IASbaba’s Daily Current Affairs – 9th & 10th September, 2015

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IASbaba’s Daily Current Affairs- 9th & 10th September, 2015

NATIONAL

Cleaner Coal vs. Zero Coal

Issue:

Recently, World Bank has clearly stated that with few exceptional circumstances, it will no longer fund coal projects in developing countries.

Related concern:

• Coal based plants are polluting environment and also they are contributing to climate change and associated risks.
• In India, coal based projects cannot be phased out, there are many cheap plants installed and running to capacity and many are under construction.
• These plants do not run optimally. They are not efficient and also degrading environment.
• Though India has huge potential for Renewable Energy, there lies a gap in switching from coal based power generation to renewable energy future.
• In the face of the World Bank’s stand on funds for coal based project, CIL will continue to take up coal projects. Also, CIL has repaid the loan taken from World Bank and will continue its business as usual approach

Coal Emission: India China vis-a-vis :

• In 2012, China emitted 5 times as compared that t India’s carbon emission.
• Aim of India is not to reach the level of carbon emission as that of USA and China. But, India cannot limit the emission at the cost of human development.

Way Forward:

If carbon emission is troubling whole world and is a concern, then efforts should be made for better coal utilization. Carbon emission can be reduced by improving efficiency. Waste ash needs to be treated and particulate emission should be minimized by treating it before releasing in atmosphere. Adequate provisions need to be followed.

Carbon Emission can be reduced by

• Optimal use of coal, this can be ascertained by use of less coal for more output
• Moving from present sub-critical coal power plant to super-critical coal power plant.
• Replacing the power plant with the super critical plant alone will reduce the coal usage by nearly 15 percent.

Need of hour:

• Clean coal is under development worldwide. But, cleaner coal in terms of more efficient coal plant will need technological innovation, policy support and financing.
• Power grid also needs balancing; with smart grid in operation we can assume coal to be cleaner.
• India will depend on coal to meet energy requirement, without global support and push for improvement, the result would be suboptimal and more polluting plants.

Improvement in technological innovation and financial support are inevitable need for treating high ash content Indian coal effectively.

Better policy, switching gradually from coal based energy generation to cleaner coal based plant can help in reducing emission and can lead to development not at the stake of environmental degradation.

Connecting the dots:

• ‘The global push to end coal appears to be a manifestation, which is sometimes aimed at limiting dangerous forms of growth but often ends up being against all new growth’. Comment in light of the statement.
• ‘Cleaner coal requires innovation to work well with high-ash Indian coal.’ What other steps can India take to ensure clean coal use?

INTERNATIONAL

Does India need Russia anymore?

• Relations with Russia are a key pillar of India’s foreign policy and Russia has been a longstanding time-tested partner of India.
• India has longstanding and wide-ranging cooperation with Russia in the field of defence.
• With India being the second largest market for the Russian defence industry, more than 70% of the Indian Military’s hardware came from Russia.
• However over the years, with Russia facing severe economic hardships and also development of close relationships between India and the western countries like USA, France, a question arises : Do we need Russia anymore ?

Present economic crises in Russia :

• Russian economy mainly depends on export of crude oil and military defence experiment.
• Over the last few months the global crude oil prices have hit an all time low of $50per barrel impacting negatively the Russian economy.
• Western countries economic sanctions on Russia over the issues of Ukraine and Crimean annexation have turned the problems in Russia into a crises situation.
• Russia can no longer afford an ambitious $650-million defence modernisation plan, particularly since -unlike western defence industries that remain commercially viable by producing both weaponry and civilian products – Russia’s defence industry serves only military buyers.

Alternatives available to India :

 Unlike in the 1990s, India has many more alternatives,

• The United States is today eager to bolster India as an emerging counter-balance to China.
• US Ambassador Richard Verma, at a recent speech in Delhi endorsed India as a “leading power” instead of a “balancing power”.
• US, the global emperor of defence technology, has opened the technology door to India. Over the past five years, ‘over-the-counter’ sales to India in defence equipment has been worth of $10 billion.
• The recent Rafale deal between India and France over the buying of 36 fighter jet planes, illustrate the ample opportunities India has other than Russia.

Should New Delhi turn away from a Russia in economic distress, or do there remain opportunities for us?

 The answer can only be “Stay tuned to Moscow!”

• Russia greatly assists India with technologies that the western bloc is unwilling to.
• One example is nuclear powered submarines. From 1988 to 1991, the Soviet Union leased India the nuclear powered attack submarine, INS Chakra, and helped create the building blocks, including design assistance, that has evolved into a successful Indian nuclear submarine, INS Arihant.
• Russia has recently offered to co-develop with India a highly advanced engine for the “fifth generation fighter aircraft” which USA and other western countries have denied from a long time.
• Another main reason to tilt towards Russia is to prevent a catastrophic Russian turn towards Beijing and Islamabad, which would prove costly to Indian defence.

Way ahead (Iasbaba’s view):

• Over the years USA and other western countries are trying to get closer to India, due to its favoured location in the Asian continent. Barring few circumstances , compared to western countries , Russia is the only natural ally of India.

Connecting the dots:

• Critically analyse the statement Russia is a natural ally of India.
• Should India focus on diversifying its defence procurement or import. If yes why and with what countries.
• Between USA and Russia, who is a natural friend of India and why.

ECONOMICS

Model Draft by Law Commission on Bilateral Investment Treaties:

• Law Commission in its 260^th report has recommended ModelDraft to ensure the balance between the rights of investors and the rights of the state.

Bilateral Investment Treaty:

• It is a treaty between the two nations that provides certain basic protection to investors of one nation investing in the other nation. These treaties ensure investor of fair and equitable treatment.

White Industries Case:

• White Industries is an Australian Entity, it obtained foreign arbitralaward against Coal India Ltd. White Industries initiated proceedings and for about 10 years no progress was made. White Industries claimed that it has been denied for effective means to its investment in India for more than 10 years. The arbitral tribunal accepted the plea and in turn India was forced to pay huge sums for the delay caused.
• Since the award made by arbitral tribunal as many as 17 other investors have opened their cases for arbitration against India. These include Vodafone and Telenor. These investors together can pose enormous liabilities on the government arising out of the settlements.

ModelDraft, a way out of the mess:

Law commission of India has proposed the following:

• To modify the enterprise based definition of investment to asset based definition, this would ensure that an investor who has not set up an enterprise will not be in a position to receive protection from the state.
• MFN principle should not be granted, as India might choose to provide differential treatment to trading partners depending on the influx of the investment arising from those countries.
• To introduce ‘denial of benefit’ clause, this would deny benefit to an investor if he is found to be engaged in corrupt practices or is involved in an act contrary to the law of the nation.
• To set up dispute resolution mechanism in home country, to make mechanism workable Law commission has suggested the omitting of the jurisdiction bar which earlier had a provision whereby an investor had to first approach local court to settle the dispute.

How will Model Draft help investors and state?

• It will help in safeguarding interest of both the investors and the state.
• It has proactively suggested the dispute resolution mechanism which will speedily settle disputes arising between investor and state.
• It has come up with the new solution to problems associated with the investment like it has given outlook to the new definition of investment to be on the basis of asset and not solely based on the enterprise.

Connecting the dots:

• How to strike a balance between the investor’s interest and state’s interest, also ensuring the maintenance of favorable environment for investment?
• Critically comment on the recommendations suggested by Model Draft proposed by Law Commission of India.