1.Risk of rising crude prices (Live Mint)

2.Moving ahead than just planting trees to meet climate goals (The Hindu)

3.Explained: Conserving traditional seeds for organic farming

1.Risk of rising crude prices (Live Mint)

Synoptic line: It throws light on howa higher level of oil prices could still pose challenges for policymakers. (GS paper III)

Overview

  • As a large importer of crude oil, India benefited significantly from lower prices. It helped contain inflation and had a favourable impact on both the fiscal and current account deficits. But a sharp reversal in prices can roll back some of those gains.

Rising crude prices

  • Oil prices touched a two-year high earlier this week and have gone up by about 14% over the last one month. The expectation in the market is that prices could remain elevated owing to several reasons, such as drawdown in inventories, especially in the US, better compliance with the voluntary production cut by the Organization of the Petroleum Exporting Countries (Opec), slower pickup in US shale oil and continued geopolitical risk in West Asia.
  • In October, according to Bloomberg data, Opec members reduced production more than they had initially agreed to. Further, the internal power struggle in Saudi Arabia has added to the uncertainty. According to the International Monetary Fund, Saudi Arabia will need oil prices to be at $70 per barrel for fiscal break-even in 2018.
  • Members of Opec will meet later this month and it is likely that they will work to push oil prices to around the $70 per barrel mark in the coming year.

Impact on India

  • Even though India is in a relatively strong macroeconomic position, a higher level of oil prices could still pose challenges for policymakers. India witnessed a significant positive terms of trade shock when oil prices fell by over 50% between 2014 and 2015.
  • The windfall for the government was to the tune of 0.9% of the gross domestic product (GDP) in terms of lower subsidy outgo and higher tax collection, which helped boost public investments. Households and firms also benefited.
  • However, higher oil prices could have the opposite effect and impede economic recovery in the coming quarters. They could have implications for growth, inflation, currency, current account deficit and fiscal deficit.
  • Every $10 increase in oil price increases consumer price inflation by 0.6-0.7 percentage point. It also estimates that a similar rise worsens India’s current account balance by 0.4% of the GDP. Reduction in excise duty on petrol and diesel by Re1 per litre lowers collection to the tune of 0.08% of the GDP. Since the government raised excise duty when prices were falling, it could come under pressure to reverse the hike if prices continue to rise.
  • In fact, higher and elevated levels of oil prices could actually test government resolve for reforms in the sector. The Union government reduced excise duty by Rs2 per litre on petrol and diesel last month; this was followed by a reduction in value-added tax by states such as Gujarat and Maharashtra.
  • More such moves in the run-up to crucial state assembly elections in 2018 and the general election in 2019 could strain government finances at the aggregate level. Lower revenue would also result in lower public investments, which will affect growth.
  • Given India’s macroeconomic position, the impact of higher oil prices on individual indicators may not look worrying as of now, but put together with added uncertainty related to revenue and economic activity due to teething problems with the goods and services tax, could worsen the outlook for India.
  • Higher oil prices will also affect corporate India’s profit margins and could delay the much awaited earnings revival. A relatively less favourable macro outlook and a decline in profit margins would affect the equity market where stocks are richly valued.

Way ahead

  • To be sure, the situation is not alarming for India at the moment, but policymakers would do well to remain watchful. It is likely that the RBI’s monetary policy committee will mull over the possible fallout in its next meeting in December.
  • Meanwhile, the government would be well advised to avoid reducing duty if prices remain at higher levels. It would need higher revenue to push capital expenditure and move forward with fiscal consolidation.
  • It will be extremely important to keep fiscal deficit in control in order to protect hard-won macroeconomic stability.

Question– What will be the impact of rising crude oil prices on the India’s Current account deficit?

2.Moving ahead than just planting trees to meet climate goals (The Hindu)

Synoptic line: It throws light on the urgent need of a adopting landscape based approach for planting trees. (GS paper III)

Overview

  • In 2015, India made a Bonn Challenge commitment to place into restoration 13 million hectares (Mha) of degraded land by 2020 and an additional 8 Mha by 2030.
  • India’s Nationally Determined Contributions(NDCs) have also pledged to sequester 2.5 to 3 billion tonnes of CO2 equivalent additionally by 2030 through enhanced tree cover. Initial government estimates suggest that to achieve this, India will need to extend tree cover on at least 28-34 million hectares, outside of the existing forest cover.

Over reliance on just plantations

  • Notably, neither the Bonn Challenge nor the NDCs are about large-scale plantations alone. The Bonn Challenge, for instance, lays emphasis on landscape approaches a model aimed at improving the ecology of a landscape as a whole in order to benefit local livelihoods and conserve biodiversity.
  • The NDC lays emphasis not only on carbon sequestration but also adaptation to climate change through a strengthened flow of benefits to local communities that are dependent on forests and agriculture for sustenance.
  • This also reflects the spirit of India’s policy framework on forests which lays emphasis on a landscape approach to manage forest and tree cover, so that the flow of multiple ecosystem services — including food security, climate mitigation and adaptation, conservation of biological diversity and water supplies is secured.
  • In this context, large-scale plantation drives, which often do not lay stress on species selection, the quality of planting materials or survival rates, nor recognise tenure and resource rights to ensure that the benefit flows to communities, do not really achieve the goals. Plantations do have their space, but as one among a larger suite of interventions. However, to operationalise a landscape approach, we must protect healthy forest areas from deforestation, degradation and fragmentation. We must also creatively integrate trees into different land uses.
  • India has numerous models that are suited for different regions and farm household sizes to draw upon, and must not rely on plantation drives alone to secure environmental and developmental outcomes.

Optimum tree model for India

  • Notably, neither the Bonn Challenge nor the NDCs are about large-scale plantations alone. The Bonn Challenge, for instance, lays emphasis on landscape approaches a model aimed at improving the ecology of a landscape as a whole in order to benefit local livelihoods and conserve biodiversity.
  • The NDC lays emphasis not only on carbon sequestration but also adaptation to climate change through a strengthened flow of benefits to local communities that are dependent on forests and agriculture for sustenance.
  • This also reflects the spirit of India’s policy framework on forests which lays emphasis on a landscape approach to manage forest and tree cover, so that the flow of multiple ecosystem services — including food security, climate mitigation and adaptation, conservation of biological diversity and water supplies is secured.
  • In this context, large-scale plantation drives, which often do not lay stress on species selection, the quality of planting materials or survival rates, nor recognise tenure and resource rights to ensure that the benefit flows to communities, do not really achieve the goals. Plantations do have their space, but as one among a larger suite of interventions. However, to operationalise a landscape approach, we must protect healthy forest areas from deforestation, degradation and fragmentation. We must also creatively integrate trees into different land uses.
  • India has numerous models that are suited for different regions and farm household sizes to draw upon, and must not rely on plantation drives alone to secure environmental and developmental outcomes.

Way ahead

  • As we regenerate trees through different interventions, it is critical to ensure that owners have the right to manage and use these trees. It is also critical to use scientific evidence-based methodology with a participatory approach to determine the right type of tree-based interventions most suitable to a certain land use.
  • A tool called the Restoration Opportunities Assessment Methodology (ROAM) is being used in 40 countries to find the best methods for landscape restoration. The tool includes rigorous analysis of spatial, legal and socio-economic data and draws on consultations with key stakeholders to determine the right type of interventions. In India, this tool is being piloted in Uttarakhand and Madhya Pradesh.
  • India has the policy framework, the political will and financing to endorse landscape restoration. What we really need now is innovation and imagination to build replicable and scalable models with a participatory approach to achieve the country’s climate goals through landscape restoration.

Question– What do you mean by landscape based plantations in the context of ecological conservation?

3.Explained:

Conserving traditional seeds for organic farming (Paper III) 

Overview

  • According to popular perception, organic farming is a system where crops are grown without chemical fertilizers. What many don’t know is that if a seed is genetically modified or even a hybrid variety, then the produce cannot be claimed organic.

Need to replace hybrid seeds

  • At an ongoing conference to highlight the importance of saving traditional seed varieties in organic farming, farmers and non-profits gathered to share their experiences on conserving indigenous seeds.
  • The conference, the 19thIFOAM Organic World Congress brought together more than 55 groups from across India, which work to save indigenous seeds. Farmers from over 15 states have displayed their seed collection till November 11.
  • Organised by IFOAM Organics International, the conference aims to bring policy level changes to encourage community-based in-situ conservation of traditional seeds.
  • Thanal, a Kerala-based agro ecology centre says that organic farming farmers are getting better profits by cultivating indigenous seeds than from conventional agriculture. While the Minimum Support Price (MSP) for normal paddy is Rs 22 /kg, the MSP for indigenous variety is Rs 28/kg, says Leneesh. Aromatic and medicinal value crops fare better with Rs 40-42/kg and Rs 50/kg as MSP, respectively.
  • As part of the Save Our Rice campaign, a people’s movement to revive rice culture and create sustainable rice ecosystems, Rice Diversity Blocks (RDB) have been introduced in these regions to conserve indigenous varieties. While the first such block was introduced in 2010 over 1.23 acre owned by Thanal, today there are 13 RDBs all over Kerala.
  • Before the conference began, the preconference, held on 8thNovember at the Constitutional Club, New Delhi, called for measures, including strong seed regulation, proper implementation and a ban on GM and hybrid varieties. Farmers, seed savers and non-profits also called for encouraging community participatory research and licensing of seeds to ensure the produce is organic.
  • Bharat Beej Swaraj Manch or India seed Sovereignty Alliance, a network of seed savers in India in a statement asked to “shun and resist the use of Genetically Modified products, to strive to influence public policies to keep them out of our food, farms and environment.

Question– What do you mean by organic farming? How it is important to conserve the ecology?