Syllabus: General Studies Paper 3

Context:

Recently, the CBI filed two charge sheets against serving and retired naval officers, and some others, for allegedly sharing details of the ongoing modernisation project of India’s Kilo Class submarines. 

• The Kilo Class comprises imported submarines that are being retrofitted.
• Experts say India has lost a decade in modernising its submarine fleet, while China has marched ahead in its larger naval and more specific submarine capabilities.

Indian Submarine Squad

• Currently, India has 15 conventional diesel-electric submarines, classified as SSKs, and one nuclear ballistic submarine, classified as SSBN.
• Of the SSKs, 
  • four are Shishumar Class, which were bought and then built in India in collaboration with the Germans starting 1980s; 
  • eight are Kilo Class or Sindhughosh Class bought from Russia (including erstwhile USSR) between 1984 and 2000; and 
  • three are Kalvari Class Scorpene submarines built at India’s Mazagon Dock in partnership with France’s Naval Group, earlier called DCNS.
• The SSBN, INS Arihant, is a nuclear-powered ballistic missile submarine, built indigenously. 
  • A second SSBN, INS Arighat, an upgraded version of Arihant, is likely to be commissioned within the next few months.
• Most of India’s submarines are over 25 years old, and many are getting refitted.

The history of India’s submarine acquisition

• India got its first submarine, INS Kalvari of the Foxtrot Class, from the USSR in December 1967. By 1969, it had four of those. 
• During the 1971 war with Pakistan, the submarines were baptised into war. 
• Between 1971-74, India bought four more Foxtrot Class submarines.
• The eight Foxtrot submarines were a “good number at that point of time” and were doing a great job, as contemporary as we could operate at that time.
• After 1974, India did not get new submarines for a decade. 
• In 1981, it signed a contract to buy two Type 209 submarines from West Germany, while two others were to be assembled at Mazgaon Dock. 
  • These formed the Shishumar Class, the first of which was commissioned in 1986.
• Parallelly, Russia offered India its Kilo Class submarines. 
• Between 1986 and 1992, India got eight submarines from the USSR and the two from Germany. 
• In 1992 and 1994, two German submarines built in India were also commissioned, adding up to 12 new submarines in eight years from 1986. 
• By 1995, we probably had amongst the most modern submarine arms in the world.
• India bought two more Kilo Class submarines from Russia in 1999 and 2000, taking the total submarine fleet to around 20.
• Soon after, the older Foxtrots started getting decommissioned. Of the ten Kilo Class submarines, INS Sindhurakshak sank off Mumbai after explosions caused by fire. 
• Last year India gifted INS Sindhuvir to Myanmar.

Delays in modernisation

• The 30-year plan (2000-30) for indigenous submarine construction, approved by the Cabinet Committee on Security in 1999, envisaged two production lines of six submarines each, built in India in partnership with a foreign Original Equipment Manufacturer (OEM). 
• The projects were called P-75 and P-75I.
• The 30-year plan anticipated that India would get the 12 new submarines by 2012-15. 
• Subsequently, India would make 12 of its own by 2030, taking the fleet size to 24, with the older submarines getting decommissioned.
• The intention was that India would maintain a force level of 18 to 20 submarines at any given time. 
• But the contract for P-75 was signed only by 2005, with France’s DCNS, now the Naval Group. Ideally the contract for P75I should have also happened then.

The current projects

• Of the six being built, P-75 has delivered three Kalvari Class Scorpene submarines so far. 
• P-75I is yet to take off; the first Request for Information was issued in 2008, then again in 2010, and the Request for Proposal was finally issued in July this year.
• The project will be India’s first under the Strategic Partnership Model, which came up in 2015. 
• The government will give the contract to an Indian Strategic Partner, which will then partner with a foreign OEM.
• The two selected SPs are MDL and Larsen and Toubro; the five selected OEMs are France’s Naval Group, Germany’s ThyssenKrupp Marine Systems, Russia’s ROE, South Korea’s Daewoo Shipbuilding and Marine Engineering, and Spain’s Navantia. 
• However, bids are yet to be finalised. The earliest that the first submarine under the project can be commissioned will be around 2032, according to experts.
• P-75, too, has been delayed. While the first boat should have been commissioned in 2012, it was commissioned in December 2017.

China’s capability, and worry for India

• India needs more submarines for two reasons. 
  • First, we need it for our own maritime security. 
  • Second, the Chinese are going to be positioning a lot more ships and submarines in the Indian Ocean in the coming years.
  • China is giving Pakistan eight submarines and four destroyers, which can be used as proxy by China. 
  • India need to handle that very soon, and move on to the P75I as fast as we can.
• According to a 2020 report by the Pentagon, China currently operates four SSBNs and is fitting two additional hulls. 
• It has six SSNs and, and 50 diesel-powered attack submarines (SSs). 
• According to the report, the Chinese Navy will likely maintain between 65 and 70 submarines through the 2020s, replacing older units with more capable units on a near one-to-one basis.
• China has constructed 12 nuclear submarines in the last 15 years. It is expected to have up to eight SSBNs by 2030, the report said.

Nuclear Submarine coveted nature

• SSNs have infinite capacity to stay dived. 
• As they are not propelled by batteries, they need not emerge for charging by a diesel engine. 
• Propelled by a nuclear-powered engine, these submarines only need to come to the surface for replenishing supplies for the crew.
• SSNs are also able to move faster underwater than conventional submarines. 
• All this allows a navy to deploy them at farther distances, and quicker. 
• They are like the fighter jets of the underwater world.
• India is among six nations that have SSNs, alongside the US, the UK, Russia, France and China. 
• India got its first SSN in 1987 from the Soviet Navy, which it rechristened INS Chakra, which was decommissioned in 1991. 
• In 2012, India got another Russian SSN on a ten-year lease, called INS Chakra 2, which has since been returned to Russia.
• The government has also decided that of the 12 submarines to be built indigenously after the P75 and P75i projects, six would be SSNs instead of SSK. 
• India is taking two SSNs on lease from Russia, but the first of them is expected to be delivered only by 2025.
• But, during this time India has developed its own SSBNs, INS Arihant and INS Arighat. 
• Unlike the other submarines, the SSBNs are strategic programmes and fall under the Strategic Forces Command, the tri-services command responsible for India’s nuclear weapons. 
• That’s not a warfighting machine. It should not be counted as a submarine warfighting capability, because it is a deterrent.
• India is building at least two larger SSBNs that will have bigger missiles, called S4 and S4* projects. The four SSBNs are expected to be commissioned before 2030.

Syllabus: General Studies Paper 1

Context:

The Supreme Court reserved its judgment on an appeal by the Ministry of Defence (MoD) for relaxing its order specifying road width under the CharDhamMahamargVikasPariyojana (Char Dham Highway Development Project) of the Ministry of Road Transport and Highways.

CHAR DHAM HIGHWAY PROJECT

• Objective:

• • • Widening of roads up to ten meters to enhance connectivity to Char-Dham shrines- Yamunotri, Gangotri, Badrinath, Kedarnath.
    • Development 889 km National Highways

• Implementation Agencies

• • • Public Works Department (PWD, Uttarakhand)
    • Border Roads Organization (BRO)
    •  National Highway and Infrastructure Development Corporation Ltd (NHIDCL)

• Chamba Tunnel-

• • Border Roads Organisation (BRO) achieved the  milestone by digging 440 m long Tunnel below Chamba town on Rishikesh-Dharasu road Highway (NH 94)

NEED OF DEVELOPMENT IN THE REGION

• Security Interests

• • • With China continuously scaling up its building activities along the Line of Actual Control (LAC), the Indian Army needs to prepare itself for any unforeseen circumstances in future.
    • The recent report by the US Department of Defence on the Chinese military also highlights the strength of the People Liberation Army and its increasing hold along Indo- China border
    • The region has terrain & altitude where the defence of the nation is extremely important. The mistakes of 1962 cannot be repeated, building and widening of roads is necessary to take up artillery and missiles
    •  Supreme Court also observed that the defence of country cannot be compromised in name of environmental risks, there needs to be a balance 

• Socio-Economic interests

• • • The first phase of the forest where’s the extraction for development which led to widespread deforestation resulting in landslides and deprivation among people dependent on the forest for survival
    • This led to the Forest Conservation Act (1980) and Supreme Court directions to check forest-based industries. This resulted in a decline in state revenue from the forest.
    • The development in the region is required to provide employment opportunities and a decent standard of living to people

• Basic facilities for people

• • • Providing people with adequate health and education facilities infrastructure is a prerequisite.

• Multiplier Effect

• • • Increasing focus on infrastructure and connectivity would multiply into various benefits across the different sectors and boost the growth of Himalayan states

• Viable & sustainable forest-based economy

• • • To reap the benefits of unique Himalayan products there is a need for development in the region like storage facilities & efficient supply chain mechanisms ‘

• Enhance connectivity

• • To increase accessibility and connectivity due to geographical and topographical factors, there is a need for construction projects like the Atal Tunnel which ensures all-weather connectivity

THREATS TO HIMALAYAN ECOSYSTEM

• Affects the forests and also the forest-based economy

• • • The first phase of forest-  the extraction for development which led to widespread deforestation resulting in landslides and deprivation among people dependent on the forest for survival
    • This led to activate of the forest conservation act 1980 and supreme Court directions to check forest-based industries
    • This resulted in the decline of state revenue from the forest. 

• National environment policy 2006

• • • According to the policy, several measures to conserve the mountain ecosystems including land use planning, watershed management, farming methods and promotion of eco-friendly tourism
    • Talked about best practice norms for infrastructure construction in the mountain regions to minimise the damage to the sensitive ecosystem
    • To promote tourism and local employment one cannot turn blind eye to the danger various projects unleash on the Himalayan ecosystem

• Geographical Factors 

• • • The himalayas are young fold mountains  that are tectonically active Kingdom of a guide and sensitive to the development activities
    • Himalayan landscape with steep slopes and shop gradients is not inherently immune to human engineering

• Threat to Mankind

• • • It is a transcontinental mountain range facing various environmental issues with huge implications for survival for one-third of all humans
    • Being called the third pole it is the source of Asia major rivers and it is a key driver in regulating the climate change

• Melting of glaciers

• • • Because of increase in temperatures and melting of glacier, will hamper the rivers and trigger massive  seasonal flooding followed by dry spells
    • Uttarakhand would lose approximately 70-99 % of glaciers by 2100

• Environmental Outlook and ethos

• • • Human induced changes to the ecological parameters would have an impact on stream runoff erosional as well as depositional processes
    • Indian Himalayan region is a home to 1000 species of flowering plants which is about 50% of all flowering plants of India, with the vast green cover it is a major sink of carbon dioxide
    • Attention towards the vulnerability of biological and physical features of the Himalayan mountain system is the need of the hour

• Forest loss

• • • In the Char Dham project, about 500 8.6 hectares of forest area would be diverted to non-forestry purposes
    • Around 33000 to 43000 trees would be cut down to build roads
    • According to estimates, Uttarakhand would take 40-45 years to recover from this loss
    • Road Edge Effect- it is an ecological phenomenon that wraps wide areas and creates ecological pressures on nearby flora and fauna 

• Road blockages and landslides

• • Cutting out trees soil rocks from hillsides would make the entire slope unstable
  • Without fresh plantations, the bare hillsides would be more vulnerable to disasters like landslides

Syllabus: General Studies Paper 3

Context:

India will achieve net-zero emissions by 2070, Prime Minister said in CoP Glasgow. He was speaking at the ‘High-Level Segment for Heads of State and Government’ during the UNFCCC’s 26th Conference of Parties (COP).

• India also raised the Nationally Determined Contribution (NDC) of achieving 450-gigawatt non-fossil energy capacity to 500 gigawatt, among other commitments including reducing carbon emissions.
• International commentators expressed disappointment that India was promising nets zero-emissions only by 2070 instead of 2050. 

Key takeaways from COP26

• PM announced India’s four other commitments — all by 2030. He called them the “gift of five elixirs” (panchamrit).
  • These are: 
    • reducing Emissions Intensity (EI), or emissions per unit of GDP, by 45% in 2030 relative to 2005 levels; 
    • cutting absolute emissions by one billion tonnes, presumably from projected business-as-usual (BAU) 2030 levels; 
    • 500 GW (1 Gigawatt = 1,000 Megawatts) of non-fossil fuel installed power generation capacity by 2030; 
    • 50% electricity generation from renewable sources by 2030; and 
    • net-zero emissions by 2070.
  • The PM also outlined the Indian Railways’ commitment of net-zero by 2030 and its ambition of installing 450 GW of renewable energy capacity.
• Climate finance: To achieve its climate goals, PM said India expected developed countries “to make $1 trillion available as climate finance as soon as possible”. 
  • Today, as we track the progress on climate mitigation, the same way we must track climate finance.
  • Significance: The commitment is significant since India is the third-largest emitter of carbon dioxide in the world, after China and the US.
  • The most substantive new commitment relates to the 1-billion-tonne reduction in its total projected emissions from now until 2030. This is the first time that India has taken any climate target in terms of its absolute emissions.
  • Now India demands the US $1 trillion in climate finance as soon as possible and will monitor not just climate action but also climate finance.
• One Sun One World One Grid group.
• India and the United Kingdom announced an initiative to tap solar energy and have it travel seamlessly across borders.

• India launched another international climate initiative called Infrastructure for Resilient Island States (IRIS), aimed at providing technical, knowledge and financial assistance to small island nations with the help of developed countries. 
  • Such an initiative should be undertaken in India too, where coastal erosion, sea-level rise, and urban flooding due to extreme rainfall exacerbated by haphazard urbanisation are acquiring threatening dimensions.
• Forest Declaration: It is an ambitious declaration initiated by the United Kingdom to “halt deforestation” and land degradation by 2030. 

• India did not sign the Glasgow Leaders’ Declaration on Forests and Land Use. 
• It objected to “trade” being interlinked to climate change and forest issues in the agreement.
• The declaration has over 105 signatories including the UK, US, Russia and China.
• India, Argentina, Mexico, Saudi Arabia and South Africa are the only G20 countries that did not sign the declaration.
• Twenty-eight governments have also committed to removing deforestation from the global trade of food and other agricultural products such as palm oil, soya and cocoa.

Global Methane Pledge: The United States and the European Union have jointly pledged to cut emissions of the greenhouse gas methane by 2030. 

• They plan to cut down emissions by 30% compared with the 2020 levels. 
• At least 90 countries have signed the Global Methane Pledge, with India and China abstaining so far. 
• Methane accounts for about a fifth of global greenhouse gas (GHG) emissions and is about 25 times as potent as carbon dioxide in trapping heat in the atmosphere. 
• India is the third-largest emitter of methane, primarily because of the size of its rural economy and by virtue of having the largest cattle population. 
• India has stated earlier that it plans to deploy technology and capture methane that can be used as a source of energy. 

Reviewing India’s goals:

The new policy paradigm asserted that although India was not a part of the problem, it was now willing and able to contribute to reduction efforts in global emissions. India’s pledge at Glasgow adheres to the Paris Agreement decision to increase emission cuts to tackle the rapidly escalating climate crisis.

• Emissions reduction by one billion tonnes by 2030: India’s current annual emissions are around 2.8 billion tonnes and projected to reach about 4.5 billion tonnes in 2030 on a BAU basis. 
  • The pledged reduction would be a substantial 20%, comparing favourably with several developed country targets. 
• Emission intensity: Both the 33%-35% decline promised in Paris, and the updated 45% reduction by 2030, are quite achievable and par for an emerging economy.
• On installed power generation capacity, India’s extant NDC had incorporated the Government’s declared goal of 175 GW from renewable energy (RE) sources by 2022. 
  • India has reached only around 101 GW of solar and wind due to numerous constraints. 
  • If one adds large hydro and nuclear, both now considered renewable, the current RE installed capacity is about 150 GW or just under 40% of the total. It almost achieves the NDC target for 2030 showing under-projection. 
  • The Central Electricity Authority (CEA) in its 2020 Report on Energy Mix for 2029-30 has projected around 525 GW or 64.3% non-fossil fuel installed capacity including 280 GW Solar and 140 GW wind. 
  • Only 267 GW is projected to come from coal and lignite, compared to 203 GW in 2019, so almost all of India’s future growth of capacity is to come from RE. 
  • India’s Glasgow pledge of 50% electricity from RE by 2030 is just a tad more than the CEA projection of 44.7%. 

These commitments may prove difficult as currently witnessed in the coal shortage crisis, combined with the need for storage and grid stability.

Syllabus: General Studies Paper 1

Context:

Tamil Nadu is suffering the fury of the northeast monsoon with heavy floods forcing a near shutdown in Chennai. 

• At least four people have died in the city after rainwater inundated large parts of the residential areas and commercial hubs. 
• It is due to the low-pressure formation in the Bay of Bengal, which caused the heavy downpour.
• As in 2015, an extreme weather event is blamed for the flooding — more heavy rainfall is predicted. 
• Climate experts have warned that such extreme weather events are likely to be frequent in the coming years. 
• Chennai is built on flat coastal floodplains. 
• Wetlands – including natural and artificial drains such as rivers, streams and canals, and water bodies such as ponds, lakes and backwaters – are the city’s insurance against heavy rains and cyclonic storm surges.

Concerns:

The impact of climate change is worsened due to poor reservoir management. The root cause of the city’s distress during rains lies in mismanagement of its water bodies. The unplanned growth of the city has led to the filling up of lakes and tanks and shrunk wetlands. 

• A parliamentary committee that enquired into the cause of the 2015 floods was categorical in its report that “encroachment of lakes and riverbeds played a major role in causing massive floods in Chennai”. 
  • Local mafia is involved in the “illegal business of usurping water bodies for real estate business”. 
  • A mass rapid transport system has severely restricted the flow in Buckingham Canal, which was designed also as a protective barrier against floods and sea ingress.
  • Over 300 lakes, tanks and canals have disappeared in the past decades and, according to the administration, over 1.5 lakh illegal constructions choke the cityscape. 
• Uncontrolled urbanisation: The city’s built-up area grew nine-fold – from 47sq km in 1980 to 402sq km in 2012 – even while area under wetlands declined from 186sq km to 71sq km during the same period.

Chennai will have to reclaim at least a part of its lost water spaces and preserve whatever is left, including its two rivers which have been reduced to large drains, in order to better withstand the vagaries of climate-change-induced weather events.

Way forward for urbanisation in India:

• Wetland policy: We need to start paying attention to the management of our wetlands by involving local communities. 
  • In most of our lakes, the shallow ends, which often lie beyond the full tank level, have disappeared. These shallow ends are called wetlands. 
  • They are sometimes owned by private individuals, other times existing as ecological commons. 
  • Regardless of ownership, land use on even this small scale needs to be regulated by development control.
• Detailed documentation of wetlands and watersheds: Urban watersheds are micro ecological drainage systems, shaped by contours of terrain.
  • We need to consider natural boundaries such as watersheds instead of governance boundaries like electoral wards for shaping a drainage plan. 
  • The Metropolitan Development Authorities, National Disaster Management Authority, State revenue and irrigation departments along with municipal corporations should be involved in such work together.
• Porous building materials: Our cities are becoming increasingly impervious to water, not just because of increasing built up but also because of hard, non-porous construction material that makes the soil impervious. 
• To improve the city’s capacity to absorb water, bioswales and retention systems, permeable material for roads and pavement, drainage systems can be used. It will allow storm water to trickle into the ground, green roofs and harvesting systems in buildings. 
• Making Sponge cities : They absorb the rain water, which is then naturally filtered by the soil and allowed to reach urban aquifers. 
  • This water can be treated easily and used for city water supply. 
  • This implies building contiguous open green spaces, interconnected waterways, and channels and ponds across neighbourhoods that can naturally detain and filter water. 
  • It implies support for urban ecosystems, bio-diversity and newer cultural and recreational opportunities.
  • These can all be delivered effectively through an urban mission along the lines of the Atal Mission for Rejuvenation and Urban Transformation (AMRUT), National Heritage City Development and Augmentation Yojana (HRIDAY) and Smart Cities Mission. 
  • Investments can only be done in a mission mode organisation with the active participation of civil society organisations at the metropolitan scale. 
• Ban against terrain alteration: Builders, property owners, and public agencies have been flattening terrain and altering drainage routes. This causes irreversible damage.
  • Terrain alteration needs to be strictly regulated and a ban on any further alteration of terrain needs to be introduced. 
• Stop the blame: Acknowledging the role of different actors in the city can create a practical space to begin this work. The constant search for a scapegoat to blame should stop.

We need to urgently rebuild our cities such that they have the sponginess to absorb and release water. Doing so will not just help control recurring floods but also respond to other fault lines, provide for water security, more green spaces, and will make the city resilient and sustainable. 

Syllabus: General Studies Paper 3

Context:

Recently, the Reserve Bank of India gave license to National Asset Reconstruction Company Limited (NARCL), popularly known as a bad bank.

About National Asset Reconstruction Company Limited (NARCL)

• The plan is to create a bad bank to house bad loans of ₹500 crore and above, in a structure that will contain an asset reconstruction company (ARC) and an asset management company (AMC) to manage and recover dud assets.
• The new entity is being created in collaboration with both public and private sector banks.
• The proposed bad bank will have a public sector character and majority ownership is likely to rest with state-owned banks.
• The objective of the bad bank is to establish a liquid market for Non-Performing Assets (NPAs) so that banks will be able to sell their NPAs at a reasonable price. 
• The biggest advantage of NARCL would be an aggregation of identified NPAs (non-performing assets). 
• NARCL, through its service company/operational entity India Debt Resolution Company Ltd (IDRCL), will manage the resolutions of these NPAs.
• The NARCL will acquire these stressed assets through 15 per cent cash and 85 per cent security receipts (SRs) in a phased manner. ₹90,000 crore of the asset will be managed in the first phase.
• A government guarantee will back the SRs for a maximum amount of ₹30,600 crore, and the guarantee will be valid for a resolution period of five years.

Initiatives for NPAs recovery in India

• Debt recovery tribunals under the Recovery of Debts Due to Banks and Financial Institutions (RDDBFI) Act in 1993
• Asset reconstruction companies (ARCs) as a part of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI Act) in 2002, and 
• The Insolvency and Bankruptcy Code (IBC) in 2016.

Need for a Bad bank

• Currently, the Indian banking system has one of the highest gross non-performing assets (GNPA) to total asset ratio globally. 
  • Post-covid stress scenarios estimated by the RBI pegs it at an aggregate GNPA ratio in the range of 12.5- 14.7 per cent.
• Lack of liquidity: The secondary market of the Security Receipts (SRs) issued by the existing ARCs is quite illiquid. 
  • There is a dominance of the selling-bank in holding SRs, resulting in a limited demand for SR by other qualified investors.
  • The main reason for the limited demand is the average low debt recovery rate of only 27.8 per cent, with the most recent 2019-20 showing a debt recovery rate of 26.7 per cent.
• The NARCL is essentially an ARC with only two distinguishing features
  • (i) NARCL is intended for dealing in big sized tickets, and 
  • (ii) NARCL has a partial government guarantee.

Challenges for Bad Bank

• International examples show that the effectiveness of ARCs hinges on: 
  • (i) a focused mandate for setting up the ARCs, 
  • (ii) limited lifespan of the ARC, 
  • (iii) market-based resolution of NPAs.
• No fixed life span: NARCL has a focused mandate as stated in its proposal to acquire ₹2 lakh crore worth of stressed assets, but the absence of a clause about the lifespan of NARCL may lead to a moral hazard problem. 
  • Evergreening of Bad loans: Public sector banks (PSBs), who own 51 per cent stake in NARCL, may continue buying their own stressed assets through NARCL leading to the propagation and evergreening of bad loans.
• The government guarantee of ₹30,600 crore is insufficient in providing liquidity and creating a market for the NPAs.

Way forward:

• Specific mandate for the bad bank: A bad bank must have a specific, narrow mandate with clearly defined goals. Transferring NPLs to a bad bank is not a solution in itself. There must be a clear resolution strategy. 
• Sunset clause: Government should address the lifespan issue of NARCL in the form of a sunset clause; a bad bank for perpetuity will pose long-term risks to the financial stability of a country, like Huarong in China.
• There should be a fair and transparent mechanism while setting the haircut on the stressed assets by the NARCL.
  • A haircut, in this context, refers to the shortfall in recovery of the creditors in comparison to their claims submitted before the insolvency professional, as part of the insolvency resolution process of a borrower.
• Minimizing exposure to bad loans: Indian banks remain exposed to these bad loans even after they are transferred to asset reconstruction companies (ARCs). 
  • To address this problem, RBI has tightened bank provisioning while liberalising foreign portfolio investment norms. 
  • Policymakers must ensure that the creation of the NARCL does not reverse this trend.
• Removing multiple ARCs: The resolution of bad loans should happen through a market mechanism and not through a multitude of bad banks. 
  • In India, the Narasimham Committee (1998) had envisaged a single ARC as a bad bank. 
  • Yet, the SARFAESI Act, 2002 created multiple, privately owned ARCs. 
  • ARCs should be allowed to purchase stressed assets from mutual funds, insurance companies, and bond investors. 
• The pricing mechanism should ensure that the net asset value (NAV) of the SRs is fairly priced, which will boost the participation and liquidity in the SR market.

While setting up a bad bank in the form of NARCL is a step in the right direction towards financial sector reforms; NARCL is just a palliative; it is neither a cure nor does it prohibit bad loans. Unless there is a strong political will to recognise bad loans and support legal infrastructure to address wilful defaulters, setting up a bad bank may become a moot point.

Syllabus: General Studies Paper 2

Context:

Recently the Defence Secretary of India stated that a free, open and inclusive maritime region, where legitimate interests of all nations must be respected, is imperative to achieving high growth.

Background

• The Navy chiefs and heads of maritime agencies of Bangladesh, Comoros, Indonesia, Madagascar, Malaysia, the Maldives, Mauritius, Myanmar, the Seychelles, Singapore, Sri Lanka and Thailand are taking part in the conclave. 
• The theme for this year’s edition is “Maritime security and emerging non-traditional threats: a case for proactive role for IOR Navies”.
• India hoped that its maritime neighbours understood, and were sensitive to, India’s “legitimate maritime security concerns”.

Concerns raised in the conclave

• India cited that the “Unprecedented expansion” of conventional Navies could start a “new genre” of arms race.
• Region cannot ignore the non-traditional threats, and the impact of expansion at an unprecedented speed of conventional Navies in the Pacific. 
• Indian Ocean Region (IOR) nations are also witnessing enhancement of certain maritime presence and passages in the region, which may not always be innocent. The negative effects of such rapid expansion are felt far beyond the Pacific.
• China has not only increased its forays into the Indian Ocean Region but has also set up a base in Djibouti and is expanding its Navy at an unprecedented rate.
• The joint coastal radar surveillance systems in coordination with countries in the region and other cooperative efforts. 
• Disaster relief
  • While seas open the doors for economic progress, the region is one of the most disaster-prone areas causing enormous destruction. 
  • Listing out several instances where the Navy was the first responder in case of natural disasters. 
  • The Navy would continue to work for Humanitarian Assistance and Disaster Relief as first responder and net security provider.

India’s request to the nations of the region

• India emphasis on working with its partners on improving Exclusive Economic Zones (EEZ) surveillance.
• India has supplied equipment, vessels and aircraft to friends like Vietnam, Mozambique, the Maldives, Mauritius, Seychelles, Comoros, Bangladesh and Myanmar. 
• India is willing to work with partners in upgrading maritime hardware and software.
• The Navy chief laid emphasis on common efforts on information exchange for maritime domain awareness in the region and capacity building. 
  • India’s efforts are spearheaded by the Information Fusion Centre for IOR (IFC-IOR) located in Gurugram which also has several international liaison officers.
  • For a secure and prosperous future, it was important to adhere to international rules and laws and understand each other’s interests and sensitivities and act accordingly.
• India was in the process of making a Standard Operating Procedure for dealing with disasters in the Asia-Pacific which would be shared with all nations concerned. 
• India also hopes this will benefit our collective preparedness to deal with these calamities.

Syllabus: General Studies Paper 2

Context:

India’s National Security Advisor has invited his counterparts from Pakistan, Iran, Central Asia, Russia, and China to join the discussion on Afghanistan. 

• This week’s consultations in Delhi on the crisis in Afghanistan among the region’s top security policymakers, following the US withdrawal, is part of developing a Eurasian strategy. 
• Pakistan’s reluctance to engage with India reinforces the urgency of an Indian strategy to deal with Eurasia.

Indo-pacific and Eurasia

• The Indo-Pacific describes the long stretch of tropical waters from the east coast of Africa to the central Pacific.
  • After years of self-doubt, Delhi has made the Indo-Pacific integral to India’s foreign and security policies. 
  • The strategic alliance Quad or the Quadrilateral forum that brings India together with Australia, Japan and the US, highly impacts the Indo-Pacific debate. 

• Eurasia is the name of a tectonic plate that lies under much of Europe and Asia. 
  • India must now devote high energy to the development of a “Eurasian” policy. 
  • If the Indo-Pacific is about Delhi’s new maritime geopolitics, Eurasia involves the reorientation of India’s continental strategy.
  • As in the Indo-Pacific, so in Eurasia, there is no shared international understanding of what constitutes the region. 
  • In Russia’s definition, Eurasia covers the former territories of the Soviet Union, which collapsed in 1991.
  • It is about Russia’s political claim to a sphere of influence in its “near abroad”. 
  • Then there are various older terms like “inner Asia” and “Central Asia” that cover parts of the region. 
  • There is a deep connection between Muslim Central Asia and West Asia, therefore the term “Greater Middle East” is used to describe parts of this region.
  • For India it makes sense to use the broadest possible definition of Eurasia in reimagining the region.

Dynamics of Eurasian politics

• The most important development in Eurasia today is the dramatic rise of China and its growing strategic assertiveness, expanding economic power and rising political influence. 
• Beijing is 
  • adopting muscular approach to the long and disputed border with Bhutan and India, 
  • hoping for security presence in Tajikistan, 
  • actively searching for a larger role in Afghanistan, and a greater say in the affairs of the broader sub-Himalayan region 
• As the world’s second-largest economy, China’s commercial influence is felt across the world. 
• Physical proximity multiplies China’s economic impact on the inner Asian regions.
• The impressive expansion of China’s Belt and Road initiative across central Asia and Russia, onto the shores of the Atlantic, and Europe’s growing economic interdependence with China have added to Beijing’s powerful support system in Eurasia. 
• China is deepening its alliance with Russia. Russia’s disputes with Europe and America have increased Moscow’s reliance on Beijing.
• Shift in USA’s Eurasian policy

• Washington has begun to rethink its strategic commitments to Eurasia. The US withdrawal from Afghanistan is just the beginning of this rethinking.
• Europe has had a massive deployment of US military resources since the Second World War. Washington and Europe are now in the middle of an important debate on how to rebalance the trans-Atlantic responsibilities for Europe’s collective defence.
• Europe must necessarily take on a larger regional Eurasian security role. More broadly, regional powers are going to reshape Eurasia.

Significance of Indo-Eurasia relations

India has certainly dealt with Eurasia’s constituent spaces separately over the decades. What Delhi now needs is an integrated approach to Eurasia. Like the Indo-Pacific, Eurasia is new to India’s strategic discourse.

• Cultural significance: There are references to India’s ancient civilisational links with Eurasia. The collaboration between the Sangha and the Shreni in the Buddhist era produced lasting interaction between the two regions. 
• Historical ties: The arrival of the British in India and the consolidation of the Raj as a territorial entity in the subcontinent saw the outward projection of India’s influence into Central Asia. 
• British rivalry with Russia during the Great Game in the 19th and early 20th centuries put Eurasian geopolitics at the top of undivided India’s security agenda. The Great Game was a political and diplomatic confrontation that existed for most of the 19th century and beginning of the 20th century between the British Empire and the Russian Empire over Afghanistan and neighbouring territories in Central and South Asia. It also had direct consequences in Persia and British India.
• The Partition of the subcontinent: This event physically disconnected India from inner Asia. It also cut India off from Eurasian geopolitics. 

Challenges:

• India will surely encounter many regional contradictions in each of the three areas — between and among America, Europe, Russia, China, Iran, and the Arab Gulf. 
• Pakistan is the geographic limitation and a challenge to an expanded Indian role in Eurasian geopolitics.
  • Turkey’s alliance with Pakistan is hostile to Delhi.
• India’s drift towards Russia: Before independence, many Indian nationalists turned to Europe to secure the nation’s liberation from British colonialism. 
  • After independence, Delhi’s drift towards an alliance with Moscow saw India neglect Europe’s strategic significance. 

As in the Indo-Pacific, so in Eurasia, Delhi should not let these contradictions hold India back.

Syllabus: General Studies Paper 3

Context:

The World Trade Organization (WTO)’s 12th Ministerial Conference (MC12) will be convened in Geneva, Switzerland. Earlier it was scheduled to be held in Kazakhstan (June 2020) but postponed due to the novel coronavirus pandemic).

• MC12 needs to consider how the economically weaker countries “can secure a share in the growth in international trade according to  the needs of their economic development, 
• It is an objective that is mandated by the Marrakesh Agreement Establishing the World Trade Organization.
  • The Marrakesh Agreement of 1994 is the culmination of the GATT’s Uruguay Round that was introduced in 1986 and led to the establishment of the World Trade Organisation (WTO). 
  • The General Agreement on Tariffs and Trade (GATT) 1994 is an international treaty binding upon all WTO Members. It is only concerned with trade in goods.
  • The General Agreement on Tariffs and Trade (GATT) traces its origins to the 1944 Bretton Woods Conference.
  • On 1 January 1995, the WTO replaced GATT, which had been in existence since 1947, as the organization overseeing the multilateral trading system.

Key issues:

• • Fisheries: The current drafts on this issue are completely unbalanced as they do not provide means to rein in large-scale commercial fishing that are depleting fish stocks the world over. It is threatening the livelihoods of small fishermen in countries such as India.
  • E-commerce: In recent months, the proposal by the members of the Organisation for Economic Co-operation and Development and the G-20 members to introduce global minimum taxes on digital companies has made headlines. 
    • Discussions on e-commerce have been held in the WTO since 1998 after the adoption of the Ministerial Declaration on Global Electronic Commerce. WTO members had agreed to continue the practice of not imposing customs duties on electronic transmissions. 
    • The more substantive outcome was the decision to “establish a comprehensive work programme” taking into “account the economic, financial, and development needs of developing countries”.
    • Currently “development needs of developing countries”, is entirely missing from the text document that is the basis for the current negotiations. 
    • On the negotiating table are issues relating to the liberalisation of the goods and services trade, and guarantee for free flow of data across international boundaries. This is all aimed at facilitating expansion of businesses of e-commerce firms. 
    • The sole objective of the negotiations on e-commerce is to facilitate expansion of e-commerce firms.

• IPRs and vaccine issue

• Intellectual Property Rights (IPRs) protected using the provisions of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) are formidable barriers to ensuring equitable access to vaccines. 
• Pharmaceutical companies controlling the global markets have used monopoly rights granted by their IPRs to deny developing countries access to technologies and know-how. 
• This undermines the possibility of production of vaccines in these countries. 
• The involvement of developing countries in vaccine production could have increased supplies of affordable vaccines to the low-income countries. 
• Availability of vaccines remains a critical problem in these countries even after a year since the first dose of COVID-19 vaccine was administered. 
• Recent statistics show that until now, a mere 4.1% of the population in low-income countries have received at least one dose of the vaccine.
• India and South Africa had tabled a proposal in the WTO in October 2020, for waiving enforcement of several forms of IPRs on health products and technologies useful for COVID-19 treatment. 
  • By doing so, barriers created by IPRs to timely access to affordable medical products could be removed. 
  • This proposal, supported by nearly two-thirds of the organisation’s membership, was opposed by the developed countries batting for their corporates. 

Divisions over investment: The current focus of the WTO to promote the global interests of oligopolies is the initiative for the adoption of an investment facilitation agreement. An oligopoly is a market form wherein a market or industry is dominated by a small group of large sellers.

• In 2001, the Doha Ministerial Declaration had included a work programme on investment but developing countries were opposed to its continuation because it favoured expanding the rights of foreign investors through a multilateral agreement on investment. 
• Its ultimate objective was to bind host governments into a multilaterally agreed commitment to comprehensively protect investor interests.

Concerns:

• Besides the bias in favour of global oligopolies, the current negotiating processes in the WTO are fundamentally flawed. 
• The negotiations on e-commerce and investment facilitation are being conducted not by a mandate given by the entire membership of the WTO in a transparent manner.
• Instead, these negotiations owe their origins to the so-called “Joint Statement Initiatives” (JSI) in which a section of the membership has developed the agenda with a view to producing agreements in the WTO. 
• This will then be offered to the rest of the member nations on a “take-it-or-leave-it” basis. 
• This entire process is “detrimental to the very existence of a rule-based multilateral trading system under the WTO”.

Recent WTO estimates show that global trade volumes could expand by almost 11% in 2021, and by nearly 5% in 2022, and could stabilise at a level higher than the pre-COVID-19 trend. The buoyancy in trade volumes has played an important role in supporting growth in economies such as India where domestic demand has not yet picked up sufficiently. Therefore, these favourable conditions provide an ideal setting to revisit trade rules and to agree on a work programme for the organisation, which can help maintain the momentum in trade growth.

Syllabus: General Studies Paper 2

Context:

The trilateral security agreement between Australia, the United Kingdom and the United States (AUKUS) continues to be in the news. 

• AUKUS is based on a shared commitment of its three members to deepening diplomatic, security and defence cooperation in the Indo-Pacific to meet the challenges of the 21st century. 
• China has criticised AUKUS as an “exclusive bloc” that gravely undermines regional peace and security and reflects a Cold War mentality. 

The reason behind the formation of AUKUS

• The rise of China, its rapid militarisation and aggressive behaviour, is the trigger behind AUKUS.
• Historical defence partnerships: The transfer of sensitive submarine technology by the U.S. to the U.K. is an arrangement based on their long-standing Mutual Defence Agreement of 1958. 
  • The U.S. and the U.K. have fought together as allies, together with Australia, in the Second World War. 
  • The U.S. shared nuclear weapons technology with the U.K. following the merging of the latter’s nuclear weapons programme with the American Manhattan Project as early as 1943. 
    • The Manhattan Project was a research and development undertaking during World War II that produced the first nuclear weapons. It was led by the United States with the support of the United Kingdom and Canada.
  • The first U.K. test was conducted in 1952 in the Montebello Islands in Australia
• Engagement with China: For three nations, their relations with China have recently been marked by a bad phase, especially with Australia.
  • While China remains Australia’s largest trading partner, relations between the two sides have been hit by a trade war. China has imposed stiff tariffs on Australian barley and wine exports and created barriers for products such as Timber and coal.
  • In 2017 and 2019, the Talisman Sabre exercises (a biennial exercise that is led by either Australia or the U.S.), conducted by the Royal Australian Navy, were tagged by a Chinese People’s Liberation Army Navy (PLAN) vessel. 
  • China also used the same type of vessel to monitor the multilateral Rim of the Pacific (RIMPAC) exercise in 2018.
    • RIMPAC is the world’s largest international maritime warfare exercise
    • It is a biennial exercise that is hosted and administered by the United States Navy’s Indo-Pacific Command.

Quad and AUKUS

• The Quadrilateral Security Dialogue is a strategic dialogue between the United States, India, Japan and Australia that is maintained by talks between member countries.
• The Quad and AUKUS are distinct, yet complementary. 
• Whereas the Quad initiatives engage with the Indian and the Pacific Oceans, the AUKUS is Pacific-centric oriented. 
• Such a strategy could potentially strengthen Japan’s security as well as that of Taiwan in the face of China’s mounting aggression.
• Shifting AUKUS’s focus to the Pacific Ocean could reassure ASEAN nations. 
• It could also maintain the balance of power in the Indian Ocean.  China’s potent military capacities must be taken seriously. 

Concerns for AUKUS

The ASEAN factor: There is also the matter of Association of Southeast Asian Nations (ASEAN) disunity over the emergence of AUKUS. 

• The Southeast Asian nations have been unable to agree on other issues before, such as developments in Myanmar or the strategic threats posed by China. 
• While AUKUS is clearly an attempt by the U.S. to bolster regional security, including securing Australia’s seaborne trade, any sudden increase in Australia’s naval capabilities is bound to cause unease in the region. 
• China is trying to exploit ASEAN’s concerns amidst worsening U.S.-China regional rivalry. 
• Australia reassured the region of its commitment to ASEAN centrality and its continued support for the South Pacific Nuclear-Free Zone Treaty as well as the Treaty of Southeast Asia Nuclear-Weapon-Free Zone. 

Significance of AUKUS

• China’s naval power is enabling it to challenge U.S. dominance in the Pacific beyond the first island chain. 
  • China has a large and growing undersea fleet, including attack submarines, both nuclear-powered and diesel-electric.
• The U.S. is tempted to look at effective means to militarily counter China. 
• The Quad structure currently has neither the mandate nor the capability to achieve this. 
• There are limited options in the economic arena with China already having emerged as a global economic powerhouse. 
• AUKUS, though, provides an opportunity to the U.S. to place proxy submarine forces to limit China’s forays, especially in the Pacific Ocean.

Syllabus: General Studies Paper 3

Context:

Recently, the UN Food and Agriculture Organisation released data showing its world Food Price Index (FPI) averaging 133.2 points in October 2021, the highest since July 2011.

Fuel and food

• One reason why petroleum and agri-commodity prices move in tandem is the bio-fuels link. 
• When crude prices rise, blending ethanol from sugarcane and corn (maize) with petrol or diverting palm and soyabean oil for biodiesel production becomes that much more attractive. 
• Cotton, likewise, turns relatively affordable vis-à-vis petrochemicals-based synthetic fibres. Also, since corn is primarily an animal feed, its diversion to ethanol leads to substitution by other grains, including wheat, for livestock use. That, then, pushes up prices of foodgrains as well.
• The same happens to sugar, as mills step up the proportion of cane crushed for fermenting into alcohol.
• The present global cotton rates of 125 cents-plus per pound were last seen in July 2011. Corn and sugar prices, too, are ruling way higher compared to a year ago.
• But it isn’t the bio-fuels effect alone: Large price increases also tend to rub off on other farm produce through the creation of positive “sentiment”. 
  • International coffee prices have nearly doubled in the last year and, like most other agri-commodities, also strengthened along with crude oil in the last three months.
• Economic activity and stimuli.
• “Sentiment” is, in turn, connected with two things.
  • The first is, demand returning with a revival of economic activity worldwide amid receding pandemic cases and rising vaccination rates.
  • The second is the flood of liquidity unleashed by the US Federal Reserve and other global central banks, to limit the economic damage wreaked by Covid-19. 
    • The US Fed’s total assets (mainly government bonds and mortgage-backed securities that it buys) on its balance sheet has expanded from $4241.51 billion to $8,574.87 billion between March 2, 2020 and November 1, 2021. 
    • All this money, combined with the policy-induced ultra-low global interest rates, has found its way into stock markets, start-up investments and also commodities. 
    • And since restoration of supply chains hasn’t kept pace with the demand recovery (manifested in congestion at ports, shortage of shipping containers/vessels and labourers yet to fully return to plantations) the overall result has been inflation.

Impact on farmers

• The surge in international prices benefited producers, especially farmers. 
  • Kapas (raw unginned cotton) is today selling at Rs 7,500-8,000 per quintal in Rajkot market (Gujarat), well above the government’s minimum support price (MSP) of Rs 6,025 for long-staple varieties.
  • Soyabean growers are similarly realising Rs 5,000-plus per quintal rates in markets such as Ujjain (Madhya Pradesh) and Latur (Maharashtra), against the MSP of 3,950.
• On the flip side, however, farmers are being forced to pay much more for fuel and fertilisers, as their international prices also have shot up. 

Fertilizers

• The situation is worse in fertilisers. 
  • Di-ammonium phosphate (DAP) is currently being imported into India at $800 per tonne, including of cost and ocean freight. 
  • Muriate of potash (MOP) is available for no less than $450 a tonne. 
  • These are close to the prices that prevailed during the world food crisis of 2007-08.
• Landed prices of urea, on the other hand, have crossed unheard-of levels of $900 per tonne. 
• Together with fertilisers, the prices of their intermediates and raw materials such as rock phosphate, sulphur, phosphoric acid and ammonia have also skyrocketed due to a combination of demand-pull (from higher crop plantings) and cost-push (from oil and gas).
• There is a huge challenge for the government to make fertilisers (particularly phosphatic and potassic nutrients) available in reasonable quantities, to enable farmers meet the requirements for their wheat, mustard, potato, onions and rabi pulses crops. 
  • That would matter for food prices down the line — at a time when fuel and fertilisers are also on fire.

Reason behind the fuel price rise

• The price of Brent Crude breached the $85 per barrel mark, reaching its highest level since 2018 on the back of a sharp increase in global demand as the world economy recovers from the pandemic. 
• Key oil producing countries have kept crude oil supplies on a gradually increasing production schedule despite a sharp increase in global crude oil prices. 
• The price of Brent crude has nearly doubled compared to the price of $42.5 per barrel a year ago.
• Recently, the OPEC+ group of oil producing countries reaffirmed that they would increase total crude oil supply by only 400,000 barrels per day in November 2021 despite a sharp increase in prices. 
• The output of the top oil-producing countries – Saudi Arabia, Russia, Iraq, UAE and Kuwait — would still be about 14 per cent lower than reference levels of production post the increase in November 2021.
• OPEC+ had agreed to sharp cuts in supply in 2020 in response to Covid-19 global travel restrictions in 2020 but the organisation has been slow to boost production as demand has recovered. 
• India and other oil importing nations have called on OPEC+ to boost oil supply faster, arguing that elevated crude oil prices could undermine the recovery of the global economy.
• Supply side issues in the US including disruptions caused by hurricane Ida and lower than expected natural gas supplies from Russia amid increasing demand in Europe have raised the prospect of natural gas shortages in the winter.
  • International coal prices have also reached all-time highs as China faces a coal shortage that has led to factories across China facing power outages. 
  • A faster than expected recovery in global demand has pushed the price of Indonesian coal up from about $60 per tonne in March to about $200 per tonne in October.

Overall Impact on India

• High crude oil prices have contributed to the prices of petrol and diesel regularly setting new record highs across the country in 2021. 
• India has seen a faster recovery in the consumption of petrol than of diesel after pandemic-related restrictions with petrol consumption up 9 per cent in September compared to the year-ago period but diesel consumption remaining 6.5 per cent below 2020 levels. 
• Diesel accounts for about 38 per cent of petroleum product consumption in India and is a key fuel used in industry and agriculture.
• S&P Global Platts Analytics noted in a report;
  • Demand for diesel in India was expected to go up in the next few months with the upcoming festive season set to accelerate the economic recovery and push up diesel consumption. 
  • However, predict that India’s total demand for crude oil would only surpass pre-pandemic levels in 2022.
• High international gas prices have led to an upward revision in the price of domestically produced natural gas. 
  • The Petroleum Planning and Analysis Cell (PPAC) set the price of natural gas produced by state-owned ONGC and Oil India under the nomination regime to $2.9 per mmbtu up from $1.79 per mmbtu in the previous six month period. 
  • The PPAC also increased the ceiling price of $6.13 per mmbtu for gas extracted from ultra-deepwater, and high pressure, high-temperature discoveries from $3.62 per mmbtu in the previous six month period.
• The increase in gas prices has put upward pressure on the price of both Compressed Natural Gas (CNG) used as a transport fuel and Piped Natural Gas (PNG) used as cooking fuel. 
• High international prices of coal have added to a coal shortage at India’s thermal power plants by forcing thermal plants to use imported coal that could not pass on the higher price of coal to procurers to stop supplying power. 
• Low coal stocks at a number of coal-fired thermal power plants have led to power outages in a number of states including Punjab and Rajasthan and have forced states to buy power at well above normal prices on the power exchange.