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GS-1


Social Issues

For a knowledge economy: (The Hindu, Editorial)

Context

India needs to do much more than investing money into higher education institutions to create a knowledge ecosystem in the country.

Creating a knowledge ecosystem in India

  • For knowledge to translate into a wealthy society, we need to create a conducive knowledge ecosystem, which is currently missing from our national plans.
  • Institutions of higher education help in creating such an ecosystem, and improve a nation’s productivity and wealth.
  • India plans to pump in over Rs. 10,000 crore to build 20 world-class higher education institutions.

Importance of knowledge-intensive industries

  • Growth and productivity could not be explained only by capital and labour.
  • This differential they attributed to the knowledge content of an economy.
  • Today, knowledge-intensive and high-technology industries contribute the most to long-term growth.
  • It is no accident that U.S. accounts for 33% of global output of knowledge-intensive services, China 10%, but India only 2%.
  • In high-technology manufacturing, India barely exists. A lot needs to done therefore.

What is the role of institutions in creating a knowledge ecosystem?

  • The creation of a knowledge ecosystem that allows for robust institutions that focus on information gathering, planning, research, teaching, credit supply, and ensuring that people are filled with hope rather than derision for the society in which they live will make a society wealthier.
  • Institutions can generate an ecosystem for innovation in many ways: by providing access to knowledge capital, an atmosphere of inquiry, and an experimental environment where those ideas can be tested.
  • Given that the success rate of ideas is low, ideas need to be tested constantly.
  • For reality testing, we need collaboration between academic researchers and the users of that knowledge, industry, and government. It is this interface that is rather weak in India.

Translating research into technology

  • Even with a low funding to research as percentage of GDP, with very few Indians taking to formal learning and research, India still accounted for 4.4% of the global output of science research publications in 2013.
  • Translating this research into technology remains the weak link.
  • For that to happen, the latest suggestion in the choice-based credit system is to include project work at all levels in higher education institutions.

Way Forward

  • We need to ensure ease in movement of personnel between universities and industry.
  • However, there are two obstacles in facilitating this. One, outdated service conditions in the government sector discriminate against people who make such lateral shifts. Two, completely artificial labels exist that distinguish between private and government-owned entities in funding for higher education.
  • Institutions like the Indian Institute of Science, the Indian Institutes of Technology, and Christian Medical College and Hospital, Vellore are all proof that that such categories make little difference to the quality of research and graduate outcomes.
  • We need to provide more autonomy to public institutions in hiring and firing people. And once an institution is given a grant, we need to ensure that it is utilised for the purpose given.

GS-2


Government Policies

Back to paper: (The Hindu, Editorial)

Context:

  • The Election Commission’s decision to use the Voter Verifiable Paper Audit Trail (VVPAT)

What is the news all about?

  • For the first time, VVPAT will be used on a State-wide basis in Gujarat
  • It may silence the critics that questioned the safety and accuracy of EVMs

What is the unique feature of Electronic Voting Machines currently being used?

  • The EC of India uses a stand-alone, non-networked machine that runs on a single programmed microchip

Should VVPAT be encouraged?

  • VVPAT is a costly process and should not be encouraged

What should be the duty of the political parties?

  • They should meaningfully engage with the election commission for a solution instead of creating hue and cry

Service For Swachhata: (Indian Express, Editorial)

Context:

  • Started on 15th August, 2014, It has been three years of the Swachh Bharat Mission.
  • The Prime Minister, Narendra Modi called for an accelerated, nation-wide campaign termed Swachhata Hi Seva, from September 15 to October 2.

What is the progress of Swachh Bharat Mission in three years?

  • Rural sanitation coverage has increased from 39 per cent to 70 per cent.
  • As many as 250 million people, almost equal to the population of Indonesia, have stopped defecating in the open since the SBM began.
  • Usage of the toilets built is over 90 per cent, according to a survey by the Quality Council of India.
  • Good progress is also being made in urban areas.

What is Swachhata Hi Seva?

  • The Prime Minister calls for Swachhata Hi Seva on September 15th, 2017.
  • People have come together and cleaned public places like bus stands, railway stations, parks, monuments and places of historical and cultural importance.
  • People also helped to construct twin-pit toilets for those who were unable to do so themselves.
  • The Ministry of Drinking Water and Sanitation, along with the Indian Railways, also did its bit by participating in a cleanliness drive at the Railway Stations.
  • Perhaps the most inspirational contribution to the Swachhata Hi Seva movement came from the officers and jawans of the Indian Army at the Siachen glacier, who carried out a cleanliness drive at the world’s highest battleground.

What is the significant effect of the mission?

  • The Swachhata Hi Seva campaign has re-invigorated the spirit of cleanliness in everyone’s heart.
  • It has already succeeded in making SBM a true jan andolan.

GS-3


Indian Economy. Planning, Growth and Employment

Fewer GST slabs possible after rise in revenue:

Context

  • Bigger reforms such as lower number of slabs under the Goods and Services Tax (GST) regime will be considered once there is revenue neutrality.

Why such reforms?

  • To reduce compliance burden for small taxpayers.
  • There will be space for improvement eventually, once economy becomes revenue neutral.
  • Bigger reforms such as lesser slabs will depend on revenue neutrality fully.
  • At present, GST slabs have rates of 5%, 12%, 18% and 28%.

Change is required

  • India is going through indirect taxation at a time when the economy is growing, and the direct tax is paid by the more affluent sections, while indirect tax is a burden on all. Therefore, a change is must.

GST: old habits spur poor compliance:

Context

  • The government had last week announced that, though the last date for filing the GSTR-3B form for August was September 20, only 55% of those ‘required to file’ had done so by September 25.

What are the reasons behind half of the registered taxpayers filing their August returns?

  • It could be due to a combination of behavioural reasons, and the clashing of various deadlines.
  • It could also be that the taxpayers are waiting to first deal with the more complicated GSTR-1 form and then turn to the GSTR-3B.
  • It appears that 45% of the assessees have still not filed returns.

What should be done?

  • The Government should go to the root cause and analyse whether these assessees are facing some genuine problems or they have been migrated automatically and are not required to comply.
  • Many small vendors have had to register themselves on the GST Network in order to obtain a GST number, something their buyers need them to have for the purpose of availing input tax credits. However, once registered, these small businesses have to file their returns regularly.

Issue of Zero returns

  • All the people who have taken up a GST registration have to file their returns, even if it is a zero return.

GST: competitiveness to quell power costs:

Context

Analysis of GST impact on power sector

the Central and State Governments have always given special tax treatment to the power sector in the past. But post GST, that trend may not continue.

Negative impact

  • The GST Act has kept electricity out of its ambit while keeping the capital goods and services consumed by the sector under its coverage. Therefore  Power generating companies will not be able to claim input tax credit i.e, they cannot pass on the tax they paid for inputs to the consumers. There is also no benefit of input tax credit in respect of state VAT So, the cost of power will come embedded with taxes on power generation equipment and other inputs.
  • Cost of generation in renewable sector will increase by 5-10%, due to the increased tax incidence on  the components that go into the manufacturing of solar PV systems and wind generation systems.
  • According to an estimate by the Ministry of New and Renewable energy, the cost of setting up solar off-grid projects will rise by 16-20%, after GST. There will be an about 16% increase in solar PV grid installations and a 11-15% jump in the cost of setting up of wind energy projects.
  • In biomass and hydro projects, the increase in project cost will be about 11-14% and 11% respectively.

Positive impact

  • Domestic coal, has been brought under the 5% tax slab — in the past, the tax slab for coal varied from 11% to 12%. It is estimated that the variable cost of generation for coal-based power companies will be decline by 5-6 paise a unit, or about 1% of the current open market tariff.
  • For the electrical and the lighting sectors that will enjoy reduction in indirect taxes — from about 30% to 18%.

Why there is a need to rationalise GST impact?

  • India is the world’s third-largest producer and fourth-largest consumer of electricity. In the last couple of years, the power sector witnessed record capacity addition taking the installed generation capacity to more than 330 GW.
  • India has announced a major initiative to achieve an all Electric Vehicle Regime by 2030. the GST at 12% for Electric Vehicles compared with 28% for diesel /petrol vehicles and hybrids is a major step. this will give a major boost for the demand pick-up. With more and more charging stations coming up, electricity demand should go up by a few hundred gigawatts by 2030.

conclusion

the government needs to rationalise the tax structure and pave the way for the seamless flow of input tax credit, eventually market competitiveness of power generators — public or private, conventional or renewable — could absorb the increase, relieving consumers of the burden

To tackle the Indian economy’s woes, create more jobs: (Live Mint, Editorial)

What is the issue?

  • The Indian economy’s health is not good. Economic growth decelerated to a three-year low of 5.7% in the June quarter of 2017-18.
  • In the same quarter, the current account deficit hit a four-year high of 2.4% of gross domestic product (GDP).
  • Industrial production grew by only 1.2% in July 2017 compared to a year earlier.
  • Investment demand growth has declined from 7.4% to 1.6% over the last year.

What measures should the government take to cure the economy?

  • With the patient in pain, the government is moving into high gear to administer relief.
  • Several short-term measures for providing income relief at the bottom of the pyramid may be rolled out, a boost to construction activities in low-cost housing and rural roads, more expenditure under the Mahatma Gandhi National Rural Employment Guarantee Act.
  • The drag of non-performing assets (NPAs) in the banking system may also be eased.
  • However, these pain-relievers will not cure the patient’s serious ailment.

Root causes of the problem

  • Though growth has been high in the past two decades, touching even 9% per annum in some years, the Indian economy has been ailing.
  • Inequality has been increasing fast: India is becoming one of the most unequal societies in the world.
  • A cause of this is that the growth of productive jobs and dignified livelihoods is not keeping pace with the growth of the population and its aspirations.
  • By many measures, the Indian economy has one of the poorest employment elasticities in the world.
  • Fundamental causes must be addressed, and holistic treatment is necessary.
  • The lack of skills for decent jobs is one of the causes of slow growth in employment, but it is only one.
  • Therefore, a vigorous treatment of it alone has resulted in only 10% of the persons trained by government’s focused drive to skill millions finding employment.
  • There is alarm that automation technology will reduce jobs in the future and industry bodies have urged the government to prepare for “Industry 4.0”.
  • The recent World Bank report “Trouble in the Making? The Future of Manufacturing-Led Development” estimates that only 2% to 8% of jobs in developing countries will be threatened by automation in the foreseeable future. The real risk is that “countries will lose out on jobs that are never created”.

Why are jobs not being created in the Indian economy? And what treatments are required to enable it to generate more jobs and livelihoods faster?

  • The generation of many more jobs in the Indian economy requires growth of more enterprises that will enable people to convert their “labour”, i.e. the work of their hands and minds, which are the only assets that many have, into incomes; and if their incomes are sufficient and they can save, into financial assets.
  • Therefore, we need more enterprises that engage people as their principal resource.
  • They are required in many sectors, especially the rural, nonfarm sector.
  • They are steps on an escalator to progressively build capabilities of people and enterprises, picking them up from where they are, to take them up to more sophisticated levels.
  • Unfortunately, such enterprises are despised by many because they are not productive, that is, they use too much labour, and because they are too tiny and informal to connect with the formal economy.
  • However, ill-conceived thrusts to force formalization on to them (as demonetisation and the introduction of good and services tax have turned out to be), can kill the patient with too much medicine given too fast.
  • Perhaps India’s policymakers also applied the medicine of free trade too fast with the big bang reforms of the 1990s.
  • Inverted duty structures came about from which consumer-facing assemblers benefited. It also made consumers happy with the variety of international branded products they could buy.
  • Whereas India and China were comparable in the strengths of their machine-building capabilities in the early 1990s, now China’s capital goods sector is over 50 times larger than India’s, and India imports a huge amount of capital goods from China.

Way Forward

  • The Indian economy is suffering from a combination of two problems: a laissez faire approach to industrial and trade policies since the 1990s, and knotted-up administration.
  • Many more enterprises that employ labour, as well as more industries with technological depth, are required to improve the health of the Indian economy.
  • “Systems thinking” is essential for stimulating sustainable growth.
  • The effects of policies that may be good for one part of the system must be understood before they are implemented in other parts.
  • Otherwise, they can become “fixes that backfire”, as the vigorous skilling mission had become, as well as the rush to demonetise, and some of India’s free trade agreements too.
  • “Whole of government” approach is required for coordinated implementation at several levels, at the Centre, in the states, and on the ground, which will truly make it easier to do business in India.

Pollution and conservation

Coal is still the secret of our energy:

Context:

Demand for coal is expected to climb despite ramping up of renewable energy capacity

Introduction:

  • Despite the rapid growth in renewable energy, legacy coal plants will continue to generate thermal energy. However, most additional capacity in the country will come from renewable sources.
  • With India’s embarking on an ambitious journey to achieve renewable energy capacity of 175 gigawatt(GW) by 2022, questions have been raised on the relevance of coal in the present context.

Future of coal:

  • Former chairman of Coal India Ltd., Partha Bhattacharya, said “If the future of the coal is dark, then the future of the country will be dark”.
  • “Today in power generation, 81 percent is out of coal, “he pointed out.
  • He also emphasized that “Going forward, the share will definitely come down. But the growth in renewable does not mean the generation from coal will come down. It will never come down, at least in next few decades.”
  • According to analysts, renewable energy sources and coal will coexist, because the availability of coal is abundant in India and it can provide affordable power to propel India’s growth and light every household.

Auctions:

  • The captive power plants purchased 80% of the coal offered on a five-year contract at an auction at an average premium of 25% over the notified price.
  • At a similar auction held last year, Coal India had managed to receive a premium of 19% over the notified price.
  • “In India we cannot do without coal. Despite the ramping up of renewable capacity, both solar and wind energy cannot go beyond 40% of the energy mix. So, coal has no problem for the next 20 years in India unless some new source of energy is invented overnight,” Sushil Kumar Jiwarajka, chairman, Renewable Energy Mini Grid Committee, FICCI, said.

Key points:

  • The abundance of coal in India makes it the most important fuel.
  • In power generation today, the share of coal in total capacity is about 62% but the share in generation is about 80%.
  • With reliable supply of energy becoming critical to provide round-the-clock electricity across the country and to achieve 100% electrification by December 2018, super thermal power plants and other modern thermal plants are being nudged by the Centre to produce more energy from the same capacity.

Advantages of coal:

  • For existing plants, coal based generation is the cheapest mode and most affordable source of power in the country.

Present status of coal in India:

  • Presently, the plant load factor (PLF) for India’s thermal power capacity has dropped to 52% from 79% in 2007-8 but the country’s thermal plants are equipped to operate at about 85 to 90% PLF.
  • To produce 500 billion units, 350 million tonnes of coal would be required.
  • Even at a requirement of 300 million tonnes of coal, coal demand will increase by 7% a year from now.
  • India uses about 800 million tonnes of coal.
  • The current coal production in the country is 650 million tonnes, while the balance is imported.
  • The additional demand for coal to fire up power plants would contribute a substantial Rs. 12,000 crore annually to the Clean Environment Fund at the rate of Rs. 400 per tonne.

Global comparison:

  • India’s share in pollution is far less than its share of the global population.
  • Developed countries did want to club India with China and said that what applied to China, applied to India too.
  • Fortunately, India has not succumbed to that.
  • Using more coal to meet the energy demand from the same thermal capacity for the next 20 years will not put India at disadvantage given its commitment to meet the Climate Change COP 21 obligations.
  • As per the COP 21 obligations, India’s renewable capacity should be 40% of the total capacity by 2030. Including hydro-based power, that capacity is currently at 28%. Once India implements the 175 GW renewable programme, the 40% criteria will be achieved.
  • Besides, India is well within the COP 21 obligation till it uses 1,500 million tonnes of coal a year as compared with 800 million tonnes now to generate energy.
  • The Chinese share in global emissions is now close to 30%, whereas its share in global population is just about 17%.
  • India’ share in global population is 16%, while its share in emissions is only 6%-7%.
  • China is obliged to provide for green alternatives to counter pollution from the burning of 4 billion tonnes of coal.
  • Even though the NITI Aayog energy policy mentions 330 GW of thermal capacity as target by 2040, it is unlikely to be achieved because of the sharp correction in solar power prices, said an analyst.
  • The International Energy Agency (IEA) in a recent report titled India Energy Outlook has said, “The rapid change anticipated for the Indian energy system in the New Policies Scenario does not translate into a dramatic shift in the energy mix. Coal retains a central position in the mix, increasing its overall share in primary energy from 44% in 2013 to 49% in 2040.”
  • Once the power sector begins to use increasing amounts of power from solar and other renewable sources, then coal can be put to use elsewhere: eg, coal can be deployed in the manufacture of ammonia and for conversion of ammonia to fertilizer.

What is Total Return Index?:

How has equity mutual fund performance been measured so far in India?

  • Majority of fund houses benchmark their equity mutual fund schemes against simple price indices which capture only the change in price of the stocks that are components of the said index.
  • An index comprises a basket of securities taken at the prevalent market price.
  • For instance, two of India’s popular indices Sensex and Nifty comprise shares of 30 companies and 50 companies respectively and the returns are measured based on price movements of the index components.
  • So, an equity mutual fund’s performance was measured against the performance of their respective benchmarks.

What is The Total Return Index?

  • A Total Return Index takes into account not just the Price Returns of the stocks but also dividends paid out on the stocks.
  • Total Returns Indices are commonly used as the primary benchmarks for comparing fund performance, but in India this trend is only now taking off.
  • Historically, Indian indices have always been tracked for the Price Return.

What is the advantage in using the Total Return Index?

  • The total returns includes interest, capital gains, dividends and distributions realised over a given period of time.
  • TRI will help in giving the right picture of the real alpha (a metric which measures what the fund has earned over and above or below), what was expected.
  • The alpha that is shown currently may look overstated as dividends are not added in benchmark returns calculation and the move towards TRI is a step towards a responsible and transparent communication with our advisors and investors and also sets high standards in investment management.
  • Total Return of the benchmark S&P BSE 100 was 165 basis points higher than the price return.
  • The number of equity mutual funds beating the benchmark dropped to 58% from 85% after making a comparison on TRI rather than on Price Return Index basis.

What does TRI mean for stakeholders in a mutual fund?

  • From an investor standpoint, TRI would give the actual picture of what exactly he or she earns from a mutual fund investment.
  • From the standpoint of fund managers, it will make them work a little harder to make the right stock pick.
  • For example, a typical dividend yield on benchmarks is in the ballpark of 1.5% per annum, which means that the TRI benchmark will be harder to beat by 150 basis points per annum.

Large solar storm sparks global aurora on Mars:

An unexpected event

  • An unexpectedly strong solar storm hit Mars in September, sparking a global aurora and doubling radiation levels on the red planet.
  • Strangely, it occurred in conjunction with a spate of solar activity during what is usually a quiet period in the Sun’s 11-year sunspot and storm-activity cycle.
  • The current solar cycle has been an odd one, with less activity than usual during the peak, and now we have this large event as we’re approaching solar minimum
  • The solar event sparked an aurora more than 25 times brighter than any previously seen by the MAVEN orbiter

RAD

  • The event produced radiation levels on the surface more than double any previously measured by the Curiosity Rover’s Radiation Assessment Detector (RAD) since that mission’s landing in 2012.
  • RAD monitored radiation levels inside the encapsulated spacecraft that carried Curiosity from Earth to Mars in 2011 and 2012 and has been steadily monitoring the radiation environment at Mars’ surface for more than five years.
  • RAD findings strengthen understanding of radiation’s impact on Mars habitability, a key objective of the Curiosity mission.
  • NASA is also using RAD findings for planning the safety of human-crew missions to Mars.

Radiations

  • Highly energetic solar events can significantly increase the radiation that penetrates through the atmosphere to the Mars surface.
  • The increased radiation also interacts with the atmosphere to produce additional, secondary particles, which need to be understood and shielded against to ensure the safety of future human explorers.
  • To protect our astronauts on Mars in the future, we need to continue to provide this type of space weather monitoring there.

Solar storm

  • Solar storms are a variety of eruptions of mass and energy from the solar surface.
  • Flares, prominences, sunspots, coronal mass ejections are the common harbingers of solar activity.
  • They all involve sudden releases of stored magnetic energy, which accelerates the hot gases near the surface or in the corona of the Sun.
  • Sometimes these particles make it all the way to the Earth and beyond by flowing along the Sun’s magnetic field into interplanetary space.
  • When the material collides with the Earth’s magnetic field and trapped radiation belts, it can dump particles into our upper atmosphere to cause the Aurora.
  • The same ‘charged’ particles can produce their own magnetic fields which can modify the Earth’s magnetic field and affect compass readings.

Aurora

  • It is a natural electrical phenomenon characterized by the appearance of streamers of reddish or greenish light in the sky, especially near the northern or southern magnetic pole.
  • The effect is caused by the interaction of charged particles from the sun with atoms in the upper atmosphere.
  • In northern and southern regions, it is respectively called Aurora Borealis or Northern Lights and Aurora Australis or Southern Lights.

Maven

  • Mars Atmosphere and Volatile Evolution Mission (MAVEN) is a space probe developed by NASA designed to study the Martian atmosphere while orbiting Mars.

Curiosity

  • With its rover named Curiosity, Mars Science Laboratory mission is part of NASA’s Mars Exploration Program, a long-term effort of robotic exploration of the red planet.
  • Curiosity was designed to assess whether Mars ever had an environment able to support small life forms called microbes.
  • In other words, its mission is to determine the planet’s “habitability.”
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