Daily Current Affairs for UPSC IAS | 30th December 2021

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1.  A whiff of trouble in the Nord Stream pipeline 

UPSC Syllabus: Prelims: International Relations | Mains: GS Paper-II – International Relations
Sub Theme: Nord Stream 2 | Delay in certification| Baltic Sea | Germany-USA | UPSC
Context: Nord Stream 2 is a pipeline through the Baltic Sea, which will transport natural gas over more than
1,230 km from the world’s largest gas reserves in Russia to consumers in Europe. The new pipeline will have
the capacity to transport 55 billion cubic metres of gas per year, enough to supply 26 million European
households. This secure supply of natural gas with its low CO2 emissions will also contribute to Europe’s
objective to have a more climate-friendly energy mix with gas substituting for coal in power generation and
providing back-up for intermittent renewable sources of energy such as wind and solar power.

IMPORTANT FACTS

• The Nord Stream-2 project was envisioned in 2015 to run in parallel to the existing Nord Stream-1
pipeline passing through the Baltic Sea to reach Germany, from where it connects to the European
pipeline system under the unified European market.
• Nord Stream 2 is a pipeline through the Baltic Sea, which will transport natural gas over more than
1,230 km from the world’s largest gas reserves in Russia to consumers in Europe.
• the total capacity of 55 billion cubic meters (per year), Nord Stream-2 will deliver gas to Europe
from the natural gas field Bovanenkovo in North Russia’s Yamal Peninsula. The pipeline, taken
together with the operational Nord Stream-1, would double the total capacity of natural gas
exported to Europe to 110 bcm per year.

  • Russia’s Energy Company – Gazprom – took ownership of the project’s operator, the Switzerland-based company Nord Stream 2 AG.  
  • The new pipeline will have the capacity to transport 55 billion cubic metres of gas per year, enough to supply 26 million European households.  
  • This secure supply of natural gas with its low CO2 emissions will also contribute to Europe’s objective to have a more climate-friendly energy mix with gas substituting for coal in power generation and providing back-up for intermittent renewable sources of energy such as wind and solar power.

 

BENEFITS CONCERNS
  • Wholesale Energy prices have doubled in Europe in 2021

 

  • According to Russia, it is purely a commercial project, which is shorter, cheaper, and economically more viable, compared to the gas transit through multiple European countries.

 

  • It saves millions of Euros for Russia which it has to pat to Ukraine and Poland – if the transit pipe went through both countries.

 

  • Nord Stream 2.0 could provide additional incentives for green energy investments and production of green hydrogen.

 

  • Faces strong opposition from United States and most of the European countries (except for Austria, Germany, Hungary and the Netherlands)

 

  • Awaits certification from Germany and other European Countries as per their legal regime.

 

  • The project can be further delayed as it requires re-submission of paperwork and a renewed certification process.

 

  • In December, Germany’s energy regulator said it would not make a decision on certifying Nord Stream 2 until, at least, the second half of 2022.

 

  • It will give more leverage and bargaining power to Russia while dealing with Europe and its energy market.

 

  • Russia can use Nord Stream 2 as a political weapon to put pressure on European security
  • Amid certification delays, there is an apprehension of Russia attacking Ukraine fearing its involvement within NATO allies. 

2.  BKU against opening of dairy sector + A victory for the dairy sector (Text & Context)

UPSC Syllabus: Prelims: Economy | Mains: GS Paper-III – Economy
Sub Theme: Concerns for Dairy Sector | India joining RCEP & CECA – Australia | UPSC    

Context:

  • India and Australia are presently negotiating Comprehensive Economic Cooperation Agreement (CECA) to improve their bilateral trade relationship. One of the most contentious issues has been the opening of Indian dairy sector to cheaper imports from Australia.
  • On one hand, Australia has been demanding for greater access to Indian market to export milk and milk-based products. While, on the other hand, Indian Government has so far been opposed to this proposal.
  • In this regard, Bharatiya Kisan Union (BKU) has opposed the CECA between India and Australia as it throws open the country’s dairy sector for Australian dairy majors. This will flood Indian market with foreign dairy products thereby reducing profit margin of Indian farmers. 
  • This is not the first time that the Dairy sector has become bone of contention in the Free Trade Agreements (FTA). Even prior to this, one of the reasons for India to stay away from RCEP was the disagreement over the dairy sector.

 

Importance of Diary Sector in India

  • India is the largest producer of milk with an annual production of 198 million tonnes (2019-20) accounting for almost 20% of global milk production. The Indian diary Industry provides employment to about 70 million households with a predominance of small producers.
  • This phenomenal success of dairy Industry is attributed to Operation Flood which was launched during 1970s. The Operation flood was basically based on organizing the farmers into cooperative societies and thus it had maximum impact on improving the socio-economic status of the poor
    • and downtrodden sections of the Indian society. The development of milk cooperatives such as Amul, Nandini, Mother Diary etc stand testimony to the fact that the dairy industry has emerged as a tool for poverty alleviation, women empowerment, improvement in the human development indicators etc.
    • Further, the importance of milk can be gauged by the fact that it is sold daily and generates cash to take care of routine household expenses, unlike other crops that are marketed only once or twice a year.
    • Hence, unlike the developed economies, where the dairy industry is more of a commercial venture, the dairy industry in India is closely linked to socio-economic outcomes. While in other countries, it may be considered as more of profit making venture, in case of India, it is treated as an enterprise that has capability to uplift a large number of people out of poverty and improve the development outcomes.

     

    RCEP Proposals with respect to Diary Industry

    As per the WTO guidelines, India is allowed to impose tariffs up to certain maximum level on the various agricultural commodities. Accordingly, India has imposed higher customs duty on the various dairy products entering the domestic market as shown in the table below.

  • The imposition of higher customs duty is considered to be one of the most important reasons for the lower import of milk based products into India. This has in turn provided adequate amount of protection to the small and marginal farmers involved in the dairy Industry.

    However, the RCEP agreement proposed to do away with the import duties on the Milk and milk based products such as skimmed milk powder, butter oil, cheese etc. As per the provisions, India would be required to reduce the average tariffs on milk and milk based products from present 34% to zero percent.

     

    Problems with the RCEP’s Proposals

    Lack of Adequate Safeguards: As stated before, the WTO agreement enables the member countries to impose customs duty up to a certain maximum level in order to offer protection to their farmers. However, the RCEP agreement adopts a “One-Size-Fits-All” approach and forces all the member countries to reduce the customs duty to zero percent within the next 15 years. It fails to acknowledge that the member countries would be required to undertake certain safeguard mechanisms such as increasing the customs duty in event of dumping of milk and milk based products.

    Adverse impact on domestic farmers: Some of the RCEP member countries such as Australia and New Zealand are considered to be the largest exporters of milk in the world. For instance, New Zealand exports almost 93% of its domestic milk production. Now, the per unit cost of milk production in these countries is quite lower because of number of factors such as extensive grazing lands (which reduces the feeding costs), mechanized operations, higher economies of scale (large herd size of the dairy farms), high productivity of Milch animals (about 30L/day) etc. 

    Earlier, both Australia and New Zealand were vying for US market as part of Trans Pacific Partnership agreement. However, after the demise of TPP, both these countries are now vying for a bigger Indian domestic market under the RCEP. It is being stated that this would go against the interest of dairy Industry due to flooding of cheaper products. 

    For instance, an average farmer in India receives around Rs 30 per litre of milk. According to the estimates of AMUL, if milk and milk based products are imported into India at zero customs duty, then the average price received by the Indian farmer would fall to Rs 19 per Litre. 

    Benefits the MNCs rather than the Farmers: Over a period of time, the Indian Government has facilitated the entry of multinational diary corporations into India through joint ventures, mergers and acquisitions. Some of these multinational diary corporations include Swiss firm NESTLE, French firms Lactalis and Danone, New Zealand firm Fonterra Diary etc. The Milk Cooperatives are no longer seen as engines of growth of the diary sector.

    Presently, these MNCs are forced to buy milk from Indian farmers since the imported milk and milk based products are costly due to imposition of higher customs duty of around 35% on such products. Hence, if India eliminates the customs duty on milk and milk based products as part of RCEP, then these MNCs would import the cheaper milk and milk based products from other countries such as Australia and New Zealand.  This would end up adversely impacting the Indian dairy farmers.

    Based on flawed Arguments: The RCEP agreement was proposed to be signed based on two fundamentally flawed arguments. Firstly, it was highlighted that due to growing demand for milk, India would end up becoming a net importer of milk in future. Accordingly, it was argued that it was better for India to join RCEP before it becomes a net importer of milk. However, this argument was flawed since according to NITI Aayog’s report, India is likely to become a milk surplus country by 2023.

    Secondly, it was argued that the total quantity of milk exports from New Zealand to India is unlikely to exceed 5% of the total exports and hence unlikely to impact the Indian domestic industry. However, it has been highlighted that even 5% of the total exports from New Zealand is enough to flood India’s domestic market. 

    Way forward

    Considering the importance of Diary Industry for the socio-economic development in India, India should be careful in joining free trade agreements in future. It should also begin work on correcting the imbalances of the existing free trade agreements.


    1. 3.  The efficiency myth of Aadhaar linking

    UPSC Syllabus: Prelims: Polity & Governance | Mains: GS Paper-II – Polity & Governance
    Sub Theme: ABPS | NPCI Mapper | Payment Delays | UPSC  

    Aadhaar Payment Bridge System (APBS)

    • Aadhaar Payment Bridge System (APBS) is implemented by National Payments Corporation of India (NPCI). APB System is used by the Government Departments and Agencies for the transfer of benefits and subsidies under Direct Benefit Transfer (DBT) scheme launched by Government of India. 
    • It uses Aadhaar number as a central key for electronically channelizing the Government benefits and subsidies in the Aadhaar Enabled Bank Accounts (AEBA) of the intended beneficiaries.   
    • As per APBS, a person’s Aadhaar number becomes their financial address. So providing a single document having all those details i.e. Aadhaar suffices.  
    • The APB System sub-serves the goal of financial inclusion and provides an opportunity to the Government to attempt financial re-engineering of its subsidy management program. 
    • The implementation of APB System has also lead to electronification of a large number of retail payment transactions which were predominantly either in cash or cheque.     
    • Induction of a bank account into APBS involves two distinct steps, both of which are meant to be based on informed consent. 
    • First, the account must be “seeded” (linked) with the customer’s Aadhaar number. 
    • Second, it must be connected to the NPCI Mapper — a step known as “mapping”. In cases of multiple accounts for the same person, the APBS automatically sends money to the latest-mapped account.   

    NPCI Mapper

    • NPCI mapper is a repository of Aadhaar numbers maintained by the APBS and used for the purpose of routing the APBS transactions to the destination banks. 
    • The NPCI Mapper contains Aadhaar number along with Issuer Identification Number (IIN) of the Bank to which the customer has seeded his/her Aadhaar number. Banks need to upload Aadhaar number in NPCI Mapper in a specified file format through NACH portal.      
    • NPCI mapper uses the latest Issuer Identification Number of the bank in which the customer has seeded his/her Aadhaar number to transfer benefits and subsidies in his/her bank account.            

    Problems Associated with Seeding & Mapping of Aadhaar Details 

      • Multiplicity of Accounts – Under Jan Dhan Yojana, JDY, many multiple accounts were opened to fulfill the target. Further, Aadhaar numbers were seeded into these accounts without proper verification and were still unused or remained superfluous. This haphazard linking of accounts with Aadhaar continued after 2014 as the government wanted to bring all direct benefit transfer (DBT) payments like pensions, scholarships, subsidies, MGNREGA wages etc. under the Aadhaar payments umbrella.    
      • Lack of Proper Verification – Government departments started sending bulk lists of bank accounts and Aadhaar numbers to the banks for accelerated Aadhaar seeding. Meeting the seeding targets was the top priority and due verification, once again was overlooked. Thus, under intense pressure from the government to link bank accounts with Aadhaar, proper verification was not done. This problem was rectified by making e-KYC norms compulsory.   
      • Lack of Consent – APBS was forced on millions without consent. As per NCPI and UIDAI guidelines, mapping should be based on an explicit request from the customer as it gives a measure of protection to educated middle-class customers. It ensures, for instance, that they know which account their money is being directed to by the APBS. In many places, bank accounts were mass-mapped onto the APBS without any consent from customers and even without e-KYC norms being completed.  
    • Opacity surrounding APBS and the consequent dilution of accountability
    1. Failure of payments – incorrect accounts
    2. Inactive Aadhaar – happens due to software mapping failure
    3. Misdirected Payments – Aadhaar getting linked to wrong accounts. Very difficult to prove as transaction shows successful on dashboard
    4. No Grievance Redressal Mechanism – UIDAI

    Way Forward

    • So, on at least three counts namely timely payment of wages, efficiency gains and grievance resolution, there appears no basis to justify APBS in MGNREGA. 
    • It is time to overhaul the nomenclature for recipients of welfare measures. Calling them “beneficiaries” subtly transforms the state from being an institution meant to uphold constitutional rights to sounding more like a charitable institution. 
    • Instead, people should be referred to as “rights holders”. This will likely help us better interrogate whether technologies have imbibed democratic principles of transparency, accountability and participation.   
    • UPSC Current Affairs: The dispute over Belagavi (Text & Context)| Page 1UPSC Syllabus: Prelims: Polity & Governance | Mains: GS Paper-II – Polity & Governance 

      Sub Theme: Boundary Dispute | Belgavi |UPSC  

       

      In the following decades, Belagavi has significantly changed on demographic and economic fronts.

      The middle-class core areas and surroundings of the city are predominantly Kannada-speaking people. But in and around Belagavi a good number of people speak both Marathi and Kannada. Intercommunity marriages between the two linguistic groups exist.

       

      • The inter-State border dispute between Karnataka and Maharashtra has erupted again. In 1957, unhappy with the demarcation of boundaries, Maharashtra demanded realignment of its border claiming 814 villages, and three urban settlements which includes Belagavi. Karnataka maintained that inclusion of Belagavi as part of its territory is beyond dispute citing the demarcation done on linguistic lines and the later Mahajan Commission Report.
      • The Mahajan Commission Report recommended that 264 villages be transferred to Maharashtra and that Belgaum and 247 villages remain with Karnataka.
      • Belagavi’s demography has changed quite a bit since independence. The core areas and surroundings of the city are predominantly Kannada-speaking people. But around Belagavi a good number of people speak both Marathi and Kannada.
      • Assertion on Belgavi
        • Karnataka has consistently argued that inclusion of Belagavi as part of its territory is beyond dispute. It has cited the demarcation done on linguistic lines as per the Act and the later Mahajan Commission Report to substantiate its position.
        • Karnataka has argued for inclusion of areas in Kolhapur, Sholapur and Sangli districts (falling under Maharashtra) as its territory. Karnataka started holding the winter session of the Legislature in Belagavi from 2006. It built a massive Secretariat building in the district headquarters, on the lines of the Vidhana Soudha in Bengaluru, to reassert its claim.

         

        What were the terms of the Mahajan Commission?

        • In 1966, at Maharashtra’s insistence, then Prime Minister Indira Gandhi established a one-man commission, the Mahajan Commission (Mehr Chand Mahajan, third Chief Justice of India) a few months before the 1967 general elections and its report was released after the elections. 
        • It recommended that 264 villages be transferred to Maharashtra and that Belgaum and 247 villages remain with Karnataka.
        • Maharashtra rejected the report, while Karnataka welcomed it. Karnataka argued that either the Mahajan Commission Report should be accepted fully or status quo maintained.

        Section 21- State Reorganisation Act

        Functions of the Councils.―(1) Each Zonal Council shall be an advisory body and may discuss any matter in which some or all of the States represented in that Council, or the Union and one or more of the States represented in that Council, have a common interest and advise the Central Government and the Government of each State concerned as to the action to be taken on any such matter. (2) In particular, and without prejudice to the generality of the provisions of sub-section (1), a Zonal Council may discuss, and make recommendations with regard to,― (a) any matter of common interest in the field of economic and social planning; (b) any matter concerning border disputes, linguistic minorities or inter-State transport; and (c) any matter connected with, or arising out of, the reorganisation of the States under this Act.

        1. UPSC Current Affairs: Israel attack on Syria | Page 8
      • UPSC Syllabus: Prelims: International Relations | Mains: GS Paper-II – International Relations 

        Sub Theme: Latakia port | Idlib | Golan Heights  UPSC  

        The article talks about the recent missile attacks at Syria’s Latakia port allegedly undertaken by Israel. This is seen as a counter to growing influence of Iran in Syria, which has been supplying men and weapons to Assad’s regime. Syria has been emerging as a new front in the Israel-Iran tussle. The latakia strike has come at a time when international powers are trying to revive the Iran nuclear deal. As such this issue has no direct bearing upon India’s interests. This topic can be important for prelims from the locations point of view. 

        Important locations to be noted:

        • Latakia port
        • Idlib
        • Golan heights

          1. UPSC Current Affairs: Faceless’ Appeal Scheme | Page 14

          UPSC Syllabus: Prelims: Economy 

          Sub Theme: Faceless Appeal Scheme, 2021 | UPSC  

           

          • The Income Tax department has brought in changes to the existing faceless appeal scheme, easing the process for taxpayers wanting a personal hearing through video conference while appealing against a tax demand by the department.
      • The Central Board of Direct Taxes (CBDT) on December 28, notified the ‘Faceless Appeal Scheme, 2021’ and said that the Commissioner (Appeals) shall allow the request for personal hearing via video conference and communicate the date and time of hearing to the appellant via the National Faceless Appeal Centre.
      • “Such a hearing shall be conducted through video conferencing or video telephony, including use of any telecommunication application software which supports video conferencing or video telephony, to the extent technologically feasible,” said the ‘Faceless Appeal Scheme, 2021’.
      • However, a person would not be permitted to appear before the Income-Tax authority either personally or through an authorised representative in connection with any proceedings under this scheme.
      • Under the previous ‘Faceless Appeal Scheme, 2020, a taxpayer’s request for a personal hearing for making oral submissions, required the approval of the Chief Commissioner or the Director General of I-T, in charge of the Regional Faceless Appeal Centre.  

       

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