1. Amid protests, Centre hikes MSP for Rabi crops
UPSC Syllabus: Prelims: Economy | Mains – GS Paper III – Economy
Sub Theme: MSP for Rabi Crops hiked | Minimum support price| Central Issue Price | UPSC
While the centre procures food grains at the MSP, the price at which food grains are sold under TPDS is much lower. The centre sells food grains to states at subsidised prices, known as central issue prices. The food subsidy is the difference between the costs incurred by the centre on MSP (including additional costs) and the central issue price.
Minimum support price
The MSP is the price at which the centre buys food grains from farmers. Typically, the MSP is higher than the market price and is intended to incentivise production. The MSPs for various agricultural commodities are fixed by the central government based on rates recommended by the Commission for Agricultural Costs and Prices (CACP). The CACP considers certain factors such as the cost of cultivation and remunerative prices for farmers on their produce while determining the MSP. The MSPs recommended by the CACP are finally approved by the Cabinet Committee on Economic Affairs.
Central issue price
Wheat and rice are sold by the central government at uniform central issues prices (CIP) to states and union territories for distribution under TPDS. The issue prices for food grains for AAY and BPL categories have remained constant since 2000 and the CIP of APL categories since 2002.
The food subsidy is the difference between the cost (MSP and handling and transportation costs) and the issue price at which the beneficiary buys food grains. The centre reimburses FCI and state agencies with the food subsidy, since they are responsible for procurement and selling the procured food grains to states at CIP. The food subsidy also includes the buffer subsidy, which is the cost borne by FCI and states for maintaining buffer stocks beyond the prescribed time frame.
UPSC Current Affairs:Ceasefire with NSCN (K) Niki group | Page 08
UPSC Syllabus: Prelims: Polity & Governance | Mains – GS Paper II – Polity & Governance; GS Paper III – Security
Sub Theme: Demand for statehood | Insurgents joining Mainstream | Naga Framework Agreement | UPSC
It was on 14 August 1947, that A.Z. Phizo, the head of the Naga National Council (NNC), along with other Naga leaders, declared Naga independence, leading to the start of an insurgency that continues till this day in some parts of Naga dominated areas in the Northeast. Despite all efforts, including the creation of the State of Nagaland in 1963, the Central Government was unable to quell the rebellion. Ultimately, in 1975, the Shillong Accord was signed in which the NNC agreed to give up arms and accept the Indian Constitution. Two prominent leaders of the NNC, Th. Muivah and Isak Swu revolted, terming the Accord as a ‘sell out’ on the Naga sovereignty demand and went on to form the National Socialist Council of Nagaland (NSCN) in 1980 along with S.S. Khaplang, a Myanmarese Naga . In 1988, the NSCN split into two factions, due to leadership differences, the NSCN (IM), led by Swu and Muivah, and the NSCN (K) led by Khaplang.
The agreement was lopsided because while it did result in a cessation of hostilities in the State, it went out of its way to appease the militants, which, not surprisingly, adversely impacted governance in the region.
By 1997, the NSCN (IM) faction had become the largest and most dominant Naga separatist group, and it was in July that Isak Swu and Th. Muivah, as well as its top leadership, signed a rather one-sided ceasefire agreement with the Central Government heralding cessation of armed confrontation in Nagaland. In brief, the agreement involved the establishment of designated camps for housing the armed cadres, which would remain out of bounds for Security Forces (SF), a prohibition of offensive operations by both sides, and no forcible collection of funds, intimidation of civilians or forcible recruitment of cadres by the NSCN. A Ceasefire Monitoring Group (CFMG) with members from both sides was also established to ensure implementation of the ceasefire. Finally, it allowed for the initiation of a political dialogue at the level of the Prime Minister in a third country with no conditions attached.
The agreement was lopsided because while it did result in a cessation of hostilities in the State, it went out of its way to appease the militants, which, not surprisingly, adversely impacted governance in the region. Firstly, since it was signed by the Centre with no involvement of local politicians in the negotiations, it put a big question mark on the relevance of the democratically elected State Government, while simultaneously legitimising the position of the NSCN, a banned outfit. Secondly, while the militants arrogantly strutted around the villages, with complete disregard for terms of the ceasefire, openly indulging in intimidation and forcible collection of money, acts difficult to prove, the SF found itself increasingly constrained by a well-orchestrated media campaign. Unable to operate freely, the SF found itself losing the initiative to the insurgents, leading to a loss of control and the ability to dominate the area, thereby creating law and order issues. The weakening of the local government and a growing lack of accountability only added to rampant corruption, which only further de-legitimised the State and added to its developmental woes.
Subsequently, in June 2001, the Government attempted to extend this ceasefire to “all Naga-dominated areas in the Northeast,” but was forced to revert to the status quo a month later, due to violent protests that broke out in the other states as people in Manipur, Assam and Arunachal Pradesh perceived it as a move that threatened their territorial integrity. This however, did not stop the Central Government from establishing three camps in Manipur to house militants, belonging to the NSCN, with permission to retain their weapons only enhancing and widening the scope of the problem.
In addition the NSCN had accepted that the “boundaries of the States will not be touched” and “some special arrangements would be made for the Nagas, wherever they are.”
As a matter of fact, in July 2013, in a scathing opinion piece in Rediff.com dated 29 July 2013 titled “Nagas in a state of anarchy” R.N. Ravi, the Governor of Nagaland, then former special director Intelligence Bureau, had come down hard on successive central governments for their appeasement of the insurgents. To quote him:
“The Naga ‘revolution’, over the years, has degenerated into a comic spectacle in which the ‘revolutionaries’ are gainfully closeted with their arch-enemy, the Indian State, while they remain unsparingly brutal with the Naga people should they ever demur on their writs, including whimsically determined ‘taxes’….The interlocutors have not risen above mere rent-seekers. K. Padmanabhaiah, a former home secretary and effectively the first interlocutor, survived for some 12 years in this cast. Setting the course for Naga ‘peace talks’ on a perverse trajectory has been his singular contribution. He ignored the popular Naga sentiment and bought into the contentious rhetoric of the NSCN-IM. Not only that, he mischievously amplified them to successive prime ministers and home ministers. He indeed proved himself a successful marketing agent for the NSCN-IM in selling its larger-than-life profile to Delhi. His successor, R.S. Pandey, is carrying on the legacy for the last four years.”
Not surprisingly, Mr. Modi’s election and appointment as Prime Minister, in 2014, led to a relook at the issue. This led to the replacement of Mr. Pandey by Mr. Ravi as the Centre’s interlocutor. By August 2015 the Centre had signed a “Framework Agreement” with the NSCN (IM), though no details were made available in the public domain. However, it stands to reason that given Mr. Ravi’s strong views on the subject, the Agreement must be substantially different from the earlier Ceasefire Agreement, if Mr. Ravi was to retain credibility. This is borne out by the details given in the 213th report on the security situation in the Northeastern States, tabled by the Parliamentary Standing Committee on Home Affairs in the Rajya Sabha. The Interlocutor informed the committee that while details had not been worked out, it was “just about the recognition of the uniqueness of the Naga history by the Government of India”. In addition the NSCN had accepted that the “boundaries of the States will not be touched” and “some special arrangements would be made for the Nagas, wherever they are.”
Moreover, over the years the rank and file of the insurgent groups has come to enjoy the trappings of city life and is unlikely to be enthused to return back into the jungle, if the talks collapse for any reason.
Since then, not much seems to have changed and reports suggest that progress is held up on the issue of a separate constitution and flag for the Naga people. However, given the turn of events in Jammu and Kashmir, the Naga groups must be able to clearly see the writing on the wall as the Central Government would find itself in an extremely difficult position if it were to acquiesce to these specific demands.
Add to this the completely different environment that the NSCN and the leadership of other Naga separatist groups are faced with today. First and foremost, the vast majority of Nagas have moved ahead and they fully appreciate the challenges that the formation of an independent Nagaland would entail, when compared to the advantages of being a full stakeholder in a rapidly growing major economy. More so, if its stated “Act East” policy is successful and leads to opening up the region as it integrates with its Southeast Asian neighbours. All stakeholders in the region are fully cognisant that for such an initiative to succeed, an essential ingredient is peace in the region. Secondly, as Mr. Ravi has earlier pointed out, insurgents with their acts of brutality, intimidation and “tax collection” over the past two decades, have turned the average Naga against them. An insurgency without local support is an anachronism.
The most important issue that would need to be dealt with sensitively, is the mainstreaming of insurgents that would help them reintegrate into the community without loss of face.
There is also the question of the ageing top rung leadership. While there are second rung leaders available, none enjoys the stature or following of Isak Muivah. Moreover, over the years the rank and file of the insurgent groups has come to enjoy the trappings of city life and is unlikely to be enthused to return back into the jungle, if the talks collapse for any reason. Finally, while there may be those who hark back to the days when motivated insurgent groups like the Vietcong, for example, were able to fight and win against greater odds, circumstances have changed and both technology and geopolitics have made their job even more difficult. India’s relationship with Myanmar and Bangladesh will make it that much harder for such groups to find safe havens there. Moreover, international opinion no longer condones the use of terror for achieving political aims. Finally technology available to the military for surveillance and strike, such as satellites, drones, electronic intelligence and Precision Guided Munitions (PGMs) make it that much easier for them to locate and neutralise camps wherever they may be established, even in the remotest of areas.
In these circumstances it is vital that the Naga leadership fully comprehend the situation that they face and look towards the issues they wish to safeguard under the provisions of Article 371 of the Constitution. The Home Minister’s categorical statement in this regard that it will neither be abrogated nor amended, needs to be given the importance that it deserves. It is also time that the Central Government also brought in the elected representatives of the people into the dialogue as they have an extremely important part to play in it as well. The most important issue that would need to be dealt with sensitively, is the mainstreaming of insurgents that would help them reintegrate into the community without loss of face. In this regard the rank and file of insurgent groups could be absorbed into our Security Forces after suitable training and orientation, while the leadership could well be assisted in joining mainstream politics as was done in Mizoram. It stands to reason that the quicker an agreement is signed the better it will be not just for the Naga population, but also for the Northeast as a whole.
2. Govt. clears Rs.10,683 cr. textiles PLI plan; Cabinet approves incentive scheme for textile sector
UPSC Syllabus: Prelims: Economy & Polity & Governance | Mains – GS Paper III – Economy
Sub Theme: Cabinet approves incentive scheme for textile sector | Production Linked Insurance Scheme | UPSC
Context: Union government has cleared a proposal to provide Production Linked Incentive scheme aimed at attracting fresh investments in the man-made fibre apparel, fabrics, and technical textiles sectors.
Note: Priority would be given for investment in aspirational districts, tier-three, tier-four towns and rural areas. The scheme is expected to benefit States such as Gujarat, U.P., Maharashtra, Tamil Nadu, Punjab, Andhra, Telangana and Odisha.
- Attract FDI
- Generate employment in rural India (7.5 lakh direct, with high employment elasticity)
- Improving India’s ability to compete in the global textiles market.
- Promotion to make in India program.
- Provide a push to MSME sector.
- Promote entrepreneurship in technical textiles sector.
- Promote textile export from India (Two-thirds of India’s textile exports now are cotton based whereas 66-70% of world trade in textiles and apparel is MMF-based and technical textiles.)
- Utilisation of excess supply of raw material.
- Encourage investment in new capacities in man-made fibre (MMF) apparel
What is Production linked incentive scheme?
Production Linked Incentive or PLI scheme is a scheme that aims to give companies incentives on incremental sales from products manufactured in domestic units. The scheme invites foreign companies to set up units in India, however, it also aims to encourage local companies to set up or expand existing manufacturing units and also to generate more employment and cut down the country’s reliance on imports from other countries.
It was launched in April 2020, for the Large-Scale Electronics Manufacturing sector, but later towards the end of 2020 was introduced for 10 other sectors. This scheme was introduced in line with India’s Atmanirbhar Bharat campaign.
The PLI scheme will be implemented by the concerned ministries/departments and will be within the overall financial limits prescribed. The final proposals of PLI for individual sectors will be appraised by the Expenditure Finance Committee (EFC) and approved by the Cabinet. Savings, if any, from one PLI scheme of an approved sector can be utilized to fund that of another approved sector by the Empowered Group of Secretaries. Any new sector for PLI will require fresh approval of the Cabinet.
The PLI scheme across these 10 key specific sectors will make Indian manufacturers globally competitive, attract investment in the areas of core competency and cutting-edge technology; ensure efficiencies; create economies of scale; enhance exports and make India an integral part of the global supply chain.
Need for PLI Scheme
The government expanded the PLI Scheme for fulfilling various needs in the manufacturing sector. Such as,
- The PLI Scheme provides enough support to Sunrise industries at their initial stage.
Sunrise Industry: These are relatively new industries but growing fast at present. Further, these are expected to become important in the future. For Example, Solar energy industries, Food Processing Industries, etc.
- Further, India despite dominating the services sector, contributes very little to the global supply chain. PLI scheme can help India to build an export base.
For example, According to the Parliamentary report, the minimum production in India due to PLI Schemes is expected to be over US$ 500 billion in 5 years.
- At present, there is a growing demand for diversification of supply chains. Especially to avoid the dominance of China. The PLI Scheme by increasing production can reduce Chinese demands.
- Attract the global investment to India after the Covid-19 pandemic. India is a consumer-based economy. By providing incentives, the PLI scheme attracts more foreign investment to India.
Advantages of PLI Schemes
The Scheme provides various advantages to the Indian Manufacturing sector.
- Firstly, Expansion of the present capacity: The PLI Scheme augments the present achievements of India. For example,
- Indian Textile Industry is one of the largest in the world
- India is the second-largest producer of steel
Introducing the PLI Scheme in these sectors will further expand these sectors.
- Secondly, India is expected to have a USD 1 trillion digital economy by 2025. The projects like Smart City Mission and Digital India require huge investments. India at present importing the equipment and raw materials. On the other hand, the PLI Scheme will provide low-cost indigenous products. So the cost associated with other projects will also come down.
- Thirdly, the government cannot make sustained investments in capital-intensive sectors. Because they have a longer gestation period. But the PLI Scheme based on incremental output is more effective than the other grant-based input subsidy schemes like Mega Food Parks, etc. This will reduce the Government expenditure.
- Fourthly, Generate employment opportunities: The sectors such as textile, steel are labour-intensive in nature. By increasing manufacturing in these sectors, India can reduce the unemployment ratio and also create skilled manpower.
- Fifthly, Encouraging local manufacturing units: The scheme aims to develop local industries. Further, the scheme also facilitates innovation and research, development and up-gradation of technology of Indian firms. Thus, the local manufacturing units can become globally competitive in the long run.
Challenges associated with the PLI Schemes
- The scheme contains a financial cap on incentives. This makes an over-performing company not to reap the benefits of its over achievements.
- In India for the majority of the PLI Scheme focussed sectors the effective cost of manufacturing is higher than the competitors. For example, Ernst & Young study shows that if the cost of production of one mobile is Rs.100. Then the effective cost of manufacturing the mobile is 79.55 in China, 89.05 in Vietnam, and 92.51 in India(including PLI). So, the investors will prefer other countries despite the PLI scheme.
- Apart from that, the scheme did not address the core challenges faced by the Sunrise industry manufacturers. Such as,
- First, less presence of domestic firms: The Scheme will benefit the international player more than the Domestic firms. As the international players can invest their revenues and produce in India and take domestic market share. Thus, the domestic manufacturer will be in a disadvantage position. For example, About 99% of Xiaomi phones sold in India were made in India. So, Indian firms might face challenges in getting market share.
- Second, the problem of Cheap imported material: Domestic firms may also face competition from cheap imports. Especially from Chinese in Solar PV Modules, White Goods etc.
- Third, lack of cutting edge technology and Foundries: India so far not focussed on adequate R&D development and Raw machinery. This resulted in poor talent retention and eventually ‘brain drain’. So, the development of industries under the PLI Scheme is questionable.
- The Challenge of WTO: In September 2019, Chinese Taipei contested the raise in tariffs under the Phased Manufacturing Programme(PMP). If the PMP is found to be the WTO non-compliant, then the growth of domestic industries is limited.
To make India a global manufacturing hub along with the PLI Schemes, certain reforms are necessary. These include,
- Focus on supply chain co-location: The government has to encourage the Foreign firms under the PLI policy to co-locate(placement of several entities in a single location) with their established industrial ecosystems. This will reduce government expenditure to invest and develop the ecosystems for the investor. This will bring the assemblers and component manufacturers together. So that, it reduces the effective cost of manufacturing.
- Further, the government must also focus on the service industry also. As other countries like China focus on the development of both Manufacture and Service sectors simultaneously in the long run.
- India also needs to focus on other key challenges of the manufacturing sector through initiatives such as,
- Reduction in costs– India also needs to consider reducing its factor costs of power and logistics.
- Encouraging states to be competitive and not indulge in trade-restrictive practices like Job reservation for locals, etc.
- Further, Implementing structural reforms such as Land reforms, etc.
- Also, India needs to improve human capital to meet the demands of the sunrise industries.
- Profiting from Anti-Chinese Sentiments: The global players including the USA, Australia aims to diversify their supply chains and also raise allegations against China. India should utilize this golden opportunity to act fast to attract outgoing investment from China.
3. Green hydrogen, a new ally for a zero carbon future
UPSC Syllabus: Prelims: Environment | Mains: GS Paper III – Environment
Sub Theme: Green Hydrogen | Zero Carbon Future | Types of Hydrogen | UPSC
According to the International Renewable Energy Agency (IRENA), hydrogen will make up 12% of the energy mix by 2050.The agency in its ‘World Energy Transitions Outlook’ Report also suggested that about 66% of this hydrogen used must come from water instead of natural gas.
‘Green hydrogen’ is seen as a driving source to power our industries and light our homes with the ‘zero emission’ of carbon dioxide.
- Hydrogen is the most abundant element on the planet, but it’snot found in pure which is required to be used as fuel.
- It has an energy density almost three times that of diesel.
- It is a rich source of energy, but the challenge is to compress or liquify it. It needs to be kept at a stable minus 253°C (far below the temperature of minus 163°C at which Liquified Natural Gas (LNG) is stored; making its ‘prior to use cost’ very high.
- Hydrogen has the potential to be the key renewable target in supporting infrastructure as well.
- Green Hydrogen can act as an energy storage option, which would be essential to meet intermittencies (of renewable energy) in the future.
Types of hydrogen
The production techniques of this ‘Energy-Carrier’ vary depending upon its applications — designated with different colours such as black hydrogen, brown hydrogen, blue hydrogen, green hydrogen, etc.
- Black hydrogen is produced by use of fossil fuel, whereas pink hydrogen is produced through electrolysis, but using energy from nuclear power sources.
- Brown hydrogenis produced using coal where the emissions are released to the air.
- Grey hydrogenis produced from natural gas where the associated emissions are released to the air.
- Blue hydrogenis produced from natural gas, where the emissions are captured using carbon capture and storage.
- Green hydrogen
- is a zero-carbon fuel made by electrolysis using renewable power from wind and solar to split water into hydrogen and oxygen.
- This ‘Green hydrogen’ can be utilised for the generation of power from natural sources — wind or solar systems — and will be a major step forward in achieving the target of ‘net zero’ emission.
- Less than 1% of hydrogen produced is green hydrogen.
The obstacle of cost
- The ‘production cost’ of ‘Green hydrogen’ has been considered to be a prime obstacle. According to studies by the International Renewable Energy Agency (IREA), the production cost of this ‘green source of energy’ is expected to be around $1.5 per kilogram (for nations having perpetual sunshine and vast unused land), by the year 2030; by adopting various conservative measures.
- Manufacturing and deployment of electrolysers will have to increase at an unprecedented rate by 2050 from the current capacity of 0.3 gigawatts to almost 5,000 gigawatts.
- For transportation fuel cells, hydrogen must be cost-competitive with conventional fuels and technologies on a per-mile basis.
- Fuel cells which convert hydrogen fuel to usable energy for cars, are still expensive.The hydrogen station infrastructure needed to refuel hydrogen fuel cell cars is still widely underdeveloped.
Benefits of Using Green Hydrogen for India
- India is the world’s fourth largest energy consuming country (behind China, the United States and the European Union).
- According to the IEA’s forecast India will overtake the European Union to become the world’s third energy consumer by the year 2030.
- Green hydrogen can drive India’s transition to clean energy,combat climate change. Under the Paris Climate Agreement, India pledged to reduce the emission intensity of its economy by 33-35% from 2005 levels by 2030.
- It will reduce import dependency on fossil fuels.
- The localisation of electrolyser production and the development of green hydrogen projects can create a new green technologies market in India.
- India is also gradually unveiling its plans. The Indian Railways have announced the country’s first experiment of a hydrogen-fuel cell technology-based train by retrofitting an existing diesel engine. Project will not only ensure diesel savings to the tune of several lakhs annually but will also prevent the emission of 0.72 kilo tons of particulate matter and 11.12 kilo tons of carbon per annum.
- The Union Budget for 2021-22 has announced a National Hydrogen Energy Mission (NHM) that will draw up a road map for using hydrogen as an energy source.
Even oil-producing nations such as Saudi Arabia is prioritising plans to manufacture this source of energy by utilising ‘idle-land-banks’ for solar and wind energy generation. It is working to establish a mega $5 billion ‘Green hydrogen’ manufacturing unit covering a land-size as large as that of Belgium, in the northern-western part of the country.
The forthcoming 26th UN Climate Change Conference of the Parties (COP26) in Glasgow from November 1-12, 2021 is to re-examine the coordinated action plans to mitigate greenhouse gases and climate adaptation measures.
It is high time to catch up with the rest of the world by going in for clean energy, decarbonising the economy and adopting ‘Green hydrogen’ as an environment-friendly and safe fuel for the next generations.