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Question and Answer
Q. 265. Water Management Index (WMI)
The Niti Aayog will soon start a process to sensitise states towards preparing a Water Management Index (WMI) which will ultimately lead the Centre's think-tank to rank them on the basis of their efforts in efficient management of water resources.
The states' performance will be judged on the basis of 28 key indicators.
It will cover:
Water use efficiency
Availability of drinking water for both rural and urban areas
Other sustainable practices in water-related sectors.
The Niti Aayog has, in fact, developed a composite WMI as a tool to assess and further improve the performance in efficient management of water resources.
Different weightage is allocated to identified performance indicators to arrive at the composite index.
The final scorecard of a particular state will carry both quantitative and qualitative aspects of indicators during 2016-17.
The WMI is one of the six indices which the Niti Aayog has introduced for ranking states. The others include:
Q. 264. Rubella vaccine
Ans. What is Rubella?
Rubella is a mild viral infection that mainly occurs in children. But a woman infected with the rubella virus during the early stage of pregnancy has a 90% chance of transmitting it to the foetus. The virus can cause hearing impairments, eye and heart defects and brain damage in newborns, and even spontaneous abortion and foetal deaths.
Why is the measles-rubella vaccine being administered to children?
Buoyed by the elimination of polio six years ago and maternal and neonatal tetanus and yaws in 2016, India has set an ambitious target of eliminating measles and controlling congenital rubella syndrome (CRS), caused by the rubella virus, by 2020.
It is the first time that the rubella vaccine has been included in the programme. Since the rubella vaccine will piggy-back on the measles elimination programme, there will be very little additional cost.
All children aged nine months and 15 years will be administered a single dose of the combination vaccine.
Of the 1,10,000 children born with CRS every year globally, an estimated 40,000 cases occur in India alone.
According to the World Health Organisation (WHO), a single dose of rubella vaccine gives more than 95% long-lasting immunity.
Why opt for a campaign?
With the target set for 2020 to eliminate measles and control CRS, there is a compelling need to create a solid wall of immunity in all children up to 15 years in one go at the earliest. That can be achieved only if immunisation is carried out in a campaign mode.
The measles-rubella vaccination campaign is being introduced in phases. Karnataka, Tamil Nadu, Puducherry, Goa and Lakshadweep are covered in the first phase.
The entire country will be covered in four phases in 18 months. Following the campaign, two doses of the combination vaccine will become a part of the national immunisation programme. All children will receive the vaccine free at 9-12 months and 16-24 months of age.
Is it possible to achieve the goal by 2020?
Though the goal is only to eliminate measles and control rubella by 2020, both viruses can be eliminated if their transmission can be broken.
For that to happen, the vaccine coverage has to be over 95% during the campaign and in the immunisation programme that follows it.
India has to ramp up surveillance of both diseases, maintain outbreak preparedness, respond rapidly to outbreaks by vaccinating all children in a community and ensure effective and timely treatment of cases anywhere in the country.
Q. 263. India-Africa health cooperation
Ans. New Delhi will host leading health researchers and policymakers from Africa and India.
This India-Africa Health Sciences Meet (IAHSM) is a follow-up of the India-Africa Summit in October 2015. To accomplish this, there is: a proposed a $100-million India-Africa Development Fund, a $10-million Health Fund and 50,000 scholarships for African students to study in India.
Africa and India together cover about a quarter of the world’s land area, support over a third of its population and harbour about half of its disease burden.
Infectious diseases such as tuberculosis, malaria, HIV/AIDS, childhood diarrhoea and respiratory infections remain big challenges. However, both regions are witnessing a shift towards non-communicable diseases such as diabetes, cardiovascular disease, mental illness, etc.
While Africa is quite diverse, the numbers show poor capacity in the health sector, especially human resource. It has a very low density of physicians and nurses, which stand at 2.7 and 12.4 per 10,000 people, respectively, against a world average of 13.9 and 28.6. This is also reflected in hospital beds and specialised medical equipment.
India’s engagement with Africa is growing at a rapid pace in the sunrise sector of health care. Besides the private sector, Government of India initiatives such as ‘Focus Africa’, ‘Team-9 Initiative’ and ‘Pan-African e-Network Project’ have a significant investment on health care.
The telemedicine initiative has enabled a number of super-specialty hospitals in India to be connected with physicians in Africa, impacting not just health tourism in India, but also capacity building in Africa through continuing medical education (CME) credits.
In 2014 India exported medicines worth $3.5 billion to Africa and the foreign direct investment (FDI) by Indian pharmaceutical companies in Africa was $67.4 million.
Affordable anti-retroviral drugs from India have been instrumental in containing Africa’s HIV/AIDS epidemic.
India is also a frequent destination for Africans seeking specialised treatment for cancer and other ailments.
India has clear strengths in its generic pharmaceuticals industry, and due to early development of its higher education sector, it has a large human resource in the health sector as well. These can be leveraged for capacity building in Africa.
The health challenges facing Africa, India and other developing countries are not attractive for big pharmaceutical companies due to low profit margins.
India has developed not just high quality institutions in basic, clinical and public health research, its alternative models of drug discovery, such as the Open Source Drug Discovery (OSDD), can provide interesting options. The Council of Scientific and Industrial Research (CSIR, India) is already championing the OSDD model for TB and malaria, both highly relevant for Africa as well.
For an aspiring global power, the India story will mean more if “Make in India” is extended to “Make with Africa”.
The Health Science Meet should discuss the
Challenges and partnerships for Africa-based manufacturing,
Alignment of the regulatory frameworks and
How best to leverage the funds announced by PM last year
Research capacity in the two regions and identify strengths, weaknesses and potential partnerships.
Disease priorities and areas of research focus should be outlined for future collaboration.
India’s ‘Look Africa’ policy can be a game changer if it also becomes an engine for knowledge generation and innovation. Capacity building, biomedical research and innovation should become central themes for discussion at the IAHSM. This will make the partnership sustainable and valuable.
Q. 262. New Steel Policy
The government has come up with a new National Steel Policy 2017 that envisages increasing the capacity in the country, more than 2 fold from 122 million tonnes per annum (mtpa) to 300 mtpa, by 2030.
The draft policy lays out two alternatives of its vision — “to create a globally competitive steel industry that promotes inter-sectoral growth” or “to create a self-sufficient steel industry that is technologically advanced, globally competitive and promotes inclusive growth.”
While it focuses on impediments like high input costs, availability of raw materials, import dependency and financial stress plaguing the sector, projections made under the policy for a couple of factors are all still under discussion, such as the demand and production of sponge iron.
To cut down reliance on expensive imports of coking coal, the policy has mooted gas-based steel plants and technologies such as electric furnaces to bring down the use of coking coal in blast furnaces.
Establishment of steel plants along the coast under the aegis of Sagarmala project will be undertaken.
Such plants would be based on the idea of importing scarce raw materials and exporting steel products,” the policy stated, adding that a cluster-based approach will be pursued, especially for micro, small and medium enterprises to ensure optimum land use, easy availability of raw materials and economies of scale.
This kind of capacity expansion will require investment to the tune of Rs 10 lakh crore.
Global scenario and India
Global steel industry is in a fragile state right now and a severe glut in China, world's largest steel producing country, has made a mockery of pricing mechanisms.
In many ways, steel is no longer a global commodity anymore as prices vary significantly from Europe and US to India, China, Middle East Asia Latin America and Africa.
In the last few years, India has provided the only silver lining.
While other markets have either stagnated or declined, consumption of steel in India has grown continuously at a steady pace.
It has resulted in expansion of the capacity by domestic companies even as new players have found it next to impossible to start operations.
In 2015, India overtook US to become the third largest steel producing country and lags only China and Japan. By the turn of this decade there are chances it may overtake Japan too.
Steel policy history in India
The government came up with its first steel policy that projected capacity to rise to 110 MT by 2019-20. Post the heady days of 2006-08 when the sector was at an upswing and global majors like Posco and ArcelorMiital were lining up with big ticket tens of billions dollar investments in India, the government came up with another policy in 2012. It then set a target capacity of 300 MT by 2025-26.
This new policy in 2017, merely extends the deadline by 5 years keeping in mind the troubled market scenario.
The erstwhile planning commission and ministry of steel had drawn up plans to ramp up capacity to 300 mt by 2025-26 on the assumption that at that time total steel production was 100 MT and per capita consumption was 62-63 kg per person. The world average is 250 kg plus. But it was too soon, too early and too large. It was about doubling capacity. We did not have the wherewithal then.
The policy, like its earlier versions, however, does not address or suggests ways to deal with the core issues facing the industry.
Setting up a steel plant is capital intensive and takes a minimum 3-4 years, provided the land acquisition process itself is smooth. Within that time span, the dynamics of the market often change.
So when the capacity actually comes on-stream, there may not be enough demand to absorb it. The lack of certainty coupled with high interest burden leads to the problem of non-performing assets that the industry is currently grappling with.
It may not be as bad elsewhere, but the domestic steel industry is not exactly flying.
Today, the sector's exposure to banks is Rs 3.13 lakh crore and more than a third of it is already classified as non-performing asset.
Given a chance, many would like to exit the sector and the policy provides little incentive to stay put or join in.
No Greenfield or Brownfield investments are underway today which will be commissioned in the next few years.
Private sector investment will take time. Any of the top 30-40 private companies in India engaged in 4-5 capital intensive sectors in the country, they are not in a position to invest because their existing plants are not fully operational, and their balance sheets require correction.
With the industry in a trough, this is perhaps the best time to set up a steel plant. By the time the capacity is ready in 2021-22, the fortunes would have changed. Yet, nobody has the cash or the tenacity to invest today. The lenders prefer to stay away and the Poscos and ArcelorMittals have long gone and are busy fighting their own bigger battles.
Q. 261. The China-Pakistan-Russia Troika
Triangularity has lately become the flavour of the season in international relations discourse. Major powers, beyond their usual bilateral engagements, have been embracing the tripartite mode of engagement in recent times to establish a tactical thread for a twofold advantage:
gain more in their foreign policy; and
influence collectively the regional balance of power in their favour.
A prominent example is the China-Pakistan-Russia triangulation. Its avowed intent is to address regional security problems, primarily the security conditions in the Afghanistan-Pakistan region. For India, however, the emergence of this troika forebodes disturbance in its geopolitical standing in the region. However, this trilateral arrangement is more of a geopolitical alignment that is aimed to influence regional security conditions to the three countries’ strategic advantage, at a possible cost to Indian strategic autonomy and challenging the India-US strategic bonhomie in the region. All the three powers concerned are in close proximity to India. China and Pakistan are its bordering adversaries whereas Russia is a traditional partner.
Officially, India has stated that the troika is a “third country relationship” and that India’s relations with Russia stay “very strong”. The strategic community in India however has been wondering if there is going to be permanent damage to India-Russia relations with Moscow’s strategic shift.
The troika has few significant bearingsfor India: First, the connectivity politics involving the China-Pakistan Economic Corridor (CPEC) would significantly influence the geopolitics of the region. Second, isolating India’s advocacy in the fight against terrorism. Third, addressing the alignments that are taking place regionally, in the backdrop of an expanded Shanghai Cooperation Organisation (SCO). Fourth, distancing India and China multilaterally.
The troika seems to have a serious influence over CPEC and a consensus appears to have emerged between them on how to advance the Russian and Chinese regional planning. Russia’s strategic intention of establishing a link between the Eurasian Economic Community (EEC) and CPEC gets fulfilled through Pakistani and Chinese backing.
Russia’s engagement with Pakistan comprises aspects that eventually endorse China’s “belt and road” initiative and supplements CPEC. The North-South gas pipeline link is one such aspect which might not be directly linked to CPEC but it endorses Putin’s vision of linking the Eurasian region with South Asia, where Pakistan is emerging as a connecting bridge. This becomes alarming for India when the strategic community in Pakistan notes that Russia might overtly support CPEC. Russia’s partaking with Pakistan bilaterally, as well as with Pakistan and China trilaterally in the region, reduces India’s standing as regards CPEC. India maintains that CPEC runs through a disputed territory that is of concern to India and China and Pakistan have unilaterally taken a decision on CPEC. China’s unilateral decision to engage with Pakistan to invest in Pakistan-Occupied Kashmir (POK) under CPEC affects India’s sovereignty over POK, and brings into question India’s historical claim on POK.
Importantly, the troika poses a new set of strategic challenges for India in its fight against terrorism, a phenomenon which has primarily been sponsored by Pakistan all these years. Pakistan has been protected in this regard at the UN by its “all-weather” friend China. Russia’s joining the troika would further strengthen Pakistan’s standing against India. Also, a coordinated China-Pakistan effort has blocked the Indian effort to list Masood Azhar on a UN terror roll. India needs to search for new grounds on these issues and also needs to discuss with Afghanistan in length on how to offset the troika’s agenda.
As it appears now, it is not India but Pakistan that is emerging as the converging location between South Asia and Eurasia. This is significant when India has been making inroads into the SCO as a member along with Pakistan. The balance of power within SCO seems to stay very much China-Russia centric and the main beneficiary of this could be Pakistan. This must induce India to rethink the advisability of becoming a member of the SCO. The China-Russia strategic alignment with Pakistan would corner India within SCO, posing a new set of challenges for it regionally.
The emergence of the troika will not only distance China and India from each other but will also severely undermine the significance of the China-India-Russia (CIR) tripartite network. From the Indian point of view, the relevance of CIR and BRICS stands to be reviewed with the arrival of the troika. This severely changes India’s equation with China since one of the stabilising aspects of India-China relations is the multilateral chain of contacts like the CIR, BRICS and SCO. The arrival of the troika empowers Beijing’s regional outreach in South Asia, and that conflicts with India’s core strategic interests. Also, the Chinese leadership has not seen South Asia and Afghanistan in isolation from its vision of linking Eurasia with South Asia. Tacitly acknowledging the existing differences between China and India on several matters like listing Azhar Masood as a terrorist under the UN and on the prospects of India’s inclusion in the Nuclear Suppliers’ Group (NSG), Beijing has officially stated recently that “China would like to work with India” for an important consensus in 2017.
The troika will be a game-changer in swaying the regional balance of power against India’s strategic interest. India seems to have been cornered by this tactical regional understanding where Pakistan has emerged as the pivotal point of regional politics. The change of guard in the United States has further complicated the situation for India. Much will depend upon how India approaches the entire spectrum of regional politics against the backdrop of its relations with Russia and China. The troika is surely a development that India cannot afford to ignore. New Delhi needs a serious policy rethink on how to respond to the troika and deal with the powers of this configuration, either bilaterally or collectively.
Q. 260. What is the twin balance sheet problem?
India's Twin Balance Sheet problem as referred by Economic survey are: overleveraged and distressed companies and the rising NPAs in Public Sector Bank balance sheets. The issue is important because it is holding up private investment in the country and therefore, growth in all sorts of sectors. It has identified most of the issues that prevented many measures introduced by the government - from Sarfaesi Act, to Asset Reconstruction Companies, to Strategic Debt Restructuring and the Sustainable Structuring of Stressed Assets.
But it is the prescription, a Public Sector Asset Reconstruction Agency (PARA), that is disappointing because it offers nothing new. The twin balance problem required a coordinated approach to debt management, which was lacking. NPAs are largely the result of the stressed cash flows of a few large companies, mainly in core industry and infrastructure, caused by economic downturn rather than bad governance.
Therefore, the solution lies in trimming debt to sustainable levels, including through write-offs or conversion to equity. While the RBI introduced several schemes on exactly the same lines, they did not work because banks were apprehensive about writing off loans or taking strategic stakes.
First, the vast bulk of the NPA problem was caused by unexpected changes in the economic environment, which is at odds with its statement that growth will not solve the problems of the stressed firms. The sectoral distribution of NPAs of PSU banks reveals a widespread issue, not confined to a few sectors, which makes it hard to accept that economic distress was the main cause.
Second, if most of the distressed loans are concentrated only in a few large companies and in a few sectors such as infrastructure, the debt restructuring that banks undertook should have borne some results, but that was not the case.
Which leads us to the real problems with financing this sector. It needs long-term financing (10 years and above) with long start-up periods (three-five years) — a remit that is clearly unviable for banks that have an average liability profile of less than two years, and limited project financing capabilities.
It is not the debt levels that are unviable, but the terms of the debt — the cost, the repayment. It is no coincidence that banks’ exposure and NPA levels in the infrastructure sector shot up after the demise of specialised term lending institutions such as the IDBI and ICICI.
Finally, the operational model of PARA is unclear. Although several assumptions are offered, most are variants of old themes — funding through transfer of government securities and not cash, or government support, capital market issues etc. The report says that private asset reconstruction companies (ARCs) failed because they probably did not see value in the debts, reflected in the low prices offered. But, this can hardly be the rationale for setting up a public ARC, unless it implies that PARA will pay higher prices irrespective of loan quality. Another stated objective of PARA appears to be to do what banks hesitated to do — write off unviable debts and take over companies.
When the reluctance of PSU banks came from their very public character — fear of retribution from investigating agencies and political fallout — one wonders how a new public sector agency will confront these issues.
Credit delivery and appraisal are two clear areas crying for reforms. Either fit-for-purpose specialised agencies need to be revived or serious attempts have to be made to develop debt markets to meet the needs of large corporates, failing which the root causes of the NPA problem will remain unaddressed.
Q. 259. Five govt. cyber security tools
Ans. Ministry of Electronics and Information Technology has launched five cyber-security tools, as part of its Cyber Swachhta Kendra (CSK), to prevent users from facing threats on the web.
These tools are:
Bot Removal Tool
Even though all these tools will be provided free of cost, four of these tools, which are meant to guard computers, would only run on Microsoft’s Windows operating system, a move which experts have pegged to be against the government’s open source policy. The open source policy calls for adoption of open standards for government procurement.
The Indian Computer Emergency Response Team (CERT-In), which has developed the CSK, would collect data of infected systems that are connected with the internet service providers and banks that have come on-board and send inform them of any threats.
Bot Removal Tool
Developed by Pune-headquartered Quick Heal Technologies.
It would detect and remove botnet infection (A botnet, or a robot network, is a number of devices connected to the internet, which are used by a botnet owner to perform various tasks such as performing Distributed Denial of Service Attack, steal data, send spam, allow the attacker access to the device and its connection. A device is compromised when it is penetrated by software from a malicious software, also known as malware) from computers.
However, it does not provide any protection against other malware, or prevent data theft, making it necessary for a user to have an anti-virus software.
Apart from this, the four other tools that have been launched were developed by the Centre for Development of Advanced Computing (C-DAC).
A software solution, which controls unauthorised usage of portable USB mass storage devices.
Through this software, user can add or remove devices to the database, and also bind one or more USB devices to be accessed using a username and password.
Any unauthorised new USB device cannot be accessed, unless it is registered. Whenever a USB device gets plugged in, the user would need to authenticate it. The software also detects and deletes malware from the mass storage device plugged into a computer.
A software to white-list executable files (Executable files are those which end with an extension .exe, .class, .war, .jar, are often loaded with Trojans and viruses. Upon execution of these files, they infect the computers) that would run on a computer, as opposed to the method adopted by anti-virus software to black-list files that may contain viruses.
One advantage that the white-listing method presents is that it does not require frequent updates.
Through this software, users can choose to add trusted executable files to the white-list, and only those files will be allowed to run.
A mobile device security application for Android devices.
Addresses threats related to misuse of resources such as Wi-Fi, Bluetooth, camera and mobile data by preventing unauthorised access to these resources.
It also offers options such ‘anti-theft’, by which a user can remotely wipe the phone of its data in case the device is stolen or is lost.
It also helps in tracking SIM card changes on the device.
M-Kavach app also allows users to restrict access to critical applications like mobile wallets, social media apps, etc.
The software learns from previous threats to understand potential future threats, and alerts the user when a malicious web page is visited by providing a detailed analysis, and threat report of the web page.
Q. 258. Oceans are fast losing oxygen
Ans. The oxygen content in global oceans has reduced by more than two per cent since 1960, with large variations in oxygen loss in different ocean basins and at different depths. The current study has predicted a decline in the dissolved oxygen inventory of the global ocean of one to seven per cent by the year 2100.
Just a little loss of oxygen in coastal waters can lead to a complete change in ecosystems.
In fact, such a decline in oxygen content could affect ocean nutrient cycles and the marine habitat.
It can have detrimental consequences for fisheries and coastal economies.
It must be noted that the only organism in the ocean that thrives with little or no oxygen is bacteria.
While the largest volume of oxygen was lost in the Pacific Ocean, the largest percentage of oxygen loss was witnessed in the Arctic Ocean. Hence, oxygen in the world's oceans is not evenly distributed.
Southern Indian Ocean and parts of the eastern tropical Pacific and Atlantic basins have already started noticing climate-linked deoxygenation.
Western tropical Indian Ocean has been warming for more than a century and at a rate faster than any other region of the tropical oceans. It is the largest contributor to the overall trend in the global mean sea surface temperature.
Cause of depleting oxygen content in oceans:
This oxygen depletion is mostly a result of climate change.
More warming on the surface of water makes the surface water less dense. Such stratification prevents the surface water from mixing with the sub-surface water. This, in turn, prevents the sub-surface water from absorbing oxygen from the atmosphere.
At times, more rain and runoffs from rivers bring in more freshwater into the sea. Due to the lack of salinity, the freshwater floats on the surface, leading to stratification.
While ocean warming is a widely identified reason for depletion of oceanic oxygen, changes in salinity can also contribute to oxygen loss.
Q. 257. Discuss the evolving trends of Digital Transactions in India. What are the risks involved and what measures can be taken to make digital space more secure for its users?
Digital lending consists of lending through Web platforms or mobile apps, by leveraging technology for authentication and credit assessment.
Digital lending promises to be a respite for the “ordinary Indian” who is starved of institutional credit.
Three out of five Indians continue to remain primarily dependent on informal credit. There is a huge unmet credit need (approximately $400 billion plus per year), particularly in the microenterprise and low-income consumer segment. Indians continue to borrow from family and friends, and moneylenders, sometimes at usurious rates, primarily because these loans are more flexible and convenient. Institutional lenders are unable to lend without appropriate collateral, and the high costs of lending limit the flexibility of lending products.
This is where digitization can be instrumental in enabling inclusive lending. India is the only country in the world with a billion unique digital IDs and more than 600 million mobile-phone users.
The emergence of digital data trails—the histories of an individual’s past digital activity, such as phone call and SMS records, remittance data, social media footprint—that can be tracked, archived and used for credit assessments, opens up the potential of inclusive digital lending. Emerging business models are already leveraging these digital data trails—digital data credit-scored lending, peer-to-peer platforms and invoice discounting—to lend to lower-income Indians. “India Stack”—a set of digital application programming interfaces (APIs), which can transition consumer lending to cashless, presence-less and paperless transactions by leveraging their digital data trails.
It builds on the Aadhaar platform and has the potential to unleash digital lending by reducing the cost of lending, and channelizing access of data trails for credit assessments. Digital lending has the potential to be a remarkably positive force for inclusion.
However, there are three major risks in the digital lending space that the Indian borrowers may face.
Over lending: Because there is no centralized tracking of lenders and borrowers in the digital lending space, it is possible that people will end up borrowing “too much” from multiple lenders that they cannot pay back.
Unsuitable lending: Indians—especially the marginalized, less literate consumers—may choose the wrong loan because of unclear disclosure of terms around, for example, interest, repayment time, and qualifying terms and conditions.
Misuse of personal data: Sensitive data can be shared or sold without proper consent, as data is controlled by under-regulated non-state actors. These risks loom large on the digital lending space—and if they continue unaddressed, may very well lead to another lending bubble, with unintended consequences, like the one that India witnessed with the microfinance institutions crisis in 2010.
Four measures that regulators should consider to address the risks involved in digital lending.
Institute strong data-sharing protocols. Because several players will have access to sensitive consumer data, there must be clear guidelines around, for example, the type of data that can be held, the length of time data can be held for, and restrictions on the use of data.
Put in place a code of conduct for lenders. Like the Microfinance Institutions Network code of conduct, digital lenders should proactively develop and commit to a code of conduct that outlines the principles of integrity, transparency and consumer protection, with clear standards of disclosure and grievance redress.
Explore the possibility of creating a “super credit bureau” that tracks all digital loans and consumer/lender credit history.
Strengthen and scale the Digi Locker initiative, which has the potential to be a safe repository of individual data, with access rights controlled by the individual.
In addition, it is incumbent upon providers to invest in more user-friendly products: developing intuitive products that will help consumers better understand loans and consent protocols so they can make truly informed choices.
India stands on the cusp of a digital lending revolution. Ensuring that this lending is done responsibly can ensure the fruits of this revolution are realized.
Q. 256. The building blocks of economic policy
Economic policy choices are not easy in a country like India. At present, the complication has increased because of the currency swap and deceleration in economic growth.
Here are five themes that should guide economic policy.
First, the policy should focus on market failures. Free markets work in enhancing prosperity but there are areas where state intervention is needed. However, in India, the state is dominant in sectors where it is not required and lacks capacity in areas where the intervention is actually desired. It often intervenes with no evidence of market failure, which affects resource allocation. This needs to change.
Second, policy intervention should be seen from the perspective of general equilibrium. Often, policy changes are made with narrow objectives, focusing on one sector or area. For example, in the context of the budget, India has a history of random tinkering with tax rates to promote one sector or the other, which has resulted in distortions. The most recent example is the suggestions made by the committee of chief ministers on digital payments—a host of fiscal measures that will further distort the tax system. The government should avoid such ideas.
Third, the government should spend more efficiently. There are demands for increasing spending in various sectors of the economy and they are often legitimate as India needs improvement in a number of areas. However, public spending has a cost. The marginal cost of one rupee of public spending to society is around Rs3. Therefore, the government should spend carefully as the cost to society is much higher than what gets recorded in the books.
Fourth, individuals, including politicians, are driven by incentives. Policy changes should factor in the possibility that people can change their behaviour. Insights from public choice theory show that politicians and bureaucrats also work in self-interest. One of the reasons why India has had a high fiscal deficit bias is because higher government spending can lead to higher growth in the short run and could electorally benefit the ruling party. Therefore, it’s important to build checks in the system. As India has moved to a rule-based monetary policy framework, it also needs a better fiscal architecture. Even though India has the Fiscal Responsibility and Budget Management Act in place, experience shows that it is not sacrosanct. What is needed is an agency like the US Congressional Budget Office which independently reviews government finances so that the public in general is better informed. This will help reduce fiscal profligacy.
Fifth, policy should promote competition. A high level of competition is desirable in a market economy as it leads to efficient allocation of capital. The government has done well by getting the bankruptcy code passed as it will facilitate the closing of firms and the shifting of capital to more productive sectors of the economy.
Following these broad principles in policymaking will help build credibility and lead to better economic outcomes in the medium to long run.
Q. 255. Invasive Alien Species
An alien species is a species introduced by humans – either intentionally or accidentally - outside of its natural past or present distribution, however not all alien species have negative impacts, and it is estimated that between 5% and 20% of all alien species become problematic. It is these species that are termed ‘invasive alien species’ (IAS). "An invasive alien species (IAS) is a species that is established outside of its natural past or present distribution, whose introduction and/or spread threaten biological diversity” Convention on Biological Diversity.
Invasive alien species are a major driver of biodiversity loss. In fact, an analysis of the IUCN Red List shows that they are the second most common threat associated with species that have gone completely extinct, and are the most common threat associated with extinctions of amphibians, reptiles and mammals.
Invasive alien species can also lead to changes in the structure and composition of ecosystems leading to significant detrimental impacts to ecosystem services, affecting economies and human wellbeing. For example, the water hyacinth Eichhornia crassipes, a native to South America is spreading across Africa, Asia, Oceania and North America. It is a fast growing floating aquatic plant forming dense mats on the water surface, limiting oxygen and preventing sunlight reaching the water column. Infestations have led to reduced fisheries, blocked navigation routes, increased cases of vector bourne diseases, reduced hydropower capacity and affecting access to water.
Due to the increase in the movement of people and goods around the world, the opportunity for the introduction of species outside of their natural range is on the increase. The different ways in which species are transported from one place to another, are called ‘pathways’. Common pathways include the release of fish for fisheries into the wild, escape from farms and horticulture, within ship ballast water and the spread through man-made corridors such as canals.
What is being done?
In 2010 almost all of the world’s governments adopted the Convention on Biological Diversity Strategic Plan for Biodiversity, which included 20 headline ‘targets’ referred to as the Aichi Targets. One of these targets (#9) is specifically related to IAS.
This international commitment to addressing IAS was re-affirmed in 2015 through the 2030 Agenda for Sustainable Development which includes 17 goals (SDGs) each with specific targets.
What is IUCN doing to address IAS?
IUCN’s work on IAS is focused primarily on achieving Aichi T9. To do this IUCN has been working in three major areas, providing scientific knowledge, engaging in and supporting national and regional policy development, and action on the ground.
The overarching aim of all IUCN policy engagement work related to IAS is to provide technical and scientific advice to work towards achieving Aichi Target 9. IUCN aims to encourage and mainstream invasive species issues across different fora, including national governments, international policy instruments such as the Convention on Biological Diversity, the private sector and civil society.
Q. 254. What is Government e-Marketplace (GeM)?
Ans. Aiming to ensure greater transparency and revolutionise government procurement, government has launched the Government e-Marketplace (GeM).
What is GeM?
GeM is a completely end to end procurement system for purchase of goods and services of common use by the government buyers.
The pilot phase of the GeM has been developed jointly for selective goods and services.
The entire process flow designing has been done in house in order to bring greater transparency, speed and efficiency in public procurement.
It is completely an end to end online procurement system including payment to suppliers.
GeM relieves public offices from tedious and time consuming tendering process and thus cuts down on administrative and transaction costs.
It will help in online registration of suppliers and government buyers using self-certification and authentication through Aadhar, PAN, MCA21 and Biometric Attendance System.
It will also facilitate seamless process flow and standardised specifications with complete audit trail.
All transactions in GeM are completely secure.
A call centre for GeM has also been set up to help both buyers and sellers in conducting their transactions on GeM.
Q. 253. Spice Routes
The Spice Routes, also known as Maritime Silk Roads, is the name given to the network of sea routes that link the East with the West.
They stretch from the west coast of Japan, through the islands of Indonesia, around India to the lands of the Middle East - and from there, across the Mediterranean to Europe.
It has a distance of over 15,000 kilometres and, even today, is not an easy journey.
From our very earliest history, people have travelled the Spice Routes. These journeys were not undertaken purely in the spirit of adventure - the driving force behind them was trade. Since ancient times, trade has had an important role in human life.
In the case of the Spice Routes the links were formed by traders buying and selling goods from port to port.
The principal and most profitable goods they traded in were spices - giving the routes their name. As early as 2000 BC, spices such as cinnamon from Sri Lanka and cassia from China found their way along the Spice Routes to the Middle East.
Other goods were exchanged too - cargoes of ivory, silk, porcelain, metals and dazzling gemstones brought great profits to the traders who were prepared to risk the dangerous sea journeys.
But precious goods were not the only points of exchange between the traders. Perhaps more important was the exchange of knowledge: knowledge of new peoples and their religions, languages, expertise, artistic and scientific skills. The ports along the Maritime Silk Roads (Spice Routes) acted as melting pots for ideas and information. With every ship that swept out with a cargo of valuables on board, fresh knowledge was carried over the seas to the ship's next port of call.
Perhaps it was their strangeness and rarity that led great medicinal and spiritual values to be attributed to them.
From ancient times, spices were burned as incense in religious ceremonies, purifying the air and carrying the prayers of the people heavenward to their gods.
They were also added to healing ointments and to potions drunk as antidotes to poisons. To hide the many household smells, people burned spices daily in their homes.
They were used as cooking ingredients very early on - not only to add flavour but also to make the food, which was often far from fresh, palatable, particularly in hot climates.
The profits to be made from spices were considerable. They were small and dried, and consequently could be transported easily. The wealth of the spice trade brought great power and influence and, over the centuries, bloody battles were fought to win control of it and the routes along which it took place.
Q. 252. Steps taken for Development of Sericulture
Ans. Government through Central Silk Board (CSB) had implemented a Centrally Sponsored Scheme viz. ‘Catalytic Development Programme’ (CDP) to synergize and disseminate technologies & innovations developed by R&D units of CSB.
The objective under the scheme was to incentivize investment among stakeholders to enhance production, productivity and quality of silk.
The components under the CDP envisaged:
Strengthening and creation of silkworm seed infrastructure,
Development of farm and post-cocoon infrastructure and
Creation of better marketing facilities to ensure remunerative price to primary producers.
Consequent upon closure of CDP with effect from 2015-16, Government through Central Silk Board has been implementing a restructured Central Sector Scheme, viz. ‘Integrated Scheme for the Development of Silk Industry’ for development of Sericulture industry in various. The scheme has the following components:
Research & Development, Training, Transfer of Technology & IT Initiatives
Coordination and Market Development
Quality Certification systems and Brand promotion & Technology up-gradation
Q. 251. Modified Special Incentive Package Scheme (M-SIPS)
The Cabinet had, in 2012 approved the M-SIPS to provide a special incentive package to promote large scale manufacturing in the Electronic System Design and Manufacturing (ESDM) sector.
The scheme provides subsidy for capital expenditure - 20% for investments in Special Economic Zones (SEZs) and 25% in non-SEZs.
The Scheme was amended in 2015 for scope enhancement and simplification of procedure.
The Scheme has attracted investments in the ESDM. The M-SIPS has been able to create positive impact on investment in electronics sector.
The main features of M-SIPS are as follows:
The scheme provides subsidy for investments in capital expenditure - 20% for investments in SEZs and 25% in non-SEZs. It also provides for reimbursement of CVD/excise for capital equipment for the non-SEZ units. For high technology and high capital investment units, like fabs, reimbursement of central taxes and duties is also provided.
The incentives are available for investments made in a project within a period of 10 years from the date of approval.
The incentives are available for 29 categories of ESDM products including telecom, IT hardware, consumer electronics, medical electronics, automotive electronics, solar photovoltaic, LEDs, LCDs, strategic electronics, avionics, industrial electronics, nano-electronics, semiconductor chips and chip components, other electronic components and EMS. Units across the value chain starting from raw materials including assembly, testing, packaging and accessories of these category of products are included. The scheme also provides incentives for relocation of units from abroad.
The Union Cabinet has given its approval for amendment in the Modified Special Incentive Package Scheme (M-SIPS) to further incentivize investments in Electronic Sector and moving towards the goal of ‘Net Zero imports’ in electronics by 2020.
Benefits: Besides expediting investments into the Electronics System Design and Manufacturing (ESDM) sector in India, the amendments in M-SIPS are expected to create employment opportunities and reduce dependence on imports.
The salient features of the amendment are:
The applications will be received under the scheme upto 31st December 2018 or till such time that an incentive commitment of Rs 10,000 crore is reached, whichever is earlier. In case the incentive commitment of Rs 10,000 crore is reached, a review will be held to decide further financial commitments.
The incentives will be available for investments made within 5 years from the date of approval of the project.
A unit receiving incentives under the scheme, will provide an undertaking to remain in commercial production for a period of at least 3 years.
A separate Committee headed by Cabinet Secretary and comprising of CEO, NITI Aayog, Secretary Expenditure and Secretary, MeitY will be set up in respect of mega projects, envisaging more than Rs. 6850 crores (approx. USD 1 Billion) investments.
The Policy covers all States and Districts and provides them an opportunity to attract investments in electronics manufacturing.
Q. 250. Electronics Development Fund (EDF)
Formation of EDF was conceived in the National Policy on Electronics -2012. Later on in 2015, EDF was set up along with the “Digital India” agenda. As part of the "Digital India" agenda of the Government, and to develop the Electronics System Design and Manufacturing (ESDM) sector so as to achieve “Net Zero Imports” by 2020 and to look at India as their next destination to cater to the domestic Indian demand as well as act as an exports hub in the ESDM sector.
It is with this objective that an Electronic Development Fund (EDF) is set up as a "Fund of Funds" to participate in professionally managed "Daughter Funds" which in turn will provide risk capital to companies developing new technologies in the area of electronics, nano-electronics and Information Technology (IT).
What are Fund of Funds and Daughter Funds?
Fund of Fund (FoF) is defined by the securities market regulator, SEBI, as a mutual fund scheme that invests primarily in other schemes of the same mutual fund or other mutual funds. An FoF scheme enables the participating investors to achieve greater diversification and spreads risks across a greater universe. The funds they invest in are commonly known as “daughter funds”.
The EDF will also help attract venture funds, angel funds and seed funds towards R&D and innovation in the specified areas.
It will help create a battery of Daughter funds and Fund Managers who will be seeking good start-ups (potential winners) and selecting them based on professional considerations.
Benefits: Electronics permeate in all sectors of economy and have a great economic and strategic importance. A major characteristic of the electronics sector is the importance of R&D and innovation due to high velocity of technology change. Intellectual Property is the most critical differentiator and a determinant of success for an electronics company.
The Department of Electronics and Information Technology, (Ministry of Communications and IT, Government of India) is coordinating strategic activities, promoting skill development programmes, enhancing infrastructure capabilities and supporting R&D for India’s leadership position in IT and IT-Enabled services. In furtherance to this objective, the Department of Electronics and Information Technology, (Ministry of Communications and IT, Government of India) has agreed to act as the Anchor Investor of the Fund.
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