Comprehensive News Analysis - 07 June 2016

Table of Contents:

A. GS1 Related:
B. GS2 Related:

1. All you need to know about Modi’s US visit

2. SC upholds closure of Kerala school

3. Swiss back India’s bid for nuclear group membership

4. Former Maldives VP gets 10 years on terrorism charge

5. ‘India never opened a window of opportunity with Pakistan’

C.GS3 Related:

1. State lenders to get Centre’s backing to reduce bad loans: FM

2. Swachh Yug campaign to make villages located along Ganga open defecation-free

D. GS4 Related
E. Important Editorials : A Quick Glance

The Hindu

1. Clear the air on FDI in retail

2. A long road to justice

3. A dumb primate?

Indian Express

1. Tackling poverty in India: The low income, low growth trap


1. PIB

2. The Financial Express: Indian economy: Here’s why it is time to speed up reforms

3. The Financial Express: Can UDAY overcome challenges, provide affordable power to all?

4. The Financial Express: Powering up India with solar energy: Neutralising threats, implementing policies

5. The Business Line: Tentative recovery

6. The Economic Times: Environment part of sustainable progress

7. Quick Bits

a) US returns over 200 artifacts worth more than $100 million to India

b) Centre to release water conservation report

C) GDP data discrepancies: Govt to release supply use table to tackle variation

d) India ranks second in retail potential

e) Prices of major drugs for treating cancer, diabetes and blood pressure cut by 25%

f) Government to increase land ownership among rural women

g) 17 of 20 smart cities ready with SPVs for project

F. Concepts-in-News: Related Concepts to Revise/Learn:
G. Fun with Practice Questions 🙂
H. Archives



Useful News Articles

A. GS1 Related

Nothing here today folks! J


B. GS2 Related
  1. All you need to know about Modi’s US visit

Topic: International Relations

Category: Indo-US Relations

Location: The Hindu

Key points:

The Indian Prime Minister will be addressing the US Congress and holding talks with the US President

Main engagements:

– Pay respects to US soldiers at Arlington Cemetery

– Bilateral meeting with President Barack Obama

– USIBC Business leaders’ summit

– Address to Joint meeting of US Congress


Key takeaways expected


– Closer cooperation on South China Sea, terrorism

– Key defence deals under negotiations

– Concluding foundational agreements including LEMOA (Logistics agreement for use of bases etc)


-U.S initiative to nominate India for membership of the Asia Pacific Economic Cooperation (APEC) is being sought

-restarting the negotiations for a bilateral investment treaty (BIT)


Nuclear and Renewable energy

– Negotiations on 6 nuclear reactors by Westinghouse in Andhra Pradesh

– India to ratify Climate Change agreement

– US investment in renewable energy programme


2. SC upholds closure of Kerala schoolTopic: Legislation

Category: Education

Key points

  • In a blow to Right to Education in the country, the Supreme Court upheld a manager’s right to close down a 45-year-old aided upper primary school in Kerala despite pleas by the State government and parents to protect the fundamental right of children to free education
  • The State government had challenged a May 29 order of the Kerala High Court upholding the school manager’s right to close down the aided school under the provisions of the Kerala Education Act and Rules, provided the manager gave a year’s due notice of his intention. The govt. said the manager’s right was restricted by the provisions of Rule 6 (10) of the Kerala Right of Children to Free and Compulsory Education Rules, 2011. The court, however, was not convinced
  • If managers of aided schools are allowed to close down the school, taking advantage of their own failure to make a self-declaration under the RTE Act or apply for recognition under the Act, it will adversely affect the objective and purpose of the RTE Act the state warned


3. Swiss back India’s bid for nuclear group membershipTopic: International Groupings

Category: NSG

Key points

  • India got the backing of Switzerland in its bid to become a member of the Nuclear Suppliers Group (NSG) ahead of the group’s crucial meeting. The two countries also resolved to strengthen cooperation in combating tax evasion and black money
  • the two leaders also had talks on stepping up ties in areas of trade, investment and vocational training


4. Former Maldives VP gets 10 years on terrorism chargeTopic: India’s Neighbourhood

Category: Maldives

Key points

  • A Maldives court has convicted the country’s former vice president on a terrorism charge for possession of firearms and sentenced him to 10 years in prison
  • The decision by the Criminal Court in a session closed to the media made Ahmed Adeeb the fourth high-profile politician to be jailed on a terrorism charge since President Yameen Abdul Gayoom was elected in 2013
  • Former President Mohamed Nasheed, former Defense Minister Mohamed Nazim and head of a leading political party, Sheik Imran Abdulla, are the others to get lengthy prison terms. Nasheed has since been granted asylum in Britain
  • The cases have been criticized for a lack of due process violations


5. ‘India never opened a window of opportunity with Pakistan’Topic: India’s Neighbourhood

Category: Pakistan

Key points

  • Pakistan is “not desperate” to resume peace talks with India which has never opened a window of opportunity for dialogue and goodwill with it, Pakistan’s Adviser on Foreign Affairs Sartaj Aziz has said(His remarks came in response to the Indian Defence Minister’s statement that the window for dialogue with Pakistan was “slowly closing.”)
  • “They say that they will talk if we (Pakistan) make some progress on terrorism, but we say that they (India) should talk on all issues including Kashmir,” Mr. Aziz said
  • Pakistan is supporting the Kashmiri people “morally and diplomatically” and will raise the issue with the U.N. General Assembly, Human Rights Council and also with permanent members of U.N. Security Council, he said


C. GS3 Related
  1. State lenders to get Centre’s backing to reduce bad loans: FM

Topic: Economy

Category: Banking

Key points

  • “Banks will be empowered, including through legal provisions; there will be protection for big, bona fide decisions by the top managements to ensure speedy resolution of stressed assets,”  said the finance minister
  • the new provisions being mooted are aimed at encouraging bankers to enter into ‘reasonable and fair settlements’ with regard to those stressed accounts where full recovery is considered difficult without fears of being targeted by investigative agencies later on
  • Reiterating that the government had earmarked Rs.25,000 crore for recapitalisation of these banks in the Budget, he said that would commit to more funds if needed


2.Swachh Yug campaign to make villages located along Ganga open defecation-freeTopic: Environment

Category: Pollution Control

Location: The Financial Express

Key points

  • As part of its efforts to make villages located along Ganga open defecation-free, Government has launched a campaign ‘SwachhYug’, a collaborative effort of three Union Ministries, to bring about behavioural change among people staying in villages along the holy river

(The Union Ministries of Drinking Water and Sanitation, Water Resources and Youth Affairs are working on the campaign in a collaborative manner)

  • As part of the campaign, the Ministry of Youth Affairs, under the coordination of the Nehru Yuva Kendra Sangathan, will enlist support of youth agencies such as the Bharat Scouts and Guides, Nehru YuvaKendras and National Service Scheme
  • These organisations will be called upon to provide a large number of local youth volunteers to support a behaviour change campaign in the 52 districts under the Swachh Bharat Mission
  • To take this initiative forward, a nodal officer has been identified for each district to work on making area under their jurisdiction open defecation free (ODF) in a “mission mode” as well as to focus on cleanliness at village through proper solid and liquid waste management.
  • “In addition to monetary incentive offered by government under Swachh Bharat Mission, extensive interpersonal behaviour change communication training will be given to local trainers through a network of virtual classrooms across the five states

(There are 5,169 villages located along Ganga falling under 1,651 gram panchayats (GPs) in 52 districts of five states – UP, Uttarakhand, Bihar, Jharkhand and West Bengal from where the holy river flows through)

Note: Take a look at the Nuclear Energy: A Global Fact Sheet in the print edition of the Hindu


D. GS4 Related
E. Important Editorials: A Quick Glance


The Hindu


  1. Clear the air on FDI in retail

Topic: Economy

Category: Investment

Key points

  • Given the Centre’s focus on attracting investment and improving India’s ‘Ease of Doing Business’ ranking, it is time it took an unambiguous stand on foreign direct investment (FDI) in retailing
  • While it is true that the government has eased some rules relating to investment in single-brand retail operations, the norm on ‘sourcing’ locally remains a significant grey area, as reflected in the discussions around Apple’s plans for India
  • In November, the Centre eased the rules permitting 100 per cent FDI in ‘Single Brand Product Retail Trading’ subject to the sourcing caveat — the precondition being that companies with more than 51 per cent foreign ownership must source 30 per cent of the value of goods in India, preferably from medium, small or micro enterprises
  • In isolation, the requirement of a certain proportion of domestic content in the products has a socio-economic relevance, given its potential to create jobs and protect livelihoods
  • But the sourcing norm has inhibited FDI inflow; worse, it could fall foul of the WTO’s National Treatment norms. The Centre therefore amended this condition allowing for an exemption to entities selling “products having ‘state-of-the-art’ and ‘cutting-edge’ technology”, and even more ambiguously, in cases “where local sourcing is not possible”. Predictably Apple has sought waivers citing the exemption clause
  • Rather than get into a potentially convoluted debate about when exemptions should be given, the best course, given the circumstances, is to drop the sourcing condition altogether. It is counterproductive and open to charges of arbitrariness
  • Allowing Ministry officials the discretion to decide on what constitutes ‘cutting-edge’ technology or whether local sourcing is possible or not opens the door for less-than-transparent outcomes and the possibility of litigation. A competitor that has invested in local manufacturing capacity would justifiably feel hard done by if a rival incorporating a similar level of technological advancement in its products were exempted
  • The Centre’s stated objectives for relaxing FDI norms — “improving the availability of such goods for the consumer” and “enhancing the competitiveness of Indian enterprises through access to global designs, technologies and management practices” — would be rendered fruitless if overseas companies, subject to the whims of interpretation, opt out of either entering the market or from making significant investment. Ultimately, keeping it simple works best, especially when it concerns investment rules


2. A long road to justiceTopic: Law and order

Category: Communal violence/Criminal Justice

Key points:


  • the Gulbarg Society case has attained judicial closure

(11 persons have been found guilty under Section 302 of the Indian Penal Code (IPC). The Special Investigation Team (SIT) has pressed for the capital sentence. It is now for the judge to take the call, after hearing the pleas of the convicts, and decide whether the killing fell in the rarest of rare cases meriting death)

  • The Godhra riot cases are a landmark in India’s history of criminal justice. There are two basic issues here which demand serious reflection. Should it have taken 14 years for the wheels of justice to reach this terminus? Will the imposition of ultimate penalty deter criminals in the future from perpetrating such savagery on innocent fellow citizens?
  • While both are relevant to any democracy, they assume special significance for us in India, where we are dismayed by rising street violence and the endless stories of subjectivity, sloth and corruption in agencies and institutions such as the police, prosecution and judiciary. Statistics of crime may not tell the whole story, but the intensity of popular impression will
  • The Gujarat happenings took place in 2002. The State police investigated nearly a hundred cases, some major, and many smaller in dimension. After political parties in the Opposition and some non-governmental organisations protested against what they alleged were biases in the Gujarat Police investigation, and the National Human Rights Commission echoed similar sentiments, the apex court appointed the SIT in 2008 and assigned to it nine of the more important cases. After assiduous investigation, the SIT started filing charge sheets at periodic intervals starting late 2008
  • The fact these cases took more than five years — actually eight in a few instances — to come to fruition in the court is testimony to the fact that even if an investigating agency does its job swiftly and efficiently, processes in the court take an enormous amount of time. Several factors, including some self-partial cross-examination by the defence counsel and a mountainous workload on judges, contribute to this situation in which victims have to wait inordinate length of time for justice
  • Many presiding officers of courts are themselves lax in permitting unwanted examinations and cross examinations, although they are well within their rights to put down the practice. A number of committees and commissions have gone into this without actually succeeding in offering measurable relief to the victims through expeditious trial
  • More than this near-harassment in the court, it is the maltreatment in police stations that is galling for many crime victims. It is an open secret that a large number of police stations in India just refuse to register crimes because of the fear that free registration of crime would boost crime figures and generate the impression of a lack of control over crime
  • More appalling is the fact that when a police station does condescend to draw up a First Information Report, such action would necessarily have to be preceded by paying bribes to the Station House Officer and his staff
  • The average citizen is therefore convinced that he cannot expect justice from any of the three components of the criminal justice system. Naturally, he rationalises that there is nothing wrong in taking recourse to extrajudicial avenues. In his eyes, the latter ‘deliver’ justice swiftly, that too only for a small service charge! This is a dangerous situation
  • Unchecked, the dim view of the state’s capacity to help avenge any injury caused to a law-abiding Indian is bound to strike at the roots of constitutional governance
  • There are lessons to be drawn from the SIT’s experience in Gujarat that could help improve the plight of crime victims
  • The SIT was the brainchild of a humane, innovative and fair-minded Supreme Court Judge. He saw it as a neutral body that would not bypass the state apparatus but still carry enough outside talent to ward off charges of partisanship
  • Of the nine cases handed over to the SIT, eight have been concluded, and only one, NarodaGaon, is left. The SIT was able to get conviction in seven of these occurrences, a signal achievement in riot cases, something that any investigating team can feel proud of. The apex court’s close yet gentle monitoring, the State government’s willingness to provide the infrastructure, and the dedication of the lower staff of the SIT performing the daily chores in the field all contributed greatly. Viewed in this perspective, the Gujarat SIT is a model for other investigations
  • One factor greatly helped to promote the cause of justice to victims. This was the apex court’s order to the SIT that the latter should ensure total protection to witnesses who came forward to testify, first before the SIT and later in the courts. An elaborate plan of action was drawn up and a team led by a senior officer oversaw the arrangement. This commends itself to be duplicated all over the country. It does require a lot of resources
  • Is it just a drop in the ocean? Yes it is so. The criminal justice system in the country is still mired in unforgivable politicisation and graft. A momentous exercise by the Centre in collaboration with the States can greatly help. This requires the kind of political will that has not been seen yet


3. A dumb primate?Topic: Environment

Category: Conservation, sensibility and good will

Key Points

  • Long decades ago, back in the third quarter of the last century, the ecologically astute anthropologist, Gregory Bateson, gently reminded his social-Darwinian colleagues across the reigning sciences and humanities that the unit of survival is never an isolated organism. It is always the organism plus its environment. “We are learning by bitter experience that the organism which destroys its environment destroys itself.”
  • A species that endangers other species endangers itself. This simple lesson in interdependence is the first principle of ecology
  • Nothing is more perilous for human destiny today than ecological illiteracy and myopia
  • The opposite is also true. A species that itself feels endangered endangers others in turn. This may be more a principle of psychology than of ecology: we often react violently when we feel threatened or besieged. This is particularly true of paranoid cultures like the United States, especially today, when guns have been allowed to proliferate in the name of security, profit, and, truth be told, power
  • Harambe, a silverback gorilla in the Cincinnati zoo who was shot dead by authorities last week apparently in order to save the life of a four-year-old child who had somehow fallen into water which was gorilla territory in the zoo. A little pause for thought, and perhaps more maturity in the culture about the use of weapons, might have indicated that the animal be tranquillised, instead of killed, to defuse the situation
  • How did zoos originate? Did they not emerge in the late 18th, early 19th century Europe, much like Royal menageries, as emblems of colonial superiority and prestige? The Jardin des Plantes in Paris dates from 1793, from just after the famed revolution. The London zoo is from 1828. The one in Berlin is from 1844. Did these zoos not signify the historical moment of a virtual extinction of wild animals from European jungles, and an approaching extinction from the forests of colonial lands? Why would you need to create zoos if the jungles which have served as the home of so many animals for millennia are not threatened with extinction?
  • The story is not too dissimilar to the creation of museums, which typically emerge when living human cultures, breathing under the open sky, are destroyed or threatened with destruction
  • In each case, colonialism with its predatory addictions has much to answer for. Nor should one falsely imagine that such colonialism is somehow, fortunately, over. It has merely taken on more insidious and hideous forms in this beleaguered 21st century. No small part of the deeper and wider consequences of ongoing colonialism and conquest is the planetary ecological crisis, climate change being only the most devastating threat among hundreds of others
  • In The Savage Mind, anthropologist Claude Levi-Strauss drew attention to a belief of a tribe native to Hawaii which could as easily be shared by many Adivasis in India: “We know what animals do and what beaver and bears and salmon and other creatures need, because our men were married to them and they acquired this knowledge from their animal wives.”
  • A village elder from a Raj Gond village in the Adilabad district of Telangana said: “BbhedDhangarka Mama lagtahai (The sheep is the tribe Dhangar’s uncle”)
  • Kinship with the animals is as old as humanity. Like us, animals are born, they suffer, they die. We share our sentience with them. Being biologically and psychologically nearest to humanity, animals have been so much a part of human affairs historically that it is impossible to write a decent history of human society from its earliest days without taking the enormous contribution of animals into account
  • The industrial age — especially the era of fossil fuels, which has falsely given educated humanity the extended illusion that we are somehow, magically, exempt from the laws of the natural world, that the technosphere is about to take the place of the biosphere — has driven a sharp wedge not merely between humanity and nature (animals being a specific case in point)
  • It has drawn an equally sharp wedge between human cultures, with the triumphant market’s marked indifference to human communities. For this profound socio-ecological alienation, not only is the entire gamut of non-human species paying a heavy price today, the laws of ecology quietly whisper that our own species already is, and ultimately will be, the just bearer of the weight of such sins. It is time that technologically desensitised “civilisation” woke up from its ecological idiocy before its follies wipe us all out
  • In the Cincinnati zoo, an innocent gorilla was murdered from primordial dread. It is not clear which of us is a dumb primate


Indian Express


  1. Tackling poverty in India: The low income, low growth trap

Topic: Social Issues

Category: Poverty

Key Points

  • While India’s economy has grown more rapidly in recent decades, the gains have been unevenly spread, and some regions have fallen further behind the rest of the country. In particular, India’s seven ‘low-income’ states have struggled to shake off the legacy of high consumption poverty, low per capita incomes, poor human development outcomes and the persistence of poverty among tribal populations
  • Addressing this geographical dimension of poverty and well-being will hold the key to improving the lives of millions of Indians.
  • Over the past decade, India witnessed widespread economic growth as well as faster and more widespread poverty reduction
  • 1 However, some states did not benefit as much as others. The seven ‘low-income states’ (LIS) in particular — Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Odisha, Rajasthan and Uttar Pradesh — continue to lag behind the rest of the country
  • 2 With the exception of Bihar and Rajasthan, all LIS have grown at a slower pace than other states after 2005. Poverty reduction has also not been as responsive to economic growth as in the other states. In other words, economic growth in the LIS has been less inclusive than in India as a whole
  • Admittedly, these states did experience greater absolute reductions in poverty after 2005. However, measuring catch-up using absolute changes can be misleading, given that initial levels of poverty and per capita incomes differed vastly across states
  • In relative terms, both growth and poverty reduction diverged across India’s states after 2005 (Figure 1). As a result, today, the LIS as a group — with Rajasthan as the exception — have a poverty rate that is twice that of other states. They are also home to a disproportionate share of India’s poor; in 2012 the LIS accounted for 45% of India’s population but nearly 62% of its poor. In fact, 44% of India’s poor — or over a 100 million people — live in three states alone: Uttar Pradesh, Bihar and Madhya Pradesh
  • Beyond monetary measures of well-being, the LIS perform poorly in providing their people with access to basic services and infrastructure. They have the highest rates of open defecation in the country. Close to 60% or more of households in these states practice open defecation compared to the national average of 44%. Access to drinking water and electricity within homes continues to be a distant dream for many. More specifically, in Chhattisgarh, Odisha, Jharkhand and Madhya Pradesh, only about a third of households have access to drinking water within their homes. As for electricity, only a third of households in Bihar report using electricity, while Uttar Pradesh performs somewhat better with half its households doing so.
  • While the LIS are by no means alone in facing persistent barriers to human capital development, the challenges that confront them are particularly acute. Residents of these states spend fewer years in school, as evidenced by their low rates of secondary school completion. Moreover, working adults are far less likely to have salaried jobs — the jobs that bring more secure terms of employment
  • In addition, the rates of infant and maternal mortality in these states are amongst the highest in the country. And, while child malnutrition is high and often endemic even in the more prosperous parts of the country, the malnutrition levels in some LIS are far worse than the national average. Alarmingly, in Jharkhand, Bihar and Uttar Pradesh, close to half of all children under the age of 5 are ‘stunted’.
  • Within the LIS too, poverty and deprivation follow distinct geographical and ethnic patterns. Typically, members of the Scheduled Castes and Scheduled Tribes are less well-off than those in other states, both in monetary terms as well as in access to basic services, education and salaried jobs. In fact, clearly distinguishable geographical clusters that have the highest rates of poverty within the LIS are often places with a high concentration of Scheduled Tribes. This suggests that social exclusion is closely intertwined with geography in India
  • Accelerating progress in the LIS will be critical to sustain India’s story of positive growth and poverty reduction. For this, targeted efforts will be needed to release these states from the twin traps of ‘low income-low growth’ and ‘high poverty-slow poverty decline’. The fact that some LIS have been successful on a few important fronts suggests that this can indeed be done
  • Notably, Rajasthan has managed to separate itself from the low-income group. The state’s growth has not only been higher than the LIS as a whole, its pace of poverty decline has been at par with more prosperous states such as Haryana and Maharashtra
  • Job creation in some LIS has also been faster than in a few better-off states. For instance, after 2005, Chhattisgarh, Rajasthan, Uttar Pradesh and Odisha created jobs at a faster pace than richer states like Gujarat, Andhra Pradesh and Tamil Nadu. Replicating such successes and spreading prosperity more widely will be key to improving the well-being of the people of these states, as well as of the development of the country at large

Tackling poverty in India




1. PIB


2. The Financial Express: Indian economy: Here’s why it is time to speed up reformsTopic: Economy

Category: Reforms

Key Points

  • There are encouraging economic signals. The latest estimate of growth for FY16 is 7.6% which is faster than the previous year’s 7.2%. Acceleration in growth in the last quarter to 7.9% has been impressive. There are also other indicators showing economic recovery
  • has been far from being congenial, exports have been declining continuously for over 17 months, the balance sheets of the banks and corporates continue to threaten the investment and credit situation and manufacturing is yet to show signs of steady revival
  • Of course, there is a long way to go before the next stage of acceleration. India has always remained a country with unexploited growth potential and the gap between promise and performance can happen only when the government gets down to serious reforms in policies and institutions
  • The extent and speed of recovery depends on several factors including the pace at which reforms are calibrated
  • The good news is that the growth of core sector output comprising of 8 key industries (cement, coal, electricity, crude oil, natural gas, refinery products, fertiliser and steel) has shown a sharp increase of 5.7% in February and 6.4% in March. While a part of the acceleration is due to low base effect and that may continue even in April, there is no mistaking the fact that the trend shows bottoming out in these important sectors
  • Of the R3.8 lakh crore highway projects stuck in the past, almost R3.5 lakh crore worth of projects have been unblocked. The daily construction kilometres have increase from 8.5 during FY13 to 11.9 in FY15 and 16.5 in FY16. In railways, average daily rate of expansion of tracks has increased from 4.3 km in 2010-15 to 7 km in FY16. The numbers of air passengers carried has increased from 66.4 million in 2014 to 80.8 million in 2015. The performances of ports, coal and hydrocarbon exploration too have shown impressive improvements. Not surprisingly, the estimated growth of gross value added at 7.2% in FY16 is better than the last year’s and the last quarterly GDP growth of 7.9% indicates revival
  • These bode well for the economy to move onwards and upwards. Going further, the bountiful rains could end distress in rural areas and replace the feeling of despondency with hope.
  • The role of improved governance is immense in this turnaround. The credit for the better performance must go to the government initiating a transparent system for auctioning coal blocks, taking specific measures to unblock stuck highways projects, substantial increase in the investments in both road and railway projects, faster environmental clearances, and overall better coordination among the infrastructure ministries
  • The time is opportune to speed up policy reforms to take advantage of the improved performance. This is the hard part and even after two years in office, the government has not found ways to effectively deal with its legislative businesses
  • The passage of the bankruptcy code is significant as it will enable public sector banks to restructure their balance sheets by selling off their distressed assets. At a time when the balance sheet crisis on the banks has been a major concern, passage of this law can be a great morale booster. Indeed, the success of the Act will depend on its implementation but at least, the necessary condition has been met with its passage
  • Hopefully, the GST and land acquisition Bills too will be passed in the monsoon session of Parliament and there are indications that the government is willing to drop the levy of 1% tax on inter-state sales. This is important for, we cannot have a GST with this birth defect
  • The other contentious issue between the opposition and the government are specifying the dispute resolution mechanism and fixing the ceiling rate at 18% in the Bill. In fact, fixing the rate in the constitutional amendment will be retrograde as you cannot resort to amendment every time the rates need to be changed
  • Surely, the government must work on its floor management better and prevent its fringe elements from derailing important legislations in their attempts to spite the opposition


  1. The Financial Express: Can UDAY overcome challenges, provide affordable power to all? 

Topic: Economy

Category: Infrastructure-Electricity

Key Points

  • The central government came out with a comprehensive reform programme called the UjwalDiscom Assurance Yojana (UDAY) in November 2015, for the financial and operational turnaround of electricity distribution companies (discoms)
  • The scheme is beneficial because it provides for affordable power to all, financial turnaround of discoms and also increases renewable energy penetration
  • Until the end of FY16, as many as 10 states have signed MoUs, which constitute about 45% of total debt. The scheme makes a clear distinction in its responsibilities between state governments, discoms and the Centre
  • State governments have committed to take over future losses from 5% to 50% progressively from FY18 to FY21. The Centre has committed additional benefits such as priority funding through DeenDayalUpadhyaya Gram JyotiYojana, Integrated Power Development Scheme, Power System Development Fund and cheap power from NTPC/other CPSUs, higher coal allocation/linkages, etc.
  • Of the 10 states that have signed MoUs, eight states have taken over 50% of the debt amounting to R1 lakh crore, of which a major portion (90%) is from the northern states of Uttar Pradesh, Rajasthan, Haryana and Punjab. Therefore, the success of UDAY for the first phase shall rest with the success of the northern states
  • The real challenge for the scheme lies in making it sustainable through operational turnaround. Now, there are seven principles of operational turnaround.
  • Loss reduction
  • Aggregate technical and commercial (AT&C) losses have two components.
  • Technical losses are generally transformation losses and losses occurring on flow of current through conductors/cables.
  • Commercial losses are basically the difference between the total input energy and the total energy billed after taking out technical losses.
  • AT&C loss reduction, as claimed by various states, varies from 11% to 71%, with a national average of 22% for FY14. The determination of AT&C losses is not currently determined through measurement as all feeders, distribution transformers (DTs) and consumers do not have metering facilities. Thus, most of the time AT&C loss is worked out with an estimated number. In order to ensure that these numbers are correct and authentic, meters are to be in place as envisaged in UDAY, in all feeders by June 30and DTs by June 30 of this and next year, respectively. So, all losses will be determined through measurement. Further, each DT will be monitored by energy sent out and sum of all energy bills of consumers on that DT
  • Technology penetration
  • Development of distribution network characteristics differs from state to state. Monitoring and control is non-existent. Measurement usually relies on aggregated information from substation and is only available with a significant time lag. More and more HV (High Voltage)distribution systems, cables and automation needs to be installed to arrest losses
  • Optimised power procurement
  • Power purchase costs are 80-85% of the cost of power supply. So, economical procurement is a key factor to reduce the cost of power. Earlier, the practice was to buy total power—even if it was required for a few hours—and pay a fixed cost for 25 years. Now, various power products are available in addition to long-term measures, such as medium-term, short-term, day-ahead, intra-day, etc. Power exchanges are functioning well and an e-bidding platform has been introduced by the central government. Each discom has to procure its power requirement scientifically, depending upon the load curve, season and cost
  • This shall be more complex with penetration of renewable energy including distributed generation in the absence of real-time distribution system operations and will need accurate load forecasting, renewable energy forecasting and real-time distribution supply management like the transmission system operation. UDAY has started yielding results by reducing NTPC generation cost by around 15%
  • Smart metering, billing and collection
  • This is the most crucial area of distribution system. UDAY envisages installation of smart meters for consumers of 500 units and 200 units per month by 2017 and 2019, respectively. The most important issues that need to be addressed are (1) cheaper communication from smart meters to a control centre and cyber-security for automatic reading; (2) complete automation from metering to collection and acknowledgement by customers; and (3) open protocol for communication to integrate meters of various manufacturers
  • Reliable distribution service
  • The reliability of distribution service has been poor due to power outages and interruptions in the distribution system. This is primarily due to low investment in capex, operational expenditure and low level of technology penetration, including monitoring and control. In fact, a study has highlighted that the distribution charges per consumer of private discoms are about twice that of state-owned discoms, whereas state discoms’ opex per consumer should be more in order to provide reliable services, considering large geography and dispersed load
  • Human resources
  • The management being deployed needs to be professional/specialised, as one needs more turnaround specialists than business-as-usual managers. They have to be kept for a longer period, say 4 years, so that they are accountable for the decision taken. Further, introduction of new technology and renewable energy penetration in distribution would need new skillsets to trigger new business models and regulatory framework.
  • Intensive monitoring
  • This programme needs to be monitored intensively and bottlenecks have to be addressed then and there. This has to be done by an independent agency, to get feedback from grassroots level.
  • It is said that “well begun is half done.” Financial engineering has taken off well and we have to take up operational turnaround aggressively on a Mission Mode. If UDAY is left to business-as-usual, this shall negatively affect state finances and all stakeholders badly. Stakes are much higher this time around


  1. The Financial Express: Powering up India with solar energy: Neutralising threats, implementing policies

Topic: Economy

Category: Energy sector

Key points:

  • In India, the solar sector—on which there was minimal focus—is now becoming the cynosure of all eyes.
  • Solar energy got the required impetus with the launch of the Jawaharlal Nehru National Solar Mission, which set a target of 20,000MW of solar power by 2022. The mission, among other things, focuses on grid, off-grid applications, solar rooftops, solar lighting systems, etc. It also underscores the need for enhancing manufacturing capabilities of solar technology, strengthening R&D and a host of other policy measures that would make India a solar hub.
  • States, too, declared their policies. Gujarat became a model state; today it has 1GW of installed solar capacity, which is more than a quarter of India’s total. In fact, the 500MW Charanka solar park in the district of Patan is one of the largest in the world. The Renewable Purchase Obligation (RPO) regulation, which makes it obligatory on the part of distribution companies and captive power generators to have a specified percentage of renewable energy in the total power generated by them, is another measure which shows the commitment towards renewable energy
  • Rooftop PV—also called RTPV, and installed on roofs of residential and commercial buildings—is receiving due attention. The International Energy Agency recognises the importance of solar energy in the power sector. In its ‘India Energy Outlook 2015’ report, it states that solar sector will witness dramatic growth, faster than any other source of generation. It predicts installed capacity to rise by 29GW in 2020 and 188GW by 2040, making India the second largest solar market in the world after China. This will boost the share of solar power in India’s total power capacity to 17% in 2040 from 1% today, the report adds
  • Policy initiatives are encouraging and global reports point towards a bright future for solar. However, will policy initiatives bear fruit? The solar sector faces a few hurdles—land acquisition and evacuation, bankruptcy of global solar power companies, and the possible anti-competitive conduct in the future
  • Land acquisition has always been the bane of power sector. Solar power generation is land-intensive—it needs huge tracts of land for installing transmission towers. The stalled 125MW projects in Parbhani and Osmanabad in Maharashtra are a case in point. The 24×7 power supply strategy report prepared by Forum of Regulators mentions that a major hurdle in the development of new transmission lines is the difficulty in obtaining additional Right of Way (RoW
  • To build transmission lines/sub-stations targeted in the 12th Plan, about 1.4 million acres of land is required. Resistance by farmers and landowners is resulting in cost overruns, which, in turn, would mean high cost of solar power. In fact, even the Charanka solar park had to face opposition from farmers.
  • Insolvency of international solar companies is another threat. The recent bankruptcy of SunEdison has set alarm bells ringing. A few months ago there was much euphoria about SunEdison establishing its footprint in India. It won a bid of R4.63kWh for a 500MW project in Andhra Pradesh. But then the company filed chapter 11 bankruptcy in the US. Such developments may make the lenders wary of advancing loans to solar power companies
  • Then there is the possibility of anti-competitive conduct. An international case involving SolarCity, a company controlled by Elon Musk, and Arizona utility Salt River Project underscores the fear of anti-competitive conduct. The former has filed a lawsuit claiming that the latter is using anti-competitive practices to maintain monopoly around energy and solar power and unfairly block competition. It is ironical that, in another case, SolarCity is at the receiving end—Nevada consumers filed a suit against it, alleging that the rooftop solar installer omitted and failed to disclose information about the future rates before it installed panels on their homes
  • Similar developments cannot be ruled out in India.
  • However, if all policy measures are properly implemented and threats neutralised, then the solar sector can find its rightful place under the sun in India


5. The Business Line: Tentative recoveryTopic: Economy

Category: Growth

Key points:

  • Headline numbers from 2,700 listed firms for the quarter ended March 2016 hint at a turnaround in the corporate sector
  • Aggregate sales growth, at 3.5 per cent year-on-year, has returned to positive territory after shrinking 3- 7 per cent in each of the last four quarters. This suggests that companies have fought off recessionary trends and are witnessing an improving demand environment
  • The recent rebound in commodity prices has restored some pricing power to firms and lifted sales too, though this has curtailed raw material savings. Excluding banks and financial firms, the profit picture looks healthier with total operating profits expanding by 8 per cent and sustainable net profits (excluding one-off items) increasing 10.4 per cent over last year
  • The corporate profit revival is getting more broad-based as well. Until December 2015, it was automobiles, FMCGs, private banks and retailers — urban consumer-focussed sectors — that did much of the heavy lifting on growth
  • But in the March quarter, higher sales of agrochemicals, fertilisers and two-wheelers suggest a tentative pickup in rural demand. Strong numbers from large infrastructure players, cement makers and power utilities show that the Centre’s efforts at de-bottlenecking stalled projects is paying off
  • While all this is good news, it isn’t going to be easy for corporate profits to push higher from here. For one, these profit numbers would show a 20 per cent decline with the inclusion of banks, which — thanks to sharply higher provisioning for bad loans — have struggled through one of their worst performances in recent memory
  • While analysts are hoping that the worst is over after record losses this quarter, the size of restructured loan books and slow progress on recoveries suggest that a turnaround is some way off
  • Two, wage inflation is a looming challenge for corporate India too, with a 10 per cent rise in employee costs despite sluggish top-lines. The key to a durable recovery at India Inc now lies in supportive commodity prices and a decisive turnaround in banking. Apart from carrying a hefty 30 per cent weight in the bellwether indices, banks supply the critical ingredient needed to fuel the rest of the economy — credit
  • Therefore, nursing the sector back to health through restructuring and recapitalisation of leading public sector banks should be a policy priority, if the recent green shoots are to flourish
  • Given that optimistic projections have been proved wrong a number of times in the last couple of years, it is best not to take the recovery for granted.


6. The Economic Times: Environment part of sustainable progressTopic: Environment

Category: Environment vs development

Key points:

  • There is a lot of opposition to the efforts of the Kerala government to revive the 20-year-old proposal for the 163 MW Athirapally hydroelectric project. This small addition to Kerala’s generation capacity is unlikely to be worth its adverse environmental impact. The state needs to think bigger and bolder, instead of wasting energy and goodwill on such tiny projects
  • However, it is hard to take issue with the chief minister’s call for rigorous scientific research into problems such as garbage treatment, resource depletion, misuse of energy, illegal exploitation of natural resources, etc. Across the political spectrum, politicians support conserving the environment without stunting development and posit the environment and development as two sides of the same coin — suggesting that there exists a possible flashpoint when the two are at odds
  • Politicians alone are not guilty of breathing life into this false dichotomy, environmentalists too have contributed
  • Globally, economic development over the last 30 years has lifted millions out of poverty but also caused environmental and societal harm that threatens to reverse or undermine development
  • It is time to set aside the dichotomy and link economic processes to the environment and natural resources through interventions that encourage sustainable patterns of production and consumption
  • That calls for higher resource efficiency. The aim of any administrator should be to ensure that their plans for alleviating poverty and promoting economic development minimise harmful effects on humans and reduce pressure on the ecosystem


7. Quick Bits


a) US returns over 200 artifacts worth more than $100 million to IndiaThe US today returned over 200 cultural artifacts estimated at $100 million to India at a ceremony, attended by Prime Minister Narendra Modi, at Washington DC

Items returned included religious statues, bronzes and terra cotta pieces, some dating back 2,000 years, looted from some of India’s most treasured religious sites. Among the pieces returned is a statue of Saint Manikkavichavakar, a Hindu mystic and poet from the Chola period (circa 850 AD to 1250 AD) stolen from the Sivan Temple in Chennai, which is valued at $1.5 million


b) Centre to release water conservation report

To ensure majority of the funds allocated under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) is spent on water conservation-related works, the Centre is planning to come out with a performance outcome report of such works done in 2015-16.

The outcome report will list out the initiatives that states have taken towards building farm ponds, canals, bunds, revitalising traditional water resources, and other such projects. “This time around, we are not only asking for a financial performance appraisal from the states, but also want to know what work they have done with the annual MGNREGS funds, particularly in conservation of water, which is a priority area for the government” said an official statement


c) GDP data discrepancies: Govt to release supply use table to tackle variationThe statistics department will shortly release the supply use table (SUT) to clear GDP data discrepancies, blamed for pushing up economic growth to close to eight per cent in the March quarter of 2015-16, by this month-end



The supply table describes the supply of goods and services, which are either produced in the domestic industry or imported. The use table shows where and how goods and services are used in the economy

If the break-up of private final consumption expenditure, gross fixed capital formation, government final consumption expenditure, change in stocks, valuables, and net exports exceed GDP, discrepancies will be negative and if it is less than the GDP, the discrepancies will be positive. In the GDP estimates of advanced countries, there are no discrepancies due to SUT. Most countries use GDP at market price


d) India ranks second in retail potentialIndia jumped 13 positions and was placed second in retail potential in the 2016 Global Retail Development Index (GRDI), released by AT Kearney, a Chicago-based consultancy. The country was ranked 15 in the previous year. The report profiled 30 developing countries

India’s high ranking is driven by GDP (gross domestic product) growth, improved ease of doing business, and better clarity regarding FDI (foreign direct investment) regulations


e) Prices of major drugs for treating cancer, diabetes and blood pressure cut by 25%Prices of 56 important medicines used in treatment of cancer, diabetes, bacterial infections and blood pressure have been capped by the government, thereby reducing the cost by an average of nearly 25 per cent.

Drug price regulator National Pharmaceutical Pricing Authority (NPPA), however, has also increased prices of some of the smaller volume packs of commonly used intravenous fluid such as glucose and sodium chloride injections


f) Government to increase land ownership among rural womenthe Centre will propose to states to give priority to households where men are willing to share land ownership with their wives, as part of strategy for subsidies for the rural housing scheme



g) 17 of 20 smart cities ready with SPVs for projectAs the Ministry of Urban Development aims to kick-start smart city projects by June 25, marking the first year of launch of the flagship mission, as many as 17 cities out of the 20 selected in the first round, have already incorporated special purpose vehicles (SPVs)


F. Concepts-in-News: Related Concepts to Revise/Learn:
  • NSG
  • APEC
  • Bilateral Investment Treaty
  • The RTE Act
  • GST
  • UDAY
  • FDI in retail
  • Renewable Purchase Obligation
  • Supply Use Table
  • Low Income States of India
G. Fun with Practice Questions 🙂
Question 1: Which of the following statements is/are correct?
With the signing of The Logistics Exchange Memorandum of Agreement (LEMOA) between India and US:

  1. It would make it easier for militaries of both the nations to share its facilities
  2. It would make it easier for Indian military to use equipment procured from US

a) 1 only

b) 2 only

c) Both 1 and 2

d) Neither 1 nor 2


Question 2: Which of the following countries is/are members of G7+5?
  1. Mexico
  2. South Africa
  3. China
  4. Canada
  5. Italy

a) 2,3 and 4

b) 1,2 and 5

c) 1,2 and 4

d) All the Above


Question 3: Which of the following statements is/are correct?
  1. The model (Bilateral Investment Treaty)BIT 2015 of India has the most favoured nation (MFN) provision
  2. The model BIT 2015 of India says that foreign investors have to exhaust local remedies before proceeding for international arbitration

a) 1 only

b) 2 only

c) Both 1 and 2

d) Neither 1 nor 2


Question 4: Which of the following are correct about UjwalDiscom Assurance Yojna or UDAY?
  1. Under the scheme statediscoms can convert part of their debt to state guaranteed bonds and pay back lenders by selling bonds
  2. The scheme also envisages improving operational efficiency of state discoms

a) 1 only

b) 2 only

c) Both 1 and 2

d) Neither 1 nor 2


Question 5: Which of the following statements is/are correct?
  1. India allows 100% FDI in multibrand and singlebrand retail
  2. There is a 30 per cent local sourcing norm which foreign investors have to adhere to in the case of single brand retailing

a) 1 only

b) 2 only

c) Both 1 and 2

d) Neither 1 nor 2


Check Your Answers

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