IAS UPSC Prelims and Mains Exam – 8th August 2019

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(PRELIMS + MAINS FOCUS)

Coastal zone management

Part of: Mains GS III- Environmental Conservation

In News

• The Environment Ministry has unveiled a draft Environmental and Social Management Framework (ESMF)
• ESMF which is a part of World Bank funded project will dictate how prospective infrastructure projects situated along the coast ought to be assessed before they can apply for clearance.
• The document was prepared by the Society for Integrated Coastal Management, an Environment Ministry-affiliated body.
• The document seeks to assist the Government of India in enhancing coastal resource efficiency and resilience, by building collective capacity (including communities and decentralised governance) for adopting and implementing integrated coastal management approaches,
• So far three coastal States, namely Gujarat, Odisha and West Bengal, have prepared Integrated Coastal Zone Management (ICZM) Plans with support from the World Bank. Such plans would be prepared for the selected coastal stretches in other States/UT.

River inter-linking

Part of: GS Prelims and Mains GS- II – Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

In News

• Tamil Nadu has been allotted 83 thousand million cubic feet (tmcft) of water under the proposed Godavari-Cauvery link, according to a draft detailed project report 
• The report was prepared by National Water Development Agency (NWDA), a Central government organisation entrusted with the task of preparing proposals for linking rivers.
• As per the current NWDA proposal, a total of 247 tmcft is sought to be diverted from the Godavari, through the Krishna river, to the Pennar basin. 
• As much as 163 tmcft will be set apart for Andhra Pradesh and Telangana, and the balance will be given to Tamil Nadu.
• The report, which has been circulated to the States concerned for views, has not provided comfort to Tamil Nadu which has been demanding 200 tmcft of water, 

Giant parrots

Part of: GS Prelims and Mains GS- III– Biodiversity 

In News

• The remains of a super-sized parrot that stood more than 3 feet tall (half the height of average human) and roamed the Earth 19 million years ago have been discovered in New Zealand.
• The parrot has been named Heracles inexpectatus to reflect its Herculean size and strength — and the unexpected nature of the discovery
• The bird was approximately the size of the giant “dodo” pigeon and twice the size of the critically endangered flightless New Zealand kakapo, previously the largest known parrot.
• Last year, scientists found the remains of a giant burrowing bat that lived millions of years ago in the same region.
• New Zealand, home to the now-extinct flightless bird moa which was up to 3.6 metres tall with neck outstretched, is well known for its giant birds.

Biodegradable Plastics

Part of: GS Prelims and Mains GS III- Environmental Conservation.

In News

• Researchers from the University of Valle de Atemajac in Zapopan, Mexico have created a biodegradable plastic from the juice of the prickly pear cactus (which is emblazoned on the country’s flag)
• The pulp of the prickly pear is mixed with non-toxic additives to produce sheets that can be used for packaging (replacing single use plastics).
• The new material begins to break down after sitting in the soil for a month and when left in water, it breaks down in a matter of days. 
• Also, it doesn’t require crude oil like traditional plastics.
• Researchers are still conducting tests, but hopes to patent their product and look for partners in early 2020, with an eye towards large scale production.

Do you know?

• It’s estimated that between 1.15 million to 2.41 million tonnes of plastic are entering the ocean each year from rivers.
• Biodegradable plastic is plastic that decomposes naturally in the environment. This is achieved when microorganisms in the environment metabolize and break down the structure of biodegradable plastic. 
• Biodegradable plastics are made from all-natural plant materials. These can include corn oil, orange peels, starch, and plants. 
• In March, UN member states committed to “significantly reduce” single-use plastics over the next decade. 
• Subsequently many Indian states like Karnataka, Himachal Pradesh, Maharashtra, Tamil Nadu have banned such plastics

(MAINS FOCUS)

ECONOMY

TOPIC: General studies 2 & 3

• Important International institutions, agencies and forums, their structure, mandate.
• Indian Growth & Economy
• Economic Developments

RBI’s monetary policy 

Context

• In its monetary policy review , the Monetary Policy Committee of the RBI decided to cut the repo rate by 35 basis points (bps)
• The RBI’s repo rate has now fallen 110 basis points since February. The RBI also announced some measures to boost economic activity.

What is monetary policy?

• Monetary policy refers to the policy of the central bank i.e., Reserve Bank of India, in matters of interest rates, money supply and availability of credit.
• It is through the monetary policy, RBI controls inflation in the country.
• Monetary policy refers to the use of monetary instruments under the control of the central bank to regulate magnitudes such as interest rates, money supply and availability of credit with a view to achieving the ultimate objective of economic policy.
• RBI uses various monetary instruments like REPO rate, Reverse RERO rate, SLR, CRR etc to achieve its purpose.

Objectives or Goals of Monetary Policy:

The following are the principal objectives of monetary policy:

1. Full Employment:

• Full employment has been ranked among the foremost objectives of monetary policy. It is an important goal not only because unemployment leads to wastage of potential output, but also because of the loss of social standing and self-respect.

2. Price Stability:

• One of the policy objectives of monetary policy is to stabilise the price level. Both economists and laymen favour this policy because fluctuations in prices bring uncertainty and instability to the economy.

3. Economic Growth:

• One of the most important objectives of monetary policy in recent years has been the rapid economic growth of an economy. Economic growth is defined as “the process whereby the real per capita income of a country increases over a long period of time.”

4. Balance of Payments:

• Another objective of monetary policy since the 1950s has been to maintain equilibrium in the balance of payments.

5. Restriction of Inventories:

• Overfilling of stocks and products becoming outdated due to excess of stock often results is sickness of the unit. To avoid this problem the central monetary authority carries out this essential function of restricting the inventories. The main objective of this policy is to avoid over-stocking and idle money in the organization

6. Promotion of Exports and Food Procurement Operations:

• Monetary policy pays special attention in order to boost exports and facilitate the trade. It is an independent objective of monetary policy.

7. Reducing the Rigidity: 

• RBI tries to bring about the flexibilities in the operations which provide a considerable autonomy. It encourages more competitive environment and diversification. It maintains its control over financial system whenever and wherever necessary to maintain the discipline and prudence in operations of the financial system.

Instruments of Monetary Policy:

• The instruments of monetary policy are of two types: first, quantitative, general or indirect(CRR, SLR, Open market operations, bank rate, repo rate, reverse repo rate); and second, qualitative, selective or direct. (change in the margin money, direct action, moral suasion)
• They affect the level of aggregate demand through the supply of money, cost of money and availability of credit. 
• Of the two types of instruments, the first category includes bank rate variations, open market operations and changing reserve requirements. 
• They are meant to regulate the overall level of credit in the economy through commercial banks.

Monetary Policy Committee (MPC)

• Now in India, the policy interest rate required to achieve the inflation target is decided by the Monetary Policy Committee (MPC). MPC is a six-member committee constituted by the Central Government (Section 45ZB of the amended RBI Act, 1934).
• The MPC is required to meet at least four times in a year. The quorum for the meeting of the MPC is four members. Each member of the MPC has one vote, and in the event of an equality of votes, the Governor has a second or casting vote.
• The resolution adopted by the MPC is published after the conclusion of every meeting of the MPC. Once in every six months, the Reserve Bank is required to publish a document called the Monetary Policy Report to explain: 

(1) The sources of inflation and

(2) The forecast of inflation for 6-18 months ahead.

• The 6 member Monetary Policy Committee (MPC) constituted by the Central Government as per the Section 45ZB of the amended RBI Act, 1934. The first meeting of the Monetary Policy Committee (MPC) was held on in Mumbai on October 3, 2016.
• The composition of the MPC as on April 2019 is as follows;

• • Governor of the Reserve Bank of India – Chairperson, ex officio; 
  • Deputy Governor of the Reserve Bank of India, in charge of Monetary Policy.
    One officer of the Reserve Bank of India to be nominated by the Central Board 
  • Dr. Ravindra H. Dholakia, Professor, Indian Institute of Management, Ahmedabad – Member
  • Professor Pami Dua, Director, Delhi School of Economics – Member
  • Shri Chetan Ghate, Professor, Indian Statistical Institute (ISI) – Member

Why does monetary policy matter?

• In any economy, economic activity, which is measured by gross domestic product or GDP, happens by one of four ways. 

• • One, private individuals and households spend money on consumption. 
  • Two, the government spends on its agenda. 
  • Three, private sector businesses “invest” in their productive capacity. 
  • Four, the net exports — which is the difference between what all of them spend on imports as against what they earn from exports.
• Monetary policy essentially answers that question. In every country, the central bank is mandated to decide the cost of money, which is more commonly known as the “interest rate” in the economy. 
• While various factors make it difficult for a central bank to exactly dictate interest rates, as a thumb rule, RBI’s decision on the repo rate sets the markers for the rest of the economy.

What is the repo rate?

• Repo and Reverse repo are short for repurchase agreements between the RBI and the commercial banks in the economy. In essence, the repo rate is the interest rate that the RBI charges a commercial bank when it borrows money from the RBI. As such, if the repo falls, all interest rates in the economy should fall.

But the interest rate for consumer loans has not reduced by 110 bps since February. Why?

• In the real world, the “transmission” of an interest rate cut (or increase) is not a hundred per cent. And that is why, even though when the RBI cut by 35 bps on Wednesday, lay consumers may only receive a much lower reduction in the interest rate on their borrowings. This is due to a lot of factors — but primarily, it has to do with the health of the concerned commercial bank.
• Over the past few years, almost all banks, especially the ones in the public sector, have seen their profits plummet because many of their past loans have turned out to be non-performing assets (in other words, they are not getting repaid).
• To cover for these losses, the banks have to use their existing funds, which would have otherwise gone to common consumers for fresh loans.
• There is another key element that affects the banks’ decision. 
• The reduced repo rate applies only to new borrowings of banks. 
• The banks’ cost of existing funds is higher. Of course, funding costs would eventually come down — but this process would take time. This “lag” in monetary policy is a key variable in determining the efficacy of any rate cut by the RBI. 
• It could take anywhere between 9 and 18 months for the full effect of an RBI decision to reflect in interest rates across the economy.

So, how does RBI decide the interest rate?

• Any central bank has a few main concerns:
• The first is to ensure price stability in the economy.  The interest rate anchors the prices in an economy. The RBI continuously maps prices, inflation (which is the rate of increase in prices), and expectations of inflation (of households) to decide if it should increase or decrease interest rates.
• The other related concern for a central bank is to take care of economic growth For instance, economic growth is anaemic at present and partly as a consequence, the inflation rate has been below 4% for several months now. The RBI is, therefore, cutting interest rates to incentivise people to consume more and businesses to invest more.

Will the rate cut bring investments?

• Investments depend essentially on the “real” interest rate.
• The real interest rate is the difference between the repo rate and retail inflation. 
• When making an investment decision, it is this interest rate that matters. As a variable, it allows an investor to compare the attractiveness of different economies. 

Conclusion:

• So it can be conclude that the implementation of the monetary policy plays a very prominent role in the development of a country. It’s a kind of double edge sword, if money is not available in the market as the requirement of the economy, the investors will suffer (investment will decline in the economy) and on the other hand if the money is supplied more than its requirement then the poor section of the country will suffer because the prices of essential commodities will start rising.

Connecting the dots:

1. What is the purpose of setting up a Monetary policy committee (MPC)? What are its objectives? What is its present composition? Discuss.
2. The ongoing slowdown is cyclical and not structural in nature. Elucidate

ENVIRONMENT

TOPIC: General studies paper 3

• Conservation, environmental pollution and degradation, environmental impact assessment
• Disaster and disaster management.

Centre unveils plan for coastal zone management

Context:

• The Environment Ministry has unveiled a draft plan that will dictate how prospective infrastructure projects situated along the coast ought to be assessed before they can apply for clearance.

Coastal Zones:

• The Coastal zones are defined by the extent of territorial waters up to the high water mark. They are long, narrow features of mainland, islands and seas, generally forming the outer boundary of the coastal domain. 
• The Coastal Zone Management (CZM) is a process of governance that consists of the legal and institutional framework necessary to ensure that development and management plans for coastal zones are integrated with environmental and social goals, and are developed with the participation of those affected.
• Coastal zone management involves managing coastal areas to balance environmental, economic, human health, and humanactivities.

Purpose of Coastal Zone Management

• The goals of the Coastal Management (CZM) are to “preserve, protect, develop, enhance, and restore where possible, the coastal resources.” The purposes of Coastal Zone Management are given below:

1. To maximize the benefits provided by the coastal zone
2. To minimize conflicts and harmful effects of activities upon each other, resources and the environment
3. To promote linkages between sectoral activities
4. To guide coastal area development in an ecologically sustainable fashion

Coastal Regulation Zones

• Coastal stretches of seas, bays, estuaries, creeks, rivers, and backwaters were declared as CRZs under coastal zone regulation notification in 1991.
• CRZs have been classified into 4 zones for the purpose of regulation:
• CRZ-I: includes ecologically sensitive areas, where no construction is allowed except activities for atomic power plants, defense.
• CRZ-II: includes designated urban areas that are substantially built up. Construction activities are allowed on the landward side only.
• CRZ-III: includes relatively undisturbed areas, mainly rural areas. No new construction of buildings allowed in this zone except repairing of the existing ones. However, constructions of dwelling units in the plot area lying between 200-500m of the high tide line is allowed.
• CRZ-IV: includes the water area covered between Low Tide Line and 12 nautical miles seaward. Except for fishing and related activities, all actions impugning on the sea and tidal water will be regulated in this zone.

Environment (Protection) Act, 1986

Enacted in 1986, it is one of the most comprehensive legislations with an intent to protect and improve the environment. Article 48A under the Constitution of India specifies that the State shall endeavor to protect and improve the environment and to safeguard the forests and wildlife of the country. The objectives of this Act are as follows:-

• To protect and improve the environment qualities
• To cover all the problems of environment
• To create an authority with the purpose of environmental protection
• To provide a deterrent punishment to those who endanger human environment, safety and health

The Union Cabinet has approved the Coastal Regulation Zone (CRZ) Notification, 2018 which were last reviewed and issued in 2011.

CRZ Notification 2018 is based on the recommendations of Shailesh Nayak committee.

New Rules under CRZ regulations

• The government notified new CRZ Rules with the stated objectives of promoting sustainable development and conserving coastal environments.
• For the so-called CRZ-III (Rural) areas, two separate categories have been stipulated.
• In the densely populated rural areas (CRZ-IIIA) with a population density of 2,161 per sq km as per the 2011 Census, the no-development zone is now 50 m from the high-tide level, as against the 200 m stipulated earlier.
• In the CRZ-IIIB category (rural areas with population density below 2,161 per sq km) continue to have a no-development zone extending up to 200 m from the high-tide line.
• The new Rules have a no-development zone of 20 m for all islands close to the mainland coast, and for all backwater islands in the mainland.

Integrated Coastal Zone Management (ICZM):

• ICZM aims to improve livelihood of coastal communities and conserve the coastal ecosystem.
• The ICZM plan involves identification of infrastructure requirementsand livelihood improvement means in coastal districts. Conservation of mangroves is among the components.
• The national component of the project includes mapping of the country’s coastline and demarcation of the hazard line.
• It is a World Bank assisted project.
• It is being implemented by the Department of Forests and Environment with assistance from the Union Ministry of Environment, Forests and Climate Change (MoEFCC).
• The National Centre for Sustainable Coastal Management (NCSCM), Chennai, will provide scientific and technical inputs

In news:

• The Environment Ministry has unveiled a draft plan that will dictate how prospective infrastructure projects situated along the coast ought to be assessed before they can apply for clearance.
• The draft Environmental and Social Management Framework (ESMF) is part of a World Bank-funded project.
• The document lays down guidelines for coastal States to adopt when they approve and regulate projects in coastal zones.
• The project seeks to assist the Government of India in enhancing coastal resource efficiency and resilience, by building collective capacity (including communities and decentralised governance) for adopting and implementing integrated coastal management approaches.
• The document was prepared by the Society for Integrated Coastal Management, a Ministry-affiliated body.
• So far three coastal States, namely Gujarat, Odisha and West Bengal, have prepared Integrated Coastal Zone Management Plans with support from the World Bank.

Proposed activities

• The key activities proposed for coastal zone development that consist of investments by States include:

• mangrove afforestation/shelter beds, 
• habitat conservation activities such as restoration of sea-grass meadows, eco-restoration of sacred groves, development of hatcheries, rearing/rescue centres for turtles and other marine animals
• creation of infrastructure for tourism, 
• restoration and recharge of water bodies,
• beach cleaning and development, 
• other small infrastructure facilities.

Conclusion:

• A well-informed science-based coastal zone management strategy embedded in an adequate social, institutional and legal framework, can prevent many future coastal problems.

Connecting the dots

1. Discuss India’s efforts for marine environment conservation and various initiatives related to it

(TEST YOUR KNOWLEDGE)

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

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Q.1) Consider the following statements

1. Researchers from Mexico have created a biodegradable plastic from the juice of the prickly pear cactus 
2. The new material begins to break down after sitting in the soil for a month and when left in water, it breaks down in a matter of days
3. The new biodegradable plastic uses only 30% crude oil inputs unlike traditional plastics which are made from 100% crude oil 

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

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

Q.2) The remains of a super-sized parrot named Heracles inexpectatus has been recovered in which country?

1. Australia
2. Central African Republic
3. Madagascar
4. New Zealand

Q.3) Consider the following statements about National Water Development Agency

1. It is a statutory body set up under the River Boards Act, 1956 
2. Recently it has released report which proposes to divert water from the Godavari, through the Krishna river, to the Pennar basin. 

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) Consider the following statements about Environmental and Social Management Framework (ESMF)

1. The framework will dictate how prospective infrastructure projects situated along the coast ought to be assessed before they can apply for clearance.
2. It was prepared by the Society for Integrated Coastal Management, an Environment Ministry-affiliated body.

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

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