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1.Crisis in the seed industry (Live Mint)

2.Lessons for India from succession movements worldwide (General)

3.Wood-based jet fuel may reduce carbon emission but impended by the costs (Down to Earth)

1.Crisis in the seed industry (Live Mint)

Synoptic line: It throws light on the issue as how the regulatory system for the seed and biotech industry should be transparent, science-based, predictable and fair. (GS paper III)

Overview

  • For many decades, the Indian policy framework facilitated the interaction of science and innovation with entrepreneurship, which led to competition and the subsequent development of an industry structure that delivered sustainable economic benefits.
  • The government was a major contributor to investments in seed research in India for close to three decades after independence. Policy reforms like the New Policy On Seed Development (1988) and New Industrial Policy (1991), and advances made by science and technology, provided an impetus to the participation of the private sector in the Indian seed industry and private investments helped India benefit from hybrid seed technology and biotechnology.

State of the seed sector

  • India’s top 10 seed firms accounted for just 25% of the total volume of seeds sold by the private sector in 2005. This level of fragmentation was aided by the low entry barriers. Historically, intellectual property (IP) had no sanctity in the industry.
  • Some of the staff of seed companies had free access to the most vital intellectual property of the company, i.e. the germ plasm and the parent lines. People could easily start a new seed company with the freely available parent lines. Many seed-producing farmers also set up seed production companies.
  • Consequently, research investment by private companies remained at a meagre 3-4% of revenue against the international norm of 10-12%. Investment by the public sector in seed research continued. A steady formal and informal flow of material from public institutions to private entrepreneurs continued.
  • There was no IP law for the seed industry till The Protection of Plant Varieties and Farmers’ Rights Act (PPVFRA), 2001, came about. In the preamble to the Act, the government said this law was intended to promote research in, and creation of, intellectual property in the seed sector.
  • it is argued that science, technology and innovation play a central role in driving change in the industry. Adoption of new technology leads to the creative destruction of old players and systems, pushing forward technological frontiers.

Persistent challenges

  • This is an accurate conceptual summary of the impact created by genetically modified (GM) seeds technology, which disrupted the existing industry structure in India. Forty-five Indian seed companies got a licence to use the technology and participated in the explosion in the Indian cotton market.
  • These changes led to a temporary monopoly for the technology provider but the policy framework had the opportunity to help society reap long-term economic benefit by enabling the industry to absorb and exploit the new technology. Sadly, the policies of the Central and state governments fell short of the required visionary approach.
  • First, no steps were taken to encourage competition in the sector. Existing technology providers continued to enjoy a monopoly. Second, the government stifled further research investment by controlling prices, dictating licensing terms and confusing IP laws between different Acts. Third, timely actions were not taken to prevent the illegal introduction of GM technology into the market.
  • In the process, the government killed the second part of the theory proposed by Schumpeter. It failed to clearly articulate the industry structure it wants to promote and the roles of the different stakeholders it would like to establish. Political posturing prevailed and they did not understand the long-term impact of the confusion they created.

What can be done? Way ahead

  • There are some actions that the government has to undertake quickly:
  • A quick and decisive action in collaboration with state governments to identify and take over fields where illegal GM cotton is being grown.
  • Agree on a national policy on GM crops, define the exact areas where GM is required by the country and where the government will encourage public and private investment in GM technology. This will bring greater clarity and remove the current policy paralysis.
  • A quick resolution to the conflicts between the different IP laws that are affecting this industry and clearly defining how the government wants to encourage research investment with assured IP protection in this important sector.
  • Invest in educating the public about the facts regarding GM technology and stress on its critical role in enhancing agriculture productivity and its benefits to farmers and consumers.
  • Strengthening the regulatory mechanism for the seed and biotech industry to make it transparent, science-based, predictable and fair.
  • These actions will bring back normalcy and establish predictability in the system. The implications of not doing so could be very damaging to the seed and biotech industry, with the Indian farmer and the consumer being the ultimate losers.

Question– What are the problems associated with the seed sector in India? What steps can be taken in its regard?

 

2.Lessons for India from succession movements worldwide (General)

Synoptic line: It throws light on the lessons to be learnt from the secessionist movements worldwide. (GS paper II)

Overview

  • The ongoing crisis in the Catalonia region of Spain, where an attempt at secession was ruthlessly put down by central authorities, is a salutary reminder to us in India of what can go wrong when regional grievances in a federal political and economic union are allowed to fester.
  • One of the roots of the putative independence movement is a sense of Catalan identity distinct from that of much of the rest of Spain an identity rooted in language, culture and history. Yet, it should not be overlooked that a growing dissatisfaction with fiscal transfers within the kingdom of Spain, which many Catalonians believe hurt their region disproportionately, was, and remains, an equally important driver of the desire for independence.

The larger ongoing problems

  • Like most federal unions, the Spanish central government engages in fiscal redistribution among regions, which, effectively, transfers resources from “have” regions to “have-not” regions. Catalonia contributes 119% of national fiscal resources compared to the national average, but receives only 102% of the national average after central government redistribution knocking it from third to ninth in the fiscal league table.
  • This is not outlandish when compared to other federal unions: for instance, in the US, the wealthy state of New Jersey receives only 57 cents back as federal spending out of every dollar it contributes in taxes to federal coffers. Similarly, Canada has a system called “equalization” in which have-not provinces in the centre and east of the country receive federal transfers while have provinces of the west do not.
  • At present, Québec is the largest single recipient, accounting for a whopping 60% of total federal equalization payments, while the wealthy, resource-rich provinces of Saskatchewan, Alberta, and British Columbia receive nothing.

What about India

  • Central statistical authorities do not release such data to the public but a sizeable quantum of inter-state fiscal redistribution occurs between have and have-not states through the Centre’s taxing and spending policies. For example, for every Rs100 that the average citizen of Maharashtra contributes to Central coffers, he or she receives Rs15; by contrast, the average citizen of Bihar receives Rs420 for every Rs100 that he or she contributes.
  • The crux is this: Resentment and separatist zeal in Catalonia have been fuelled by the feeling among many residents that their hard work and thrift are paying for the alleged indolence, welfare dependency culture, and absence of entrepreneurial ethos in lagging regions. Something similar is afoot in Italy,where many in the wealthy north resent large fiscal transfers to the poorer south, the way many in former West Germany bristle at transfers to the poorer former East Germany within the reunified German republic.
  • In Canada, many Albertans and British Columbians complain that their tax dollars go to subsidize Quebec, which as a French-speaking province claims to be culturally distinct as well as having the largest claim on federal coffers. It is perhaps only the US among major federal economic and political unions which has little, if any, of such feeling: but then that country fought a bloody and bitter Civil War in the 19th century and emerged a stronger union from it.
  • Could India witness a Catalonian-style separatist movement from have states on the back of the potent brew of fiscal and cultural elements?
  • For a nation that has combatted numerous armed insurgencies, this question is not outlandish. The mix of economic and cultural sources of alienation amongst have states is perhaps strongest in Tamil Nadu, where there exists a pre-existing vein of pan-Tamilian nationalism that may be tapped by vote-getting politicians.
  • As recently as 4 June, Dravida Munnetra Kazhagam working president M.K. Stalin tweeted: “Willful erosion of States Rights by Centre which seeks to establish a Monolith will only incite a renewed War of Independence.” Meanwhile, the late All India Anna Dravida Munnetra Kazhagam leader and chief minister, J. Jayalalithaa, argued last year that greater demands for fiscal and other forms of autonomy from the Centre by the states, “should not be seen as centrifugal or fissiparous trends that have to be curbed, but as a manifestation of India’s maturing as a nation with diversity and as a democracy”.

Way ahead

  • The lesson for India is clear. The need of the hour is to move away from the over-centralizing tendencies of the Centre which have characterized all dispensations and towards a model which takes fiscal and policy devolution to the states seriously.

Question– What should be the govt.’s approach to pacify the state’s interests so that separatist tendencies can be curtailed well in advance?

3.Wood-based jet fuel may reduce carbon emission but impended by the costs (Down to Earth)

Synoptic line: It throws light on the utility of wood based jet fuels and its sustainability. (GS paper III)

Overview

  • Airline emissions account for about 2-5 per cent of the world’s greenhouse gas output.
  • The UN proposes to cap the carbon pollution of all international flights at 2020 levels. As the proposal of UN’s International Civil Aviation Organisation (ICAO) to freeze carbon emissions at 2020 levelsand impose a carbon emission fee on airlines will be put, several plans are afoot to cut airline emission by using greener jet fuels, especially the one made from waste wood.However, environmentalists dismiss it as a “pipe dream”.

Fuel from wood waste

  • Recently, the US Federal Aviation Authority had given go-ahead to a new fuel making process by preparing mixture of wood pulp, water and enzymes. The new biofuel is made from a type of alcohol called isobutanol, which is produced naturally by fermenting pine feedstock.
  • While the enzymes are used to extract sugar from pine, genetically modified yeast produces the isobutanol from the sugars. The isobutanol goes through one more process of refinement in a facility before it becomes the jet fuel.

Arguments in favour of wood fuel

  • There are reasons that are making airlines excited about this new biofuel. Firstly, it is much more powerful than ethanol, the current choice for transport. Moreover, unlike ethanol, jet fuel made from isobutanol can be used as fuel for trucks. The supporters of this NEW fuel believe that it is sucking carbon directly out of the atmosphere since it is prepared only by using the waste that tree produces.

Cost is a major deterrent

  • Gevo, a US-based company that develops wood fuel and other bio-based alternatives to petroleum-based products, is planning to increase production to around 1 million gallons in 2016. Though it will reduce the cost of production to around $3 a gallon, it is still $1.80 more than the current market price of petroleum-based jet fuel.
  • Whether isobutanol is made from wood waste or corn, the financial cost of this new fuel is proving to be a major deterrent to industry-wide adoption, according to environmentalists. Bill Hemmings of campaign group Transport & Environment believes that besides being expensive, the new fuel is “not delivering the emissions reductions that would justify the investment”.
  • The new fuel is two or three times the cost of existing jet fuels. No-one in their right mind would pay that price. People continue to bang that drum about new bio-fuels, but they are not going to deliver.

Question– What should be the govt.’s approach to make the usage of wood based jet fuels more popular?