09 January, 2020

29 Min Read

Paper Topics Subject
GS-II Centre opens up coal sector
Rising oil prices may hit Budget math International Relations
Revised norms for data­-led probes
China, Pakistan navies deploy submarines in strategic Arabian Sea International Relations
What’s next in U.S.­Iran conflict? International Relations
GS-III The link between growth, demand and investment Economic Issues
Re-grassing is mandatory after mining, rules SC
Northeast Gas Grid Miscellaneous
Centre opens up coal sector

Syllabus subtopic: Government policies and interventions for development in various sectors and issues arising out of their design and implementation.


Prelims and Mains focus: About the govt.’s move and its significance; about disinvestment and its types; India’s Coal sector


News: The Union cabinet on Wednesday approved opening up of coal mining and further disinvestments. It also extended the validity period of mining lease clearances ending in 2020 by two years.


Context: Govt.’s move comes at a time when the window for fossil fuels is rapidly closing, and the global energy landscape evolving, with fundamental changes to the investment culture amid growing climate concerns.



It comes against the backdrop of India’s gross domestic product growth decelerating to a six-and-a-half-year-low of 4.5% in the September quarter amid slowing domestic and external demand.


About the govt.’s move and its significance

  • In an attempt to attract investments in coal mining, the Cabinet approved the promulgation of Mineral Laws (Amendment) Ordinance 2020.
  • Under the Ordinance, requirement of previous approval in cases where allocation of blocks was made by Centre has been dispensed with to speed up the process of implementation of projects and ease of doing business.
  • The ordinance allows coal mining by any company present in sectors other than steel and power, and does away with the captive end-use criteria.
  • While the move will help create an efficient energy market, usher in competition and reduce coal imports, it may also bring an end to state-run Coal India Ltd’s (CIL) monopoly.
  • The move will also help India gain access to sophisticated technology for underground mining used by global miners.



India’s Coal Sector

  • Despite having the world’s fourth largest coal reserves, India imported 235 million tonnes (mt) of coal last year, of which 135mt valued at Rs.171,000 crore could have been met from domestic reserves.


  • The Centre has set a mining target of 1.5 billion tonnes of coal by 2020. Of this, 1 billion tonnes was to be from CIL and 500 million tonnes from non-CIL sources, in line with the government’s push to raise natural resources production to kickstart economic growth. This has now been revised down to 1 billion tonnes of coal by 2023-24.


  • The government has been progressively liberalizing the coal sector over the last several months to attract new investments, and getting rid of this archaic end-use restriction was a key step. It is expected that the government will also address other procedural issues that add to time delays and upfront cost of developing a mine.


Govt.’s decisions on disinvestment

  • As part of the NDA government’s disinvestment agenda, the Cabinet Committee on Economic Affairs gave ‘in-principle’ approval for strategic disinvestment of equity shareholding of Minerals & Metals Trading Corp. Ltd (49.78%), National Mineral Development Corp. Ltd (10.10%), MECON (0.68%), Bharat Heavy Electricals Ltd (0.68%) and two Odisha state government units—Industrial Promotion and Investment Corporation of Odisha Ltd (IPICOL) (12.00%) and Odisha Mining Corp. (OMC) (20.47%) in Neelachal Ispat Nigam Ltd.


  • The government has set an ambitious disinvestment target of Rs.1.05 trillion for FY20, of which it has managed to garner only Rs.17,364 crore so far.


What does the term ‘disinvestment’ mean?

  • The term 'disinvestment' literally means the opposite of investment. Disinvestment is the process of reducing the share of government in public sector undertakings (PSUs). It is the sale of shares of the government in these companies to financial institutions, employees or the public at large.
  • In disinvestment, also called divestment, there is no change in the management of PSUs from the public to private hands as the government still holds majority equity (51 percent). Even when the government's share falls below 51 percent, the rest of the equity may be sold in such a way that no one institution or individual holds enough stake to take control of the management.
  • Disinvestment is primarily a money-raising exercise. The proceeds of disinvestment are treated as non-debt creating capital receipts. Though the government can technically hold a stake less than 51 percent and still be the largest shareholder in PSUs, it was not done on a large scale. This is because a PSU ceases to be a public sector company post such exercise.


Types of Disinvestment

Disinvestment of a minority stake in PSUs can be done in the following ways:

  1. Initial Public Offering (IPO): an offer of shares by an unlisted PSU to the public for the first time.
  2. Follow-on Public Offering (FPO): also known as Further Public Offering, it's an offer of shares by a listed PSU.
  3. Offer for sale (OFS): shares of a PSU are auctioned on the platform provided by the stock exchange. This mode has been used extensively by the government since 2012.
  4. Institutional Placement Programme (IPP): under this, only selected financial institutions are allowed to participate and the government stake is offered to only such institutions. E.g., mutual funds, insurance, and pension funds such as LIC etc.
  5. CPSE Exchange Traded Fund (ETF): Through this route, the government can divest its stake in various PSUs across diverse sectors through a single offering. This mechanism allows the government to monetize its shareholding in those PSUs which form part of the ETF basket.
  6. Cross-holdings: in this method, one listed PSU takes up the government stake in another listed PSU.


Disinvestment of a majority stake in PSUs:

  • Strategic sale: it is the sale of a substantial portion of government shareholding, 50 percent or higher, in a PSU, along with the transfer of management control.


  • Privatization: it's a type of strategic sale in which the government divests its entire shareholding, along with the transfer of management control, to a private entity.

Source: Livemint

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GS-II : International Relations West Asia
Rising oil prices may hit Budget math

Syllabus subtopic: Effect of policies and politics of developed and developing countries on India's interests, Indian diaspora.


Prelims and Mains focus: about the geopolitical tensions between U.S. and Iran and its impact on India’s economy


News: The prices of crude oil constituting the Indian basket has been increasing since October and is likely to exceed $70 a barrel this month on escalating U.S.­ Iran tensions.



  • Major General Qassem Soleimani, the Iranian Revolutionary Guards commander, was recently killed in a US strike at Baghdad International Airport. He was the long-serving head of Iran’s Quds (“Jerusalem”) Force and has been seen as a deadly adversary by America and its allies.


  • Rising oil prices had already led to an increase in the prices of petrol and diesel by about 54 paise a litre and 83 paise a litre respectively since January 1, 2020. The Indian basket of crude oil was pegged at $59.70 per barrel in October 2019, rising to $62.54 per barrel in November and to $65.52 in December. It is currently hovering around $70 per barrel.


What is the reason behind this increase in oil prices?

  • The price of benchmark Brent oil went up to $71.75 per barrel after Iran retaliated against the U.S. by attacking the latter’s bases in Iraq, but softened to $67.50 a barrel after Iran said that it did not want to further escalate the tensions.


Impact on India’s economy

  • Higher crude oil prices is ‘bad news’ for the Indian economy that imports over 85% of its crude oil requirements.


  • Higher crude oil prices will be bad for Inida’s current account deficit and it will further tighten our fiscal situation.


  • Further, divestment of oil PSUs will become difficult due to higher crude oil prices.


  • Rising crude oil prices could impact corporate earnings of several sectors, including auto and oil marketing companies, according to analysts.

Source: The Hindu

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Revised norms for data­-led probes

Syllabus subtopic: Government policies and interventions for development in various sectors and issues arising out of their design and implementation.


Prelims and Mains focus: about the guidelines issued by MHA, significance of data preservation; about the 24/7 network


News: The Union Home Ministry (MHA) has said that before seeking information about a person’s e­mail account hosted on servers in foreign countries, investigating agencies will have to establish that it is linked to a crime.



  • Most intermediaries and social media platforms such as Facebook, WhatsApp, Google, Yahoo!, Twitter and YouTube have their servers outside India.
  • The Centre introduced the Personal Data Protection Bill, 2019 in the Lok Sabha last month that seeks to provide for protection of personal data of individuals and establishes a Data Protection Authority for it.



Guidelines issued by the MHA

  • The Ministry said it was not enough to show that the accused had an e­mail account as “the account must have something to do with the crime being investigated” and it was “the lowest legal standard required of all investigative processes”.


  • The Ministry issued revised guidelines to streamline the process of seeking legal assistance from foreign countries in criminal matters, issuing directives on drafting and processing letters rogatory, mutual legal assistance requests and service of summons, notices and other judicial documents.


  • In the guidelines issued to the States and other agencies, the Ministry stressed “data preservation” as it was the key to the investigation of cyber­offences and those involving digital evidence.


  • The Ministry said the G­8 countries’ 24/7 Network was one such channel that could be used to place request for preserving data in real time.


  • The requested country has to be informed about the time period for which the data is required. Such period shall be consented by the requested country.


  • The transferred data shall be kept for no longer than the period required for the purpose for which it has been received and shall be returned to the requested country or deleted at the end of the period specified.”



Importance of Data Preservation

  • Accessing the Internet through an Internet Service Provider (ISP) creates important records and other information such as customer records, connection information and stored data. This is very important evidence to prove the guilt intention of the accused.
  • Since this type of evidence can disappear quickly, it is of paramount importance to get the data preserved expeditiously through appropriate channels. The request may be sent to the service provider or to the CBI — the contact point in respect of G­8 24/7 Network.


About the G­8 24/7 Network

  • The G­8 network allows law enforcement agencies to make urgent preservation requests of the digital data before it perishes.
  • The network, established among the G8 nations in 1997, has since grown to 55 member countries, all of which have dedicated cyber crime investigators who can respond to fast-moving cases at a moment’s notice—often with the ability to “fast freeze” e-mail traffic and other stored electronic data, which can preserve a crook’s otherwise fleeting digital footprint.

Source: The Hindu

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GS-II : International Relations
China, Pakistan navies deploy submarines in strategic Arabian Sea

Syllabus subtopic: India and its neighborhood - relations.


Prelims and Mains focus: about the exercise; Gwadar and Chabahar ports; China incursions in India’s neighborhood and its implications


News: Navies of China and Pakistan, holding nine-day exercises in the Arabian Sea to enhance their all-weather strategic partnership, have for the first-time deployed submarines, providing a rare major exposure to the Chinese navy in the region.


About Pakistan-China Joint maritime exercise

  • The joint maritime exercises began on Monday in the North Arabian Sea, regarded strategically significant for China which is now developing Pakistan's deep water Gwadar port there.
  • The joint exercises are expected to be the first of many to come, as China and Pakistan have now developed a series of joint exercises covering the navy, army and air force.
  • The exercise is also the first between China and Pakistan that will feature anti-submarine and submarine rescue training, indicating a high-level of strategic mutual trust.


About Gwadar port

  • Gwadar is being connected through the over USD 60 billion China Pakistan Economic Corridor (CPEC) to China's Xinjiang province, providing a key land route to China to access the warm waters of Arabian Sea. India has objected to China over the CPEC as it is being laid through the Pakistan-occupied Kashmir (PoK).


  • The Gwadar is also located close to Iran's Chabahar Port being jointly developed by Iran, India and Afghanistan to ensure a trade corridor for Indian exports to Afghanistan.



Strategic importance of Arabian Sea for India

  • The Arabian Sea region is strategically important for India as major ports including Kandla, Okha , Mumbai, Nhava Sheva (Navi Mumbai), Mormugão, New Mangalore, and Kochi are located there.


  • The Arabian Sea provides entry to the Indian Ocean where China currently has built a logistics base at Djibouti in the Horn of Africa.

Source: Indian Express

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GS-II : International Relations West Asia
What’s next in U.S.­Iran conflict?

Syllabus subtopic: Effect of policies and politics of developed and developing countries on India's interests, Indian diaspora.


Prelims and Mains focus: about the escalation in US-Iran tensions and its geopolitical implications


News: Five days after Major General Qassem Soleimani, the Qods Force chief, was killed in a U.S. air strike outside Baghdad airport, Iran on Wednesday launched ballistic missile attacks at American troops in two military bases in Iraq.



What did the attack achieve?

  • President Donald Trump has said that there were no American casualties in the attacks on the Erbil and al-Asad bases and the damage caused was minimal. However, the strike is still a pivotal moment in the U.S.-­Iran tensions as this is the first time Iran is launching a direct attack at the U.S. troops and owning it up.


  • Practically, these are acts of war. First, the U.S. took out an Iranian military leader in a third country and now Iran has struck U.S. troops. Javad Zariff, the Iranian Foreign Minister, said, “Iran took and concluded proportionate measures in self­defence under Article 51 of the UN Charter targeting base from which the cowardly armed attack against our citizens and senior officials were launched.” The Article allows states to take action in self­defence when they are under attack. Mr. Zariff has added that Iran doesn’t seek “escalation or war, but will defend ourself against any aggression”.


Was the attack imminent?

  • The Iranian response was expected. The call for revenge was reverberating throughout the funeral processions of Soleimani. A mosque in the Shia holy city of Qom in Iran had unfurled a red flag indicating that war was coming.


  • Kataib Hezbollah, a unit in the Popular Mobilisation Forces (PMF), the umbrella organisation of Iraqi Shia militias that Soleimani helped build, had asked Iraqi forces to stay away from the bases that house American soldiers, indicating that U.S. troops in Iraq could be targeted.


  • Iran has launched a calculated, limited strike that doesn’t cause much damage to the Americans but yet makes good on its pledge for revenge. It was an escalating step, but not yet an all­out war.


  • By hitting the U.S. base in Erbil, the capital of the Iraqi Kurdistan, Iran may also be sending a message to Washington. Erbil houses not just American soldiers but also a large American consulate.


  • The U.S. has deep ties with the Iraqi Kurdistan and it would like to keep some U.S. troops in the autonomous region even if its forces are forced to pull back from the rest of Iraq. It’s to be noted that most Kurdish lawmakers had boycotted Sunday’s Iraqi Parliament session, in which lawmakers passed a resolution to expel American troops from the country.


  • For the U.S., some troops in Iraq are necessary to retain its presence in Syria. So Iran’s message could be that, ‘you’re not safe in Erbil’.


So what are the possible scenarios?

  • President Trump has already indicated that he’s backing away from further conflicts with Iran. In a televised speech from the White House, he said Iran appears to be standing down, and urged European countries as well as Russia and China to break away from the nuclear deal and negotiate a new one. He has also threatened to slap Iran with more sanctions. But despite his message of de-escalation, the risks of further conflicts still remain.


  • The Supreme Leader Ayatollah Ali Khamenei has hinted that more actions will follow to force the U.S. to retreat from West Asia (read Iraq and Syria).



  • The Revolutionary Guard’s commander Hossein Salami threatened on Wednesday before a mourning crowd in Kerman, Solaimani’s hometown, that Iran would set ablaze “the place the U.S. loves”, in a reference to Israel.


  • Iran could target U.S. troops inside Iraq through its proxies such as the Badr Brigade and Kataib Hezbollah, like it did before the killing of Soleimani. That could drag the U.S. into a deeper conflict. Also, the Shia militias in the region operate with relative autonomy. Infuriated by the loss of their commander, they could act without authorisation from Tehran against U.S. troops in Iraq, which could trigger a harsher response from the U.S. against Iran, dragging both countries into war.

All these suggest that West Asia remains on the brink.

Source: The India

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GS-III : Economic Issues Budget
The link between growth, demand and investment

Syllabus subtopic: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.


Prelims and Mains focus: the ongoing economic slowdown and its impact on India’s GDP; measures to be taken in the upcoming budget


News: As per the government’s first advance estimate, gross domestic product (GDP) growth for FY20 is likely to be 5%— the lowest since the global financial crisis of 2008-09, when it fell to 3.1%.



Why is GDP growth likely to fall to 5%?

Private consumption expenditure, the money people spend on buying things, has comprised 56-57% of India’s GDP (in real terms, adjusted for inflation) over the past few years. In FY20, it is expected to grow at 5.8%, after growing at over 7.4% in each of the last four fiscals. This can clearly be seen in the fall in sales of cars, two-wheelers and tractors, and the slower volume growth of FMCG companies. People are not spending as much money on buying things as they used to, given the lack of confidence they have in their economic future. This is reflected in slow growth of private consumption expenditure.



What is investment’s part in the fall?

Investment is a key driver of consumption. Investment growth in FY20 is expected to collapse to 1%, the lowest since FY06 (i.e., as far back as growth data for the current GDP series goes). Without proper investment growth, jobs can’t be created. And without jobs, there won’t be a source of income for the million Indians entering the workforce every month. Only when people earn can they spend. Also, one man’s expenditure is another man’s income—creating a cycle. Hence, a slowdown in investment growth is bound to affect private consumption, which, in turn, will slow down GDP growth in FY20.



What is the state of government expenditure?

Government expenditure—growing 9.3% in FY19 and 15% in FY18—has driven growth between 2017-19. In FY20, it is expected to grow 10.5%, the fastest among all constituents of GDP (others being private consumption expenditure, investment and net exports). This fiscal, the government’s share in the economy will reach 11.3%, the highest in a decade.


What about the non-govt part of economy?

If we leave government expenditure out of the GDP, what remains is the non-government part of the economy. This part is expected to grow at 4.3% in FY20 —the lowest since 2008-09, when it had grown 2.2%. This is hardly surprising given the slow private consumption growth and plunging investment growth. The non-government component forms around 90% of the economy, and it’s this part that needs a boost if the overall economy is to be revived. Higher government spending can only do so much.


So what can the government do?

In the short run, consumption growth needs to be revived, without which investments are unlikely to improve. Companies invest when people consume. To ensure this, the government can put more money in the hands of people via a personal income tax cut, and spend more on social schemes, such as MGNREGS. Also, the GST Council needs to stop fiddling around with the goods and services tax and go for a comprehensive overhaul.


Source: Livemint

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Re-grassing is mandatory after mining, rules SC

Syllabus subtopic: Conservation, environmental pollution and degradation, environmental impact assessment


Prelims and Mains focus: about the judgement and its significance ; Mining and its harmful impact on the environment


News: The Supreme Court on Wednesday ordered that mining lease holders should be held responsible for re­grassing mined areas, so that biodiversity gets a second chance in these scarred landscapes.


About the Judgement

  • A Bench led by Chief Justice of India S.A. Bobde ordered the government to include re-grassing of mined areas as a mandatory condition in every mining lease, environmental clearance and mining plan across the country.


  • The government was ordered to file an action taken report in three weeks. The Bench also directed the government to devise methods to ensure compliance by mining lease holders. The cost of re­grassing the mined area and wherever damage was caused, would be entirely borne by the licence holder.



  • The mandatory re­grassing would be in addition to the other conditions imposed on the licence holder in the mine closure plan, to restore biodiversity.



Environmental impacts of mining

Environmental issues caused by mining include erosion, formation of sinkholes, loss of biodiversity, and contamination of soil, groundwater and surface water by chemicals from mining processes, and the effects persist for years.




 An area which is mined results in complete elimination of grass, which in turn denies fodder to the herbivores. The only solution can be re­grassing of such mined areas. It is not in dispute that re­grassing technology is available in India.


Note: to read more about the mining sector in India, click on the link below:


Source: The Hindu

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GS-III : Miscellaneous
Northeast Gas Grid

Syllabus subtopic: Infrastructure: Energy, Ports, Roads, Airports, Railways etc.


Prelims and Mains focus: about the Northeast gas grid project and its significance; Natural gas and its advantages


News: The Cabinet on Wednesday decided to provide Rs 5,559-crore viability gap funding (VGF)/capital grant for the North East Gas Grid project.


About the project

  • It aims to connect all the eight states (Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura)  of the Northeast with a 1,656-km network of natural gas pipeline for Rs 9,265 crore.


  • The VGF amount is 60 per cent of estimated project cost and will not be linked to project cost escalation.


  • It is being executed by Indradhanush Gas Grid Limited under the Ministry of Petroleum and Natural Gas.


  • It is only the second instance of the government directly funding a gas pipeline.


  • The Cabinet Committee of Economic Affairs, chaired by PM Modi, also decided that a committee comprising officials from the Ministry of Petroleum and Natural Gas, Department of Expenditure, Ministry of Development of North East Region, Ministry of Environment, Forest and Climate Change, and Department of Fertilizers, will periodically review the progress in implementation of the project.


  • The capital grant will provide natural gas supplies to various types of consumers like industrial, PNG(domestic), CNG (transport) and others.


  • The government’s aim through this project is to substitute liquid fuels like kerosene and firewood traditionally prevalent in the region.


Natural gas Scenario in India

  • About 20 per cent of India’s natural gas production comes from the Northeast. Of about 75 million standard cubic meters per day of gas output, 15 mmscmd come from Northeast.


  • Currently, Assam, Arunachal Pradesh and Tripura have established gas production potential while there are possibilities for the same in Nagaland and Manipur.


  • Gas Pipeline infrastructure is an economical and safe mode of transporting the natural gas by connecting gas sources to gas consuming markets. Gas pipeline grid determines the structure of the gas market and its development. Therefore, an interconnected National Gas Grid has been envisaged to ensure the adequate availability and equitable distribution of natural gas in all parts of the country.


  • At present, there are about 16800 km long Natural Gas pipeline network which is operational in the country. In order to make available natural gas across the country, it has been envisaged to develop additional about 14,300 km pipelines to complete the National Gas Grid and same are at various stages of development. This would ensure easy availability of natural gas across all regions and also potentially help to achieve uniform economic and social progress.



Availability of natural gas across the region is expected to boost industrial growth without impacting the environment and would offer better quality of life to the people in general due to use of cleaner and green fuel.


About Natural Gas

Natural gas is the cleanest fossil fuels among the available fossil fuels. It is used as a feedstock in the manufacture of fertilizers, plastics and other commercially important organic chemicals as well as used as a fuel for electricity generation, heating purpose in industrial and commercial units. Natural gas is also used for cooking in domestic households and a transportation fuel for vehicles.


Source: Indian Express

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