Mitras Analysis of News : 3-05-2017

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1.Needed boost to Electronic Vehicles in India(Live Mint)

2.Revisiting the idea of public sector bank (Live Mint)

3.Refuge from the sinking islands (The Hindu)

4.Explained: Targeted treatment to HIV

 

1.Needed boost to Electronic Vehicles in India (Live Mint)

 Synoptic line: It throws light on the importance of electric vehicles, govt. measures and challenges to achieve their viability.  (GS paper II and III)

Overview

  • Do you know that electric cars are almost as old as petrol engine cars? The first electric car was built back in 1837 and the first internal combustion engine powered car was built in 1807.
  • However, Electric never picked up in the 200 years! Now it is high time that electric vehicles are given a push in Indian markets as electric vehicles offer advantages that are particularly suited to India’s economic and environmental conditions.

Scenario for Electric Vehicle (EV) in India

  • In FY16, only 22,000 EVs were sold in India, of which approximately 2,000 were cars and the rest two-wheelers.
  • Whereas in Norway, EVs accounted for 23% of all new car sales in 2015. The figure for the same year stood at 9% in the Netherlands. China is now the largest market for electric buses, with over 173,000 of them on its roads. In 2015, China also became the top electric passenger car market globally. Perceived from this lens, the Indian market for EVs has seen minimal uptake.
  • EV are significantly important for India as they steeply reduce the oil import bill of nations, bolstering energy security. They can also be much cheaper than conventional vehicles in the long run, due to fewer moving parts, lower maintenance costs, and reduced fuel expenses.

Problems with EV in India

  1. Sales of electric vehicles in India have remained low partly because electric vehicles are expensive compared with cars that run on petrol or diesel. For instance, Mahindra’s e2o at Rs7.50 lakh ($11, 845) is significantly more expensive compared with Maruti Swift’s base price of Rs4.42 lakh ($6, 980) in Delhi. That’s exactly why companies such as Mahindra & Mahindra, which is struggling to sell its electric cars in India, have been pushing the government for subsidies to popularize such vehicles.
  1. Apart from the lack of subsidies, there is another, equally big roadblock i.e. infrastructure shortage. For electric vehicles to become seriously viable in a country like India, investment has to be focused on creating the infrastructure to support the vehicles. For example, you can charge these things by plugging them into the regular 16 Amp socket at home. Or one of the charging points in the city if you run out of charge. But there are very less points of charging in public places. For example, there are 19 in Delhi, 2 in Mumbai and 14 in Bengaluru. Whereas California has about 5,700 charging stations.
  1. While electric vehicles are said to be pollution free, it all boils down to how the electricity that is used to charge the batteries was generated. In India, of the total 302,833 MW of the grid-connected installed capacity, nearly 61% is produced using coal. Another 8.1% using gas. Can you imagine the amount of carbon emissions? So, if the car’s batteries are being charged using electricity produced by a coal or gas based power plant, the emissions were actually transferred from the tailpipe to the chimney.
  1. A complete absence of public charging points, high costs of acquisition, and the anxiety of driving a car with a crippling problem of limited range, are keeping customers away from EVs (electric vehicles)

Government’s efforts at e-vehicles

  • The National Electric Mobility Mission Plan (Nemmp) 2020 was launched in 2013 which generated a positive buzz. It aims to have 6-7 million (60-70 lakh!) electric vehicles on the road by 2020 of which a lion’s share will be two-wheelers. However, subsidies and incentives were promised by the plan which proved to be difficult to come by.
  • Then Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME) scheme, launched in 2015, seeks to tackle the pain points largely unaddressed by Nemmp in its first phase. To overcome the scattered presence of charging stations, and the additional barrier of still-expensive batteries, the government is contemplating a policy push for the sale of EVs without batteries, supplemented with battery leasing operations and battery swap stations. This is an important step.
  • The xEV One consortium, a collaborative effort between the government of India and car manufacturers was created to develop a supplier base for critical hybrid and EV components. However, it started off on a wrong footing and Maruti Suzuki and Ford India have backed out from the initiative.
  • Moreover, the government is exploring a strategy to task a company with buying electric vehicles (EVs) in bulk and then leasing them to companies such as taxi aggregators, in an attempt to bring down the cost of such vehicles.
  • is also working with PSU network as Bharat Heavy Electricals Ltd (Bhel), India’s largest power generation equipment maker, wants to manufacture electric vehicles such as buses, cars, two-wheelers and boats, Power Grid Corp. of India Ltd, the power transmission utility responsible for establishing green energy transmission corridors, is considering setting up charging stations for electric vehicles.

A roadmap to e-vehicles: Way ahead

  1. The first, and perhaps the most obvious, is the targeting of direct sops and incentives for EV and component manufacturers, as well as consumers. From the supply side, such interventions include speed-tracking of environmental and labour clearances, tax rebates and exemptions. Demand-side interventions include direct consumer subsidies, waiver of road tax and registration fees, GST (goods and services tax) refunds, and free parking spaces.
  1. The second step must be a renewed commitment on the part of governments to provide and promote greater public infrastructure for EVs, including public charging stations, dedicated electric supply lines for such stations, and battery swap stations. Doing so will infuse much-needed trust and confidence in this mobility solution. As seen from the earlier failure of Nemmp, financial incentives do not work by themselves.
  2. Third, and equally important, is a big boost for R&D (research and development) innovation in this space. In February 2016, a Technology Platform for Electric Mobility was initiated jointly by the departments of heavy industries, and science and technology. Five projects have been accurately identified therein for “demand driven R&D to achieve desirable target specs”—lithium battery, charging infrastructure, driving cycle and traffic pattern, motors and drives, and light weighting of EVs. These are clearly the most critical areas for research, and directing funding will be instrumental in meeting the Nemmp target of six million EVs/hybrids by 2020.
  1. In addition, a robust system of incentives for private entities spearheading EV innovation, including tax credits for setting up research labs, is crucial.

Question: Electric vehicles can be a great respite to meet the Paris climate pledge. What more should be done to make electric vehicle market a booming one?

 

2.Revisiting the idea of public sector bank  (Live Mint)

 Synoptic line: It throws light on the issues and solution with respect to revitalize the banking sector. (GS paper III)

Overview

  • Witnessing the deteriorating condition of Public Sector banks, we must accelerate recoveries from non-performing assets, recapitalize public sector banks, and introduce reforms that will increase the efficiency of these banks.
  • Hence far reaching reforms are needed for the sake of public sector banks (PSBs)

Condition of banking sector

  • The dominance of public sector banks was supposed to have lent the Indian financial sector unique stability in an unstable world. All this is now worth remembering at a time when the state of the Indian banking sector still predominantly owned by the government is the single biggest risk to economic stability.
  • Bank nationalization did have its historical role, especially the financial deepening in the 1970s as a result of the expansion of the branch network. The result was higher savings that created the conditions for the acceleration of economic growth after 1980. But the damage done was also immense.
  • Even as the Indian central bank and the finance ministry struggle to deal with the stock of bad debts that has clogged the banking system, it is worth kicking off a debate about what needs to be done to avoid a repeat of the current mess.

Suggestion to improve the performance of banking sector

  1. Government ownership of the Indian banking sector needs to be drastically reduced. Reserve Bank of India (RBI) deputy governor Viral Acharya boldly asked in a speech as whether Indian banks need to be privatized. Bank privatization is a worthwhile project for the government to follow. The starting point should be reviving the proposal tabled in Parliament by the Atal Bihari Vajpayee government to bring down government holding in public sector banks to 33%.
  1. If reducing government equity below 51% is not feasible at present, we should at least experiment with the halfway house suggested by the P.J. Nayak committee, of vesting the government’s shareholdings in public sector banks in a separate holding company, and limiting the finance ministry to deal only with the holding company on policy issues. The individual public sector banks should be free of finance ministry control and become board-managed entities.
  1. The best solution is to create a new government institution—the so-called “bad bank”—to which the public sector banks transfer their large problem assets at a realistic price, leaving it to the new entity to handle recovery. Realistic pricing of the assets transferred is absolutely critical, since otherwise the hole in the balance sheets of banks will simply be transferred to the new institution. It should remain in the books of the banks, and can then be recapitalized appropriately.
  1. India needs a more diverse financial system so that banks are not burdened with tasks they are not suited for. The current mountain of bad debts can at least partly be explained by the pressure from New Delhi during the tenure of the previous government to fund large infrastructure projects as well as generally push lending at a rate that was far faster than the underlying growth in nominal gross domestic product. The result was a credit bubble that later popped.
  1. Government needs to back the RBI in its quest to build a diverse financial system through the growth of finance companies, specialized infrastructure lenders and the corporate bond market.
  1. Government should allow new private sector banks to bloom. Privatization of public sector banks will necessarily be a slow process. It requires legislative change. Investor interest in many of the weaker banks will most likely be absent. And most public sector banks trade at discounts to book value, so the government will in all probability come under attack for selling at low prices.
  1. The government should thus shift its attention away from the current enthusiasm for public sector bank consolidation to promoting bank competition through the creation of new private banks. Such privatization by stealth needs to be promoted even as the bigger battle for public sector bank privatization is fought.

Way ahead

  • Looking ahead, we cannot avoid serious banking sector reforms if we want the public sector banking system to become more efficient. In this context, reducing the government equity below 51%, and attracting some strategic investors, would be a very major step. It will not only reduce the pressure on the budget to provide funds for recapitalization, it will also set the stage for a more commercial orientation for public sector banks. This is critical if public sector banks are to compete more effectively with private sector banks.
  • All this needs to be supported by a robust regulatory regime that can identify problems as they emerge rather than when they can no longer be hidden from view. The Indian central bank deserves credit for forcing banks to come clean in the asset quality reviews, but it also deserves criticism for not being able to spot the problem earlier.
Mission Indradhanush for Banking reforms

1.Appointments

The government will be hiring bankers from the private sectors to head PSB banks.

2.Bank Board Bureau

The government will set up a Bank Board Bureau as a watchdog for PSUs’ performance. The Bureau will monitor the key performance indicators of state banks.

3.Capitalisation

The government has already announced its plans to capitalize state banks by Rs 70,000 crore over the next four years.

4.Distressing

The government will concentrate on distressing the banks’ bad loans

5.Empowerment

The government will strive to make it easier for PSBs to hire. PSBs have all the freedom, but they want to recruit at the middle level; they are already free to hire on contractual basis.

6.Framework of accountability

The government will be coming out with a framework to make PSBs accountable.

7.Governance reforms

The government will reveal ‘Indradhanush’ plan to revamp PSU banks

Question: What systemic changes can be introduced in the banking framework to make them more responsive to emerging demands of India?

 

3.Refuge from the sinking islands (The Hindu)

 Synoptic line: It throws light on issue of sea level rise thus affecting low island population. (GS paper III)

Overview

  • One of the direst impacts of climate change is a rise in the global sea level. High projected rates of future sea-level rise have captured the attention of the world. Particularly, countries which are located in low-lying areas as well as small islands are concerned that their land areas would be decreased due to inundation and coastal erosion and at worst, a large proportion of their population may be forced to migrate to other countries. Therefore, this issue has resulted in heightened attention internationally, as the effects of climate change become apparent.
  • Sea level can rise by two different mechanisms with respect to climate change. First, as the oceans warm due to an increasing global temperature, seawater expands—taking up more space in the ocean basin and causing a rise in water level. The second mechanism is the melting of ice over land, which then adds water to the ocean.
  • According to the Internal Displacement Monitoring Centre, an international body reviewing trends of internal displacement, an estimated 24 million people are being displaced annually by natural disasters since 2008. This crisis will make almost half a billion people worldwide “environmental refugees” by the end of the century.

Islands concern

  • Due to the rising sea level caused by global warming, other low-lying island nations such as Kiribati, Fiji, Marshall Islands, Vanuatu, Micronesia and Nauru are destined to suffer the same fate as Tuvalu is seeing. Tuvalu is a small island nation in the South Pacific and home to about 10,000 people. It is likely to be under water in less than 70 years.
  • These low-lying vulnerable island nations sustain small amount of people and emit less than 1% of global greenhouse gases (GHGs), yet are among the first victims of climate disruption. These island nations require immediate remedies, including migration, compensation and reduction in GHG emissions.

Environmental refugee

  • In recent years, the concept of “environmental refugees” has gained new importance, as global climate change and desertification have threatened the livelihoods of millions of people, causing many to leave home in search of new opportunities.
  • “Environmental refugee” a term coined by Essam El-Hinnawi, describes “people who have been forced to leave their traditional habitat, temporarily or permanently, because of a marked environmental disruption that jeopardizes their existence and seriously affects the quality of their life”.

Need for International support

  • With the policies in force today, GHG emissions are projected to grow by 50% by 2050. However any amount of decrease in GHG emissions cannot save the islands from sinking, but a significant decrease in emissions can delay the island nations from becoming uninhabitable, thereby postponing the burden of accommodating mass migration.
  • The international community does not yet realize its responsibility to enable such migration. For example on request from Tuvalu’s Prime Minister, New Zealand agreed to allow a meagre 75 Tuvaluans to relocate annually to their country, a migration that should stretch over 140 years. Australia refused to make any offers when approached similarly.
  • However, in any remedial adaptive mechanism employed, high costs are unavoidable. The only practical way to attain these remedies seems to be to reinvigorate political pressure and negotiate globally to arrive at a forum that could deal with the issue.
  • The forum must enable negotiations regarding the legal status of migrants and develop adaptive strategies in the destination country to guarantee and to protect dignity and cultural identity of the displaced in the destination country.
  • The United Nations Framework Convention on Climate Change (1992) obligates countries to provide finance to resist global warming. By extending such existing obligations through political pressure and diplomacy, the forum could ensure compensation to the island nations in the form of contributions from party countries by managing a fund created in this regard.

Way ahead

  • There is a need for a wide range of varied remedies, mostly adaptive such as coastal protection, population consolidation, rainwater harvesting and storage, alternative methods of growing fruits and vegetables, human resource development and research and observation to save the people of the sinking small island nations.
  • International community through collective interest can make efforts on finding a resolution to this problem before the ensuing harm becomes irreparable.

Question: What should be the correct strategy to ensure that island nations such as Maldives and Fiji do not face challenges of submergence. Does the INDC adopted by countries are sufficient to avert climate change?

 

Explained

4.Targeted treatment to HIV (GS paper II)

Background

  • In 2015, WHO release guideline that makes available two key recommendations:
  • First, antiretroviral therapy (ART) should be initiated in everyone living with HIV at any CD4 cell count (a type of white-blood cell)
  • Second, the use of daily oral pre-exposure prophylaxis (PrEP) is recommended as a prevention choice for people at substantial risk of HIV infection as part of combination prevention approaches.

Now, in a major shift, Union Health Minister had recently said that any person who tests positive for HIV will be provided ART “as soon as possible and irrespective of the CD count or clinical stage”. Nearly 4.5 lakh deaths can be averted through this move.

  • It was in 2002 that the WHO first issued its ART guidelines. In the absence of AIDS-defining illnesses, the WHO set CD4 count less than 200 cells per cubic millimetre as the threshold to begin ART treatment.
  • Over time, it changed its guidelines and, in 2013 increased the threshold to CD4 count less than 500 cells per cu. mm.

Implications of the decision

  • With the government changing its treatment guidelines, the 0.6 million who have been diagnosed but not been on treatment are now eligible for treatment. Of the 0.6 million, about 0.25 million have been enrolled for pre-ART care and can be started on treatment almost immediately.
  • But the biggest challenge will be to identify the 0.35 million who have been diagnosed but not on treatment and the 0.5 million who have been infected but have not been diagnosed. Also, nearly 80,000 people get infected each year.
  • Even as efforts are on to expand the 1,600 treatment delivery sites that are currently operational, there should be greater focus now on identifying people with HIV.
  • The government has plans to start community-based testing to bring it closer to those in need, and target special groups that are more vulnerable to infection such as partners of people who are HIV-positive.

Question: What do you mean by targeted treatment of HIV with respect to administration of ART?

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