25 May 2018: UPSC Exam Comprehensive News Analysis

A. GS1 Related

B. GS2 Related

• Tamil Nadu Chief Minister Edappadi K. Palaniswami said on Thursday that the State government was taking all steps legally to permanently close down Sterlite Copper, a Vedanta Group company, in Thoothukudi.
• Thirteen persons were killed in police firing during the protests against the plant.
• Earlier in the day, the Tamil Nadu Pollution Control Board (TNPCB) ordered the closure of the Sterlite Copper unit with immediate effect and disconnected electricity supply.
• In its order, the TNPCB said that during inspections by its officials on May 18 and 19, it was found that “the unit was carrying out activities to resume its production operations” though permission was not granted.
• Following this, the Joint Chief Environmental Engineer, Tirunelveli, recommended disconnection of electricity supply to the plant under Section 33A of the Water (Prevention and Control of Pollution) Act, 1974, and Section 31A of the Air (Prevention and Control of Pollution)Act, 1981.
• However, Vedanta Chairman Anil Agarwal on Thursday said the company would like to continue the business at the plant with the “wish” of the community. At present, the company is waiting for clearance from the court and the government to restart the plant, which was closed for annual maintenance, he said in a video statement on Twitter.
• The Board took cognizance of an application made by Vedanta seeking renewal of the Consent To Operate (CTO) and the rejection of the application in April by the Board for non-compliance of certain conditions under the previous CTO.

Centre seeks report on firing

• Singh also appealed to the people of Thoothukudi to remain calm and maintain peace. Thirteen people have died in police firing during protests demanding the closure of the Vedanta group’s Sterlite Copper plant over pollution concerns.
• The MHA has taken cognizance of the situation and sought a report on the incident and the prevailing situation from the State government.
• The Ministry has been in touch with the State government and sought a detailed report on the circumstances leading to the loss of lives on May 22.
• The Tamil Nadu government has been asked to provide details of the action taken to restore peace and normalcy.
• The smelter, which can produce 400,000 tonnes of copper cathode a year, is run by Vedanta’s Sterlite Copper unit, which is controlled by Vedanta, a majority-owned subsidiary of London-listed Vedanta.
• The plant has been shut since March 27, when it was closed as part of a 15-day scheduled maintenance. The company plans to double capacity at the smelter to 800,000 tonnes per year.

Pollution board action 

• During the closure, the Tamil Nadu Pollution Control Board rejected Vedanta’s licence to operate the smelter in April, saying the company had not complied with local environmental laws.
• Sterlite has challenged the step. The appellate authority of the pollution board has adjourned the next hearing to June 6. The board has accused Sterlite of dumping copper slag in a river and not furnishing reports of groundwater analysis of borewells near the plant. This is not the first time the plant has shut down. It remained shut for weeks in 2013 due to a case at the National Green Tribunal.

Why are people against the smelter? 

• Residents have been demanding closure of the smelter for the past 100 days, and had announced they would take out a march to the Tuticorin District Collectorate on Tuesday.
• The district has been witnessing several protests by locals and others against the plant and its proposed expansion. Protesters have alleged that the smelter was polluting groundwater in their area.
• An activist group has accused pollution board of allowing the company to operate its smelter with shorter chimney stacks than permitted which helped the company reduce costs but harmed the environment.

What the company says

• CEO of Sterlite Copper has claimed that the plant had adhered to all conditions imposed by NEERI and the Supreme Court and its facilities would now conform to the benchmarks set by International Finance Corporation (IFC).
• Maintaining that the plant was not a polluter, the company had offered to open its gates for people to see for themselves than believe rumours and half-truths.
• The activists, however, turned down the offer, saying the problem was not what happened inside the factory but the pollution it caused outside.

• In a boost to India’s Act East policy, Prime Minister Narendra Modi will pay a visit to Indonesia and Singapore between May 29 and June 2.
• The External Affairs Ministry on Thursday announced that during the tour the Prime Minister was expected to focus on agreements in defence, skill development and connectivity.
• As far as defence cooperation with Indonesia is concerned, there is interest on maritime domain awareness and Navy-to-Navy cooperation is an important element (in this).
• The official said that defence interaction between India and Indonesia had intensified in recent years. There are some agreements that are under discussion in the areas of defence, space and science and technology which are still being negotiated.
• India was in talks to upgrade ports and airports of Indonesia. The maritime affairs minister of the country had informed that India would soon be getting access to the strategic port of Sabang on the Strait of Malacca.
• A kite-flying festival featuring tales from the Ramayana and the Mahabharata would be the cultural highlights during the visit of the Prime Minister.

Shangri La Dialogue

• Prime Minister Modi will deliver the keynote address at the Shangri La Dialogue on June 1. The dialogue is a platform to articulate regional security issues and our Prime Minister will convey India’s view on peace and security in the region.
• Shangri La Dialogue would be attended by several other international leaders but declined to confirm if Mr. Modi would be holding any bilateral meeting with counterparts from other countries.

The IISS Asia Security Summit:

• The Shangri-La Dialogue (SLD) is a “Track One” inter-governmental security forum held annually by an independent think tank, the International Institute for Strategic Studies (IISS) which is attended by defense ministers, permanent heads of ministries and military chiefs of 28 Asia-Pacific states.
• The forum gets its name from the Shangri-La Hotel in Singapore where it has been held since 2002.
• The summit serves to cultivate a sense of community among the most important policymakers in the defence and security community in the region.
• Government delegations have made the best out of the meeting by holding bilateral meetings with other delegations on the sidelines of the conference.
• While primarily an inter-governmental meeting, the summit is also attended by legislators, academic experts, distinguished journalists and business delegates.

• Following Washington’s withdrawal from the Iran nuclear deal, the Islamic republic’s supreme leader has laid out his country’s conditions for upholding its side of the landmark accord with world powers.
• The following excerpts from an address by Ayatollah Ali Khamenei to Iranian officials outline Iran’s demands of Russia, China, Britain, France and Germany if the deal is to survive.
• The U.S. withdrawal is a violation of United Nations Security Council Resolution 2231 (establishing the nuclear deal). The Europeans need to table a resolution against the U.S. to protest this action.

‘Iranian missiles’

• The heads of the three European nations must promise not to raise any objections to Iranian missiles or Iran’s presence in the region.
• The Islamic Republic of Iran will never give up elements of its power, especially concerning questions of defence.
• The U.S. has levied sanctions against Tehran for its ballistic missile programme and labels Iranian regional proxy groups such as Hezbollah as terrorist entities.
• If the U.S. succeeds in disturbing Iranian oil sales, the Europeans must promise to buy whatever quantity we wish to sell.
• U.S. President Donald Trump triggered fears for Iran’s economy when he pulled his country from the 2015 deal.

C. GS3 Related

• Prime Minister of Netherlands Mark Rutte, who is in India on a two-day visit, launched the ‘Clean Air India Initiative’ in the national capital.

Clean Air India Initiative’

• The campaign aims to curb air pollution in Indian cities by promoting partnerships between Indian start-ups and Dutch companies and build a network of entrepreneurs working on business solutions for cleaner air.
• The Clean Air India Initiative is a collaborative project between Get In The Ring, a platform for start-ups, the government of the Netherlands, Start-up India, and INDUS Forum, an online matchmaking platform of Indian and Dutch businesses.
• Governments need to be articulate about the problems they want to solve, bring together the right partners, and channelise entrepreneurs in the right direction to find solutions to global problems.
• Sustainable businesses present an opportunity to do social good, as they represent a for-profit orientation in the right framework. They advance the U.N.’s Sustainable Development Goals [SDGs] in a smartly profitable way.

Stubble burning

• A major business opportunity for Dutch firms that was highlighted included the potential for sale of equipment (such as sensors), data, and solutions concerning air quality monitoring (AQM), with experts estimating that 80% of India is not covered by AQM data collecting which is the first step toward monitoring and combating air pollution.
• Also under focus was the severe air pollution in Delhi caused by the burning of paddy straw in neighbouring Haryana and Punjab.

INDUS impact

• The ‘INDUS impact’ project aims to halt the hazardous burning of paddy stubble by promoting business partnerships that “upcycle” it.
• This entails using paddy straw as feedstock to make materials that would find use in construction and packaging — a technology and expertise that Dutch companies are keen to market in India.

• The government may levy a windfall tax on oil producers like Oil and Natural Gas Corp. (ONGC), as part of a permanent solution it is working on for moderating the spiralling retail prices of petrol and diesel.
• The tax, which may come in the form of a cess, will kick in the moment oil prices cross $70 per barrel.
• Under the scheme, oil producers, who get paid international rates for the oil they produce from domestic fields, would have to part with any revenue they earn from prices crossing $70 per barrel mark.

Paying retailers

• The revenues so collected would be used to pay fuel retailers so that they absorb spikes beyond the threshold levels.
• This may be accompanied by a minor tinkering with excise duty rates to give immediate relief to consumers. States too would be asked to cut sales tax or VAT to show a visible impact on retail prices.
• Sources said the thinking in the government is to levy cess on all oil producers — both public and private sector — so as not to attract criticism of stifling State-owned explorers.
• A similar tax was considered in 2008 when oil prices were on the rise but the idea was dropped after stiff opposition from private sector firms like Cairn India.
• Windfall tax, they said, is levied in some of the developed countries globally. The U.K. in 2011 raised the tax rate to be applied to North Sea oil and gas profits when the price was above $75 per barrel.
• China on April 1, 2006, began levying the special upstream profit tax on domestic oil producers to redistribute and allocate the windfall income enjoyed by the oil companies and subsidise disadvantaged industry and social groups that are most affected by soaring crude oil prices. It, in 2012, raised the windfall tax threshold to $55 per barrel.
• Sources said the windfall tax is one of the options being considered by the government as a permanent solution to dealing with the problem of spike in oil prices.

Excise duty cut

• This follows reluctance on part of the Finance Ministry to cut excise duty as it has to ensure adequate funds are available to social welfare schemes in the election year.
• In particular, resources have to be arranged for the National Health Protection Scheme (NHPS) that aims to provide health insurance cover of Rs.5 lakh to every eligible household.
• Law Minister Ravi Shankar Prasad had stated that the government will take a long-term view on the retail prices of petrol and diesel, which had touched record high instead of having an ad hoc measure.
• Petrol and diesel prices were raised for the 11th day in succession on Thursday as the State-owned oil firms gradually passed on to the consumer the increased cost of international oil that had accumulated since a 19-day freeze was imposed just before Karnataka elections.
• Since the time the hiatus ended on May 14, rates had gone up by Rs.84 a litre in case of petrol and Rs.2.60 in diesel. Petrol costs Rs.77.47 a litre in Delhi and diesel Rs.68.53. Sources said a $70 per barrel threshold for the windfall tax is sufficient to cover for capital expenditure requirement of ONGC and other oil producers.

Fuel subsidy

• Incidentally, ONGC and Oil India Ltd. had till June 2015 provided for up to 40% of the annual fuel subsidy bill.
• This they did by way of providing discounts on crude sold to downstream refining and marketing companies, IOC, BPCL, and HPCL. This discount helped the retailers make good a part of the losses they incurred on selling petrol and diesel below cost.
• The government raised excise duty nine times between November 2014 and January 2016 to shore up finances as global oil prices fell, but then cut the tax just once in October last year by Rs.2 a litre.
• The Centre levies Rs.48 as excise duty on a litre of petrol and Rs.15.33 on diesel. State sales tax or VAT varies from state to state. Unlike excise duty, VAT is ad valorem and results in higher revenues for the State when rates move up.

• The government’s decision to prioritise coal supply to power plants will greatly hurt other industries dependent on coal such as cement and aluminium.
• The Ministries of Coal, Railways, Power, and Finance held a meeting on May 17 in which they decided, given the shortage of coal with power plants, to instruct companies such as Mahanadi Coalfields Limited (MCL) to deploy rakes of coal only for power plants and not to do so for other consumers of coal.

Stock position

• According to data with the Central Electricity Authority, 17 power plants had super-critical (less than three days worth) of coal stocks as of May 22 while three power plants had critical (less than five days worth) of stocks.
• The Railway Board wrote to all zonal railways on May 18 saying that it has been decided that loading of coal for power houses (i.e. plants of Central/State power utilities and IPPs) from goods sheds should be accorded higher priority till June 30, 2018. These instructions were made applicable from May 19 onwards.

Fuel supply pacts

• The CPP (captive power plant) consumers have signed fuel supply agreements (FSA) with CIL (Coal India Limited), which is a legally binding agreement with long-term coal supply assurance and hence abrupt stoppage of supply will bring the industry to a grinding halt which will have a severe impact on the downstream industry like transmission and distribution, packaging, cement, consumer products, paper, tyre manufacturing, resulting in a loss of jobs for millions.
• While CIL’s coal supply to independent power producers (IPPs) had grown every year and by as much as 8.1% in 2017-18, the supply to captive power plants contracted by 6.2% in 2016-17 and saw no growth in the next year.

Coal shortage

• What we have requested the government is that we understand that there is a genuine issue of IPPs running short of coal and that this would affect the end-consumers and that they should be given priority, but this should not mean zero supply to other sectors, and it shouldn’t be without any advance notice.
• Other industry analysts lay the blame for the shortage of coal stocks in power plants on the government’s laxity regarding maintaining critical stocks and its untimely decision to stop all coal imports for power generation, increasing the pressure on domestic supplies.
• Even when there was adequate supply of coal, many power plants did not keep sufficient stocks of coal because they felt that there was enough supply.
• The government took no action against them for this. And then, the government, last year decided to bring down coal imports for power to zero, which has resulted in this shortage now.
• Coal India’s supply falls short in the May to June period, which is then followed by the monsoon when supply is naturally low.

D. GS4 Related

E. Editorials

Why in news

• PM Modi’s meeting with the Russian President signals a necessary recalibration
• With his visit to Sochi to meet Russian President Vladimir Putin for a day-long “informal summit”, Prime Minister Narendra Modi appeared to set a new normal in his foreign policy outreach.

Aims

• As was his Wuhan meeting with Chinese President Xi Jinping, the Sochi visit was aimed at resetting and rebalancing bilateral ties that have weakened over the past few years.
• The special understanding between India and Russia has frayed, with India drifting closer to the U.S. and Russia to China.
• The personal touches — hugs, handshakes, a boat ride on the Black Sea — projected the impression of two strong leaders addressing each other’s concerns “man to man”. Substantively, Mr. Modi’s visit was premised on a number of new realities facing India.

1. India’s existing dependence on Russian military hardware, with orders for about $12 billion more in the pipeline, must not be jeopardised at any cost. These have been made more difficult by a new U.S. law (Countering America’s Adversaries Through Sanctions Act) that would hit India’s big-ticket hardware purchases and energy deals from Russia, and Mr. Modi would have wanted to reassure Mr. Putin that India will not bow to such pressure.
2. Russia’s recent military exercises and helicopter sales to Pakistan, as well as its outreach to the Afghan Taliban, have been viewed with deep concern by India, which has sought to extract assurances that this would not in any way hurt its national security interests.
3. The new push to strengthen ties is driven by the global instability that the Donald Trump administration has set off.

India’s views

• India appears to have decided it can no longer depend on consistency in the S.’s foreign policy.
• As a result, the recalibration of Mr. Modi’s foreign policy from its perceived Western tilt to a more even-handed approach of aligning with all in India’s interests is welcome.
• Informal summits of the kind in Sochi and Wuhan are also useful to break the ice and reset relations when needed.
• But a comprehensive shift in foreign policy must be accompanied by greater transparency.
• If India is contemplating a turnaround from its earlier postures with world powers, it needs to explain the change of course.
• The secrecy surrounding Mr. Modi’s dashes to Wuhan and Sochi is intriguing since he is already scheduled to meet both Mr. Xi and Mr. Putin at least twice in the next two months, at the Shanghai Cooperation Organisation summit in Qingdao and the BRICS summit in Johannesburg.
• Even more curious are the official outcomes of the informal summits that India and China will cooperate in Afghanistan, while India and Russia will coordinate on the Indo-Pacific.
• Both have hitherto only been referenced in India’s ties with the U.S. and its allies, Europe, Japan and Australia.
• Without clarity, at a time of global flux India may appear to be attempting to travel in two boats at once.

Category: ECONOMY

1. Seller beware: homebuyers and Bankruptcy Code

Question 1. Consider the following statements about Clean Air India Initiative:

Question 2. Consider the following statements about Nocebo effect:

Question 3. Consider the following statements about Windfall Tax:

Question 4. Consider the following statements:

H. UPSC Mains Practice Questions