    • With 38 MT of coal to be imported by October this year, and half of that by end of June, the need for rakes will not only go up but would be front-loaded.
    • We need the requisite number of rakes otherwise, we are back to where we began.

    Conclusion

    While the government is taking steps to increase coal imports and addressing the other issues, it must ensure that domestic production does not dip during monsoon season.

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  • Food Processing Industry: Issues and Developments

    Rising global food prices: Causes and Solution

    op-ed snap | Agriculture | Mains Paper 3: Agriculture and related issues,PDS, Buffer Stock & Food Security

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Consultative Group on International Agricultural Research (CGIAR)

    Mains level: Paper 3- Food crisis due to price shocks

    Context

    This increase in global food prices which manifested itself in the three food price crises since the 1960s offers some pertinent lessons for global food systems and the international community.

    Managing year-to-year volatility Vs. periodic spikes in food prices

    • Year-to-year volatility is easily managed by most countries through changes in their trade and domestic policies.
    • But steep and severe periodic price shocks can lead to some sort of a crisis at the global and national levels.
    • Implications: The crisis can emerge in the form of food shortages, trade disruptions, a rise and spread in hunger and poverty levels, depletion of foreign exchange reserves, a strain on a nation’s fiscal resources, a threat to peace, and even social unrest in some places.

    History of food crises after since adoption of Green Revolution

    • Data from Food and Agriculture Organization of the United Nations, the World Bank/International Monetary Fund show that since the onset and the adoption of Green Revolution technology in the early 1960s, the world has been struck thrice by food price crises.
    • First shock-1973-76: The first shock was experienced during 1973-76 when the food price index (based on prices in U.S. dollars) doubled in nominal terms.
    • Declining trend: For the next two decades, food prices in real terms followed a declining trend and were at their lowest around 2002.
    • After this, nominal as well as the real prices of food began rising.
    • Second crisis-2008: This momentum built up to culminate in the next food price crisis of 2008, which was further intensified by 2011.
    • While the price shock began softening after 2014, food prices did not move back to their pre-2006 level.
    • Third crisis-2020: This time the increase in the food price index happened very quickly and it turned out to be very big – it has taken the food price index to its historically highest level.
    • Cause outside agriculture: All the three food price crises were triggered by factors outside agriculture.
    • They were not caused by any serious shortfall in agriculture production.
    • The interval between crises is reducing: The interval between two consecutive price shocks has narrowed down considerably and the severity of shock is turning stronger.

    What are the causes responsible for the recent food price crisis?

    • 1] Covid-19 and Ukraine crisis: It was triggered by supply disruptions due to COVID-19 and further aggravated by the Russia-Ukraine war.
    • The current food price spike first began in vegetable oils and then expanded to cereals.
    • Higher the global trade higher disruption: The effect of global trade disruption will be higher for commodities that are traded more and vice-versa.
    • 2] Diversion of food for biofuel: Another factor underlying the rising trend and spikes in food prices is the diversion of food for biofuel needs.
    • When crude prices increase beyond a certain level it becomes economical to use oilseeds and grains for biodiesel and ethanol, respectively.
    • The second reason for the use of food crops for biofuel is the mandates to increase the share of renewable energy resources.
    • 3] Increased cost of agrochemicals and fertilisers: Food prices are also expected to go up in the current and next harvest season because of an increase in the prices of fertilizer and other agrochemicals.

    Way forward for India

    • Transmission of international prices to domestic prices can be prevented only if there is no trade.
    • 1] Trade policy changes: This transmission of global prices to the domestic market can be moderated through trade policy and other instruments.
    • When international prices go too low, India has checks on cheap imports to protect the interests of producers; and when international prices go too high, the country liberalises imports and imposes checks on exports to ensure adequate availability and reasonable food prices for domestic consumers.
    • 2] Buffer stock: The policy of having a buffer stock of food staples has also been very helpful in maintaining price stability, especially in the wake of global food crises.
    • 3] Strategic liberalisation: India should continue with a policy of strategic liberalisation, as followed in the past, to balance the interests of producers and consumers.
    • 4] Maintain image as a reliable and credible exporter: The importance of agriculture exports to mop up food and agriculture surplus from the country is increasing.
    • Ongoing trends in domestic demand and supply imply that India will be required to dispose of 15% of its domestic food output in the overseas market by 2030.
    • This underscores the need to maintain India’s image as a reliable and credible exporter.
    • However, it is important to differentiate between the two situations: disturbing normal export and regulating exports exceeding the normal level.

    What are the implications for India?

    • Increased prices in India: Export and import in the agriculture sector constituted 13% of gross value added in agriculture during 2020-21.
    • Therefore, some transmission of an increase in global prices on domestic prices is inevitable.
    • Wheat export ban and implications: The recent ban on wheat exports and restrictions on the export of other food commodities by India need to be seen in the light of an abnormal situation created by spikes in international prices.
    • Some experts see it as a setback to India’s image as a reliable exporter as this move is seen to disrupt (regular) export channels.
    • A closer examination of data reveals that India’s action to ban or restrict food exports is not disrupting its normal exports.
    • India was a very small exporter of wheat, with its share in global wheat trade ranging between 0.1% to 1% during 2015-16 to 2020-21.
    • The international market is looking for around 50 million tonnes of wheat to compensate for the disruption in wheat exports from Russia and Ukraine.
    • If India had not imposed a ban on wheat export, it would have resulted in a severe shortage of wheat within the country.

    Global impact and suggestions

    • As the steam of Green Revolution technology slowed down with the start of the 21st century, food prices began increasing in real terms.
    • New breakthroughs required: The world requires new breakthroughs such as Green Revolution technology, for large-scale adoption in order to enable checks on food prices rising at a faster rate.
    • Increase spending on agri-research: This in turn requires increased spending on agriculture research and development (especially by the public sector and multilateral development agencies).
    • Strengthen global agri-research system: There is a need to strengthen and rejuvenate the global agri-research system under the Consultative Group on International Agricultural Research (CGIAR) which is heading towards disarray.
    • Rethink biofuel protocols: Biofuel protocols have contributed to the global food crisis for the second time in the last 15 years.
    • Diversion of land under food crops and food output for biofuel should be carefully calibrated with implications for food availability.

    Conclusion

    • The last three food price crises were primarily caused due to an increase in energy prices and disruptions in the movement of food across borders.
    • Factors related to climate change are going to be an additional source of supply shocks in the years ahead.
    • Therefore, the global community must plan to have a global buffer stock of food in order to ensure reasonable stability in food prices and supply.

    Back2Basics: Consultative Group on International Agricultural Research (CGIAR)

    • CGIAR (formerly the Consultative Group for International Agricultural Research) is a global partnership that unites international organizations engaged in research about food security.
    • CGIAR research aims to reduce rural poverty, increase food security, improve human health and nutrition, and sustainable management of natural resources.

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  • Telecom and Postal Sector – Spectrum Allocation, Call Drops, Predatory Pricing, etc

    The way forward on 5G

    op-ed snap | Economics | Mains Paper 3: Effects Of Liberalization On The Economy, Changes In Industrial Policy and their effects on Industrial Growth

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much

    Mains level: Paper 3- Duopoly threat in India's telecom sector

    Context

    The near-death of competition signalled by the incipient exit of Vi late last year pushed the Department of Telecommunications (DoT) to announce steps to prevent the premature exit of a sagging operator.

    About 5G

    • 5G is the 5th generation mobile network.
    • It is a new global wireless standard after 1G, 2G, 3G, and 4G networks.
    • 5G can be significantly faster than 4G, delivering up to 20 Gigabits-per-second (Gbps) peak data rates and 100+ Megabits-per-second (Mbps) average data rates.
    • 5G enables a new kind of network that is designed to connect virtually everyone and everything together including machines, objects, and devices.
    • 5G wireless technology is meant to deliver higher multi-Gbps peak data speeds, ultra low latency, more reliability, massive network capacity, increased availability, and a more uniform user experience to more users.
    • Higher performance and improved efficiency empower new user experiences and connects new industries.
    • With high speeds, superior reliability and negligible latency, 5G will expand the mobile ecosystem into new realms.
    • 5G will impact every industry, making safer transportation, remote healthcare, precision agriculture, digitized logistics — and more — a reality.

    India’s telecom sector: From monopoly to hyper-competition to duopoly

    • India’s telecom market has seen monopoly as well as hyper-competition.
    • Twenty-five years ago, the government alone could provide services.
    • Technology and deregulation: In the following years, the combined forces of technology and deregulation helped break the shackles of public sector dominance despite the latter’s stiff resistance
    • In the following years, there were nearly a dozen competing operators. Most service areas now have four players.
    • However, the possible exit of the financially-stressed Vodafone Idea would leave only two dominant players-Airtel and Jio in the telecom sector.
    • A looming duopoly, or the exit of a global telecommunications major, are both worrying.
    • They deserve a careful and creative response.

    Government package for telecom sector to prevent duopoly

    • The near-death of competition signalled by the incipient exit of Vi late last year pushed the Department of Telecommunications (DoT) to announce steps to prevent the premature exit of a sagging operator.
    • As a part of its support package for the telecom sector, in October 2021, it dispensed with the requirement of performance bank guarantees required earlier as security.
    • It increased the tenure of spectrum holding from 20 to 30 years.
    • It allowed for the surrender of the unutilised or underutilised spectrum after 10 years.
    • Most importantly removed the levy of spectrum usage charges. 

    Why competitive telecom market is important?

    • Key to achieving digital ambitions: A competitive telecom sector is fundamental to realising India’s digital ambitions.
    • Innovation: Monopolies have no incentive to innovate.
    • Investment: The competition will guarantee that operators find it attractive to invest in network infrastructure upgradation and offer consumers a wide range of innovative service options.
    • Source of revenue: A competitive telecom sector would be an indirect source of tax revenue as well.
    • How to make market competitive? Competition cannot be willed into the sector.
    • It needs careful nurturing, assiduous fostering and regulatory neutrality. 

    Way forward on 5G

    • Structural changes: While the package may have prevented the exit of Vi from the market, to embed competition within the sector, structural changes are necessary.
    • The imminent 5G networks demand massive investment and sophistication of operations.
    • 1] Level playing field: This will not be achieved unless the playing field is level across the relevant operators and honest incentives are provided to operators to embrace new technology.
    •  2] Change the spectrum allocation method: There is no doubt that spectrum auctions have served India well in the past due to the acrimonious political economy associated with administrative spectrum assignment, including First Come First Serve (FCFS) method.
    • The auction regime worked well when demand exceeded supply, but if there is an adequate quantity of spectrum for everyone, that constraint would not exist.
    • Administrative assignments can thus be considered once again.
    • 3] Administrative assignments:  An administrative assignment will include the possibility that all spectrum can be assigned at reasonable prices and in the process, a grand bargain can be struck with telecom operators.
    • 4] Assigning 5G spectrum for private enterprise business: TRAI and the Digital Communications Commission (DCC) are considering whether 5G spectrum should be assigned to companies like TCS, Amazon and Google, among others, for their private enterprise business.
    • 5G spectrum assignment for enterprises would adversely affect the business model of telcos.
    • But there will be enterprises that telcos could serve that are not large enough to purchase 5G spectrum.
    • A grand bargain that allows enterprises to buy 5G spectrum while assigning spectrum to the existing telcos through the administrative route will also serve the revenue needs of the government.
    • 5] Privatise public sector operator: This is an opportunity to also signal to the public sector operator that 5G business is outside the range of its capability set.
    • Hence like Air India it needs to be privatised in the fullness of time.
    • These are difficult decisions and will need much more political will than in 1994.

    Consider the question “Why a competitive telecom market is a prerequisite for achieving India’s digital dream and why an eminent duopoly in the sector stands to threaten that dream? Suggest way forward.”

    Conclusion

    It would be tragic if India’s telecom-access market was to be reduced to only two competing operators, as we have a long way to go. What we need is structural changes in the sectors as well as the way the sector is regulated.

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    Back2Basics: Spectrum usage charges

    • Companies had to pay 3-5 per cent of their adjusted gross revenue (AGR) as spectrum usage charge to the department of telecom.
    • If they share spectrum with another operator, operators must pay an additional 0.5 per cent of AGR for that band as SUC.
    • However, in September 2021, the Department of Telecommunications (DoT) decided to remove the floor rate of 3% of the adjusted gross revenue (AGR) for operators to pay their spectrum usage charge (SUC).
    • The removal of the clause fixing a floor rate of 3% was done to give effect to the recently announced telecom relief package.
    • Though the telecom package talks of scrapping SUC only on spectrum acquired in future auctions like that of 5G, if the 3% floor is abolished, as and when operators acquire more spectrum in future auctions, their SUC will become zero on the entire holding.
    • This is because of a complex weighted average formula to calculate the SUC of operators who have a mix of administratively allocated spectrum and acquired through auctions.

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  • Health Sector – UHC, National Health Policy, Family Planning, Health Insurance, etc.

    CoWIN as a repurposed digital platform

    op-ed snap | Governance | Mains Paper 2: Health & Education

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: CoWIN

    Mains level: Paper 2- CoWIN platform

    Context

    Seeing its success, other nations have also expressed interest in availing CoWIN and using it as a bridge for erecting their digital health systems. Responding to this incoming interest, our prime minister has offered CoWIN as a digital public good, free of cost, for all nations globally to adopt.

    About CoWIN

    • In late 2020, even before the Covid-19 vaccines had arrived, the Government of India had commenced preparations for launching the world’s largest vaccination drive.
    • This led to the beginning of the CoWIN journey in January 2021.
    • Scalability, modularity, and interoperability: CoWIN, or the Covid-19 Vaccine Intelligence Network, was developed in a record time, with consideration given to scalability, modularity, and interoperability.
    • The platform has been made available in English and 11 regional languages to allow citizens across multiple states to access the platform with ease.
    • To circumvent the lack of digital access, the platform allows for up to six members to be registered under one mobile-number linked account.
    • CoWIN has scaled every 100 million milestone faster than any other platform.
    • It reached the coveted one billion registered user mark which only a handful of platforms have been able to achieve globally, and none in such a short time.
    • A key feature of the platform has been its modularity and evolvability.
    • The CoWIN team has been adept at keeping pace with the changing policy environment and scientific research and developments in the administration of vaccines.
    • It was never that CoWIN became the bottleneck or delayed the implementation of our vaccination policies or drive.
    • Time and again, CoWIN has proved itself as one of the most secure and robust platforms with minimal data input and zero risk of personal data hacks. 

    Major phases of CoWIN

    • The journey of CoWIN was staggered across three major phases, with multiple additions subsequently.
    • In phase 1, the registration process went online where healthcare workers and frontline workers were sent system-generated notifications about their vaccination schedule.
    • In subsequent phases, beneficiaries were allowed both walk-in and online vaccination registration, along with the choice of location and time slot as per their convenience.
    • An assisted mode was also made available through the 240,000+ Common Service Centres (CSCs) and a helpline number.
    • After ensuring successful orchestration using scalability and agile features of the platform to vaccinate individuals over 45 years of age, the APIs of the platform were made available to private players at the beginning of Phase III of the vaccination drive.
    • Once access to its services was opened through APIs, more than 100 applications integrated with CoWIN for providing search, booking and certification facilities to their users.

    Way ahead

    • The inevitable question is what will we do with CoWIN when no further Covid-19 vaccines are to be administered?
    • Repurpose the platform: The decision is to repurpose the platform as a universal immunisation platform.
    • The credentialing service of DIVOC, used in CoWIN, has proven to be a game-changer in the world of digital certificates.
    • CoWIN service is being implemented in five other countries after India and receiving global acceptance for its veracity and sound architecture.
    • There is a proposal for opening the credentialing service for more use cases in health.

    Conclusion

    The story of CoWIN has truly been one of national impact and importance. And while the story started during the pandemic, it won’t end with the pandemic: it will segue into a repurposed digital platform for more health use-cases.

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  • Issues with the Environmental Performance Index (EPI)

    op-ed snap | Enviro & Biodiversity | Mains Paper 3: Conservation, Environmental Pollution & Degradation, Eia

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: EPI

    Mains level: Paper 3- Environmental Performance Index (EPI) and related issues

    Context

    The 2022 Environmental Performance Index (EPI) produced by Yale and Columbia Universities and released on World Environment Day (June 5) has triggered much consternation in India, as the country is ranked last (180th).

    Issues with EPI 2022

    • Ignoring the past effects: Indicators may focus on current rates of increase or decrease in environmental pressures (flows) — as the EPI does for carbon dioxide emissions and tree cover gains — but under-state the accumulated effect (stocks) that relates to actual harm, thereby ignoring past effects.
    • Same standard in different socio-ecological context: When ranking countries, one is essentially applying the same standard across vastly different socio-ecological contexts – this involves difficult choices.
    • For example, the EPI leaves out arsenic in water, which is a major threat in Bangladesh.
    • Difficulty in measurement of frogress on climate change: Climate change is a global environmental problem, and because its effects depend on the accumulation of greenhouse gases over time, measuring progress in a given country is challenging.
    • Climate change mitigation has to be measured against what it is reasonable and fair to expect from different countries, taking into account their past emissions as well as national contexts.
    • There has been an inconclusive 30-year debate on this question; any choice of benchmark involves major ethical choices.
    • EPI has given 38 per cent weight to the climate change in the index.
    • They assume that the world must reach net zero emissions by 2050, and so the appropriate benchmark is whether all countries are reducing emissions and reaching zero by 2050.
    • Against CBDR: This approach is contrary to widely accepted ethical principles, especially the global political agreement on common-but-differentiated-responsibility (CBDR).
    • The Yale-Columbia approach ignores the fact that countries have different responsibilities for past accumulations and are at different levels of emissions and energy use.
    • The inclusion of indicators on emissions intensity and emissions per capita partly addresses this issue, but these two account for 7 per cent of the weight, versus 89 per cent for indicators derived from current emission trends.

    Implications EPI’s approach

    • This approach is guaranteed to make richer countries look good, because they have accumulated emissions in the past, but these have started declining in the last decade.
    •  Meanwhile, poorer countries that have emitted comparatively little in the past, look bad.
    • The EPI’s flawed and biased approach distracts from a much-needed honest conversation about the environment in India.
    • India’s local environmental performance on air, water and forests is deeply problematic.
    • Air quality in India is now the second largest risk factor for public health in India, behind only child and maternal nutrition.
    • Rivers and lakes are increasingly polluted, rivers are drying, groundwater tables are rapidly declining, and gains in tree cover hide declining natural productivity and diversity of forests and grasslands.

    Conclusion

    While indices like these have a limited attention-grabbing purpose, they serve this purpose well only when they are focused, limited to easy-to-measure metrics, and consciously minimise value judgements. The EPI 2022 resoundingly fails this test.

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  • Economic Indicators and Various Reports On It- GDP, FD, EODB, WIR etc

    India is not the fastest growing big economy

    op-ed snap | Economics | Mains Paper 3: Indian Economy

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: GDP and inflation

    Mains level: Paper 3- India's growth rate

    Context

    The Provisional Estimates of Annual National Income in 2021-22 just released show that GDP grew 8.7% in real terms and 19.5% in nominal terms (including inflation). It makes India the fastest growing major economy in the world.

    What data implies

    • Just 1.51% larger: Provisional Estimates of Annual National Income in 2021-22 also indicate that, the real economy is 1.51% larger than it was in 2019-20, just before the novel coronavirus pandemic hit the world.
    • In nominal terms it is higher by 17.9%.
    • Inflation: These numbers imply that the rate of inflation was 10.8% in 2021-22 and 16.4% between the two years, 2019-20 and 2021-22.
    • Almost no growth: This picture implies almost no growth and high inflation since the pre-pandemic year.
    • So, the tag of the fastest growing economy means little.
    • Quarterly growth rate: The quarter to quarter growth currently may give some indication of the present rate of growth.
    • In 2020-21, the quarterly rate of growth increased through the year.
    • In 2021-22, the rate of growth has been slowing down.
    • Of course in 2020-21, the COVID-19 lockdown had a severe impact in Q1 (-23.8%); after that the rate of growth picked up.
    • In 2021-22, the rate of growth in Q1 had to sharply rise (20.3%).
    • Ignoring the outliers in Q1, growth rates in 2021-22 have sequentially petered out in subsequent quarters: 8.4%, 5.4% and 4.1%.
    • Going forward, while the lockdown in China is over, the war-related impact is likely to persist since there is no end in sight.
    • Thus, price rise and impact on production are likely to persist.

    Issues with the data

    • The issue is about correctness of data.
    • The annual estimates given now are provisional since complete data are not available for 2021-22.
    • There is a greater problem with quarterly estimates since very limited data are available for estimating it.
    • No data for Q1 of 2020-21: The first issue is that during 2020-21, due to the pandemic, full data could not be collected for Q1.
    • No data for agriculture: Further, for agriculture, quarterly data assumes that the targets are achieved.
    • Agriculture is a part of the unorganised sector.
    • Very little data are available for it but for agriculture — neither for the quarter nor for the year.
    • It is simply assumed that the limited data available for the organised sector can be used to act as a proxy.
    • The non-agriculture unorganised sector is represented by the organised sector.
    • Changes in non-agriculture unorganised: The method using the organised sector to proxy the unorganised non-agriculture sector may have been acceptable before demonetisation (2016) but is not correct since then.
    • The reason is that the unorganised non-agriculture sector suffered far more than the organised sector and more so during the waves of the pandemic.
    • Shift in demand to the organised sector: Large parts of the unorganised non-agriculture sector have experienced a shift in demand to the organised sector since they produce similar things.
    • This introduces large errors in GDP estimates since official agencies do not estimate this shift.
    • All that is known is that the Micro, Small and Medium Enterprises (MSME) sector has faced closures and failures.
    • If GDP data are incorrect, data on its components — private consumption and investment — must also be incorrect.
    • Further, the ratios themselves would have been impacted by the shock of the lockdown and the decline of the unorganised sectors.
    • Private consumption data is suspect since according to the data given by the Reserve Bank of India which largely captures the organised sector, consumer confidence throughout 2021-22 was way below its pre-pandemic level of 104 achieved in January 2020.
    • In brief, neither the total nor the ratios are correct.

    Possible corrections

    • In the best possible scenario,  assume that the organised sector (55% of GDP) and agriculture (14% of GDP) are growing at the official rate of growth of 8.2% and 3%, respectively.
    • Then, they would contribute 4.93% to GDP growth.
    • The non-agriculture unorganised component is declining for two reasons: first, the closure of units and the second the shift in demand to the organised sector.
    • Even if 5% of the units have closed down this year and 5% of the demand has shifted to the organised sector, the unorganised sector would have declined by about 10%; the contribution of this component to GDP growth would be -3.1%.

    Conclusion

    Clearly, recovery is incomplete and India is not the fastest growing big economy of the world.

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  • Indian Ocean Power Competition

    Indo-Pacific Economic Framework presents opportunities

    op-ed snap | International Relations | Mains Paper 2: Bilateral, Regional and Global Groupings and agreements involving India

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: IPEF countries

    Mains level: Paper 2- IPEF opportunities and challenges

    Context

    The official launch of the Biden Administration’s Indo-Pacific Economic Framework (IPEF), the US’s de facto foreign economic policy for Asia, has been lauded and welcomed.

    About IPEF

    • Seen as a means to counter China in the region, it is a U.S.-led framework for participating countries to solidify their relationships and engage in crucial economic and trade matters in the region.
    • The member nations include Australia, Brunei, India, Indonesia, Japan, South Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand and Vietnam.
    • It includes seven out of 10 members of the Association of South East Asian Nations (ASEAN), all four Quad countries, and New Zealand.
    • Together, these countries account for 40 per cent of the global GDP. 
    • Not a free trade agreement: The Indo-Pacific Economic Framework is not a free trade agreement.
    • No market access or tariff reductions have been outlined, although experts say it can pave the way for future trade deals.
    • The IPEF is also seen as a means by which the US is trying to regain credibility in the region after former President Donald Trump pulled out of the Trans Pacific Partnership TPP.
    • IPEF countries value its purpose and potential, particularly given some doubts over whether the US administration could sustain its focus in Asia as war broke out in Europe.
    • The IPEF empowers the Biden administration to shape rules across several critical pillars that will condition America’s economic engagement in the Indo-Pacific amid competing economic paradigms, notably the Chinese through the BRI and Europe through digital policies and standards.
    • Countering China: Besides Ukraine, the IPEF’s importance also owes to China’s patent economic footprint across Asia that could be checked by an alternative economic paradigm that emphasises openness, flexibility, and integration.

     Significance of IPEF

    • Boost supply chain resilience: Globally, the IPEF signifies the first multilateral attempt to boost supply chain resilience to ease global inflationary pressures and mitigate effects of future disruptions, particularly key raw materials, critical minerals, and semiconductors.
    • Four key pillars: It’s a framework or a starting point to regulate trade and commerce across four key pillars: Digital economy, supply chains, clean energy, and governance. 
    • Negotiating high standard rules: The IPEF also represents an effort to negotiate “high-standard” rules between like-minded countries to govern the digital economy, particularly data flows, climate mitigation, global tax, anti-money laundering and anti-bribery provisions.

    Challenges

    • Impact on domestic companies: IPEF commitments and standards that other signatories like India have to accede to, will likely facilitate US MNCs’ access to Asian economies at the expense of domestic preferences.
    • Impact on policy preference of countries: The IPEF’s pillars — climate, digital, supply chains, and governance reforms — could clash with and supersede these countries’ policy preferences on such issues.
    • For instance, the US’ preference to allow free and open data flows under the digital economy pillar will constrict India’s ability to regulate data for domestic purposes.

    Way forward for India

    • The IPEF remains attractive for India given its flexibility and open nature, allowing Delhi to demonstrate its political commitment to the United States to jointly shape the rules governing the Indo-Pacific’s economic future even as competitors lurk.
    • Tough policy choices, like the one on data and taxation, must be made by Indian officials while negotiating the terms of the IPEF accession.

    Conclusion

    What’s clear is that the IPEF represents both a mirage and aspiration. Collectively, it represents a leap into an unknown that has to be negotiated amongst partners that share interests and some values.

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  • Foreign Policy Watch: India-Pakistan

    Indus Waters Treaty (IWT): An enduring agreement bridging India-Pakistan ties

    op-ed snap | International Relations | Mains Paper 2: India & Its Neighborhood – Relations

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much

    Mains level: Paper 2- Lessons from Indus Water Treaty

    Context

    The 118th meeting of the Permanent Indus Commission (PIC) comprising the Indus Commissioners of India and Pakistan held on May 30-31, 2022 in New Delhi.

    Indus Waters Treaty, 1960: A background

    • After years of arduous negotiations, the Indus Waters Treaty was signed in Karachi on September 19, 1960, by then Indian Prime Minister Jawaharlal Nehru and then Pakistani President Ayub Khan, negotiated by the World Bank.
    • According to this agreement, control over the water flowing in three “eastern” rivers of India — the Beas, the Ravi and the Sutlej was given to India
    • The control over the water flowing in three “western” rivers of India — the Indus, the Chenab and the Jhelum was given to Pakistan
    • The treaty allowed India to use western rivers water for limited irrigation use and unrestricted use for power generation, domestic, industrial and non-consumptive uses such as navigation, floating of property, fish culture, etc. while laying down precise regulations for India to build projects
    • India has also been given the right to generate hydroelectricity through the run of the river (RoR) projects on the Western Rivers which, subject to specific criteria for design and operation is unrestricted.
    • The Permanent Indus Commission, which has a commissioner from each country, oversees the cooperative mechanism and ensures that the two countries meet annually (alternately in India and Pakistan).
    • This year, the commission met twice, in March in Islamabad, Pakistan, and then in New Delhi, in May.
    • It is a rare feat that despite the many lows in India-Pakistan relations, talks under the treaty have been held on a regular basis.

    Some disagreements

    • Throughout its existence, there have been many occasions during which differences between the two countries were discernible.
    • Both countries held different positions when Pakistan raised objections regarding the technical design features of the Kishanganga and Ratle hydroelectric power plants.
    • Differences were also discernible when Pakistan approached the World Bank to facilitate the setting up of a court of arbitration to address the concerns related to these two projects referred to in Article IX Clause 5 of the treaty, and when India requested the appointment of a Neutral Expert referent to Clause 2.1 of Article IX .
    • Eventually, on March 31, 2022, the World Bank, decided to resume two separate processes by appointing a neutral expert and a chairman for the court of arbitration.
    • The appointment of a neutral expert will find precedence to address the differences since under Article IX Clause 6 of the treaty provisions, Arbitration ‘shall not apply to any difference while it is being dealt with by a Neutral Expert’.
    • Pakistan, invoking Article VII Clause 2 on future cooperation, raised objections on the construction and technical designs of the Pakal Dul and Lower Kalnai hydropower plants.
    • Similarly, India has raised concerns on issues such as Pakistan’s blockade of the Fazilka drain.

    Lessons from the treaty

    • Engagement between conflicting nations: The treaty is an illustration of a long-standing engagement between the conflicting nations that has stood the vagaries of time.
    • Water management cooperation: The treaty is considered one of the oldest and the most effective examples of water management cooperation in the region and the world.
    • Avoiding conflict: With the exception of differences on a few pending issues, both countries have avoided any actions resulting in the aggravation of the conflict or acted in a manner causing conflict to resurface.

    Potential for cooperation

    • Joint research: Recognising common interests and mutual benefits, India and Pakistan can undertake joint research on the rivers to study the impact of climate change for ‘future cooperation’ (underlined in Article VII).
    • Potential for cooperation and development: The Indus Waters Treaty also offers great potential for cooperation and development in the subcontinent which can go a long way in ensuring peace and stability.

    Conclusion

    Given that both India and Pakistan have been committed to manage the rivers in a responsible manner, the Treaty can be a reference point to resolve other water-related issues in the region through regular dialogue and interaction.

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  • Swachh Bharat Mission

    The Jal Jeevan and Swachh Bharat Missions are improving people’s well-being

    op-ed snap | Governance | Mains Paper 2: Governance, Transparency & Accountability, Citizens Charters

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Jal Jeevan Mission

    Mains level: Paper 2- Achievements of JJM and SBM

    Context

    The performance of the Jal Jeevan and Swachh Bharat Missions highlights the importance of convergence as an operating principle of the government.

     Jal Jeevan Mission: Progress made so far

    • Jal Jeevan Mission (JJM) is a flagship programme of the Government of India, launched by Hon’ble Prime Minister on 15th August 2019.
    • Jal Jeevan Mission, is envisioned to provide safe and adequate drinking water through individual household tap connections by 2024 to all households in rural India.
    • Community approach: The Jal Jeevan Mission is based on a community approach to water and will include extensive Information, Education and communication as a key component of the mission.
    • Over 9.6 crore rural households get tap water supply; notably, more than 6.36 crore households have been provided tap water connections since the programme was announced in August 2019.

    Achievements of Swachh Bharat Mission

    • Universal sanitation coverage: To accelerate the efforts to achieve universal sanitation coverage and to put the focus on sanitation, the Prime Minister of India had launched the Swachh Bharat Mission on 2nd October 2014.
    • Under the mission, all villages, Gram Panchayats, Districts, States and Union Territories in India declared themselves “open-defecation free” (ODF) by 2 October 2019, the 150th birth anniversary of Mahatma Gandhi.
    • To ensure that the open defecation free behaviours are sustained, no one is left behind, and that solid and liquid waste management facilities are accessible, the Mission is moving towards the next Phase II of SBMG i.e ODF-Plus.
    • Swachh Bharat Mission Phase-2: The government has launched Swachh Bharat Mission Phase 2 with a focus on plastic waste management, biodegradable solid waste management, grey water management and faecal sludge management.
    •  Under Swachh Bharat Mission Phase-2, arrangements for solid and liquid waste management have been made in 41,450 villages; nearly 4 lakh villages have minimal stagnant water.
    • ODF Plus: Nearly 22,000 villages have been named “model village” under the ODF Plus scheme, and another 51,000 villages are on their way to achieving this tag.
    • Sludge treatment and plastic waste management: Before the government embarked on Swachh Bharat Mission, nearly 1,20,000 tonnes of faecal sludge was left untreated as two-thirds of all toilets were not connected to the main sewer lines
    • The scale of India’s plastic waste pollution is staggering.
    • Both these problems find themselves on the agenda of Swachh Bharat Mission’s Phase 2.
    • In a short time, 3.5 lakh villages have become plastic dump free and nearly 4.23 lakh villages have minimal litter.
    • Nearly 178 faecal sludge treatment plants and nearly 90,000 km of drains have been constructed.

    How convergence between SBM and JJM enabled each other

    • Principle of convergence: The late Arun Jaitley introduced convergence as one of the primary operating principles of the government in his first budget speech.
    • One enabling the other: The best exhibition of this can be found in the ways in which the Jal Jeevan Mission and Swachh Bharat Mission work in tandem, one enabling the other.
    • More than 10 crore toilets were built under SBM but this accomplishment could have been difficult had the government not had the foresight to build the toilets on a twin-pit design that has in-situ treatment of faecal sludge.
    • Now, providing tap water connections through the Jal Jeevan Mission is among the government’s top priorities.
    • Managing grey water discharge: The Jal Jeevan Mission faces a challenge similar to that faced by the Swachh Bharat Mission — managing grey water discharge.
    • Holistic sanitation: When household tap connections were provided, the Jal Jeevan Mission converged with the Swachh Bharat Mission to achieve holistic sanitation in which the treatment of grey water became a vital component.
    • Focus on women: The Jal Jeevan mission intends to relieve women of the drudgery of travelling long distances to fetch water.
    • The Swachh Bharat Mission too is centred around the dignity of women.
    • A joint study by the Bill and Melinda Gates Foundation and UNICEF revealed that an overwhelming number (80 per cent) of the respondents stated that safety and security were the main drivers of their decision to construct toilets.
    • The Jal Jeevan Mission is catalysing change at the grass roots level by reserving 50 per cent seats for women in village and water sanitation committees.
    • In every village, at least five women have been entrusted with water quality surveillance and many of them have been trained as plumbers, mechanics and pump operators.

    Impact on growth and economy

    •  In 2006, a joint study by WSP, Asian Development Bank and UKAID revealed that inadequate sanitation cost India Rs 2.4 trillion — 6 per cent of India’s GDP at that time.
    • The Swachh Bharat Mission, apart from preventing GDP loss, provides annual benefits worth Rs 53,000 per household.

    Conclusion

    The success of Jal Jeevan Mission and Swachh Bharat Mission is a good example of convergence, one of the primary operating principles of the government.

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