UPSC Exam: Comprehensive News Analysis - January 29


A. GS1 Related
B. GS2 Related
1. Funding Elections in India
C. GS3 Related
1. Bank Capitalization
2. E-way bill for GST
3. Changes in Insolvency Law
4. Will Bail-in ever be applied?
5. Textile sector needs reforms
6. India and TPP
7. Charging Points for Electric Vehicles
1. TRAPPIST-1 planetary system
2. Super Blue Blood Moon
3. Cloning Monkeys
1. India’s ranking in Environmental Performance Index
D. GS4 Related
E. Prelims Fact
F. UPSC Prelims Practice Questions
G. UPSC Mains Practice Questions 

A. GS1 Related

Nothing here for Today!!!

B. GS2 Related


1. Funding Elections in India

In news:

What are the issues with Election funding?

  • Indian elections are the world’s biggest exercise in democracy but also among the most expensive.
  • India’s campaign spend is only rivalled by the American presidential race, the world’s most expensive election.
  • Parties and candidates need large sums of money for voter mobilisation, advertising, consulting, transport, propaganda and printing of campaign materials to reach voters in constituencies.
  • Corporate donations constitute the main source of election funding in India which is awash with black money, with business and corporate donations to political parties commonly taking this form. The public disclosure system that exists is limited.
  • Only in 2008, using the provisions of the Right to Information (RTI) Act, the Central Information Commission allowed disclosure of income tax returns of political parties, though it is an open secret that actual expenditure is much, much higher than what is disclosed.
  • India’s privately funded election campaign stands in contrast to the trend in most countries, which have partial or full public funding or transparent regulation and financial accountability of political finance as in the U.S.
  • Corruption in election finance and the flawed party funding system drive political parties to misuse government’s discretionary powers to raise funds for election campaigns.
  • The combined effect is the absence of a level playing field which has reduced the effectiveness of our democracy.
  • In his 2017 Budget speech, while emphasising the absence of transparency in funding, Finance Minister Arun Jaitley noted that even 70 years after Independence the country had not been able to evolve a transparent method of funding political parties which is vital to the system of free and fair elections.

How does electoral bonds scheme work?

  • The electoral bonds scheme was notified by the government this month to clean election finance.
  • Under this scheme, anybody can buy electoral bonds in the form of bearer bonds from specified branches of the State Bank of India and donate it anonymously to a political party of their choice; the party must cash the bonds within 14 days.
  • All donations given to a party will be accounted for in the balance sheets but without exposing the donor details to the public.
  • Donors continue to prize anonymity as they fear disclosure could invite adverse consequences from political opponents.
  • As a result, the Election Commission (EC), the Income Tax department and the voter would remain in the dark about it.
  • However, the ruling dispensation at the Centre can ferret out information on who’s funding whom from banking authorities on some pretext or the other.
  • The most significant aspect of the electoral bonds scheme is that it will not carry the name of the payee as there is reluctance to donate to parties through bank instruments citing loss of anonymity.

Is the scheme effective in bringing in transparency?

  • Far from reducing the large-scale corporate funding of elections, the introduction of electoral bonds does not even address this issue.
  • The government’s principal aim is to reduce the role of unaccounted cash in the electoral process and not the corporate control of politics.
  • The bonds scheme imposes no restrictions on the quantum of corporate donations.
  • Consequently, electoral bonds cannot address the problems that arise from the corporate control over politics and corporate capture of government policies and decisions.
  • Rather, electoral bonds will result in unlimited and undeclared funds going to certain political parties which will be shielded from public scrutiny as the balance sheets will not show which party has been the beneficiary of this largesse.
  • Bonds will allow corporate houses to make anonymous donations through banking channels to the party of their choice. This would lead to further opacity in the funding process and further limit oversight and accountability.
  • The bond scheme could provide a backdoor to corporates and other lobbies for shaping public policy to benefit their interests.
  • There is thus a legitimate fear that policy decisions of political parties and politicians after being elected may be biased in favour of groups that fund them.

 Role of transparency in democracy

  • Transparency is a global norm while opacity of election funding is an area of existential concern for democracies.
  • Subversion that such anonymity affords is perhaps one of the biggest threats to our democracy today; it is the very wellspring of institutionalized corruption.

What are the regressive developments in this regard?

(1) Lifting of the maximum limit of 7.5% on the proportion of the profits a company can donate to a political party, thus opening up the possibility of shell companies being set up specifically to fund parties;

(2) Amendment of the Foreign Contribution (Regulation) Act (FCRA) opening the floodgates of foreign funding to political parties, especially those which have a foreign support base; and

(3) The refusal of political parties to come under the RTI Act in order to conceal their sources of funding.

What is the impact of these developments?

  • These three things will end up strengthening the business-politics nexus. It goes against the position taken by various electoral reform committees that the existing pattern of political funding encourages lobbying and capture of the government by big donors.
  • Moreover, these bonds are likely to reverse the small steps towards transparency of political finance that came as a result of RTI-driven public disclosure of income tax returns of political parties arguing that these disclosures were a matter of public interest and should be available to citizens.
  • Furthermore, all registered parties were required to disclose to the EC the identity of individuals and private entities donating more than Rs. 20,000 every year.
  • Proposed amendments to the Income Tax Act and the Reserve Bank of India (RBI) Act will exempt parties from keeping records of donations made through bonds.
  • However, the decision to reduce cash contributions from Rs. 20,000 to Rs. 2,000 is a step in the right direction.But it could prompt parties to take smaller cash donations, and therefore not declare their source.
  • This would not decrease the drift towards non-transparent funding reported by the Association for Democratic Reforms which found that nearly 70% of party funding over an 11-year period came from unknown sources; nearly Rs. 7,900 crore donations came from unknown sources in 2015-2016.
  • Electoral bonds will not change this. In fact, political parties don’t need to reveal the donor’s name for a contributions above Rs. 20,000 provided these are in the form of electoral bonds.

Money power and elections

  • Elections that work well are essential for democracy; conversely, money power can corrode the entire process.
  • A major concern associated with the high cost of elections is that it prevents political parties and candidates with modest financial resources from being competitive in elections.

What are the ways to reduce Election costs?

  • A number of government committees have outlined reform proposals to contain the negative effects of the high cost of elections.
  • These include strong disclosure norms, strict statutory limits on election expenses and ceiling on corporate donations to political parties.
  • The rules to limit and restrict the campaign expenditure of parties are largely inoperative because it is easy to circumvent them.

Is State funding of elections a viable solution?

  • State funding of elections (in various forms) is a potential solution to this problem.
  • The Indrajit Gupta Committee on State Funding of Elections had endorsed partial state funding of recognised political parties and their candidates in elections way back in 1998, but the lack of political will has prevented any serious discussion on this.
  • The mechanics of this process need to be carefully worked out to establish the allocation of money to national parties, State parties and independent candidates, and to check candidate’s own expenditure over and above that which is provided by the state.


C. GS3 Related

Category: ECONOMY

1. Bank Capitalization

In news:
  • About Rs. 1 lakh crore is expected to be pumped into India’s 21 public sector banks by March, which the Centre hopes will enable them to extend fresh credit lines worth over Rs. 5 lakh crore to spur economic activity.
  • Of the capital injection — the first half of an ambitious Rs. 2.11-lakh crore recapitalisation programme for ailing public sector banks announced last October — about Rs. 8,100 crore is from the government’s budgetary resources.
  • Banks are expected to tap the markets for Rs. 10,300 crore, while recapitalisation bonds worth Rs. 80,000 crore are to be issued to finance the rest.

Prompt Corrective Action

  • Leaving aside the market-raising efforts by banks, over half the fresh capital of over Rs. 52,000 crore is being directed to the 11 public sector banks that the Reserve Bank of India has placed under the prompt corrective action, or PCA, framework.
  • The RBI deploys the PCA to monitor the operation of weaker banks more closely to encourage them to conserve capital and avoid risks.

How is the capital useful to these banks?

  • For these entities, this capital offers a fresh lease of life as it will help meet regulatory requirements under the Basel-III regime as well as cushion them to an extent from possible haircuts on stressed loans that are going through the insolvency resolution process.
  • State Bank of India, the country’s largest, and the nine others that are out of the RBI’s PCA net will receive nearly Rs. 36,000 crore in order to strengthen their lending capacity.
  • RBI’s assertion that no public sector bank will fail and that depositors’ money will remain safe should allay customers’ worry about the safety of their savings under the proposed Financial Resolution and Deposit Insurance legislation.
  • Rating agencies have given the move the thumbs up, but remain unimpressed about governance reforms packaged with it.
  • These include tweaks to existing systems for closer monitoring of big-ticket loans, identifying niche areas where a bank has strengths, restricting corporate exposure to 25%, and a new performance management system.
  • Actual capital inflows will depend on their performance on these fronts and their ability to meet the government’s service priorities, including smoother credit flows to small businesses.
  • More structural reforms may well be on the anvil in the second half of this recap plan.
  • Moreover, while the government has repeatedly ruled out privatisation of these banks, the only one where it intended to offload its majority stake, IDBI Bank, has got the largest allocation of Rs. 10,610 crore.

2. E-way bill for GST

In news:
  • The e-way bill, set to be introduced across India from February 1 as part of the Goods and Services Tax (GST) regime, could lead to ‘large scale’ disruption in the transportation of goods, transporters caution.
  • The bill is intended as a mechanism to prevent leakage of GST by tracking the movement of goods from one party (and place) to another.
  • Transport industry officials said it would have been better to have addressed ‘several key issues’ before migrating to the new system.
  • Lack of preparedness and possible harassment by tax officials citing compliance issues could hinder movement of trucks. They cited the initial confusion witnessed after demonetisation and more recently the introduction of GST.
  • The Central Goods and Services Tax (Sixth Amendment) Rules, 2017, requires every person causing the movement of goods worth more than Rs. 50,000 from one State to the other to generate an e-Way or electronic Way bill for each such movement.
  • Though e-way bill forms are easy and intuitive and could be generated through a variety of platforms including a mobile app, SMS, web platform and API-based integration, multiple issues have been raised by the industry.
  • There are several practical and operational problems that have not been addressed. The transportation industry is predominantly an offline industry. Expecting them to go online suddenly is difficult to cope with. The general feeling in the industry is that it will be impractical to roll out the e-way bill from February 1.
  • At a recent meeting, 450 members of the BGTA raised 25 issues with GST officials who did not have answers for half of the issues. The government is adamant [on going ahead] and the decision will adversely impact the industry even as it is coping [with] GST. Transporters fear that unintended lapses on their part could lead to the imposition of heavy penalties. Also, consignments could end up getting stranded mid way due to drivers’ inability to pay the fine at remote locations.
  • Transporters and other taxpayers will not be required to visit any tax office or checkpost under this system and the e-way bill can be generated electronically.
  • The transporters can manage sub-users and allocate roles to them. Large transporters can declare their various offices as sub-users. There is provision for cancellation of an e-way bill within 24 hours by the person who generated the e-Way Bill.
  • The recipient can also reject the e-way bill within 72 hours of generation. The validity of an e-way bill is fixed as one day for every 100 km or part thereof.
  • Movement of project cargo or heavy cargo, which takes months to reach the destination, could suffer as a result of the e-way bill rule that mandates 100 km per day movement. Such cargo generally does not travel more than 20 km a day, transporters said.
  • The return of the Inspector Raj as the RTO and sales tax check posts are still there. The e-way bill will create documentation problems and harassment citing non-compliance.
  • In our type of business, it takes a long time to transport heavy lift cargo due to logistics issues and requirement of multiple permissions while in transit.
  • If, for some reason, the e-way bill would lapse, it would invite penalty. The government must issue a blanket order to officials not to harass truck drivers in transit. If the driver has an e-way bill then [it is clear] there is no intention to cheat.
  • Transporters have urged the government to ensure officials differentiate between errors in the e-way bill and intentional tax evasion.
  • Eighty lakh trucks transport goods across India. It is not possible to make everyone understand the way the e-way bill works. There will be errors and the government will levy penalty. So we need a platform that should address the errors and establish evasion.
  • It would have been ideal not to have had an additional document in the form of an e-way bill, the government was keen on introducing it in order to plug suspected evasion of GST.
  • The lower revenue collections encountered during the past few months despite an enhancement of the taxpayer base could possibly be due to the fact that some taxpayers are not paying the appropriate tax.
  • While the e-way bill existed in some States even earlier, the countrywide introduction across all sectors is likely to pose documentation and system challenges initially to smaller businesses. Low literacy levels and poor technology awareness among a majority of truck owners could also create stumbling blocks.
  • One major issue highlighted by transporters is increased financial burden due to filing of e-way bills. A majority of the small transporters who are driver-owners will find it difficult to generate e-way bills as the process requires comfort with using electronic medium such as apps. Seeking professional help would only cost them more.
  • The stipulated time limit for delivery of goods is also causing jitters.
  • In case of a breakdown in hilly areas or remote villages with no mobile connectivity, the e-way bill will not be easily updated. There is no clarity on the resolution of such issues in the rules.
  • There is lack of clarity on the issue of vehicle detention in the case of mispresentation of details such as price of goods. The responsibility should lie with either the consignee or the consignor without detaining the vehicle.
  • Moreover, rules also give the right to inspect the vehicles at random(138 B) which increases the chances of harassment by inspectors, transporters fear.
  • Inspectors have the right to unload the entire consignment to check compliance. There is no guidance provided for genuine randomness as against targeted checks, industry players said.
  • However, the rules provide for redressal against any such harassment. Still, implementation would be the key. Going by historical antecedents, discretion leads to harassment and corruption, and rules could have done better by defining discretionary measures more tightly.
  • With just the e-way bill number, all transactions can now be tracked and average waiting time for vehicles will now reduce, as verification processes will be online. The compulsory introduction of e-way bill may face initial glitches, but in the long-term, it will benefit not only the logistics industry, but the country as a whole.

3. Changes in Insolvency Law

In news:
  • The insolvency law might be amended depending on recommendations of the panel reviewing issues related to the legislation, including those pertaining to homebuyers.
  • While everything is time-bound under the Insolvency and Bankruptcy Code (IBC), the issue is how the interests of stakeholders are to be balanced.
  • A 14-member panel, also chaired by Mr. Srinivas, is working to identify and suggest ways to address issues faced in the implementation of the IBC, which came into force in December 2016.
  • There is a feeling that this law is skewed a little too much in favour of financial creditors. It is not adequately addressing the requirements or expectations of other stakeholders.
  • Competition, regulatory clearances, tax liabilities and other aspects would also be looked at. It was felt that there was enough reason to have a comprehensive stock taking even though it is a one-year old law. Based on recommendations of the Insolvency Law Committee, in the future there may be changes in the IBC.
  • A large number of cases have been filed under the IBC, which provides for a market-determined and time-bound insolvency resolution process.There are also apprehensions on whether this system [insolvency law] can be abused.

Valuation debate

  • Among others, issues such as whether the insolvency process should be governed by liquidation value or enterprise value would also be looked into.
  • What are the rights of homebuyers?
  • What is the capacity of insolvency professionals?
  • These are among the issues that has to be seen.

In recent months, there have been concerns about incomplete realty projects and consequent hardships faced by home buyers. Some real estate firms are also facing insolvency proceedings.

There have also been suggestions from certain quarters about having provisions that would help provide relief to home buyers.

4. Will Bail-in ever be applied?

In news:
  • The Financial Resolution and Deposit Insurance (FRDI) Bill 2017 now pending before the joint committee of Parliament contains a new method for saving a failing bank — a ‘bail-in’ of customers deposits instead of a ‘bail-out’ by the government.
  • It sees no moral hazard in recapitalising a bank with customers’ deposits while the owners of banks are granted immunity by the ‘limited liability’ of a corporate identity. The bill aims at financial stability through the lens of an accountant.
  • The Resolution Corporation (RC), the proposed super regulator (the Reserve Bank, SEBI and IRDAI would all report to the RC) and the government are empowered to use uninsured deposits of customers to set off bank losses.
  • The bankrupt bank carries on with its business but with ‘good’ assets and insured deposits. Subsequently, the RC would bring in new management that infuses fresh capital by buying the equity of the now ‘healthy’ bank!
  • The ‘bail-in’ owes its origin to the 2008 bankruptcy of the ‘too big to fail’ Lehman Brothers that spooked central bankers in G7 countries. Lehman Brothers was forced to file for bankruptcy due to its inability to pay $3 billion to its creditors.
  • This triggered a chain reaction among banks and insurance firms financially interconnected with Lehman Brothers. As a consequence, the Financial Stability Board was set up and it proposed the ‘bail-in’ as a key attribute to cope with bank failures wherein the price for ‘financial stability’ is paid by the customer.
  • The government argues that deposit insurance protects 93% of the depositors who keep up to Rs. 1 lakh in their bank accounts. This is a half truth. These depositors account for only 30% of total bank deposits. Deposit insurance can never be adequate protection for the remaining 7% retired or aged customers who have deposited their life savings in a bank.
  • Stress test shocker
  • It is naive to believe that ‘bail-in’ shall never be applied. The unstable character of banking is highlighted in the routine stress tests conducted by the Reserve Bank.
  • According to the December 2017 Financial Stability Report, if customers of 54 commercial banks in India were to withdraw 15% of their uninsured deposits, 18 banks would fail to repay the deposits of customers.
  • Similarly, if the top three borrower groups of each bank default, then six banks would fail to maintain their minimum capital requirement of 9%. In a severe economic downturn, one bank can trigger failure of 18 out of the 54 banks only because of financial interconnectedness. The safeguards in application of a ‘bail-in’ appear fragile.
  • It would be difficult to categorise riskiness of a bank fluctuating rapidly among low, moderate, imminent and critical levels. Prioritising uninsured deposits over unsecured creditors is a marginal advantage since a bank is not likely to have too many unsecured creditors other than customers.
  • Circa 2015, the official administrator of Lehman Brothers was left with a surplus of roughly £7 billion in hand! In the end, no one suffered a loss; not even retail customers.
  • This raises a serious question on the raison d’être of ‘bail-in’. In 2008, if ‘bail-in’ had been law, customer deposits would have been needlessly appropriated. It is equally disturbing that ‘bail-in’ may be triggered for reasons unrelated to banking.
  • In 2013, European creditors dictated a ‘bail-in’ on the Laiki Bank in Cyprus in addition to other austerity measures and reforms as a precondition to a €11-billion bail-out package by the European Union and the International Monetary Fund.
  • Despite contentious credentials, ‘bail-in’ is the showstopper of the FRDI bill. If the ‘limited liability’ clause can protect the personal wealth of corporate borrowers despite the huge loans their bankrupt companies owe to public sector banks, the Centre must protect all retail customers from the ‘bail-in’ clause.
  • Financial stability can be achieved by conservative, old fashioned banking instead of ‘bail-in or bail-out’.

5. Textile sector needs reforms

In news:
  • A couple of major issues have impacted the country’s textile and clothing sector in the past year. Expectedly, the industry’s aspirations for the Union Budget are related to the revival of exports and the GST.
  • According to data available with the industry and the export promotion councils, readymade garment exports grew less than 1% between April and November 2016 in dollar terms and dropped 3.03 % in rupee terms.
  • Fabric exports were to the tune of $230.37 million in April 2017 and slumped to $113 million in October. Yarn exports fared better in value terms at $267.33 million in April and $354.05 million in October last year.
  • However, in terms of volume, yarn exports stayed almost flat. Apparel exports dropped 8% in December alone compared with a year earlier.
  • Between 2009 and 2015, the domestic market grew 10% every year for the Indian textile and clothing sector, and exports rose almost 8% year-on-year. For the last three years, exports have almost stagnated. Countries such as Vietnam have overtaken India in yarn exports to China.
  • When the global economic slowdown hit the industry seven years ago, the Centre had come out with a time-bound stimulus package. The two major policy decisions of the government in the recent past, demonestisation and GST, have impacted the industry more than the economic slowdown.
  • What the industry needs now is a stimulus package. The Confederation of Indian Textile Industry (CITI) pointed out that in a study of 600 SME units, the number of units under the SME 2 category rose from 54 to 191 between March and September and the number of units that were categorised as non-performing accounts by lenders went up from 18 to 32 in the period.
  • A stimulus package will give relief to the units,said Sanjay K. Jain, chairman, CITI. Rebate of State levies (ROSL) is critical for revival of exports.
  • Towards this, the government should sanction adequate funds for ROSL and extend it to all products instead of just garments and made-ups.
  • According to data available with the ministry, the allocation for ROSL for 2017-2018 was Rs. 1,555 crore and it has been exhausted.
  • However, according to the industry, garment exporters got ROSL only for April and May and made-up exporters received rebates till July this financial year.
  • India exports garments and made-ups worth $23 billion annually. The average tax rate after GST for garments and made-ups is 1.8%; it was 3.7% before GST.

‘Allocations must rise’

  • The industry estimates it needs about Rs. 2,100 crore to clear pending ROSL reimbursements and another Rs. 2,500 crore for the next fiscal. So, allocations need to go up substantially, sources said.
  • The Centre should announce the drawback rates, restore the pre-GST level of incentives for exports and increase the import duty, said representatives of industry associations.
  • The Apparel Export Promotion Council has said that under schemes such as Advance Authorisation and EPCG, applicants should get early approvals. This will lead to higher investments.

6. India and TPP

In news:
  • If India were to join the mega-regional Free Trade Agreement (FTA) called the Trans-Pacific Partnership (TPP) and adopt its norms, they would severely hurt the country’s agriculture, manufacturing, services and the generic pharma industry.
  • Titled “Trans-Pacific Partnership Agreement: A framework for future trade rules?” the book — co-edited by Abhijit Das, Professor and Head, Centre for WTO Studies (CWS), Indian Institute of Foreign Trade (IIFT) and Shailja Singh, Legal Consultant, CWS — has done an analysis of almost the 5,544 pages of the TPP text.
  • Released on January 27, the book comes in the backdrop of U.S. President Donald Trump’s statement at the World Economic Forum that he was open to the pact provided it offered substantially benefits for his country.
  • It was under his orders that the U.S. had withdrawn from the TPP early last year. The other 11 countries (Japan, Australia, Canada, New Zealand, Singapore, Malaysia, Brunei, Mexico, Peru, Chile and Vietnam) that were part of the agreement are now expected to ink an amended version in March.

Stiff competition

  • According to the book, if India were to conform to the TPP template of rules on market access in goods, it would pose severe challenges to India’s manufacturing sector. The domestic industry may not be able to face import competition in a duty-free regime, it added.
  • On the agriculture front, the farmers will be continuously exposed to the risk of being knocked out of the market by cheap and subsidised exports, particularly from the U.S., Australia and New Zealand. The TPP template may pose severe challenges to the government in regulating services in the future, the book claimed.
  • TPP also would severely restrict the entry into the market, or the reimbursement for use, of generic medicine. If India were to adopt [TPP] rules, it would require significant changes in the domestic regulatory regime. India’s export prospects in government procurement markets may continue to below, if it entered the pact.
  • The Commerce Ministry has pitched for a single Goods and Services Tax (GST) rate for multimodal transportation of vehicles to improve logistic services and reduce the compliance burden on automobile manufacturers, an official said.
  • Multimodal transportation includes a combination of more than one mode of movement, such as rail, road or sea, for end-to-end delivery of goods.
  • Automobile industry body Society of Indian Automobile Manufactures (SIAM) had approached the logistics department of the Ministry raising issues faced by companies due to lack of a clearly defined multimodal GST structure.
  • Currently, manufacturers and their logistics service providers have to deal with the issue of variable GST rates, applicable on various sectors of the entire multimodal transportation process, according to SIAM.
  • They had stated that currently there was no clearly defined multimodal GST structure where vehicle makers could hand over finished goods through a single document to a third-party logistics service provider.

Complexity, inefficiency

  • The government official said that the current structure was leading to complexity in the entire taxation system, often leading to inefficiencies.
  • SIAM had also pointed out that in the multimodal movement of goods, the present GST law was subjective and was left to the interpretation of consultants to provide a better understanding of applicable tax rates.

7. Charging Points for Electric Vehicles

In news:
  • Achieving the target of all-electric vehicles by 2030 will need a substantial push from the government and the private sector in terms of setting up the charging infrastructure, enabling cheaper availability of raw materials and incentivising mid-way measures such as hybrid vehicles.

What is the aim?

  • Prime Minister Narendra Modi to Transport Minister Nitin Gadkari and erstwhile Energy Minister Piyush Goyal have all spoken about the target to achieve an all-electric fleet of vehicles by 2030, in line with the ongoing global push away from the internal combustion engine.

What steps have been taken?

  • Different departments and ministries have stepped up their engagement with the electric vehicle industry. Energy Efficiency Services Limited, a government firm, has put in motion plans to procure 10,000 e-vehicles and has already given out tenders to the likes of Tata Motors and M&M. EESL aims to lease these vehicles out to government departments so as to replace their existing fleets of petrol and diesel vehicles.
  • The Government also notified the scheme for Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME), as a part of its National Electric Mobility Mission Plan 2020. The scheme has four focus areas: technology development, pilot project, charging infrastructure and demand creation. The scheme has been extended till March 31, 2018.

Is the infrastructure ready?

  • There are several initiatives, by both the government and the private sector, to enhance the required charging infrastructure. The Centre has begun pilot projects in this regard, having already installed 25 charging stations in Bengaluru, and planning to expand this to other metros.
  • Last year, Fortum India inaugurated a 22 KW AC charger on a pilot basis in Delhi, and the company said it was looking to install up to 160 charging stations over a year in Delhi, Mumbai and Bengaluru. The parent company Fortum Oyj also signed an agreement with government-owned NBCC (India) to bring cloud-based back-end infrastructure for electric vehicles to India.
  • Reliance Energy also has said it planned to install 15 charging stations across its distribution licence area in Mumbai over the next three years. The company is also working on a third-party business model to provide charging station facilities for electric two-wheelers and four-wheelers in public places, parking plazas near highways, and offices and malls. Tata Power has also installed two charging stations in Mumbai.

What are the roadblocks?

  • There are several. The first is that very few global carmakers have brought their electric variants into India. The fact that the government has also made a distinction between EVs and hybrid vehicles under the GST regime is seen as a problem. While EVs are to be taxed at 12%, hybrid vehicles are taxed at 28% plus a 15% cess.
  • The view among carmakers is that people are still sceptical about the shift to all-electric vehicles since they fear the charge duration of the batteries. As such, they are more likely to try hybrid vehicles, but that sector is not being encouraged by the current tax structure. The other issue has to do with the charging stations themselves.
  • While sector specialists said that EVs can be charged at home using AC power, this would take about 5-8 hours for a full charge. DC chargers, on the other hand, can do the same in a fraction of the time. Most of the chargers being installed across the country, however, are AC chargers.


1. TRAPPIST-1 planetary system

In news:
  • Scientists have identified two exoplanets in the nearby TRAPPIST-1 planetary system that are most likely to be habitable.
  • The TRAPPIST-1 system has been of great interest to observers and planetary scientists because it seems to contain seven planets that are all roughly Earth-sized.
  • Because the TRAPPIST-1 star is very old and dim, the surfaces of the planets have relatively cool temperatures by planetary standards, ranging from 126 degrees Celsius, which is cooler than Venus, to minus 106 degrees Celsius, which is colder than Earth’s poles.
  • The planets also orbit very close to the star, with orbital periods of a few days. Because their orbits are eccentric – not quite circular – these planets could experience tidal heating just like the moons of Jupiter and Saturn.
  • Assuming the planets are composed of water ice, rock, and iron, we determine how much of each might be present, and how thick the different layers would be.
  • The planets studied are referred to by letter, planets b through h, in order of their distance from the star.
  • Analyses show that planets d and e are the most likely to be habitable due to their moderate surface temperatures, modest amounts of tidal heating, and because their heat fluxes are low enough to avoid entering a runaway greenhouse state.A global water ocean likely covers planet d, researchers said.

2. Super Blue Blood Moon

In news:

The night of January 31 will be special for people in many parts of the world. A rare celestial spectacle, popularly called the Super Blue Blood Moon, awaits skywatchers when a blue moon, a super moon and a blood moon (ie total lunar eclipse) happen at the same time. This week we will get to know more about this phenomenon, which is occurring after a gap of 36 years in India.

What is a blue moon?

  • When there are two full moons within a month, the second full moon is called a Blue Moon. The full moon witnessed on January 1, 2018, and we are going to witness another on January 31, which will be referred to as a blue moon. The interval between two full moons is approximately 29.53 days. The same applies for two new moons.

What is a total lunar eclipse?

  • A lunar eclipse occurs when the moon passes directly behind the earth into its shadow. The earth, sun and the moon are either closely or perfectly aligned, with the earth in the middle.
  • The earth’s shadow blocks sunlight from reflecting off the moon, thus resulting in an eclipse – partial or total. A total lunar eclipse is dramatic, as the earth’s shadow (umbra) completely covers the moon.
  • This can happen only when the sun, the earth and the moon are perfectly aligned. Anything less than perfection will create a partial lunar eclipse or no eclipse at all. An eclipse does not appear every full moon because the orbit of the moon (around the earth) lies in a different plane than that of the earth (around the sun).
  • During totality, the moon may turn red or coppery. This happens because some light from the sun passes through earth’s atmosphere and is bent towards the moon.
  • While other colours in the spectrum are blocked and scattered by the atmosphere, red makes it through. And it is called Blood Moon. It is not a scientific term.

When does a supermoon occur?

  • The moon’s orbit around the earth is distinctly elliptical. The point when the moon is closest to the earth is called Perigee and the point when it is farthest from it is called Apogee.
  • When a full moon occurs at its perigee, it is called a supermoon. It is a rare event, as it has to satisfy two conditions – the moon must be closest to the earth and it should be a full moon.
  • At this point, the moon is observed to be 30 per cent brighter and appears 14 per cent larger. But such difference cannot be seen with the naked eye.

Why is the celestial event significant?

  • It is rare to have a condition that favours the occurence of a blue moon, a supermoon and a lunar eclipse.
  • For India, the three events coincide after a gap of 36 years. India had the last blue moon eclipse occurring on December 30, 1982. The interval varies for different regions. The last time the three celestial events coincided for the United States was on March 31, 1866, which is 152 years ago.
  • The January 31 supermoon is also the third in the Supermoon Trilogy, as scientists call it. The first in the series appeared on December 3, 2017.

Why does the moon seem to appear bigger sometimes?

  • The moon appears to be gigantic, sometimes, especially near the horizon. As it moves overhead, the size becomes smaller. Scientists call this effect the Moon Illusion. This striking phenomenon has kept them puzzled for years. But the precise reason behind this is not fully understood.

3. Cloning Monkeys

In news:
  • Scientists in China have created the first monkeys cloned by the same process that produced Dolly the sheep more than 20 years ago, a breakthrough that could boost medical research into human diseases.
  • The two long-tailed macaques (Macaca fascicularis) named Hua Hua and Zhong Zhong were born at the Chinese Academy of Sciences (CAS) Institute of Neuroscience in Shanghai, and are the fruits of years of research into a cloning technique called somatic cell nuclear transfer.

What’s new?

  • Until now, the technique has been used to clone more than 20 different animal species, including dogs, pigs and cats, but primates have proven particularly difficult.
  • The birth of the now six and eight-week old macaque babies also raises ethical questions about how close scientists have come to one day cloning humans.
  • Humans could be cloned by this technique, though this team’s focus was on cloning for medical research.
  • One day, the approach might be used to create large populations of genetically identical monkeys that could be used for medical research — and avoid taking monkeys from the wild.
  • In the United States alone they are importing 30,000 to 40,000 monkeys each year by drug companies.
  • Their genetic backgrounds are all variable, they are not identical, so you need a large number of monkeys. For ethical reasons, cloning monkeys will greatly reduce the number of monkeys used for drug tests.
  • Monkeys are commonly used in medical research on brain diseases like Parkinson’s, cancer, immune and metabolic disorders.

What’s the technique involved?

  • The method used for these experiments is similar to that used to clone Dolly,” in 1996 but with several updates.
  • The process involves removing the nucleus from a healthy egg, and replacing it with another nucleus from another type of body cell. The clone becomes the same as the creature that donated the replacement nucleus.



1. India’s ranking in Environmental Performance Index

In news:
  • Out of the 180 countries assessed, India ranks low in the Environmental Performance Index (EPI) 2018, slipping from rank 141 in 2016, to 177 in 2018.
  • The EPI is produced jointly by Yale University and Columbia University in collaboration with the World Economic Forum.
  • The EPI ranks countries on 24 performance indicators across 10 issue categories.
  • In comparison, emerging peer economies, Brazil and China, rank 69 and 120, respectively.
  • A look at recent initiatives shows that the government has set ambitious targets for environmental protection.
  • In December 2015, it notified new, strict environmental standards for coal-fired power plants, to be effective from January 2018.
  • An aggressive target was set to implement Bharat Stage VI emission norms from April 1, 2020, skipping Stage V norms.
  • In 2017, the Minister of State for Power and Renewable Energy said that a road map was being prepared so that only electric vehicles would be produced and sold in the country by 2030.
  • In order to accelerate the transition to renewable sources of power, the government, under the National Solar Mission, revised the target for setting up solar capacity from 20 GW to 100 GW by 2021-22.
  • The Centre has also assured the Supreme Court of India that the highly polluted Ganga will be cleaned up by 2018.

What are the issues with environmental laws?

  • There appears to be a big gap between policy goals and action. While we seem to be moving in the right direction on solar targets, we are seriously lagging behind in a number of other goals.
  • For example, the government has gone back on its promise of implementing strict power plant emission norms by December 2017, and may even dilute the norms.
  • The automobile industry has categorically stated that based on current estimates, full conversion to electric vehicles is realistically possible only by 2047.
  • After setting electronics manufacturers a reasonable annual electronic waste collection target of 30% of the products sold in the market, the figure has now been relaxed to 10%.
  • And late last year, the Comptroller and Auditor General, in a report, pulled up the government for not developing an action plan and for its poor utilisation of allocated funds in the clean-up of the Ganga.

Is environmental degradation a cost of development?

  • A recent study by the World Bank and the Institute for Health Metrics and Evaluation, University of Washington, Seattle, U.S., showed air pollution to be the cause of an estimated 1.4 million premature deaths in India, which translated into a welfare loss equivalent around 8% of India’s GDP in 2013.
  • In addition, the cost of lost labour productivity was 0.84% of its GDP. These estimates do not account for many other forms of environmental degradation and are quite conservative also because of our lack of scientific understanding of several other key ecological impacts.
  • A significant concern is also the fact that the poor are affected disproportionately because of environmental degradation.

What can be done?

  • Rapid transition to solar energy can be accomplished not only by enabling subsidies but also by pricing the more polluting fuels correctly.
  • The strict environmental standards for coal plants are expected to do precisely that — the price we pay for coal-based electricity reflect, at least partially, the true costs of producing such electricity.
  • The failure to implement these standards would be a step backwards. Similarly, the transition to electric vehicle use would be aided by pricing petrol and diesel, and perhaps the vehicles that use these fuels, to reflect their external costs to society.

D. GS4 Related

Nothing here for Today!!!

E. Prelims Fact

Nothing here for Today!!!

F. Practice Questions for UPSC Prelims Exam

Question 1.Consider the following with respect to “Electoral Bonds”
  1. Electoral bonds will be valid for 6 months during which they could be used to make donations to registered political parties
  2. Only those political parties that have secured not less than 1% of votes polled in the previous Lok Sabha elections or general election to the Assembly can avail funding through these bonds.
  3. Electoral bonds are interest-free banking instruments.
  4. India is the first country to introduce bonds for electoral funding.
  1. 1 and 2 only
  2. 2 and 3 only
  3. 1,2 and 3 only
  4. All of the above


Question 2.According to the insolvency and Bankruptcy Code (Amendment) Bill, 2017, which of the following persons are prohibited from submitting resolution plan, in case of default:
  1. Wilful defaulters
  2. Disqualified directors
  3. Promoters or management of the company that has outstanding non-performing debt for more than a year.

Identify the correct statement/s from the codes given below:

  1. Only 1 and 2
  2. Only 2 and 3
  3. All of the above
  4. None of the above



Question 3.Consider the following with respect to FAME India Scheme:

  1. The objective of the scheme is providing monetary and fiscal incentives for market creation and adoption of electric & hybrid technology vehicles in the country
  2. It is a part of the National Electric Mobility Mission Plan 2020
  3. It intends to achieve about 9500 million litres of cumulative fuel savings, which would result in the reduction of emission of Greenhouse Gasses and pollution of 2 million tonnes.
  4. The scheme was formulated by the Department of Heavy Industry under the Ministry of Heavy Industries and Public Enterprises

Select the correct answer using the codes below:

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




Question 4. Consider the following statements:
  1. The point when the moon is closest to the earth is called Perigee
  2. The point when it is farthest from it is called Apogee
  3. When a full moon occurs at its Apogee, it is called a supermoon.
  4. The second full moon in a month is called a “Blue moon”.

Identify the correct statement/s from the codes given below:

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




G. UPSC Mains Practice Questions

  1. Snow leopard has been moved from Endangered to Vulnerable. What are challenges in conducting their survey? What are the threats they face and how can this be overcome?
  2. What are orphan Crops and how do they help address issues of climate change?
Also, check previous Daily News Analysis

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