IAS UPSC Prelims and Mains Exam – 14th August 2019

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(PRELIMS + MAINS FOCUS)

Perseids Meteor shower

Part of: GS Prelims and Mains GS-I – Geography

In News

• The Perseid meteors appears as streaks of light in the sky. 
• These start around every year around late July and will peak on August 12 night to August 13. 
• The meteor shower appears as the Earth passes through the cosmic dust left by the comet Swift-Tuttle.
• The Perseids are widely sought after by astronomers and stargazers because most years at its peak, one can see 60 to 100 meteors in an hour from a dark place. 
• They are visible in the Northern Hemisphere and can be viewed in skies all across. 
• As NASA explains, Meteor showers take their name from the location of the radiant. The Perseid radiant is in the constellation Perseus. 
• For example, the Geminid meteor shower, which is observed each December, is named for a radiant in the onstellation Gemini.

Repo-linked deposit and lending rates

Part of: GS Prelims and Mains GS II- Indian Economy

In News

• Public sectors banks(PSB) SBI, Syndicate Bank, Bank of India, Union Bank and Allahabad Bank have announced to link their deposits and loans to the repo rate.
• The RBI has been looking at various ways in which banks can be made to transmit repo rate cuts to depositors and borrowers.
• Given that banks source only about 1 per cent of their funds from RBI’s repo window and the bulk of deposits from the public, PSBs used to complain that they cannot slash their lending rates unless their deposit rates also reduced.
• Curbing inflation or stimulating growth by raising or lowering the repo rate is the key objective of monetary policy.
• However, hikes or reductions in the repo rate by India’s Monetary Policy Committee have had only a marginal impact on the economy because of the partial transmission of these cuts by banks.
• This action of PSBs linking savings account interest rates to the repo rate partly solves this problem of transmission of rate cuts by RBI
• Using an external benchmark like the repo rate makes the process more transparent to retail borrowers and depositors.
• On the flip side, both savings bank account and loan rates will swing with the repo rate making it volatile.
• Concern: SBI, for instance, applies it only to depositors who have a balance of over Rs 1 lakh in their savings accounts. This make up less than 10% of its deposit base and is bound to lead to partial transmission.

Do You know?

• Repo Rate is the rate at which the RBI lends money to commercial banks
• Decrease in deposit rate will discourage people to deposit their savings in bank deposits and instead adopt informal channels like gold. 
• Decrease in lending rate will boost credit uptake and increase the investment & production activity in an economy.

Regulatory sandbox

Part of: GS Prelims and Mains GS III- Economy

In News

• The Reserve Bank of India (RBI) issued the final framework for regulatory sandbox
• A regulatory sandbox usually refers to live testing of new products or services in a controlled/test regulatory environment for which regulators may permit certain regulatory relaxations for the limited purpose of the testing.
• The objective of the sandbox was to foster responsible innovation in financial services, promote efficiency and bring benefit to consumers.
• RBI will launch the sandbox for entities that meet the criteria of minimum net worth of ₹25 lakh as per their latest audited balance sheet
• The entity should either be a company incorporated and registered in the country or banks licensed to operate in India.
• While money transfer services, digital know-your customer, financial inclusion and cybersecurity products are included, crypto currency, credit registry and credit information have been left out.

Corporate Social Responsibility (CSR)

Part of: GS Prelims and Mains GS-III – Indian Economy

In News

• Centre had recently amended the Company Law to make CSR spend mandatory for companies. It also stipulated that non-compliance could be treated as a criminal offence and attract penalties.
• A High-Level Committee CSR constituted in Sep 2018 under the chairmanship of Injeti Srinivas to review the existing framework on CSR has submitted its report
• Some of its recommendations include
  • CSR spends should be eligible for tax deduction under the income tax law. Currently, income tax law does not allow CSR spends as tax deductible amount.
  • Allowing the carry-forward of unspent balance for a period of 3-5 years
  • Aligning Schedule 7 of the Companies Act (which outlines the kinds of activities that qualify as CSR) with the UN Sustainable Development Goals.
  • Companies having CSR-prescribed amount below ₹50 lakh may be exempted from constituting a CSR Committee
  • Violation of CSR compliance may be made a civil offence and shifted to the penalty regime.
  • Introducing impact assessment studies for CSR obligations of ₹5 crore
  • Registration of implementation agencies on the Ministry of Corporate Affairs portal

(MAINS FOCUS)

RENEWABLE ENERGY

TOPIC: General Studies 3

• Conservation, environmental pollution and degradation
• Infrastructure: Energy
• Indigenization of technology and developing new technology.

Solar energy-KUSUM scheme

Concern:

• The World Bank predicts that around 60% of the aquifers in India will be in a critical state by 2032 if we do not change the current practice of overexploitation of groundwater for irrigation. Large-scale deployment of solar pumps, without a comprehensive plan to monitor and control water usage, is likely to make this prediction a reality

Renewable energy:

• The Ministry of New and Renewable Energy (MNRE) recently rolled out a massive solar-pump programme called the PM-KUSUM scheme.
• The scheme has a target to set up 25,750 megawatts (MW) solar capacity by 2022 to power irrigation pumps, with central financial support of Rs 34,422 crore. It includes installation of 1.75 million off-grid and 1 million on-grid solar pumps as well as 10,000 MW of solar capacity in rural areas through decentralised ground-mounted plants of 0.5 MW to 2 MW capacity. These plants will be used to solarise the rural grid.
• This rapid transition is possible because the scheme makes buying pumps extremely affordable for medium-sized and large farmers. With 30% subsidy from the central and state government each and provision to take bank loans for 30% of the cost, farmers have to sell out only 10% of the cost to buy solar pumps

Positives of the scheme:

• It increases farmers’ income in the short term. 
• As solar power is cheaper than diesel, in states like Bihar, where farmers largely use diesel pumps, off-grid solar pumps will reduce the cost of irrigation significantly. This will allow farmers to grow more crops, even the water-intensive ones, at a lower cost of cultivation, thereby increasing income.
• In Punjab, where electric pumps dominate and the power subsidy to the agricultural sector is about `7000 crore annually, solarisation of agriculture feeders will reduce the subsidy burden significantly. 
• Farmers’ income will also be augmented by selling electricity from solar plants on to the discoms.
• The most important part of the solar pump is that the solar cycle matches the irrigation cycle. Farmers will get assured irrigation for at least six hours during day time, and they don’t have to remain awake at night to irrigate their farms (grid supply is more assured at night in most states).

Negatives of the Scheme:

• Over exploitation of groundwater: a high possibility of overuse of these pumps, leading to groundwater depletion. 
• The KUSUM scheme fails to promote efficient irrigation and incorporate explicit and strict measures against groundwater exploitation. 
• The scheme only mentions exploring the possibility of its convergence with state-level schemes for promoting the micro-irrigation systems and energy-efficient pumps instead of mandating the same
• In the case of solarisation of agriculture feeders, the implications can be even more disastrous. Currently, states like Punjab and Haryana bear a huge burden of agriculture power subsidy. 
• With solar power predicted to be at least 30% cheaper, the subsidy burden is likely to reduce significantly. This means that the state governments have even less incentive to increase agriculture tariff to conserve water when the grid is solarised. Thus, the gross overexploitation of groundwater is likely to continue.

Few points to consider improving the design of the scheme:

• One, the central government could push massive irrigation reforms in states through this scheme. For instance, KUSUM should only be extended to states willing to take strong measures to improve irrigation efficiency and control exploitation of groundwater.
• Two, it must mandate micro-irrigation for solar pump beneficiaries. Groundwater extraction must be closely monitored and strict mandates on pump size and bore-well depth must be set. Supporting low water-intensive crops in water-scare regions, too, is crucial.
• Three, deployment of off-grid solar pumps must be restricted to areas where the grid has not reached and groundwater is abundant. Even in groundwater-abundant areas, off-grid solar pumps must be used for rural electrification or developed into community-based water sale models to maximise utilisation and reduce water wastage.
• Four, solarisation of rural feeders should be the preferred solution, given that it is most economical and provides additional income to farmers. However, this should be accompanied by a gradual increase in electricity tariffs, which is crucial to control groundwater exploitation and reduce the burden of agricultural subsidy.
• Last, given the central role of discoms, electricity regulators need to ensure that solar pumps and decentralised plants are allowed to evacuate power to the grids easily and payments are made to the farmers regularly.

Conclusion:

• Renewable energy is clean energy, but it doesn’t always lead to green solutions. For clean energy to become green, solutions must be comprehensively designed in an integrated manner.

Connecting the dots:

• What is the essence of ‘energy conservation’ in today’s time period? Examine the role of energy in one’s life with respect to sustainability of that source
• Discuss the challenges in implementing KUSUM scheme and suggest the measures for the same.

(TEST YOUR KNOWLEDGE)

ECONOMY

TOPIC: General studies 3

• Economy and development; Intellectual Property Rights

Context:

• Geographical indication can boost agriculture exports

Concern: 

• The key concern is the value of agri-imports has surged by four percentage points, touching an all-time high of $25 billion in FY18, which can possibly surpass the value of agri-exports, thus making India a net agri-importer. 

Geographical indication:

• An initiative India should take is branding agri-products through steps such as geographical indication (GI), especially for organically-produced commodities that would realise higher returns in global markets. 
• Establishing effective agricultural brands can help farmers gain a competitive advantage in ‘buyer-driven’ global markets. 
• Some globally recognised brands (California almonds, Chilean wines, Swiss chocolates) enjoy a high stature in their respective product groups. Branded items usually fetch better price and can lead to brand loyalty, and are seen as a move towards a strong customer base. Branding adds value by differentiating the product and also because of the consumer perception that such products are of superior quality than unbranded ones

What is Geographical Indication?

• Geographical Indication is a genre of Intellectual Property.
• GI tag is an insignia on products having a unique geographical origin and evolution over centuries with regards to its special quality or reputation attributes.
• The status to the products marks its authenticity and ensures that registered authorised users are allowed to use the popular product name.
• These could be naturally grown crops like Assam Chilies or manufactured products like Jaipur Pottery.
• GI tags are given on the basis of the Geographical Indications of Goods (Registration and Protection) Act, 1999.
• The registration of GI is valid for 10 years after which it needs to be renewed.
• Violation of GI tags is punishable offence under law.

 What are the benefits of a GI Tag?

• Legal protection to the products
• Prevents unauthorised use of a GI tag products by others
• Helps consumers to get quality products of desired traits
• Promotes economic prosperity of producers of GI tag goods by enhancing their demand in national and international markets.
• The GI tag allows the producers of the objects to claim a premium for their products.Thus, it is financially beneficial to them.
• The GI tag can also pique interest of consumers and thus raise demand for a product again benefiting the producer.

 What are the legalities related to GI Tag?

• It is covered as an element of intellectual property rights (IPRs) under the Paris Convention for the Protection of Industrial Property.
• At international level, GI is governed by World Trade Organisation’s (WTO’s) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).
• In India, GI registration is governed by the Geographical Indications of goods (Registration and Protection) Act, 1999.
• This Act is administered by Controller General of Patents, Designs and Trade Marks, who is also Registrar of Geographical Indications and is based in Chennai, Tamil Nadu.

India and GI Tag:

• India has about 300 registered GIs, but few have been used for commercial value addition. Two of India’s well-known GIs are Darjeeling tea and Basmati rice, but both seem to be minuscule in terms of market impact when compared with, say, Chilean wine or Danish cheese. 
• While a programme to promote branding and commercialisation of GI products for exports has been initiated in the Directorate General of Foreign Trade policies during 2015-20, it is pertinent to take it to the next level.

What lessons can also be learnt from other countries in promoting brands:

• Many countries have opted for clustering, which is at the root of branding agricultural commodities and adding value to products. 
• For example, France started this for wine, and soon after many other countries followed—Japan for Kobe beef, Colombia for Juan Valdez coffee and New Zealand for Manuka honey.
• A celebrated example is that of Malaysia for having implemented commodity branding programme called Malaysia’s Best. It is an umbrella brand for selected horticultural products that guarantee quality and safety in accordance with Malaysian standards and good agricultural practices.
• Aggressive branding of agri-products is that government support, if given, would be WTO-compliant as it is placed under the ‘green box’ instead of ‘amber box’. 
• Currently, India supports agri-exporters through duty drawback and under the Merchandise Export from India Scheme, which may carry the risk of being WTO non-compliant.
• It goes without saying that adequate budgetary allocations towards aggressive branding and packaging can encourage producers and exporters.

Conclusion:

• An initiative India should take is branding agri-products through steps such as geographical indication.
• An increased thrust on agricultural exports is well documented in the Agriculture Export Policy 2018, and is also visible through alterations in the tariffs and non-tariffs measures.

Connecting the dots:

1. Discuss the benefits and problems of GI tag?
2. How geographical indication can boost agriculture exports. Explain?

(TEST YOUR KNOWLEDGE)

Model questions: (You can now post your answers in comment section)

Note: 

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Q.1) Consider the following statements about Perseids Meteor shower

1. They occur every year during December 
2. The meteor shower appears as the Earth passes through the cosmic dust left by the comet Swift-Tuttle.
3. They are visible in the Northern Hemisphere and can be viewed in skies all across.

Which of the statement(s) given above is / are correct?

1. 1 and 2only
2. 2 and 3 only
3. 1 and 3 only
4. 1,2 and 3

Q.2) Consider the following statements 

1. Reverse repo Rate is the rate at which the RBI lends money to commercial banks
2. Repo-linked deposit and lending rates will bring transparency in bank rates and leads to quick transmission of monetary policy rate cuts.
3. Decrease in bank deposit rate will lead to increase in formalisation of economy

Which of the statement(s) given above is / are incorrect?

1. 1 and 2only
2. 2 and 3 only
3. 1 and 3 only
4. 1,2 and 3

Q.3) Consider the following statements about Regulatory sandbox

1. It refers to live testing of new products or services in a controlled/test regulatory environment for which regulators may permit certain regulatory relaxations for the limited purpose of the testing
2. RBI will launch the sandbox for entities involved in money transfer services, digital know-your customer, crypto currency, credit registry and credit information.

Which of the statement(s) given above is / are correct?

1. 1 only
2. 2 only
3. Both 1 and 2
4. Neither 1 nor 2

Q.4) Injeti Srinivas Committee appointed by Union Government deals with which of the following issues?

1. Recapitalization of Public Sector banks
2. Economic Capital Framework for RBI
3. Cryptocurrency
4. Reviewing of Corporate Social Responsibility

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