Comprehensive News Analysis – 23 May 2016

Table of Contents:

A. GS1 Related:
B. GS2 Related:

1. Gaya-model lantern in Colombo

2. China instigated Naga outfit: Centre

3. Immense opportunities after lifting of sanctions, says Narendra Modi

C. GS3 Related:

1. India successfully launches Reusable Launch Vehicle

2. Sirajuddin Haqqani could succeed Mullah Akhtar Mansour as Taliban leader

3. Gulf remittances fall 2.2%, offset by slide in oil imports

4. Breakthrough as new form of light discovered

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

The Hindu

1. Fishermen in troubled waters

The Indian Express

1.India, US and an eastward tilt

2.India’s Chabahar test

Others:

1. The Financial Express: India largest producer, consumer, importer of pulses. Here’s how we can be self-sufficient

2. The Financial Express: Corruption in emerging economies

3. The Financial Express: Bt cotton-Monsanto measure shows India wants seed R&D but not willing to pay for it

4. The Business Line: Big bank theory

5. The Economic Times: Time to complete oil marketing reform

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

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Useful News Articles

A. GS1 Related

Nothing here for today folks!

B. GS2 Related

1. Gaya-model lantern in Colombo

Topic: India’s Neighbourhood

Category: Sri Lanka

Location: The Hindu

Key points:

  • Lanterns are an integral part of the Vesak Poya festival (Full Moon in May), which is celebrated to mark three important events in the life of Buddha — birth, enlightenment and death.
  • This time, in Colombo, a Vesak lantern kept near the Gangaramaya temple is an additional attraction as it has been modelled on the “stupa” at the Mahabodhi temple in Gaya, Bihar. This has been arranged by the Indian government at the invitation of the Sri Lankan government
  • The Mahabodhi temple, one of the oldest brick structures in eastern India, was declared a World Heritage Site by the UNESCO in June 2002
  • Located about 115 km south of Patna, the temple is regarded as one of the four holy sites related to the life of Buddha

 

2. China instigated Naga outfit: Centre

Topic: India’s Neighbourhood

Category: Indo-China Relations

Location: The Hindu

Key points:

  • For the first time, the Centre has admitted officially that the National Socialist Council of Nagaland (Khaplang), named after its Myanmar-based leader S.S. Khaplang, intensified violence in the Northeast in 2015 at the behest of the Chinese
  • The admission was made in depositions by the Centre and other States before a tribunal set up early this year to adjudicate the ban on the insurgent outfit under the Unlawful Activities (Prevention) Act (UAPA). The tribunal upheld the decision to ban the outfit for five years
  • The order reveals that Nagaland was the only State which was not in favour of declaring the NSCN-K an unlawful association and sought a “peaceful political solution”. Arunachal Pradesh and Manipur supported the ban

 

3. Immense opportunities after lifting of sanctions, says Narendra Modi

Topic: International Relations

Category: Indo-Iran Relations

Location: The Hindu

Keypoints:

  • PM began his Iranian tour on May 22
  • He said the signing of the agreement on the development of Chabahar portwill provide wider connectivity
  • Besides signing a deal on the development of phase-1 of the port, India is looking at doubling oil imports from the Persian Gulf nation, which a few years back was its second-biggest oil supplier, as well as making progress on getting rights to develop the Farzad–B gas field
  • India has “shared interest” in peace and prosperity of the region, PM Modi said, adding that combating the menace of international terrorism and radical ideologies is a common challenge

 

C. GS3 Related

1. India successfully launches Reusable Launch Vehicle

Topic: S&T

Category: space

Location: The Hindu

Key points:

  • The Indian Space Research Organisation (ISRO) has added one more feather in its cap by successfully launching the Reusable Launch Vehicle, the indegeneously made space shuttle, from Sriharikota on Monday

 

2. Sirajuddin Haqqani could succeed Mullah Akhtar Mansour as Taliban leader

Topic: Security

Category:Terrorism

Keywords:

  • SirajuddinHaqqani could succeed the slain Taliban leader Mullah Akhtar Mansour
  • The Taliban now control more territory than they have done since their ouster from government in 2001, and hopes of peace talks that the United States was pushing have all but collapsed as the bloodshed has increased

 

3. Gulf remittances fall 2.2%, offset by slide in oil imports

Topic: Economy

Category: Remittances

Keypoints:

  • Remittances from the Gulf nations to India declined for the first time in six years due to sliding oil prices, according to a Crisil report
  • It fell by 2.2 per cent in 2015-16 but the slide had also resulted in a contraction of oil imports, which offset the drop
  • More than half of India’s remittance income comes from the GCC. Remittances to India from the GCC amounted to $35.9 billion in 2015-16 down from the $36.7 billion seen in the previous year
  • India’s trade deficit with the GCC has fallen a $46 billion, or 77 per cent, in three years, to $14 billion because of rapidly declining imports

(Reason: Falling oil prices )

  • The fact that GCC remittances to India contracted only 2.2 per cent despite a 47 per cent slump in oil prices shows that these economies, especially Saudi Arabia and the United Arab Emirates (the two largest remitters in the GCC), are less dependent on oil income
  • “India’s dependence on remittances and the resultant vulnerability is much lower than some of its Asian peers who receive similar proportions of remittances from GCC countries.”
  • Remittances make up 7 per cent of India’s GDP, compared with 28 per cent in Nepal, 9.7 per cent in Sri Lanka, and 6.5 per cent in Pakistan.

 

4. Breakthrough as new form of light discovered

Topic: S&T

Category: Physics

Keypoints:

  • One of the measurable characteristics of a beam of light is known as angular momentum. Until now, however, it was thought that in all forms of light the angular momentum would be a multiple of Planck’s constant — the physical constant that sets the scale of quantum effects
  • Now, researchers from Trinity College Dublin’s School of Physics and CRANN Institute have demonstrated a new form of light where the angular momentum of each photon (a particle of visible light) takes only half of this value
  • The discovery will have real impacts for the study of light waves in areas such as secure optical communications

 

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

 

The Hindu

1. Fishermen in troubled waters

Topic: India’s Neighbourhood

Category: Indo-Pak Relations

Key Points:

  • Indian prisoners like Sarabjit, Kirpal Singh, Vaaga Chauhan and Ratan Das have died in Pakistani prisons, Pakistani prisoners like Nawaz Ali and others have died in Indian prisons
  • These men were not criminals or terrorists; small errors on their part and hostilities between their nations cost them their lives
  • These prisoners have nothing to do with the policies of their respective governments, but they bear the consequences of these policies or are often held up as “prizes” in a tense geo-political conflict
  • And here’s what makes the situation glaringly unfair. India and Pakistan had signed the Agreement on Consular Access in 2008, according to which consular access must be provided within 90 days of arrest of either country’s prisoners. This period is given to help verify the person’s nationality and enable necessary steps to repatriate the person to his or her country of origin.
  • There have been instances where prisoners could not be released and repatriated because their nationalities were not verified on time. Even today, 18 Indian fishermen remain in Pakistan’s prison after completing their sentences more than a year ago.
  • In January 2008, India and Pakistan set up the India-Pakistan Joint Judicial Committee on Prisoners, which consisted of retired judges from both countries. The committee worked hard to seek early repatriation of prisoners who have completed their sentences in the other country’s jail and also ensure that they are treated humanely. It met every six months and visited prisoners in both countries. It discussed issues such as health and food of the prisoners and the need to evolve a mechanism for humanitarian treatment of women, the mentally challenged, juvenile prisoners, and so on
  • For prisoners lodged in jails in the neighbouring country, meeting judges from the higher judiciary meant a lot. It gave them hope and confidence of returning to their homes. They brought to the notice of the committee members the hardships they faced in these prisons. This intervention helped the prisoners receive better medical treatment. It also allowed family members to find them through the committee members. Both governments applauded the role played by the committee
  • Unfortunately, this committee has not met for about 2 years now
  • India and Pakistan must immediately revive the committee to ensure that the prisoners are ensured their rights and are repatriated at the earliest. It is time that these prisoners, who are victims twice — first of poverty and circumstance, and then of a geo-political conflict — are not held hostage. The least India and Pakistan can do is evolve a policy of no arrest on straying fishermen.

 

The Indian Express

1. India, US and an eastward tilt

Topic: India’s Neighbourhood

Category: Indo-Pak Relations

Key Points:

 

  • From the Indian point of view, there is one disconnect in Indo-US Relations — between US eagerness for Indian participation in action in the South China Sea, and its lukewarm approach to an Indian connection in Afghanistan or, for that matter, the Persian Gulf and the Saudi peninsula
  • When we do military cooperation, the Indian Ocean does not quite include the northern Arabian Sea and the Persian Gulf.
  • However, both from the geo-economic and geo-strategic view, this is the most important external region for India’s security. We source 70 per cent of our oil from there, and 7 million Indian citizens working there send back $30 billion in remittances. As our energy needs increase, this area will only become more important
  • In the past, we have had to carry out large-scale evacuations of our nationals because of war-like situations in this region, most recently from Yemen in 2015. The prognosis for the stability of the whole region is not particularly good. Yet, somehow, there are no drills, joint exercises or planning between the US, which is the dominant power, with a fleet headquartered in Bahrain, and India for conflict contingencies
  • It is a bit odd that all the exercises and activities take place in the east, which is largely stable and peaceful and none in the area may actually require cooperative military action. Whereas in East Asia, we are building trilateral partnerships with the US and its other partners like Japan, Australia and South Korea, in the Persian Gulf and Saudi peninsula, we appear to be on our own
  • Given the rapid rise of China and our own considerable difficulties with Beijing, having the US as a security partner is useful. With its million-man army and nuclear weapons, India does not really need the US for its existential security, certainly not from any direct threat from China
  • But we do need partnerships and coalitions to enable us to maintain a secure periphery that includes a region which will literally provide the fuel for it. The US, for its part, wants India to play a role in creating a balance of power to keep China in check in East Asia. China may be well ahead of India in almost all measures of what is called comprehensive national power. But, India is the only country in Asia that can offset the massive gravitational pull of China
  • Yet, beyond the need to have open sea lanes in the South China Sea, India has little or no interest in facing off with Beijing in the area. Given its huge external trade, the biggest loser from any disruption would be China itself
  • The US, let’s be clear, is seeking Indian friendship to maintain its primacy in the world system. India, in turn, needs the US as a guarantor of a secure and stable world system, but especially as a security provider in the Persian Gulf region, where we have no military capacity
  • So while the overall tenor of our relationship is excellent and we have growing convergence in East Asia, there is need to focus on the huge gap that exists in relation to the most vital area of our external interest

 

2. India’s Chabahar test

Topic: India’s Neighbourhood

Category: Indo-Pak Relations

Key Points:

  • A rare trilateral engagement with the president of Iran, Hassan Rouhani, and the Afghan leader, Ashraf Ghani, in Tehran today underlines the extraordinary strategic opportunities that continue to present themselves for India in the region.
  • But the fact that it has taken more than a decade for India to begin work on Chabahar reveals the deep-rooted internal constraints on India’s regional economic strategy
  • Part of the problem was the framing of a sensible Indian approach to the nuclear tensions between Iran and the US that sharpened just after Delhi and Washington signed off on the nuclear initiative in 2005
  • As the US sought India’s support in international forums against Iran, Delhi debated the issue in terms of non-alignment and strategic autonomy. In the end, the government was pragmatic enough to go along with the majority opinion of the international community rather than line up behind Iran and risk undermining its own nuclear deal with America
  • If Delhi had allowed its instinct to posture prevail over common sense, it would have looked foolish when Iran negotiated a nuclear deal of its own with America in 2015. This involved a harsh set of compromises that Tehran was unwilling to make a decade earlier.
  • The real challenge in India’s engagement with Iran was not about holding up the high principles of “strategic autonomy”, but of effectively navigating the international complexities surrounding economic and energy ties and seizing upon the few opportunities that were available for building a partnership under adverse conditions
  • Consider the case of Chabahar port. The idea of building a port in the south-eastern coast of Iran first came up when the Iranian president Mohammed Khatami came to Delhi in January 2003. While the international circumstances made engagement with Iran hard, India’s internal problems contributed to the problem.
  • Delhi’s vote against Iran at the International Atomic Energy Agency on the nuclear issue has done a lot less damage than India’s inability to find practical ways to advance the relationship on the ground
  • Although India has taken long to get it off the ground, the Chabahar project has the potential to alter the hostile regional geography that Delhi had inherited in 1947. The partition of the subcontinent and Pakistan’s control of parts of Kashmir had left India without physical access to Afghanistan. Pakistan, which resented Kabul’s special relationship with Delhi, had no desire to provide overland transit rights to India or facilitate an expansive cooperation between Afghanistan and India
  • Iran came into this bleak picture as Delhi and Tehran discovered a common interest in opposing the Taliban that had captured Kabul in 1996 with the support of the Pakistan army. The ouster of the Taliban in 2001 did not reduce the salience of the India-Iran partnership
  • Chabahar’s significance also rose, as China began to develop Gwadar and unveiled ambitious plans for linking its far western province of Xinjiang with the Arabian Sea with a transport corridor running through Pakistan.
  • The successful launch of the Chabahar project allows India to circumvent the geographic limitations imposed by Partition and the enduring hostility with Pakistan. The delay in the execution of the Chabhar project, however, has exposed the big problem that India had created for itself
  • It is the vast gap between an expansive rhetoric on promoting regional connectivity and the lack of institutional capacity to implement strategic projects across and beyond borders. The Chabahar project, hopefully, is the first step in plugging that gap

 

Others:

1. The Financial Express: India largest producer, consumer, importer of pulses. Here’s how we can be self-sufficient

Topic: Economy

Category: Agriculture

largest consumer and importer of pulses

Key Points

  • UN General Assembly proclaimed 2016 as the International Year of Pulses (IYP)
  • An International Year designation provides an unprecedented opportunity to raise awareness and to celebrate the role of beans, chickpeas, lentils and other pulses in feeding the world
  • It is a sheer but timely coincidence that during IYP, in India pulses are on the boil, witnessing unprecedented rise in prices of pulses. Pulses occupy a unique place in India’s nutritional food security as they are a major sources of plant proteins for vegetarians.
  • By-products of pulses—leaves, pod coats and bran—are fed to animals as dry fodder. Some pulses crops like gram, lobia, urad and moong bean are fed to animals as green fodder. Plants of moong (green gram) are also used as green manure to improve soil health.
  • India is the biggest producer, as well as the largest consumer and importer of pulses. The country has not been able to increase productivity, raising the question what ails the pulses agriculture? In 2013-14, India produced 19.25 million tonnes of pulses, which a year later came down to 17.3 million tonnes, necessitating more imports.
  • The current crisis can be attributed largely to decrease in farm area, as farmers opt for high-yielding crops with higher MSP, such as paddy and wheat. This has resulted in pulses getting pushed to being grown in marginal, poorly-irrigated and low-quality soils, resulting in lower yield
  • Moreover, the fact that pulses in India are mostly grown in rain-fed areas with unstable and uncertain rainfall conditions, this increases the risk of crop failure. Poor access to storage and milling facilities causes further risk to farmers, as unshelled pulses have a low shelf life. Additionally, poor market linkages cause constrains in effectively meeting market demand
  • Procurement prices of pulses are announced every year, but without any procurement being made. Compared to the prices farmers get for wheat and rice, the procurement prices for pulses are low. This becomes a disincentive for farmers to grow pulses. At a time when retail market prices are more than double the farmers’ price, we have to provide farmers with MSP that makes pulses production attractive vis-a-vis crops like wheat and rice
  • Let us not forget the dimension of equity. Pulses are largely grown in marginal lands prone to moisture stress. Offering remunerative prices would not only help the less well-off producers of these regions, but may even induce farmers in irrigated areas to switch from water-guzzling paddy and sugarcane to pigeon pea, or from wheat to chick pea
  • In fact, the recent announcement by the NITI Aayog to create a buffer stock for pulses is welcome. Further, alongside creating a buffer, if pulses are included in PDS, it will go a long way to improve the food and nutrition security of the country. India has the potential to achieve much higher pulses production. To stabilise prices in the long run, we need to increase domestic production by eliminating the risks farmers experience in relation to growing pulses. India can be self-sufficient in production of pulses taking certain steps.

* Developing short duration and pest-resistant crops: Scientists have evolved short duration varieties of gram and tur, which can be harvested in 100 days. Some salt-tolerant varieties like JG-11 for south India have also been released. Recently, the International Crops ResearchInstitute for the Semi-Arid Tropics (ICRISAT) released high-yielding pigeon pea hybrid suitable for irrigated areas, which may induce farmers to take up cultivation of pulses in irrigated areas, provided there are remunerative prices.Seed multiplication is also a task that needs immediate attention. State Agricultural Universities, Indian Council of Agricultural Research and KrishiVigyanKendras have to take the lead in seed multiplication and distribution
* Area expansion: Substantial additional area can be brought under pulses by adopting cropping systems like mung/urad beans as catch crops in summers under cereal-based cropping system, inter-cropping with short-duration pulses (mung, urad and cowpea) in sugarcane, millet, cotton, etc, and new cropping system such as pigeon pea and wheat in northern region, rice and lentil in eastern region, and urad and rice in southern peninsula
* Targeting large farmers will bring higher returns: Given the high price risk of growing pulses, production by large farmers who possess more than five acres of land would be prudent. They can diversify into pulses and have greater risk-absorbing capacity in case of inadvertent loss. Such progressive farmers can also be monitored and trained easily

  • Although there are no recent data, it is likely that the decrease in pulses consumption will have been greater in the past two years, as India experienced its second consecutive drought and spike in prices. With decreasing rural income, it is also likely that the rural poor will not be able to afford expensive pulses, which will have a negative impact on the food and nutritional security of the poor

 

2. The Financial Express: Corruption in emerging economies

Topic: Governance

Category: Corruption

Key Points

  • At the start of this century, the world was celebrating the rise of BRICS, dynamic emerging economies which held the promise of rapid transition from developing to developed status
  • Fifteen years down the line, the president of Brazil faces impeachment.In South Africa, president Jacob Zuma has been accused of hundreds of corrupt acts. In China, president Xi Jinping has embarked on an anti- corruption crackdown which affects party members, army generals and local government officials.InIndia,we now have the Agusta Westland chopper scandal to add to many others
  • Why has corruption become such a big issue ? Is it the case that while growth was rapid, people did not mind the elite taking their cut but now that growth has slowed down, corruption costs too much perhaps?
  • One could say for India that many citizens face petty corruption as a transaction cost just to access the facilities that they should have in any case. Transparency International India found in a report five years ago that BPL families had paid Rs 800 crore in bribes. Business people no doubt bribe to circumvent regulations or reduce delay or jump the queue. These are costs which may be understood as costs of overcoming the built-in inefficiency due to regulatory regimes
  • Petty corruption that the consumer-citizen suffers from is one where s/he has little choice. The consumer-citizen faces a local monopolist who may be a policeman or a registrar. To challenge the monopoly requires a lot of time and energy. Paying up is the easy option. The producer/citizen gives bribe to speed up the transaction and may benefit from it. Big corruption is what is becoming politically explosive. This is because the corrupt elite are trading their privileged access to national assets to extract very large sums of money
  • The assets do not belong to them. They have just been put in charge by virtue of election or induction into the civil service. They turn this into monopoly power and translate it into large profits. The citizens may or may not lose personally but they resent the betrayal of trust which the behaviour implies
  • It may yet be that emerging economies will reach a relatively incorrupt position. But it will happen only if the costs that the corrupt are made to pay match their potential returns from corruption

 

3. The Financial Express: Bt cotton-Monsanto measure shows India wants seed R&D but not willing to pay for it

Topic: Governance

Category: Agriculture

Key Points

  • Though the government recognises the need for R&D in the agriculture sector—with global warming, India needs drought- and flood-resistant seeds, for instance—the complaints of a few seed companies have managed to ensure it dramatically tightened the screws on technology suppliers like Monsanto
  • Not only have all existing contracts between technology firms and seed companies been declared null and void, they have to be renegotiated afresh on terms specified by the government
  • This compulsory licensing is ironic since, apart from being anti-market, it wasn’t as if costs were exorbitant or that farmers were being forced to use the seeds despite not getting any returns from it. While farmers are free to use traditional seeds, they saw an advantage in moving to Bt seeds since they didn’t have to spend money to save the crop from the bollworm any more—indeed, the royalty costs added up to just around 1% of their total cost of cultivation
  • Yet, last year, the government imposed a price control on the seeds which were, till then, fixed depending upon what the market could bear. If this wasn’t bad enough, a subsequent order was passed limiting the amount of royalty a technology company could charge—normally, this is decided through negotiation between the technology and seed companies
  • As a result, in the case of Bt cotton technology provided by Monsanto, while the seed prices for farmers were reduced by Rs130 per 450 gram packet, around Rs129 of the hit was taken by Monsanto in the form of reduced royalties and just one rupee by the seed firms which used Monsanto’s technology
  • And now, based on the latest licensing order, while the government is free to fix whatever prices it wants for the seeds, the royalty is to be capped at 10% of this for the first five years and then has to be reduced by a tenth in each subsequent year
  • In effect, seed companies have to recover the bulk of their investments in the first 10-15 years. That’s fair since, in any case, the technology loses its efficacy after that time—in the case of Monsanto’s Bollgard II, for instance, there are reports of the bollworm developing resistance to the technology, which is why the tech firm is planning on introducing Bollgard III
  • But, based on the new orders, if the government is to decide on how much of its costs a Monsanto can recover and how much profit it can make, it is not clear why it would want to do business in India
  • The government’s behavior is decidedly odd not just because the order comes at a time when Monsanto is fighting a case on this in the courts, but because it has consciously stayed away from implementing compulsory licensing in the pharmaceuticals space
  • Worse, with Monsanto’s annual R&D budget far greater than that of the entire government-led research system in India, the country doesn’t have too many other sources of seed technology either. Given how the government is keen on increasing agricultural productivity, the move against seed-tech companies suggests one arm of the government doesn’t know what the other is doing

 

4. The Business Line: Big bank theory

Topic: Economy

Category: Banking

Key Points:

  • The idea that an economy of India’s size cannot aspire for higher growth without global-scale financial institutions to bankroll it, has led Indian governments to toy with the idea of bank consolidation every now and then
  • But this has translated into little action. This is why it is good to see the State Bank of India moot the proposal to consolidate five of its subsidiaries (the State Banks of Bikaner and Jaipur, Hyderabad, Mysore, Patiala and Travancore) as well as the BharatiyaMahila Bank into itself. Prima facie, there appears to be a sound business case for the merger
  • Apart from a balance sheet size of ₹37 lakh crore that will catapult the SBI into the league of top 50 global banks, synergies in business and treasury operations, branch rationalisation and the ability to access cheaper funds are expected to reduce the merged entity’s costs by a good 100 basis points. But the success of the merger will depend on the SBI’s ability to win over protesting unions and negotiate tricky integration issues
  • While the SBI merger is desirable, the Centre should be wary of applying this as a cookie-cutter solution to all future consolidation moves involving public sector banks (PSBs). While proponents of the big bank theory argue that banks with larger balance sheets are more efficient users of capital, are better at recoveries and resilient to business cycles, the ongoing crisis in PSBs suggests that a more nuanced approach to bank mergers is necessary
  • Latest March quarter numbers reiterate that PSB giants such as the Punjab National Bank or Union Bank of India (gross NPAs of 12.9 and 8.7 per cent respectively) have proved no better managers of asset quality than the much smaller Dena Bank or Vijaya Bank (9.9 and 6.6 per cent). As poor lending decisions and concentrated exposure to large corporates are at the root of the bad loan mess, the strength of a bank’s credit appraisal and risk control systems contribute far more to capital efficiency and resilience than mere balance-sheet size
  • While the forced takeover of a troubled bank by a stronger peer has been the quick-fix solution to stave off bank failures in the past, it may not work in a scenario where almost all PSBs are weighed down by asset quality issues. Forcing big banks that have made substantial progress in their clean-up (SBI and Bank of Baroda for instance) to take-over distressed rivals would be retrograde
  • The universal banking model is also under fire from digital disruption and the advent of small finance banks, payment banks and NBFCs with niche models
  • These factors suggest that for public confidence in PSBs to be shored up, an overhaul of their risk control and governance structures should precede consolidation efforts. Consolidation, when taken up, should take individual bank boards into confidence and need to make strategic sense
  • Mergers that focus on similar lending segments to create larger banks focussed on, say, SMEs, retail loans or project finance could well be the way forward

 

5. The Economic Times : Time to complete oil marketing reform

Topic: Economy

Category: Energy sector

Key Points:

  • Last week, crude oil prices surged past $48 a barrel, after dipping below $30 in January, marking gain of four-fifths. An uptick in crude prices has macroeconomic implications, on inflation and the current account deficit, given the country’s huge dependence on oil imports
  • The government cannot waffle now on real reform in the oil sector. It should institute a fully competitive market from upstream to retail.
  • In theory, the government has deregulated petrol and diesel prices. In reality, fuel retail remains a cosy oligopoly, thanks to three factors. Policy says only those who have invested at least Rs 2,000 crore in hydrocarbons can retail petro-fuels. Third parties have no access to storage and transport infrastructure. And there is no guarantee that if oil prices soar and the government reintroduces subsidy, private retailers would have access to the subsidy
  • If the government can remove these three hurdles to a competitive market in fuel retailing, consumers will get the best possible price, instead of the rate jointly set by public sector oil companies
  • Subsidised kerosene is mostly diverted to adulterate petrol and diesel. Adulteration only adds to pollution, making the case for the phase-out of subsidy on kerosene even more compelling
  • There is no rationale to have a special excise duty on petrol. It only pushes up petrol prices above diesel prices. This goes against the entire orientation of discouraging diesel vehicles
  • A proactive policy to phase out kerosene subsidies and reform in the tax regime on petrol will narrow the gap in the prices of diesel, petrol and kerosene

 

G. Fun with Practice Questions 🙂
Question 1: Which of the following stupas belong to Mauryan period?
  1. Sanchi stupa
  2. Dhamekh stupa
  3. Bharhut stupa
  4. Peshawar stupa

a) 1 and 2 only

b) 2 and 3 only

c) 1,2 and 3

d) All the Above

 

Question 2: Which of the following statement(s) is/are correct?
  1. RLV-TD of ISRO is a hypersonic flight experiment
  2. After the launch, the RLV-TD will glide back onto a virtual runway in the Bay of Bengal.

a) 1 only

b) 2 only

c) Both 1 and 2

d) Neither 1 nor 2

 

Question 3: Which of the following rights is/are curbed by the Unlawful Activities (Prevention) Act?
  1. Right to equal protection of law
  2. Right to form associations
  3. Right to free speech

a) 1 and 2 only

b) 2 and 3 only

c) 1 and 3 only

d) All the above

 

Question 4: Which of the following statement(s) is/are correct?
    1. Remittances are included in GDP calculation not in GNP calculation
    2. Remittances can increase household consumption

a) 1 only

b) 2 only

c) Both 1 and 2

d) Neither 1 nor 2

Question 5: Which of the following crop(s) are procured at MSP(Minimum Support Price) by the government?
  1. Lentil
  2. Sugarcane
  3. cotton
  4. Gram

a) 2 and 3 only

b) 1,2 and 3

c) 1,2 and 4

d) All the Above

Check Your Answers

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