SYNOPSIS: IASbaba’s TLP – 2018: UPSC Mains General Studies Questions [11th January 2018]- Day 34
1. Examine the significance of the Sagarmala Programme for India’s external and internal trade.
- Introduction: Mention what is Sagarmala project.
- Body: Split the body into two parts. One for External and another for Internal trade and then mention relevant points for each part.
- Conclusion: 2-3 line conclusion.
To harness India’s 7,500 km long coastline, 14,500 km of potentially navigable waterways and strategic location on key international maritime trade routes, the Government of India has embarked on the ambitious Sagarmala Programme which aims to promote port-led development in the country.
Significance of Sagarmala project:
- External Trade:
- Transit facility: India can become a transit hub overtaking Singapore and Srilanka. Even the location plays to its advantage.
- Logistics Channel: A new channel can be created to fasten logistics facility from passenger facility to fasten transportation.
- Port of call: For container and ships heading for far off places can dock for repairs and maintenance leading to extra revenue.
- Costs: Reduce cost of transportation especially for export oriented industries as they can locate facilities near ports and coasts.
- Efficiency: It will help to reduce organizational and operational delays leading to efficiency.
- FDI: It will also help in attracting foreign container companies to set up their facilities.
- Maritime economy: It will help in India’s maritime economy and achievement of its dream of Blue Economy vision.
- Export competitiveness: It will help the country and industrial to gain competitive advantage compared to its neighbors.
- Internal Trade:
- Multi-modal Connectivity: It will help to create transport corridor by involving all modes of transport to connect ports like Roadways, Railways, and Internal water ways.
- Faster movement: Of goods to and from ports which will enhance usage of waterways than other ways which cause environmental damages. Ex: Emission from goods vehicles, Aircrafts etc.
- Cost reduction: Waterways is meant to be the cheapest means of transportation compared to others.
- Development: It will lead to development of river transport facility in turn leading to maintenance of health of river, flow of water which is double benefit to country.
- Shift of Industrial facility: It will help in shifting of Industrial units towards ports and coastal areas there by reducing delays, usage of non-renewable resources and aid in sustainable development.
Components of Sagarmala Programme are:
- Port Modernization & New Port Development: De-bottlenecking and capacity expansion of existing ports and development of new greenfield ports
- Port Connectivity Enhancement: Enhancing the connectivity of the ports to the hinterland, optimizing cost and time of cargo movement through multi-modal logistics solutions including domestic waterways (inland water transport and coastal shipping)
- Port-linked Industrialization: Developing port-proximate industrial clusters and Coastal Economic Zones to reduce logistics cost and time of EXIM and domestic cargo
- Coastal Community Development: Promoting sustainable development of coastal communities through skill development & livelihood generation activities, fisheries development, coastal tourism etc.
Sagarmala project not only helps in port led development and trade but it will also enhance employment opportunity, increase foreign exchange earnings for country. The Britain ruled the world due to its Maritime power, India aiming for superpower status can utilize this opportunity to project its might among world countries.
Connecting the dots:
- Blue Economy.
- Blue Revolution.
- Multi-modal transport model.
Best Answer: Mindovermatter28
2. The UDAY (Ujjwal DISCOM Assurance Yojana) scheme can be a game changer for India’s ailing power sector. Do you agree? Substantiate.
- In such question, use your introduction to define the problems. In this case the problems in the power sector
- Then, answer how UDAY can be the solution (game changer).
Years of populist tariff schemes, mounting AT&C losses and operational inefficiencies have adversely affected the financial health of State Discoms which are currently plagued with humongous out-standing debts. In this regard, the recently introduced UDAY scheme can be a game changer in the following way:
- UDAY aims to improve efficiency of distribution by minimizing technical loss which originate from transformers and power cables and commercial losses from power theft by installing smart metering system will reduce AT and C losses from 22% to under 15%
- There is provision for distribution of energy efficient LEDs, pump motors and fans to conserve power to be used for deficit-areas
- States accepting UDAY and performing as per operational milestones will be given additional / priority funding through Deendayal Upadhayay Gram Jyoti Yojana (DDUGJY), Integrated Power Development Scheme (IPDS), Power Sector Development Fund (PSDF) or other such schemes of Ministry of Power and Ministry of New and Renewable Energy.
- Financial Discipline for DISCOMs in future – they will have to comply with the Renewable Purchase Obligations (RPO) with Ministry of Power
- Coal price rationalization to be done to lower fuel cost for power manufacturers
UDAY is a shining example of the utilization of the best principles of cooperative and competitive federalism and has been evolved through discussions at the highest levels with multiple States. The scheme covers the entire value chain in the power sector from fuel, to generation, transmission, renewables, distribution and consumers. It has a very vast canvas determined through a bottom-up approach. With the planning in place, good execution of scheme can definitely make it a game changer for India’s power sector.
Extra: Salient Features of UDAY Scheme
States shall take over 75% of DISCOM debt as on 30 September 2015 over two years – 50% of DISCOM debt shall be taken over in 2015-16 and 25% in 2016-17.
- Government of India will not include the debt taken over by the States as per the above scheme in the calculation of fiscal deficit of respective States in the financial years 2015-16 and 2016-17.
- States will issue non-SLR including SDL bonds in the market or directly to the respective banks / Financial Institutions (FIs) holding the DISCOM debt to the appropriate extent.
- DISCOM debt not taken over by the State shall be converted by the Banks / FIs into loans or bonds with interest rate not more than the bank’s base rate plus 0.1%. Alternately, this debt may be fully or partly issued by the DISCOM as State guaranteed DISCOM bonds at the prevailing market rates which shall be equal to or less than bank base rate plus 0.1%.
- State DISCOMs will comply with the Renewable Purchase Obligation (RPO) outstanding since 1st April, 2012, within a period to be decided in consultation with Ministry of Power.
- States accepting UDAY and performing as per operational milestones will be given additional / priority funding through Deendayal Upadhayay Gram Jyoti Yojana (DDUGJY),Integrated Power Development Scheme (IPDS), Power Sector Development Fund (PSDF) or other such schemes of Ministry of Power and Ministry of New and Renewable Energy.
- Such States shall also be supported with additional coal at notified prices and, in case of availability through higher capacity utilization, low cost power from NTPC and other Central Public Sector Undertakings (CPSUs).
- States not meeting operational milestones will be liable to forfeit their claim on IPDS and DDUGJY grants.
- UDAY is optional for all States. However, States are encouraged to take the benefit at the earliest as benefits are dependent on the performance.
Best Answer: None
Q.3) Waterways has been the most neglected mode for inland transportation in India. Examine. Discuss the challenges associated with waterways in India. How can their potential be tapped?
India is blessed with 7,551km of coastline and about 14,500km of navigable inland waterways. Yet this sector has remained neglected despite universal acceptance that transportation through waterways, both coastal and inland, is fuel efficient, environment friendly and more economical than rail and road.
Challenges associated with waterways in India:
India has about 14500 km of inland water navigational length. But it was never utilized fully. India’s current transport modal mix is overwhelmingly dominated by rail and road which contributes about 94% while the rest 6% is accounted by IWT, India’s Waterways has been a neglected sector due to lack of focus and policy measures. India is in the last position in the world in this sector. The prime causes of underutilization are:
- Lack of Public Funds: The financing requirement for NWs is huge and open-ended. Heavy investment will be needed to procure equipment, including dredgers, shipping vessels, and barges of different sizes.
- Disinterest by Private Players: Even after liberalisation and economic reforms, there has been very less active participation from private players in this sector.
- Lost Competitive Edge: Its needless to say that other modes of transport such as rail and road received huge investment as well as policy support which caused IWT lose its competitive edge despite being a very cheap mode of transport and cargo, freight handling.
- Many of the rivers generally remain dry. There is a need to develop water reservoirs for conservation of rain water to feed such rivers.
- Higher water salinity, especially in the coastal regions and estuaries, and constant inflow of silt in the rivers can be problematic.
- The cost savings from NW would never be realized unless vessels are able to load to their full tonnage. This is possible only if the rivers are deepened between 2.5 and 4.5 meters and if return cargo is made available for the vessel to avoid wasteful return trips.
- The right of the state governments to develop additional irrigation projects would also be impaired. Hence, specific provisions to protect the rights of the state government over the waterway even after its declaration as an NW may be provided for.
- These NWs will also require river ports with their support infrastructure- road and rail connectivity, warehouses and other services.
Ways to tap the potential of waterways:
These waterways can be developed as environment-friendly modes of transport. This will decrease the huge logistics cost in India significantly, the following steps can tap the potential of waterways.
- The Government will have to figure out innovative ways of financing as they would be requiring about Rs. 70,000 cr to develop these river stretches into navigable transport ways. Government will explore multiple sources of finance, including market borrowings and tapping the National Clean Energy Fund (NCEF) and the Central Roads Fund (CRF).
- With the enactment of the National Waterways Act, 2016, the total number of national waterways is now 111. But providing infrastructure such as jetties, terminals, and navigational channels continues to pose a challenge.
- Central Road Fund Act, 2000 Act regulates the Central Road Fund (CRF) that is credited with the cess collected on high speed diesel oil and petrol. This collected amount is then released to National Highways Authority of India, and to the state/union territory governments for the development of national and state highways.
- Once enacted, Central Road Fund (Amendment) Bill, 2017 will give a big boost to our waterways as cargo transportation through water is a much cheaper and cleaner way of transportation. It will bring down logistics cost that is very high.
National waterways provide a cost-effective, logistically efficient and environment-friendly mode of transport, whose development as a supplementary mode would enable diversion of traffic from over-congested roads and railways. Hence, the waterways project deserves better regulation and development across the country.
Best answer: Akshath
4. The debate around definition of minorities and majorities is constitutionally settled. In this light, critically analyse the demand to grant Hindus minority status in Jammu and Kashmir and the ramifications it can have on others.
- Introduction- Why in news?
- Constitutional status on minority- majority debate.
- Rationale behind demand of minority status for Hindus in J&K.
- Critical analysis- Issues associated with such demand.
A public interest litigation (PIL) filed in the Supreme Court has demanded that the Hindus be notified as a minority community in eight states, including Jammu and Kashmir.
Constitutional status on minority- majority debate:
The Constitution of India uses the word minority/ minorities in some Articles viz Article 20 to 30 and 350 A to 350 B, but does not define the word ‘minority’. The National Commission for Minorities Act, 1992 in the Section 2(c) of the act defined a minority as “a community notified as such by the Central government”.
In T.M.A. Pai Foundation case, 2002, the Supreme Court set out the principle that minority status should be determined in relation to the population of the State and not to India as a whole. Thus, religious and linguistic minorities, who have been placed on a par in Article 30, have to be considered in terms of the State concerned.
Minority status to Hindus in J&K:
- Neither central nor the state governments have notified Hindus as a ‘minority’ under Section 2 (c) of the NCM Act. Therefore, the Hindus are being deprived of their basic rights, guaranteed under the Articles 25 to 30
- A 1993 notification on minority communities declares Muslims as minority, but not the Hindu. Thus, communities, which are in majority in the state, are enjoying benefits meant for minority communities.
- The recent demand for considering the Hindus as minority in Jammu and Kashmir seems to be more politically driven then by the concern to protect the interest of the remaining Hindus (left after migration of Kasmiri Pandits in 1990s).
- There is also a valid opinion that the term ‘minority’ refers to a power relationship. This is because numbers per se merely quantify the proportion of a group in a population; they do not tell us anything about whether a particular minority group is powerful or powerless, advantaged or disadvantaged, represented or under-represented.
- It may flare up communal tensions in the state.
- Similar demands may arise from other states.
According to 2011 census, Hindus are in minorities in Lakshadweep, Mizoram, Nagaland, Meghalaya, Arunachal Pradesh, Manipur and Punjab apart from Jammu and Kashmir.
A minority commission must be established in the state to look into the matter. And given the sensitivity of the matter all stakeholders must be involved so as to arrive at the amicable solution.
Best answer: No Answer
5. Analyse the relevance of FRBM Act for a developing economy like India. Also elaborate on the recommendations of the N K Singh panel in this regard.
Background: Government may delay implementation of N.K. Singh’s FRBM report,The move gives finance minister leeway to decide fiscal deficit levels for 2017-18 and 2018-19 when he presents his last full union budget on 1 February 2018.
- Start by writing about FRBM act
- Write why this act is relevant for a developing country like India
- Elaborate on the recommendations of N.K Singh Panel.
The Fiscal Responsibility and Budget Management Act, 2003 (FRBMA) is an Act of the Parliament of India to institutionalize financial discipline, reduce India’s fiscal deficit, improve macroeconomic management and the overall management of the public funds by moving towards a balanced budget and strengthen fiscal prudence.
The main purpose was to eliminate revenue deficit of the country (building revenue surplus thereafter) and bring down the fiscal deficit to a manageable 3% of the GDP by March 2008.
However, due to the 2007 international financial crisis, the deadlines for the implementation of the targets in the act was initially postponed and subsequently suspended in 2009.
In 2011, given the process of ongoing recovery, Economic Advisory Council publicly advised the Government of India to reconsider reinstating the provisions of the FRBMA. N. K. Singh is currently the Chairman of the review committee for Fiscal Responsibility and Budget Management Act, 2003, under the Ministry of Finance (India), Government of India.
Relevance of FRBM Act for a developing economy like India
- FRBM in India was Enacted to Check the Government borrowing , Deficit financing , Diversion of Funds /deviation of targets , encouraging Fiscal mgmt. These principles In nutshell Act was enacted in good faith to put check on executives quantitatively on politicians running popular government of freebies, subsidies and waivers .
- Prohibits the Centre from borrowing from the Reserve Bank of India — that is, it bans `deficit financing’ through money creation.
- Lays down fiscal management principles, making it incumbent on the Centre to reduce the fiscal deficit and, to eliminate revenue deficit – as per the targets set out thereunder.
- Reduction of fiscal deficit and revenue deficit which will help Government in building up surplus amount of revenue which it may utilised for discharging liabilities in excess of fiscal deficit.
- FRBM prohibits borrowing the Government from RBI , therefore making the monetary policy independent policy from fiscal policy.
- Measures and surveillance is needed to ensure greater transparency in fiscal operation.
- Such measures will enhance countries economic image, invite more FDI, help in maintaining a credible economic cycle.
Recommendations of the N K Singh panel
The Fiscal Responsibility and Budget Management (FRBM) Review Committee chaired by former Revenue Secretary N.K. Singh has recommended –
- The committee has recommended a debt-to-GDP ratio of 38.7% for the central government, 20% for the state governments together and a fiscal deficit of 2.5% of GDP (gross domestic product), both by financial year 2022-23.
- The committee has prescribed a so-called glide path to these targets—steady progress towards them—and also suggested that there be some flexibility in the deficit targets on both sides, downwards when growth is good and upwards when it isn’t.
- The Centre can take a pause on the fiscal consolidation front over the next three years by maintaining a fiscal deficit to GDP ratio of 3% till 2019-20.
- The panel has recommended enacting a new Debt and Fiscal Responsibility Act after repealing the existing Fiscal Responsibility and Budget Management (FRBM) Act, and creating a fiscal council.
- In 2016-17, India’s debt-to-GDP ratio for the central government was 49.4% and fiscal deficit at 3.5% of GDP. The government is hoping to end 2017-18 with a fiscal deficit that is 3.2% of GDP, marginally higher than the 3% mentioned in the FRBM Act.
- On the FRBM roadmap for future, the panel has advocated reaching a fiscal deficit to GDP ratio of 2.8% in 2020-21, 2.6% the subsequent year and 2.5% in 2022-23.
- Revenue deficit-to-GDP ratio has been envisaged to decline steadily by 0.25 percentage points each year from 2.3% in 2016-17 to 0.8% in 2022-23.
- The Panel has recommended an Escape Clause.
- The panel has recommended that the existing FRBM Act and rules be scrapped and a new Debt and Fiscal Responsibility Act be adopted and proposed the creation of a Fiscal Council that the government must consult before invoking escape clauses.
FRBM Act is a European model of fiscal responsibility. There were concerns of India adopting it as it is. The review panel has suggested relevant reforms with required contingency clauses embedded. As the Economic Survey of the year referenced it is important to remain on the path of fiscal discipline but adopt an Indianised model of the same.
Best Answer: Suman Roy