9 PM Daily Brief – July 17th,2020

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GS-2

  1. Issues with Higher Education

GS-3

  1. Opening economy for sustainable revival
  2. Discom loan package: A boon for the power sector?
  3. Assam Floods – In need of long-term solution

9 PM for Preliminary examination

FACTLy


1.Issues with Higher Education

Source: The Hindu

Syllabus: GS-2- Education

Context: Government-oriented bureaucratic centralization in higher educational institutions has intensified with the outbreak of the COVID-19 pandemic.

Issues with Higher Education in India

  1. Access: According to the All India Survey on Higher Education, the Gross Enrolment Ratio (GER) in higher education in India is 25.8% in 2017-18. The Kasturi Ranjan Committee identified lack of access as a major reason behind low intake in higher education. It is much behind that of USA (85.8%) and China (43.39%)
  2. Poor investment in research and innovation: According to Economic Survey 2017-18, only 0.6-0.7% of GDP has been spent on research in India in the last two decades. This is very low as compared to 2.4% of USA, China-2.1%, Japan-3.58% and South korea-4.29%
  3. Curriculum and Employability: The curriculum remains outdated, theoretical in nature with low scope for creativity. There is a gap between industry requirements and curriculum leading to low employability of graduates. The government noted in 2017 that 60% of engineering graduates remain unemployed, while a 2013 study of 60,000 university graduates in different disciplines found that 47% of them were unemployable in any skilled occupation.
  4. Bureaucratic centralization and Lack of autonomy: Universities lack institutional and academic autonomy. The university administration has been replaced by the Education Minister and his bureaucratic apparatus. The imposition of the ‘cafeteria system’ associated with the Choice Based Credit System and renewed attempts to privatise higher education linked to an emphasis on rankings are prime examples of bureaucratic centralization.

Government Initiatives in Higher Education:

  1. Revitalizing Infrastructure and Systems in Education (RISE): It aims to increase investments in research and related infrastructure in premier educational institutions.
  2. IMPRINT India: It is a joint initiative of IITs and IISc to address major and science and technology challenges in India.
  3. Study Webs of Active-Learning for Young Aspiring Minds (SWAYAM): E-education platform
  4. Ucchtar Aavishkar Abhiyaan: To promote industry-specific need-based research
  5. Institution of Eminence: It aims to develop 20 world-class teaching and research institutions

Way Forward:

  • It is important for Higher educational institutions restore the fertile academic space where ideas are discussed and debated rather than suppressed and dismissed.
  • The higher education curriculum should focus on industrial demands and skill development to increase the employability of Indian graduates.
  • A National Research Foundation (NRF) should be set up as an autonomous body of the Government of India to boost investment in research and innovation.

2.Opening economy for sustainable revival

Source – Indian Express

Syllabus – GS 3 – Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment

Context – India has had little option but to open up the economy. That has led to some improvement in economic activity towards the latter part of the April-June quarter — but this is unlikely to sustain.

Improvement in economic activity towards the latter part of the April-June quarter

In the July-September quarter, the pace of improvement is expected to slow down or even stagnate and fall in some cases because of following reasons:

  1. Reintroduction of containment measures– In some regions, where the spread has been faster, have reintroduced containment measures, which will adversely impact economic activity.
  2. Hiccups for logistics– The partial unlocking of the economy and the back and forth on containment measures will continue to pose a hindrance to supply chains, transportation and logistics.
  3. Most effected sectors– It will take time to restore normalcy in the services sector, particularly in hospitality, travel, sports and entertainment.
  4. Failure of monetary policy– The problem is that the monetary measures announced after the pandemic do not have the heft to trigger a recovery because of rising financial sector stress and lack of fiscal space.

Suggested solutions for revival of economy

  1. Promoting ease of doing business – Business environment need to be promoted for firms to utilize their underutilized capacity for fulfilling demand in economy.
  2. Reforming financial sector – For monetary policy to work effectively for reforming economy, financial sector has to be reformed on priority basis with new provisions for lockdown affected firms under IBC code.

Way Forward – Opening the economy gradually in phased manner along with increasing fiscal space for states are the needed solution to curb lockdown’s impact on livelihood of millions.

 3.Discom loan package: A boon for the power sector?

Source: Financial Express

Syllabus: GS 3-Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment

Context: Analyzing the Rs 90,000 crore loan package announced by the Centre for discoms.

Background:

  • Benefit: Improvement in their cash-flows will help their credit rating and enable fresh funding.
  • State government guarantees against the loans to the discoms will help PFC and REC to treat the loans as standard assets.
  • There is no assurance against default in debt-servicing and historically no lender has invoked a state government guarantee.

Over the years, the Centre has formulated various schemes to help the ailing state power sector.

No real improvements for Discoms:

  • Increase in liabilities with no creation of assests: Diversion of funds meant for capital expenditure to meet interest liability is rampant.
  • No significant investment has been seen in terms of strengthening sub-transmission and distribution, systems improvement or separation of agriculture feeders.
The Accelerated Generation & Supply Programme (AGSP)-Late 1990s · It subsidised the interest on loans from PFC by 3-4%.

· Around Rs 38,000 crore was securitised under the Ahluwalia Committee model of One-Time Settlement to make SEBs bankable.

· Interest/surcharge of Rs 8,300 crore was waived and Net outstandings were converted into tax-free bonds at 8.5% pa with a repayment period of 15 years.

The Accelerated Power Development Reforms Programme (APDRP)-2002-03 · It envisaged a six-level intervention for reform with a budget of Rs 40,000 crore.

· Objectives: To improve the financial viability of discoms and bring aggregate technical & commercial (AT&C) losses down to 10%.

· Funding: The Centre funded 25% of the cost and 75% was arranged by the discoms from financial institutions or internal resources.

· Failure of APDRP: As NTPC and PGCIL imparting consultancy to the discoms, fell short of expectations. They had little knowledge or experience of the constraints and complexity of distribution systems.

·  Delayed release of funds by states to the discoms, and even diversion of funds to other sectors compounded the problem.

· In the XII plan, the Restructured APDRP was introduced with changes in the scope and revised terms and conditions with an outlay of Rs 51,000 crore.

The Integrated Power Development Scheme (IPDS)-2014 · For strengthening of sub-transmission and distribution, metering of distribution transformers/feeders/consumers and IT enablement.

· The scope extended to 4,041 towns.

· An outlay of Rs 32,612 crore and R-APDRP scheme cost of Rs 44,011 crore, including a budgetary support of Rs 22,727 crore, was earmarked.

· The latest information on the ministry of power’s website shows a sanctioned amount of Rs 32,500 crore, and Rs 12,500 crore released.

UDAY scheme-2015 · Aim: At financial turnaround, operational improvement, reduction in cost of generation, development of renewable energy, energy efficiency and conservation.

· State governments took over 75% of the debt of discoms and issued low-interest bonds.

· In return: Discoms were given a deadline (2017-19) to meet efficiency parameters such as timely tariff revisions and elimination of the gap between the average cost of supply (ACS) and average revenue realised (ARR) by 2019.

· The turnaround envisaged by UDAY hasn’t materialised, with several targets missed.

Other issues in power sector:

  • Overruns:Power projects in India suffer from cost and time overruns.
  • Tariffs issue: Many private players quoted unworkable tariffs in making successful bids for projects.
  • Many naphtha/gas-based stations were built but the absence of gas supply and import of costly naphtha added to their woes. Most of these plants are either shut or some lucky few which got into long term PPAs are getting paid fixed charges but are not operating.
  • Role of banks:
    • Banks took considerable time in approving revised project costs: This affects many private power plants as it accumulates interest during construction.
    • ‘Evergreening’ the loans to remain standard assets:Additional assistance by the banks was adjusted against their dues. No disbursements went towards completing the project.
    • Defaults: As there is no cash flow. It resulted in many of the private projects today facing IBC proceedings or liquidation.
  • Role of regulators: Despite APTEL order mandating electricity regulatory commissions to initiate suo-motu proceedings for discoms tariff revision, no tangible action is visible.
  • Pendency of litigation has increased and sometimes commissions have been reduced to safe havens for retiring bureaucrats.

Role of private sector:

  • The FM’s announcement regarding privatisation of discoms in the Union Territories is a welcome step.
  • Private players like Torrent Power with their successful experiences in distribution can even be retained on an agency basis, on a profit-sharing model.

Way forward:

  • Need of discoms’ cash-flow and efficient collection:By the introduction of prepaid metering (complemented by smart metering and remote reading), separation of agriculture feeders, metering and measurement of agriculture consumption, direct transfer of subsidy and write-off of all state government loans to discoms.
  • It is important to establish benchmarks for efficiency in operations, develop MIS and use data analytics for continued improvement.
  • Professionals can be appointed for managing the discoms and delegate operational authority can be given to them.

4.Assam Floods – In need of long-term solution

Source Indian Express

Syllabus – GS 3 – Disaster and disaster management

Context – Floods are a recurrent feature during the monsoons in Assam. Still, the Centre and state governments have not found ways to contain the toll taken by the raging waters.

Reasons of flood in Brahmaputra valley

Natural Reasons

  1.  High sedimentation and changing course of river– River Brahmaputra is in its youth stage in valleys of Assam which leads to frequent changes in course causing flood as water swells up. Further, the river comes from a high slope (Tibet) to a flat plain in Assam, its velocity decreases suddenly and this results in the river unloading the sediment.
  2.  Monsoonal rainfall – India receives ~80% of rainwater from monsoon and that too is erratic and uneven in nature. High concentrated rain in parts of north-east leads to heavy rainfall in short time causing flood.
  3. Topography of region– Guwahati’s topography — it’s shaped like a bowl — does make it susceptible to water logging which is exacerbated by flooding.

Anthropogenic reasons

  1. Unplanned expansion of the cities – Lack of scientific approach in planning has led to severe encroachments in the wetlands, low lying areas, hills and shrinkage of forest cover. This also contributes in higher sedimentation of the areas. The denuded hills and loss of wetlands lead to artificial floods.
  2. Lack of cooperation among basin states– The rainwater from Meghalaya and the surrounding hills often causes flash floods in Guwahati. However, recognition of the problem has not led to any meaningful conversation between the two states on flood control.
  3. Overreliance on embankments– The state has primarily relied on embankments to control floods since 1950’s. The pressure of the surging water and frequent changes in course of river takes a toll on these walls and they need constant reinforcement — by all accounts, that hasn’t happened in Assam.

Suggested solutions

  1.  Preventing encroachment in green cover– State needs to bring in public domain the bye-laws associated with constructing building, implement the environment impact assessment in letter and spirit and mobilize people for participative approach in preventing loss of green cover.
  2. Refocusing on traditional methods – Traditional methods of water harvesting used by ethnic communities of northeast need to be practiced to prevent flooding with low-cost sustainable model.

Way Forward – “Integrated basin management” – one that needs all the basin sharing (China, India, Bangladesh and Bhutan) countries to come to an understanding about taking measures in the catchment areas is the only long-term solution. For that, interstate relationships, political cooperation and the role of the government are important.


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