Among the world’s major economies, India seems the most serious about doing its bit to contain climate change. So suggests a report released by Climate Transparency, a global non-government organisation.
Its Brown To Green Report 2019 has reportedly noted that ours is the only country among G20 nations that is close to its “pathway” chalked out towards ensuring the world’s mean temperature rises no further than 1.5° Celsius, a goal set by the Paris Agreement against global warming.
- That’s a remarkable achievement. Remember, G20 countries together represent more than four-fifths of the world’s gross domestic product, so this group of 20 probably accounts for an overwhelming bulk of all carbon emissions.
- While several other G20 states are likely to achieve their targets, the report seems displeased with the progress made by most. South Korea, Canada and Australia, in particular, are reported to be laggards.
- The world’s biggest economy, the US, has rejected the Paris accord. The very signal sent by this appears to have weakened the world’s will to adhere to its emission-reduction agenda.
The battle against climate change is a race against time—one that we can’t afford to lose. The report also lauded India for its investments in renewable energy. It’s safe to say that the country is doing a good job. Some deft diplomacy at the international level might be able to enjoin others to do likewise.
Source – Livemint
QUESTION – India’s resolve to fight climate change is stronger than most of the competitive economies. How it should convince fellow developing economies to handhold against the menace of climate change?
PRELIMS – Brown to Green Report 2019 is released by Climate Transparency, a global non-government organisation.
News reports that e-commerce majors such as Amazon and Flipkart have sold goods worth ₹19,000 crore in their festival discount sales seem to be causing some heart-burn in India’s traditional retail industry.
The Confederation of All India Traders (CAIT), a trade body representing brick-and-mortar retailers, has been urging the Commerce and Finance Ministers to launch a probe into the deep discounting practices of e-commerce players for ‘predatory pricing’. But why would the discounts be anti-competition? The competition regulator will have final say on this.
What is it?
- Predatory pricing is a strategy whereby the biggest players in an industry with deep pockets prices its goods or services at rock-bottom levels, so that no rivals can compete with it. Once everyone else runs up huge losses and is forced out of the business, the giant makes hay by withdrawing the freebies and fleecing consumers.
- In India, the Competition Act of 2002 lays down the ground-rules on what constitutes predatory pricing. ‘Predatory pricing’ figures in the section on abuse of dominant position by a market player. It expressly forbids any enterprise or group from ‘abusing its dominant position’ in the market, either by imposing unfair conditions or an unfair and discriminatory price — including predatory price — resulting in denial of market access.
- Predatory price is specifically defined as sale or goods or services at a price below the cost of production, with a view to reduce or eliminate competition.
The case –
If the CAIT really believes that e-commerce players are indulging in ‘predatory pricing’, it should be knocking on the doors of the Competition Commission of India with its complaints on e-commerce discounts, and not the Finance or Commerce Ministry.
Why is it difficult to establish the rules?
But even the CCI may not have easy time pinning down India’s e-tailers for predatory pricing.
- One, despite the big splash they make, e-commerce players in India are still bit players in the humongous retail industry, which consists of thousands of mom-and-pop stores, super markets, hyper markets et al.
- In value terms, online sales still make up less than 5 per cent of the total retail sales in India. It may therefore be hard to accuse them of ‘abusing their dominant position’ though they have deep pockets.
- Two, for a case of predatory pricing to stick, the CCI will have to establish that e-commerce platforms are actually selling products below their costs of production. This can be tricky, especially as sellers on these platforms aren’t complaining.
- In fact, predatory pricing is a much-debated facet of anti-competition law globally, because these laws are essentially meant to protect consumer interests. Discounts, however predatory, do initially benefit consumers. They turn anti-consumer only when the firm offering them withdraws them and begins misusing its monopoly position to fleece customers.
Source – The Hindu Business Line
QUESTION – What is ‘predatory pricing’? What are the difficulties to control and regulate them?
The odd-even scheme is an out-of-the-box idea with unproven claims on containing AQI levels. It is though a terrific concept (like the laser light display touted as a replacement for crackers this Diwali) to focus attention on air pollution, especially that caused by automobiles.
The issue –
For three years now, the National Capital Region (NCR) has seen the pollution saga play out every winter; while some politicians can take solace in the marginal fall in AQI levels even though it stays in hazardous territory, the reality is that if something is not done urgently then NCR will soon become unliveable in the six months beginning October-November.
Understanding the problem –
- The NCR pollution problem is partly because of the nature of its topography. It is shaped like a saucer and hence is hugely dependent on a cross breeze—which serves it for most of the year, except in winter—to keep its AQI under control; exactly why the stubble burning that happens in the early part of the year does not harm Delhi as much. The obvious inference is that mitigation efforts have to be that much more to make up for this handicap.
- Further, vehicular pollution, the gorilla in the room, has been growing very sharply. As previously pointed out in this column the emissions of particulate matter (PM) by automobiles have surged by 40% in eight years ended 2018; according to the Economic Survey put out by the Delhi government, there were 10.9 million vehicles in NCR at the end of 2018.
- Experts have long been making a case for public transport. The assumption among policy planners is that the Metro Rail, an extremely capital-intensive option which nonetheless has been critical in addressing transport woes of NCR’s working population, especially women, is the best solution. If dovetailed with a robust public bus network it will undoubtedly magnify the gains; unfortunately this is not the case.
- Similarly, focus on building and maintaining good roads (which at the moment are mostly in neglect) and actually implementing laws to ensure only road-worthy vehicles ply, could go a long way in mitigation. Remember every time you brake to avoid a pothole and then accelerate your emissions are that much more.
- Finally, the ultimate stakeholders, the residents of Delhi, have to force a public debate. With elections around the corner, this may well be a good time to get our elected politicians to commit to a timeline to contain pollution in the city.
The only freebie that matters is clear air; and our politicians who always aver the cause of the poor should remember that like income inequality pollution is hardest on those at the bottom of the pyramid.
Source – Livemint
QUESTION – The pollution levels in Delhi reach beyond the tolerable limits. Examine the factors responsible for it and suggest solutions for the same.
India is slipping pathetically from its high growth trajectory. Exports continue to decline. Major financial institutions and donors have downgraded the country’s growth prospects in the coming year.
Good news –
- The recent World Bank’s Doing Business rankings provided the spark the economy badly needed. India made impressive improvements in the 2019 rankings of Ease of Doing Business — a jump from 100 in 2017 to 63, and similar one for Trading across Borders from 146 in 2017 to 68.
- These improvements, if they continue, will soon create a conducive environment for the right kind of export-promoting or outward-looking foreign direct investment (FDI) to flow in.
- Most FDI in India so far has been inward-looking to tap the large domestic market with high tariffs and transaction costs.
Logistics sector –
- Another measure of trade transaction costs is the Logistics Performance Index (LPI) of the World Bank that captures behind the border transaction costs.
- Logistics reforms that impact transaction costs behind the border include: Transport infrastructure such as road, rail, ports, and airports; reliable communications and technology infrastructure, and quality logistics services such as transport operators. India’s ranking in LPI has also improved over the years, and stands at 44 at present.
- Future reforms in trade and logistics facilitation are recommended in the October 2018 Logistics Development Report of the Prime Minister ’s Economic Advisory Council. A slightly modified version of my recommendations are here:
Behind the border logistics –
- Rail tariff rationalisation and expediting commissioning of dedicated freight corridors (DFCS).
- Fast track elimination of container freight stations and inland container depots by pushing direct port delivery (DPD) and direct port export (DPE).
- Nudge shipping lines to institute a transparent tariff structure.
- Seamless and efficient road transport experience — introduce One Nation, One Permit, One Tax System.
- Uniform business processes. Standardise gate-in /gate-out approvals and documentation processes n 24 x 7 shipping line services to trade
Border trade facilitation –
- Fully facilitated trust-based clearance processes through modern risk management system.
- Fully-automated paperless trade environment with minimum face to face interactions.
- Single-window digital portal integrating all stakeholders n Monitoring of key outputs across major gateways.
- Physical inspection of goods to be an exception.
- Training of officers to operate/manage the new system, implement audit-based controls with the use of IT.
- Popularise advance bills of entry, authorised economic operators, DPD and DPE in the private sector.
- Target cargo dwell time to reach levels comparable to the successful Southeast Asian countries
Institutional framework –
- Establish a National Council of Logistics and Trade Facilitation outside the line ministries reporting to the prime minister.
- It must consist of Cabinet ministers of the ministries and departments related to logistics and trade facilitation, and chief ministers of concerned states.
- Private sector and trade stakeholders should be represented n The logistics wing under the commerce ministry be made a dedicated secretariat.
- Development of robust performance outcomes for logistics and trade facilitation.
- Monitor performance through an online dashboard and fix responsibilities for time-bound corrective action.
- Facilitate policy development and multi-stakeholder coordination.
- Regular publication and dissemination of data on key sectoral outputs
Way forward –
- India should quickly implement these reforms to revive the lost export momentum and spur high, inclusive growth to create jobs.
- The Prime Minister should now with the same zeal bring down our average tariff levels to make our industry internationally competitive.
- These reforms, along with his recent overruling of all opposition from some of his ministers, industry, and an important part of his party, to be in the Regional Comprehensive Economic Partnership, will be his biggest personal contribution to the long overdue trade reforms.
Source – Business Standard
QUESTION – India’s temporary economic slowdown needs a comprehensive reform to prevent a prolonged slowdown. Discuss.
The deadline set by the Centre for wrapping up the Naga peace talks, October 31, arrives this week. While the Centre’s interlocutor and now Nagaland’s Governor, R N Ravi, has stressed that the government intends to meet the deadline, some key issues remain unresolved with the National Socialist Council of Nagalim (Isak-Muivah), or NSCN(I-M).
What are the Naga Peace Talks?
- The talks seek to settle disputes that date back to colonial rule. The Nagas are not a single tribe, but an ethnic community that comprises several tribes who live in the state of Nagaland and its neighbourhood. One key demand of Naga groups has been a Greater Nagalim that would cover not only the state of Nagaland but parts of neighbouring states, and even of Myanmar.
- The British had annexed Assam in 1826, in which they subsequently created the Naga Hills district and went on to extend its boundaries. The assertion of Naga nationalism, which began during British rule, has continued after Independence, and even after Nagaland became a state. Along the way, the unresolved issues gave rise to decades of insurgency that claimed thousands of lives, including of civilians.
- The earliest sign of Naga resistance dates back to 1918, with the formation of the Naga Club. In 1929, the Club famously told the Simon Commission “to leave us alone to determine for ourselves as in ancient times”.
- In 1946, A Z Phizo formed the Naga National Council (NNC), which declared Naga independence on August 14, 1947, and then, in 1951, claimed to have conducted a referendum in which an overwhelming majority supported an independent Naga state.
- By the early 1950s, the NNC had taken up arms and gone underground. The NNC split in 1975, the breakaway group being the NSCN, which split further in later years, most prominently into the NSCN(I-M) and NSCN (Khaplang) in 1988.
The agreements –
- 1975: A peace accord was signed in Shillong in which the NNC leadership agreed to give up arms. Several NNC leaders, including Isak Chishi Swu, Thuingaleng Muivah and S S Khaplang refused to accept the agreement and broke away to form the NSCN. In 1988 came another split, with Khaplang breaking away to form the NSCN(K) while Isak and Muivah headed the NSCN(I-M).
- 1997: The NSCN(I-M ) signed a ceasefire agreement with the government in 1997, preceded by rounds of talks since 1995. The key agreement was that there would be no counter-insurgency offensive against the NSCN(I-M), who in turn would not attack Indian forces. The NSCN(I-M) had then announced to “every citizen of Nagalim wherever they may be”, that a ceasefire agreement was entered into between the Government of India and the outfit “to bring about a lasting political solution to the long drawn out Indo-Naga issue”.
- 2015: In August that year, the Centre signed a framework agreement with the NSCN(I-M). Prime Minister Narendra Modi described it as a “historic agreement” towards settling the “oldest insurgency” in India. This set the stage for the ongoing peace talks. In 2017, six other Naga armed outfits under the banned of the Naga National Political Groups (NNPGs) joined the talks.
- Today, Muivah remains the senior-most Naga rebel leader. Isak died in 2016. In the NSCN(-K), its leader Khaplang died in 2018.
Key issues –
The government and the NSCN(I-M) have failed to agree on issues relating to a separate Naga flag and a constitution. In its latest statement, the NSCN(I-M) has said it will not budge from the demand for the flag and the constitution — and that it is looking for a lasting solution.
Source – The Indian Express
QUESTION – Throw some light on the progress of Naga Peace Talks. Why the issue has not yet been resolved since the last seven decades?
On Friday, Navy Chief Admiral Karambir Singh visited INS Baaz, the southernmost air station of the Indian Armed Forces and spent a day with personnel stationed there.
INS Baaz is located at Campbell Bay on the Great Nicobar island, the southernmost and largest island in the Union Territory of Andaman and Nicobar Islands. This island is also the location of the Indira Point and is less than 250 km by sea from Banda Aceh in Indonesia.
According to the Indian Navy website, the Indian Naval Ship (INS) ‘Baaz’ was commissioned in July 2012, and is the southernmost air station of the Indian Armed Forces. Campbell Bay, where the base is located, is more than 1,500 km away from the Indian mainland, and 500 km from Port Blair.
The primary functions of the INS Baaz include helping build Maritime Domain Awareness by providing information via airborne surveillance using aircraft and Unmanned Aerial Vehicles (UAVs). The base was first equipped with a runway of 3,500 feet but was later lengthened to enable larger aircraft to operate from it.
- The Andaman & Nicobar Islands are strategically important for India’s national security as they provide a critical capability to monitor sea areas in the region.
- The location has been described as India’s “window into East and Southeast Asia”, and is in close vicinity of the Six Degree Channel, also called the Great Channel, one of the Indian Ocean’s busiest shipping lines, carrying strategic cargo to East Asian countries.
- It is also close to the Strait of Malacca.
- The INS Baaz helps to ensure maritime security in the Bay of Bengal and the Andaman Sea, and substantially enhances the Indian Navy’s maritime surveillance capability, as per a Defence Ministry press release.
- The base also assists the local populace in times of need such as facilitating evacuation during medical emergencies.
- It is a part of the Andaman and Nicobar Command, the only tri-services formation of the Indian Armed Forces that was started in 2001.
Source – The Indian Express
This week, Google has announced that it has reached ‘Quantum Supremacy’ in computing.
What is ‘Quantum Supremacy’?
- It is a term proposed in 2012 by John Preskill, professor of theoretical physics at the California Institute of Technology.
- It describes the point where quantum computers can do things that classical computers cannot. In Google’s case, researchers at the University of California, Santa Barbara have claimed to have developed a processor that took 200 seconds to do a calculation that would have taken a classical computer 10,000 years.
What is a quantum computer?
Our traditional computers work on the basis of the laws of classical physics, specifically by utilising the flow of electricity. A quantum computer, on the other hand, seeks to exploit the laws that govern the behaviour of atoms and subatomic particles. At that tiny scale, many laws of classical physics cease to apply, and the unique laws of quantum physics come into play.
What difference would such a simulation make?
- It is about processing speed. Let us look at how a classical computer processes information. Bits of information are stored as either 0 or 1. Every string of such digits (bitstrings) represents a unique character or instruction; for example, 01100001 represents the lowercase “a”.
- In a quantum computer, information is stored in quantum bits, or qubits. And a qubit can be both 0 and 1 at the same time. Quantum physics involves concepts that even physicists describe as weird.
- The higher the number of qubits, the higher the amount of information stored in them. Compared to the information stored in the same number of bits, the information in qubits rises exponentially. That is what makes a quantum computer so powerful.
None, as far as practical applications are concerned. The task performed isn’t super important for this milestone; it’s much more about the fact that the milestone happened in the first place.
Way forward –
The scientists are looking to improve on their work, including detecting and fixing errors. The University of California, Santa Barbara noted that the research has already achieved a very real tool for generating random numbers. Random numbers can be useful in a variety of fields — including protecting encrypted keys for decryption, which could be a potentially thorny issue for governments.
Quantum computers could one day result in huge advances in science research and technology. Among areas that stand to gain are artificial intelligence, and new drug therapies. All that, however, is a long way away.
Source – The Indian Express
India, as we know, is not an Arctic nation, or even a ‘near-Arctic’ one, but China has designated itself to be one. India seems to have little business interest in the resource-rich area, and the proposed sea and land routes that are strategically emerging in the region with the melting of the sea ice, are not exciting enough to elicit a resounding response.
The Arctic Circle –
- The Arctic Circle, established in 2013, is a quasi-government body that works with the Icelandic government to create the largest, unique and open Arctic platform.
- It is a meeting place for over 2,000 delegates from 60 odd countries. The Assembly does not uphold any specific embodied mandates, but is key in setting the trends and priorities for the increasingly challenging future in all the eight Arctic nations—Russia, Canada, the Kingdom of Denmark (including Greenland and the Faroe Islands), Finland, Iceland, Norway, Sweden and the United States, plus the countries that border them.
The Chinese angle –
- In the recent (October 9-12) meeting, China’s presence was substantive in the sessions, but it was the outlook of the other countries towards China that was worth noting.
- Greenland (Denmark) for instance expressed deep distrust towards China’s investment in its aviation sector.
- Also observable, was the keen interest of multi-nation academia in discussing China’s leading role in the establishment of new routes in the region—notably the Polar-Silk route and the Belt and Road Initiative.
- Four delegates from India’s nodal institute—National Centre for Polar and Ocean Research, Goa, working on Polar science presented the nation’s scientific stronghold in the Arctic.
India’s Arctic vision –
- India has had a vibrant Arctic scientific programme since 2008. It has been posturing for scientific leadership for many decades now—the commencement of the Antarctic programme, way back in 1982, was a significant step towards this.
- India’s dedicated competence in scientific research, perhaps, helped the nation gain the Antarctic Treaty Consultative Meeting membership, and, thereon, the Arctic Council observer status in 2013. This has been renewed again in 2019. This competence also beckons collaborative international research augmentation and enhanced expertise in global science.
- The Reykjavik’s Assembly had a mere 10 purely scientific, and about 40 academic sessions, out of a total of 170. The rest ranged from policy and governance to infrastructure, industry and concerns of the indigenous populace.
Directions for India to explore –
Although, India has been partnering with Russia for oil and gas in the high Arctic, the Reykjavik Assembly saw no participation from the sector. The Arctic Council, the intergovernmental forum established by the eight Arctic nations that concerns itself with all issues (except military security), interestingly does not prohibit commercial exploitation of resources in the Arctic. It simply mandates sustainability, “without harming the interests of local populations and in conformity with the local environment”.
Way forward –
- The Arctic needs a new direction—scientific expertise, investment in oil and gas sector, infrastructure investment, new fishery technologies and skilled human capital are all being urgently sought.
- India’s various policy bodies and industry federations need to strategise and devise a new and challenging roadmap for interventions in the region.
- Antarctica, as we know, is not likely to open up for exploration for many years, but the Arctic discourse is different and mandates an aggressive and need-based directive.
- With a quiet acceptance of India in the global fora and increasing distrust towards Chinese investments, it is an opportune time for India to show its indelible Arctic leadership to the world.
Source – Financial Express
QUESTION – Does India need to involve itself in the Arctic region? What constructive role can it play to secure its energy interest? Discuss.
From a peak of 8.1% in the fourth quarter of 2017-18, growth in gross domestic product (GDP) has now decelerated to a six-year low of 5% in the fiscal first quarter, with a slowdown visible across all sectors. We now require a macroeconomic strategy to revive aggregate demand in the short-run, while initiating structural reforms to sustain growth over the long-term.
Response by Government –
- The measures the government has announced are largely in response to demands of specific interest groups such as foreign portfolio investors, real estate companies, automobile companies, etc. These have mostly been piecemeal supply-side interventions, which may help these specific interest groups but won’t reverse the collapse in aggregate demand.
- The Reserve Bank of India (RBI) has repeatedly cut the repo rate to revive demand and has also taken other measures to ease the availability of credit. However, in real terms the policy rate is still rising and there is a lack of credit demand in some segments and credit exposure limits in others.
- With limited traction for monetary policy, the burden of growth stimulation must fall mostly on fiscal policy. Here, the unrealistic assumptions of the 2019-20 budget are quite worrying. It has been assumed that tax revenue and total revenue will grow by 25.3% and 25.6%, respectively, though they both grew by only 8.9% in 2018-19.
What needs to be done?
- Clearly, the 2019-20 budget will have to be substantially revised in the winter session of Parliament or earlier to arrest the crisis. In fact, tax policy has already been revised after the budget, with a large reduction in corporate tax rates. The impact of an increase in government spending would be direct and fast, especially if it puts more money in the hands of poor consumers who have a high propensity to consume. That would have a strong multiplier effect, and this should be the guiding principle for an inclusive fiscal strategy to revive growth.
- Extraordinary conditions call for extraordinary measures. Deep fiscal reforms could create enough fiscal space to substantially increase pro-poor spending and revive growth while reducing the fiscal deficit; all this without raising tax rates. Fixing the GSTN on a war footing, paring down tax exemptions and rationalising subsidies can free up fiscal space to the tune of 6-7% of GDP.
Distribution is the key –
This can be used to finance an inclusive growth revival strategy with three components.
- First, building on the PM-Kisan programme. There is a merit in extending the ₹6,000 income support per farmer to all citizens, which would cost 1% of GDP. This income support could be increased to ₹12,000 per citizen per year, doubling the cost to 2% of GDP. This support could grow with the economy.
- Second, education, health and infrastructure are all underfunded. Additional funding of 1% of GDP could be provided to each of these.
- Lastly, the remaining fiscal space could be used to cut the fiscal deficit.
Source – Livemint
QUESTION – A crude economic growth cannot resolve the contradictions of Indian economy. The slowdown needs a distributive approach of economic development. Discuss.
Profound uncertainty about the impact of climate change means that estimates of the social cost of carbon have been all over the place. Consider two of the most influential estimates that were released in recent years. Nicholas Stern of the London School of Economics estimated it at $85 per tonne of carbon. William Nordhaus of Yale University came up with a much lower estimate of $8 per tonne. It gives us some idea about the fragile nature of such estimates.
What is ‘carbon tax’?
- A carbon tax increases the price that consumers pay for energy. What will be the price impact of a carbon tax of $75 per tonne of carbon consumed in India? The IMF estimates that a tax of this magnitude will increase the price of coal by 230%, natural gas by 25%, electricity by 83% and petrol by 13%.
- Such steep price hikes will necessarily make such a tax a political hot potato, especially in a developing country like India, where on the one hand politically influential groups such as the urban middle class or rich farmers are the biggest consumers of energy, and on the other, people emerging out of poverty need access to cheap electricity and fuels.
- The proceeds of the carbon tax could be used to protect the household budgets of poor families, but that is easier said than done, despite the availability of the JAM trinity of Jan Dhan accounts, Aadhaar numbers and mobile phones.
Need of carbon tax –
- Economists at the International Monetary Fund (IMF) have argued in a recent report that the world needs a global carbon tax in the next 10 years. Their recommendation is $75 per tonne of carbon.
- The IMF team argues that such a Pigouvian tax will help limit global warming to 2 degrees Celsius above pre-industrial levels, as embedded in the 2015 global climate change agreement in Paris.
A prudent response –
- Economists have often debated whether the best way to reduce carbon use is via higher prices or through quantity restrictions. The consensus now is that a carbon tax is the better policy response.
- The decision of the Narendra Modi government to increase fuel taxes as well as quadruple the coal cess is sometimes interpreted as a variant of a carbon tax. Only a third of the sharp decline in global oil prices after 2014 was passed on to consumers.
The idea of a global carbon tax will run into two problems –
- First, it will penalise incremental carbon emissions rather those that have already been spewed into the atmosphere since the Industrial Revolution. A homogenous global carbon tax will, in effect, impose costs on developing countries rather than those that have been responsible for most of the existing stock of pollution.
- Second, taxes are part of national social contracts that emerge out of very specific conditions that cannot necessarily be replicated on a global scale.
Way forward –
The underlying principle should be of Common but Differentiated Responsibilities and Respective Capabilities that has been recognised by the United Nations Framework Convention on Climate Change.
Climate change is undoubtedly one of the most serious challenges for the entire world, and the poor in countries such as India are especially at risk. A carbon tax can eventually be an important part of any mitigation strategy—from new technologies to rethinking cities to lifestyle changes.
Source – Livemint
QUESTION – What is ‘carbon tax’? Examine its impact and shortcomings in global fight against climate change.