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Type: op-ed snap

  • Foreign Policy Watch: India-United States

    Why does the deepening Indo-US friendship puzzle so many?

    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- India-US relations

    The India-US ties have advanced by leaps and bounds. Yet, there is a persistent underestimation of India’s capacity to rework its great power relations. The article deals with this issue.

    Expanding partnership

    • India-US relations have been on a steady upward trajectory over the last three decades.
    • This partnership withstood significant political transitions in both countries and managed to overcome many difficult barriers.
    • The US is now India’s most comprehensive partner.
    • The Russia relationship is long on defence but short on commerce.
    • India’s commercial ties with China are large, but tilted heavily in Beijing’s favour.
    • Collective Europe is big on commerce but small on security cooperation.
    • The US has a sizeable presence in both economic and security dimensions and the political common ground with India has steadily expanded.

    So, why persistent doubt in India about the US partnership

    • One part of it is the ingrained ideological bias in the dominant foreign policy elite.
    • Delhi’s stilted debate on the US is, unfortunately, reinforced by the sad absence of investment in institutional capabilities to study American politics, economics and international relations.

    Issues with our assessment of relations with India

    • There is an enduring reluctance of India’s foreign policy community to either acknowledge or accept the unfolding transformation of India’s ties with the US.
    • There is also continuing underestimation of India’s capacity to rework its great power relations to meet India’s changing interests and circumstances.
    • It was widely held that the Indo-Pacific and the Quad will become footnotes in Biden’s foreign policy.
    • This in turn was based on the bet that Biden is likely to embrace China rather than confront it in the manner that Trump did.
    • All these assumptions turned out to be inaccurate.
    • Concern for democracy and human rights has always been part of US foreign policy ideology.
    • But no state, not even a revolutionary one, can run its foreign policy on a single-point agenda. 

    Underestimating India’s agency to shape the partnership

    • Even as it continuously misjudged the US, the Indian foreign policy elite has not appreciated India’s agency to shape the relationship with America.
    • The conviction that Delhi is perennially under US pressure to accept policies harmful for itself further distorts the discourse in the media and among the chattering classes.
    • The evidence from the 1990s — one of India’s most vulnerable moments after Independence — should have corrected this misperception.
    • The traditional discourse finds it hard to come to terms with the twin factors shaping India’s new approach.
    • One is the significant increase in India’s material capabilities.
    • India’s aggregate GDP increased ten-fold between 1990 ($270 billion) and 2020 (about $2,700 billion).
    • Equally important is the new political will in Delhi.

    Consider the question “There is a continuing underestimation of Delhi’s capacity to rework its great power relations with the US to meet India’s changing interests and circumstances. Critically examine.” 

    Conclusion

    The new India no longer wrings its hands in dealing with the US; it relishes the large room for strategic bargaining with America. Even more important, Delhi is no longer a reluctant partner to Washington.

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  • Banking Sector Reforms

    Privatisation of Banks

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

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much

    Mains level: Paper 3-Privatisation of banks in India and debate around it

    The article highlights the different aspects that need to be considered while contemplating the idea of privatisation of public banks.

    Opposite trends in India and the US

    • While the United States epitomises the private banking model, a nationwide public banking movement is coming into vogue.
    • In contrast, India seems to be quickly warming to the idea of bank privatisation.

    Public or the private?

    • The development view sees government presence in the banking sector as a means to overcome market failures in the early stages of economic development.
    • The government-owned banks can improve welfare by allocating scarce capital to socially productive uses.
    • The stellar success of Indian PSBs in implementing the PMJDY while missing the mark on creating high-quality credit highlights a critical divide between the asset and the liability side of a bank.
    • Banks provide two functions at a fundamental level: Payments and deposit-taking on the liability side and credit creation on the asset side.
    • The payment services function, a hallmark of financial inclusion, is similar to a utility business — banks can provide this service, a public good, at a low cost universally.
    • The lending side, in contrast, is all about the optimal allocation of resources through better credit evaluation and monitoring of borrowers.
    • Private banks are more likely to have the right set of incentives and expertise in doing so.
    • It comes as no surprise that the PSBs in India are better at providing the public good functions, whereas private banks seem better suited for credit allocation.
    • However, the political view argues that vested interests can influence the lending apparatus to achieve political goals.
    • This results in distortion of credit allocation and reduce allocative efficiency in government-owned banking systems.

    Reasons for privatisation of banks

    • Evidences shows that government ownership in the banking sector leads to lower levels of financial development and growth
    • This led to waves of banking sector privatisations that swept emerging markets in the 1990s.
    • Cross-country evidence suggests that bank privatisations improved both bank efficiency and profitability.

    How public banks performed in India

    • Public sector Banks (PSBs) dominate Indian banking, controlling over 60 per cent of banking assets.
    • The private-credit to GDP ratio, a key measure of credit flow, stands at 50 per cent, much lower than international benchmarks — in China it is150 and in South Korea it is 150 per cent.
    • India’s Gross NPA ratio was 8.2 per cent in March 2020, with striking differences across PSBs (10.3 per cent) and private banks (5.5 per cent).
    • The end result is much lower PSB profitability compared to private banks.
    • The rationale for privatisation stems from these considerations.

    Way forward

    • The optimal mix of the banking system across public and private boils down to what you need out of your banking system.
    • When the wedge between social and private benefits is large, as with financial inclusion, there is a strong case for public banks.
    •  At this stage, inefficiency in capital allocation seems to be a bigger issue for the Indian banking sector, whereas, in the US, the debate is centred around the public goods aspects of banking.

    Consider the question “What are the factors India needs to consider as it reverses the course of history by privatising the public banks?”

    Conclusion

    At this stage, inefficiency in capital allocation seems to be a bigger issue for the Indian banking sector, whereas, in the US, the debate is centred around the public goods aspects of banking.

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  • Implications of increasing prices of subsidised LPG on Pradhan Mantri Ujjwala Yojana (PMUY).

    op-ed snap | Governance | Mains Paper 2: Government Scheme/Policies

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Ujjwala Yojana

    Mains level: Paper 2- Impact of increasing prices of subsidised LPG on PMUY

    Price increase of subsidised LPG

    • Subsidised LPG prices have increased by a massive 50% in this financial year alone.
    • This would have a significant impact on the government’s flagship scheme, the Pradhan Mantri Ujjwala Yojana (PMUY).
    • Since 2016, PMUY has provided LPG connections to 80 million poor households to reduce women’s drudgery and indoor air pollution.
    • Providing an upfront connection subsidy of ₹1,600, PMUY helped expand LPG coverage to more than 85% of households.

    Challenges

    • Large-scale primary surveys by the Council on Energy, Environment and Water (CEEW) suggest that, on average, recent PMUY beneficiaries consumed only about half the LPG compared to long-standing regular consumers.
    • Limited uptake of LPG among poor households has two main reasons.
    • First, the effective price of LPG is not affordable for such households, despite the subsidy.
    • Second, many rural consumers have access to freely available biomass, making it difficult for LPG to displace it.
    • Beyond causing indoor air pollution, biomass use for cooking contributes up to 30% to the ambient PM2.5 at the national level, more than the contribution of transport, crop residue or coal burning.

    Impact of price rise

    • The recent increases in the subsidised LPG price have made it more difficult for the poor to sustain LPG use.
    • As the pandemic set in, the LPG subsidised price began to rise, even when global LPG prices plummeted.
    • Now with LPG prices rising globally, a 50% reduction in the LPG subsidy budget for FY22 (versus FY21) does not bode well.
    • The information about LPG price build-up and subsidy has become more difficult to obtain in recent years.

    Way forward

    • The central government tread should balance between LPG subsidies and sustained clean fuel consumption in poorer households by better targeting of subsidy.
    • One approach for such targeting is to rely on the existing LPG consumption patterns of consumers. 
    • Provide households exhibiting low consumption or a decline in LPG consumption over time with greater subsidy per cylinder to sustain health gains.
    • Further, the subsidy levels could be dynamic with different slabs reflecting the previous year’s consumption.
    • Alongside, the de-duplication efforts must continue to avoid subsidy leakages.

    Consider the question “What is the social impact of the Ujjwala Yojana (PMUY)? What are the challenges in its success.”

    Conclusion

    In the post-pandemic rebuilding, the continued support to the economically poor for sustaining LPG use is not merely a fiscal subsidy but also a social investment to free-up women’s productive time and reduce India’s public health burden.

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

    What we must consider before digitising India’s healthcare

    op-ed snap | Governance | Mains Paper 2: Government Scheme/Policies,Health & Education

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: National Digital Health Mission

    Mains level: Paper 2- Issues to consider in digitising health infrastructure

    As India seeks to create digital health infrastructure, it must consider several issues.

    Integrated digital health infrastructure

    • The National Digital Health Mission aims to develop the backbone needed for the integrated digital health infrastructure of India.
    • This can help not only with diagnostics and management of health episodes, but also with broader public health monitoring, socio-economic studies, epidemiology, research, prioritising resource allocation and policy interventions. 
    • However, before we start designing databases and APIs and drafting laws, we must be mindful of certain considerations for design choices and policies to achieve the desired social objectives.

    Factors to be considered

    1) Carefully developing pathway to public good

    • There must be a careful examination of how exactly digitisation may facilitate better diagnosis and management, and an understanding of the data structures required for effective epidemiology.
    • We must articulate how we may use digitisation and data to understand and alleviate health problems such as malnutrition and child stunting.
    • We need the precise data we require to better understand crucial maternal- and childcare-related problems.

    2) Balancing between public good and individual rights

    • The potential tensions between public good and individual rights must be examined, as must the suitable ways to navigate them.
    • Moreover, for the balancing to be sound and for determining the level of due diligence required, it is imperative to clearly define the operational standards for privacy management.
    • Conflating privacy with security, as is typical in careless approaches, will invariably lead to problematic solutions.
    • In fact, most attempts at building health data infrastructures worldwide — including in the UK, Sweden, Australia, the US and several other countries — have led to serious privacy-related controversies and have not yet been completely successful.

    3) Managing the sector specific identities

    • Even if we define and use a sector-specific identity, the question of when and how to link it with that of other sectors remains.
    • For example, with banking or insurance for financial transactions, or with welfare and education for transactions and analytics.
    • Indiscriminate linking may break silos and create a digital panopticon, whereas not linking at all will result in not realising the full powers of data analytics and inference.

    4) Working out the operational requirement of data infrastructure

    • We need to work out the operational requirements of the data infrastructure in ways that are informed by, and consonant with, the previous points.
    • In other words, the design of the operationalisation elements must follow the deliberations on above points, and not run ahead of them.
    • This requires identifying the diverse data sources and their complexity — which may include immunisation records, birth and death records, informal health care workers, dispensaries etc.
    • It also requires an understanding of their frequency of generation, error models, access rights, interoperability, sharing and other operational requirements.
    • There also are the complex issues of research and non-profit uses of data, and of data economics for private sector medical research.

    5) Issue of due process

    • Finally, “due process” has always been a weak point in India, particularly for technological interventions.
    • Building an effective system that can engender people’s trust not only requires managing the floor of the Parliament and passing a just and proportional law, but also building a transparent process of design and refinement through openness and public consultations.
    • In particular, technologists and technocrats should take care to not define “public good” as what they can conveniently deliver, and instead understand what is actually required.
    • While we can understand the urge to move forward quickly, given the urgent need to improve health outcomes in the country, deliberate care is needed.

    Consider the question “While seeking to develop digital health infrastructure through the National Digital Health Mission, we should be mindful of certain considerations for design choices and policies to achieve the desired social objectives. Comment.”

    Conclusion

    Developing a comprehensive understanding of the considerations related to health data infrastructure may also inform the general concerns of e-governance and administrative digitisation in India, which have not been all smooth sailing.

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

    Recovery? Different numbers tell different stories

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

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much

    Mains level: Paper 3- Indian economy's growth rate

    India’s growth numbers reveal a different story when seen through the quarter-on-quarter growth lense. The article deals with this issue.

    Weakness of India’s GDP statistics

    • The CSO press release for 4Q20 stated that India grew 0.4 per cent on a year-ago basis.
    • That is, relative to the level of GDP four quarters before.
    • Many heaved a sigh of relief at growth turning positive after two-quarters of negative year-ago: -24.4 per cent in 2Q20 and -7.3 per cent in 3Q20 and declared that growth would accelerate from hereon.
    • Nothing could be further from the truth.
    • To know whether the economy will accelerate or decelerate, one needs to know its current speed.
    • To do that, one needs to compute the quarter-on-quarter growth as almost all large economies do.
    • This is a central weakness of India’s GDP statistics, exemplified by last week’s 4Q20 print.

    Challenges in measuring quarter-on-quarter growth

    • These computations are not easy, because each quarter has its own characteristics or, as economists call it, “seasonality”
    • Seasonality naturally increases or decreases activity in that period.
    • Think of quarters with festivals or with harvests versus those without them.
    • The modern economy is more complicated as its seasonal patterns change when its structure does.
    • To compare two quarters, these changes to seasonality need to be excluded from the data.
    • Statisticians have been working on this issue for more than a century and, over the last two decades.
    • As a result, many official statistical bodies (such as the US Census Bureau) have made deseasonalising methods freely available.

    Understanding the issue through example

    • If the level of 1Q20 GDP is set at 100, then the quarterly growth rates imply that it fell to 75, rising to 91.1 in the following quarter and then to 96.3 last quarter.
    • Now assume that the level of GDP remains constant for the next five quarters, that is, there is no growth in the economy until the end of fiscal year 2021-22.
    • This would mechanically put the full-year growth in 2021-22 at 7.2 per cent simply because of the low average level of GDP in the previous year.
    • If the speed of the economy were to remain at its current pace of 5.7 per cent, then the annual growth in 2021-22 would be an astonishing 28.7 per cent.
    • Any annual growth projection for next year that is less than this necessarily implies a slowdown from the current pace.

    So, what is Indian economy’s current growth rate

    • J.P. Morgan uses one of the above mentioned deseasonalising technique.
    • The derived quarterly path is the following: In 1Q20, India’s economy grew 3.7 per cent over the previous quarter, in 2Q20 the economy contracted 25 per cent and then recovered 21.5 per cent in 3Q20 and ended the last quarter at 5.7 per cent.
    • Put differently, growth slowed to 5.7 per cent last quarter — the latest reading of the economy’s “current” speed.

    Putting in context the projected nominal growth

    • The budget documents suggest that the government’s projected nominal growth for 2021-22 is 14.5 per cent.
    • This implies a real growth rate of around 11 per cent assuming inflation averages 3.5 per cent.
    • The implied average quarterly pace, consistent with an 11 per cent annual growth, is just 1 per cent.
    • The year-on-year quarterly numbers will keep rising giving the false assurance of a strengthening recovery when in reality the level of income would rise only at a grinding pace.

    Reasons behind the deceleration

    • India’s growth drivers had already slowed dramatically prior to the pandemic, the pandemic likely exacerbated them.
    • With listed companies posting strong profit growth in 3Q and 4Q, much of the decline in overall income has fallen on households and MSMEs.
    • This is likely to have not only worsened income inequality, but also severely impaired their balance sheets, making it that much more difficult to access credit in the coming quarters.
    • While industry has recovered to 98 per cent of its pre-pandemic level, the service sector remains substantially below.
    • Thus, much of the continued high unemployment (as reported by private surveys) is in services.
    • This is likely to have disproportionately increased women’s unemployment, thereby widening the gender gap.
    • Last quarter, central government spending rose 12 per cent, but overall public expenditure contracted 1 per cent, implying a sharp contraction at the state level.

    Consider the question “Why quarter-on-quarter growth rates reveal a true picture of India’s growth rate as compared to year-on-year rates? What are the challenges in dealing with the quarter-on-quarter data?”

    Conclusion

    Neither fiscal policy nor monetary policy are designed to reverse these widening economic imbalances. This makes it hard to see India’s growth engines firing on all cylinders, despite the rollout of vaccines and the anticipated surge in US growth.

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  • Swachh Bharat Mission

    Women’s needs are key to Swachh Bharat success

    op-ed snap | Governance | Mains Paper 2: Government Scheme/Policies

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much

    Mains level: Paper 2- Women's role in SBM

    The article highlights the central role of women in the success of the Swacch Bharat Mission.

    Recognising the gender dimensions of sanitation in India

    • The Swachh Bharat Grameen Phase I guidelines (2017) state that requirements and sensitivities related to gender are to be taken into account at all stages of sanitation programmes.
    • Planning, procurement, infrastructure creation, and monitoring are the basic tenets of implementation in Swachh Bharat and the guidelines for the first phase of the mission called for strengthening the role of women.
    • The states were accordingly expected to ensure adequate representation of women in the village water and sanitation committees (VWSCs), leading to optimal gender outcomes.
    • The department of Drinking Water and Sanitation released the guidelines, recognising the gender dimensions of sanitation in India.
    • Swachh Bharat Mission 2 .0 speaks of sustained behavioural change while embarking on the newer agendas of sustainable solid waste management and safe disposal of wastewater and reuse.
    • Besides the government, the role of non-state actors like the Bill and Melinda Gates Foundation, Unicef and several NGOs, must be lauded as we pursue sustainable sanitation using a powerful gender lens.

    Challenges and solutions

    • There were inevitably cases where women were fronts for spouses.
    • This capturing has happened in panchayat seats as well but research has shown that over time, women do pick up the challenge, and if voted back are likely to assume charge.
    • The government has also very effectively used over 8 lakh swachhagrahis, mainly women, who for small honorariums work to push through behavioural change at the community level.
    • There are no quick solutions other than adopting concerted approaches to ensure the survival and protection of the girl child through good health from sanitation and nutrition.
    • Information, education, and communication, which aims at behaviour change of the masses, is key to the success of the swachhta mission 2.0.
    • Changes in SBM messaging reflects major transformations attempting to popularise and portray stories of women groups and successful women swachhta champions.

    Need for monitoring and evaluation system

    • A national monitoring and evaluation system to track and measure gender outcomes in SBM is necessary.
    • Several researchers in this space have commented that gender analysis frameworks have a long history in development practice.
    • We can learn from these frameworks to support design, implementation, and measurement.

    Conclusion

    There is no doubt that women can help to drive change and bring about lasting change as the jan andolan for swachhta, health and sanitation gains momentum.

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  • Climate Change Negotiations – UNFCCC, COP, Other Conventions and Protocols

    Adaptation, not mitigation, should inform India’s climate strategy

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

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: 26th COP

    Mains level: Paper 3- COP 26 to UNFCCC agenda

    The article discusses issues such as China’s changing stance, climate finance and adoption of targets.

    The 26th COP to the UNFCCC

    • Countries Across the world are gearing up for the 26th Conference of Parties (COP) to the UN Framework Convention on Climate Change (UNFCCC).
    • At the forthcoming COP countries will be expected to increase the nationally determined commitments they made as part of that agreement.
    • Those original commitments would put the planet on track towards a 3 degrees centigrade temperature rise by the end of the current millennium.
    • 3-degree centigrade is far beyond the 1.5-degree limit that science considers to be a relatively safe threshold.

    Countries declaring carbon neutrality targets

    • The European Union (EU), the UK, Japan and South Korea have announced more ambitious targets.
    • The EU and the UK have pledged to reduce their carbon emissions by 55 per cent in 2030 with 2000 as the base year
    • They have also pledged to achieve “carbon neutrality” or zero carbon emissions by 2050.
    • China has announced that it will achieve carbon neutrality by 2060 and this has been welcomed by other major economies.

    Delinking from China

    • It is anticipated that the Biden administration may engage with China to come up with a template for COP-26.
    • That template did not take into account India’s interests despite China being part of the BASIC group of Brazil, South Africa, China and India.
    • BASIC, as major emerging economies, had been taking coordinated positions at multilateral climate negotiations.
    • Going forward, India must delink itself from China, let BASIC become a consultative forum only and reconstruct a larger coalition of developing countries whose climate change goals are more aligned with its own.
    • After Paris, BASIC has lost whatever rationale it originally possessed.

    Course of action for India: Adaptation is the key

    • There will be some important international conferences before COP-26, where major efforts are expected to set down an agenda for that meeting.
    • Biden has called for a summit of major emitting nations on April 22.
    • In June there will be a G-7 summit of western countries and Japan to which India has been invited.
    • The UK has let it be known that climate change would be at the top of the summit agenda.
    • What should India’s stance be at these meetings?
    • Both for India and other developing countries, it is important that mitigation does not overshadow other key elements of the Paris Climate agreement.
    • There has been step-motherly treatment of adaptation, which is a bigger challenge for most developing countries than mitigation is.
    • Adaptation should have equal billing with mitigation whenever and wherever climate change action is being deliberated upon.
    • India may find itself under pressure to commit to decisions that limit rather than enhance its development prospects.
    • One should not yield to pressures to declare a peaking year for India’s carbon emissions or to follow China into declaring a target year for carbon neutrality.
    • There is a relentless effort by the US and Western European countries to include climate change on the UN Security Council (UNSC) agenda.
    • At a recent UNSC meeting, this was strongly opposed by Russia and by India.
    • We will need to work out a persuasive case for opposing it since a large number of countries seem to believe that climate change is indeed a security issue and needs to be treated as such.
    • The potentially menacing intent behind it should be exposed.

    Climate finance falling short

    • The developed countries had committed themselves to providing $100 billion a year in climate finance to developing countries up to 2020.
    • There was a pledge to increase the size of this funding significantly in the period 2021-2025.
    • Even by the very accommodative accounting methods used by the OECD, the actual flows have fallen far short, being only $79 billion in 2018.
    •  Our own ministry of finance has estimated that there has been only a billion dollars in new and additional finance transferred to developing countries annually against the $100 billion pledge.
    • It is therefore important for India to highlight the finance component.
    • This will also enable the mobilisation of other developing countries, in particular small and medium countries and small island developing states.
    • These countries look up to India to provide intellectual leadership in a domain that is often quite technical and complex.

    Consider the question “What are the factors India should highlight and focus on as it heads to the 26th COP to the UNFCCC?”

    Conclusion

    It is evident that India needs to fashion a fresh strategy on climate change negotiations to safeguard its interests, contribute to a global climate regime that enhances and does not diminish India’s development prospects and helps the country both to adapt to climate change that is already taking place and to accelerate its transition to a low carbon growth trajectory.

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  • UDAY Scheme for Discoms

    Reforms-Linked, Result-Based Scheme for Distribution’ (RLRBSD)

    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: RLRBSD

    Mains level: Paper 3- Issues with the RLRBSD scheme for discoms

    The debt burden of discoms is estimated to touch 4.5 lakh crore by the end of 2020-21. This high level of debt underscores the need for reforms in the discoms. With this in view, RLRBSD has been launched by the Centre. The article highlights the issues with this scheme.

    Reforms-Linked, Result-Based Scheme for Distribution’ (RLRBSD)

    • In her FY22 Budget speech, Finance Minister proposed Electricity (Amendment) Bill, 2021, which intends to delicence the distribution business, bring in competition, and give the consumer power to choose her supplier.
    • She also unveiled the Rs 3 lakh crore electricity distribution reform programme to reduce losses and improve the efficiency of discoms.
    •  Against this background, the RLRBSD aims at helping discoms trim their electricity losses to 12-15% from the present level.
    • The aggregate technical and commercial (AT&C) losses and shortfall in the average revenue realisation from the sale of electricity vis-a-vis the average cost of supply or the ACS-ARR gap, are major causes for losses of discoms.
    • Accordingly, the scheme sets the target for both to be achieved by 2025.
    • It also aims to gradually narrow the deficit between the cost of electricity and the price at which it is supplied to ‘zero’ by March 2025.
    • It will also have a compulsory pre-paid and smart metering component to be implemented across the power supply chain, including in about 250 million households.

    Funding for RLRBSD

    • The Centre is expected to contribute around Rs 60,000 crore to the scheme’s corpus.
    • The rest may be raised from multilateral funding agencies such as ADB and World Bank (WB).
    • The Centre’s contribution will be met through the previous commitment of the ongoing schemes, viz. the Integrated Power Development Scheme (IPDS) and the Deen Dayal Upadhyaya Gram Jyoti Yojna (DDUGJY).
    • The funds will be released subject to discoms meeting reform-related milestones.

    Analysing RLRBSD against the context of UDAY

    • Under UDAY, discoms were required to reduce AT&C losses from 20.7% during 2015-16 to 15% by 2018-19.
    • During 2019-20, their AT&C losses were 18.9% against the 15% target for 2018-19.
    • Further, they were to reduce the ACS-ARR gap from Rs 0.59 per unit during 2015-16 to ‘zero’ by 2018-19.
    • The ACS-ARR gap during 2019-20, stood at Rs 0.42 per unit against target of ‘zero’ for 2018-19.
    • Simultaneously, the government gave them a financial restructuring package (FRP).
    • The FRP was nothing but a condoning of discoms’ staggering debt of about Rs 4 lakh crore.
    • Against this backdrop, aims of achieving those targets by 2025 under RLRBSD, which should have been achieved by 2018-19 under UDAY seems difficult.

    3 factors that contribute to  debt of discoms

    • 1) At the root of persistent and increasing losses of discoms is the orders issued by state governments to sell electricity to some preferred consumers, viz. poor households and farmers.
    • Electricity is supplied to these customers either at a fraction of the cost of purchase, transmission and distribution, or even free.
    • On the units sold to these groups, discoms incur colossal under-recovery.
    • 2) This is aggravated by AT&C losses—most of it plain theft.
    • 3) Inflated tariff allowed to independent power plants (IPPs) under purchase agreements adds to the revenue shortfall.

    Consider the question “Why the discoms in India require frequent bail-outs? How far will the Reforms-Linked, Reforms-Based Scheme for Distribution be successful in addressing the woes of discoms?”

    Conclusion

    The problem is entirely political. In a bid to win elections almost every political party promises sops which include, among others, power supply to farmers and poor households at a throwaway price or even free. As long as this effect of populist politics persists, the discoms will continue to be in the red, needing a bailout at frequent intervals.

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  • The perils of domicile-based preferential policies

    op-ed snap | Polity | Mains Paper 2: Federalism,Government Scheme/Policies,Indian Constitution – historical underpinnings, evolution, features, amendments, significant provisions and basic structure

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Article 16(3)

    Mains level: Paper 2- Domicile-based preferential policies and issues with it

    The Haryana government is considering a Bill that provides for 75 per cent reservation to the residents of the state. This article discusses the challenge such policies poses.

    Domicile-based preferential policies on rise

    • The Haryana government’s State Employment of Local Candidates Bill 2020 reserves 75 per cent of new jobs in private establishments for Haryana residents.
    • Andhra Pradesh has mandated 75 per cent reservation for locals.
    • Karnataka is considering reserving all blue-collar jobs for locals.
    • Madhya Pradesh has announced that public employment in the state be reserved for state residents.

    Constitutionality of such policies

    • The Constitution prohibits discrimination based on place of birth.
    • The right to move freely in the country and reside and settle in any part of it, the right to carry out any trade or profession, are all established rights.
    • Article 16(3) does, in principle, enable Parliament [ not state legislature] to provide for domicile-based preferential treatment in public employment.

    Judicial scrutiny

    • The constitutionality of domicile-based employment preferences (unlike preferences in education) has never been frontally tested.
    • But almost all the existing case law that impinges on the matter clearly indicates such laws are unconstitutional.
    • In Pradeep Jain vs Union of India, the court had indicated this direction; in Kailash Chandra Sharma vs State of Rajasthan, the court had warned against parochialism.
    • The Andhra Pradesh Bill is sub judice in the high court.

    Issues with the policies

    • The Supreme Court will hopefully rule on the constitutionality of the  Haryana government’s Bill.
    • But the Bill has ramifications beyond constitutionality.
    • First, because this kind of constitutional cynicism is now not an exception but has become a contagion.
    • Second, even if the Bill is struck down, such a high wire act is meant to fuel the flames of localism.
    • Third, the Bill now exposes the bad faith of political parties on private sector reservation more generally.
    • Fourth, these bills will open up a new form of competitive ethnic politics.
    • It is odd that a state like Haryana which has benefitted from being part of a cosmopolitan zone like NCR should unilaterally impose reservations.
    • Fifth, there is patent class discrimination: If you are rich, privileged or highly skilled, there are no entry barriers in accessing any labour market.
    • But we shall put entry barriers on lower skilled migrants; our own internal version of an H-1B visa.
    • The greatest damage the Bill does is to increase the discretionary power of the state, almost taking us back to a license permit raj, where companies will have to bargain, or worse, bribe the state for exemptions.
    • This is the antithesis of regulatory reform.

    Consider the question “There have been growing tendencies among the states to pursue domicile-based preferential policies. What are the issues related to such policies?”

    Conclusion

    But the fact that states feel the need to enact these bills is an indictment of the economy as a whole: They suggest a pessimism about both education and job creation. So we have returned to a world of zero sum thinking.

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  • Climate Change Impact on India and World – International Reports, Key Observations, etc.

    Climate and consciousness

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

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much

    Mains level: Paper 3- Need to galvanise climate action

    Two recent events: floods in Uttarakhand and Texas cold snap serves as reminders of the devastation climate change could unleash. What we need is climate action. The article deals with this issue.

    Fingerprints of global warming in Uttarakhand floods and Texas cold snap

    • The melting of the Himalayan glaciers that prompted the floods and landslides in Uttarakhand have the fingerprints of global warming.
    • The United States has already witnessed many deadly avalanches since the beginning of 2021.
    • Furthermore, as glacier cover is replaced by water or land, the amount of light reflected decreases, aggravating warming.
    • The extreme cold weather in Texas, like the double-digit negative temperatures seen in Germany earlier this year, is connected to Arctic-peninsula warming, at a rate almost twice the global average.

    Global warming causing the movement of cold air

    • Usually, there is a collection of winds around the Arctic keeping the cold locked far to the north.
    • But global warming has caused gaps in these protective winds, allowing intensely cold air to move south — a phenomenon that is accelerating.

    India needs to announce carbon neutrality target

    • When the public connects cause and effect, responses are usually swift.
    • Global warming is still seen as a danger that lies over the horizon.
    • For India, the third-largest carbon emitter after China and the United States, a decisive switch is needed from highly polluting coal and petroleum to cleaner and renewable power sources.
    • China has announced carbon neutrality by 2060, Japan and South Korea by 2050, but India is yet to announce a target.
    • HSBC ranks India at the top among 67 nations in climate vulnerability (2018), Germanwatch ranks India fifth among 181 nations in terms of climate risks (2020).
    • But public spending does not reflect these perils.

    Including policies for climate mitigation in the Budget

    • A vital step should be explicitly including policies for climate mitigation in the government budget.
    • Growth targets should include timelines for switching to cleaner energy.
    • The government needs to launch a major campaign to mobilise climate finance.
    • India’s Central and State governments must increase allocations for risk reduction, such as better defences against floods, or agricultural innovations to withstand droughts.

    Neglect of warnings and lack of policy response

    •  The Uttarakhand government and the Centre have been diluting, instead of strengthening, climate safeguards for hydroelectric and road projects.
    • Studies had flagged ice loss across the Himalayas, and the dangers to densely populated catchments, but policy response has been lacking.
    • Similarly, Kerala ignored a landmark study calling for regulation of mining, quarrying and dam construction in ecologically sensitive places, which contributed to the massive floods and landslides in 2018 and 2019.

    Consider the question ” Frequent occurrences of the extreme weather events serve as the warning for more climate actions, yet there is a lack of policy actions. In light of this, suggest the measures India should take.”

    Conclusion

    Events like Uttarakhand and Texas should be treated as lessons to change people’s minds and for the public to demand urgent action.

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