tinglado-mediafiles.s3.amazonaws.com · Web viewThe World Meteorological Organisation (WMO, 1976) uses the term 'Tropical Cyclone’ to cover weather systems in which winds exceed

Daily News Simplified - DNS

19 05 20Notes

SL. NO. TOPICS

THE HINDUPAGE NO.

1 Odisha, West Bengal brace for Amphan 01

2 A jolt to national energy security 06

3 A matter of relief 06

4 Stimulus to cost only about 1% of GDP 15

5 Preparing for a syndemic 07

Dated: 19-May-2020 DNS Notes

Title 1. Odisha, West Bengal brace for Amphan (Page no. 1)Syllabus Prelims: GeographyTheme CycloneHighlights

Context: The storm system in the Bay of Bengal, Amphan, developed into a super cyclone on

Monday and is expected to make landfall along the West Bengal-Bangladesh coast on Wednesday, according to the India Meteorological Department.

Cyclones are caused by atmospheric disturbances around a low-pressure area distinguished by swift and often destructive air circulation.

Cyclones are usually accompanied by violent storms and bad weather.

So when does a “Depression” becomes a “Cyclone” The World Meteorological Organisation (WMO, 1976) uses the term 'Tropical Cyclone’

to cover weather systems in which winds exceed ‘Gale Force’ (minimum of 34 knots or 63 kph).

o A gale is a strong wind, typically used as a descriptor in nautical contexts. The U.S. National Weather Service defines a gale as 34–47 knots (63–87 km/h, 17.5–24.2 m/s or 39–54 miles/hour) of sustained surface winds.

Are they called something else also? Cyclones are given many names in different regions of the world – They are known as

o Typhoons in the China Sea and Pacific Ocean;o Hurricanes in the West Indian islands in the Caribbean Sea and Atlantic Ocean;


By the time it makes landfall in West Bengal, Amphan is expected to tone down into a category 4 Extremely Severe Cyclonic (ESC) storm with wind speed of 165-175 kmph and gusting to 195 kmph.

How are they named? Cyclones that form in every ocean basin across the world are named by the regional

specialised meteorological centres (RSMCs) and Tropical Cyclone Warning Centres (TCWCs). There are six RSMCs in the world, including the India Meteorological Department (IMD), and five TCWCs.

The RSMC New Delhi Tropical Cyclone Center is responsible to name the tropical cyclones that have formed over the Bay of Bengal and the Arabian Sea when they have reached the relevant intensity.

As an RSMC, the IMD names the cyclones developing over the north Indian Ocean, including the Bay of Bengal and Arabian Sea, after following a standard procedure. The IMD is also mandated to issue advisories to 12 other countries in the region on the development of cyclones and storms.

Few facts There is no retirement of tropical cyclone names in this basin as the list of names is only

scheduled to be used once before a new list of names is drawn up. Should a named tropical cyclone move into the basin from the Western Pacific, it will

retain its original name.

WMO maintains rotating lists of names which are appropriate for each Tropical Cyclone basin.The Panel Member’s names are listed alphabetically country wise.

The names will be used sequentially column wise. The first name will start from the first row of column one and continue sequentially to

the last row in the column thirteen. The names of tropical cyclones over the north Indian Ocean will not be repeated, once

used it will cease to be used again. The name should be new. It should not be there in the already existing list of any of the RSMCs worldwide including RSMC New Delhi.

The name of a tropical cyclone from south China Sea which crosses Thailand and emerge into the Bay of Bengal as a Tropical cyclone will not be changed.


Conditions The proposed name should be neutral to (a) politics and political figures (b) religious

believes, (c) cultures and (d) gender Name should be chosen in such a way that it does not hurt the sentiments of any group

of population over the globe It should not be very rude and cruel in nature It should be short, easy to pronounce and should not be offensive to any member The maximum length of the name will be eight letters The proposed name should be provided with its pronunciation and voice over The names of tropical cyclones over the north Indian Ocean will not be repeated. Once

used, it will cease to be used again. Thus, the name should be new.


“Extensive damage to all types of kutcha houses, some damage to old badly-managed pucca structures. Potential threat from flying objects, extensive uprooting of communication and power poles, Disruption of rail/road link, extensive damage to standing crops, plantations, orchards,” are what the disaster management agencies warn on the impact of the storm.

Personal Notes

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Title 2. A jolt to national energy security (The Hindu Pg. No. 6)Syllabus Mains: GS Paper III – EconomyTheme Energy SectorHighlights

Context Finance Minister Nirmala Sitharaman’s proposal for reform of power tariff policy —

announced as part of the stimulus package following the pandemic — is of a piece with the recent comprehensive proposal to amend the Electricity Act 2003; put together, they erode the concurrent status accorded to electricity in the Constitution.

If implemented, they will not only weaken the control of States over an industry supplying a basic human necessity such as electricity but also arm the Centre with a pincer-like weapon which could choke the distribution utilities/companies (DISCOM) and jeopardise the country’s energy security.

DISCOM troubles

These proposals have to be seen in the context of a continuing centralisation of control over the sector whose main impact in the last 25 years has been to drive up the cost of power purchase to 80% of the total costs of State DISCOMs.

ISSUE 1: POWER PURCHASE AGREEMENTS At the core of DISCOM woes is the two-part tariff policy, mandated by the Ministry of

Power in the 1990s at the behest of the World Bank.


As more private developers came forward to invest in generation, DISCOMs were required to sign long-term power purchase agreements (PPA), committing to pay a fixed cost to the power generator, irrespective of whether the State draws the power or not, and a variable charge for fuel when it does.

The PPAs signed by DISCOMs were based on over-optimistic projection of power demand estimated by the Central Electricity Authority (CEA), a central agency.

o The 18th Electric Power Survey (EPS) overestimated peak electricity demand for 2019-2020 by 70 GW. The 19th EPS published in 2017, by 25 GW, both pre-Covid 19.

o In the event, DISCOMs locked into long-term contracts end up servicing perpetual fixed costs for power not drawn.

o NTPC Limited’s Kudgi, in Karnataka, alone received ₹4,800 crore as idle fixed costs during 2018-19, operating at a plant load factor of only 22%.

o Due to the CEA’s overestimates, the all-India plant load factor of coal power plants is at an abysmal 56% even before COVID-19.

ISSUE 2: MANDATORY PURCHASE OF RENEWABLE ENERGY From 2010, solar and wind power plants were declared as “must-run”, requiring

DISCOMs to absorb all renewable power as long as there was sun or wind, in excess of mandatory renewable purchase obligations.

This led to following troubles:o This means backing down thermal generation to accommodate all available

green power, entailing further idle fixed costs payable on account of two-part tariff PPAs.

o Power demand peaks after sunset. In the absence of viable storage, every megawatt of renewable power requires twice as much spinning reserves to keep lights on after sunset.

The spinning reserve is the extra generating capacity that is available by increasing the power output of generators that are already connected to the power system. For most generators, this increase in power output is achieved by increasing the torque applied to the turbine's rotor.

DISCOMs, especially in the southern region, have had to integrate large volumes of infirm power, mostly from solar and wind energy plants which enjoy must-run status irrespective of their high tariffs (₹5/kwh in Karnataka and ₹6/kwh in Tamil Nadu for solar power) even as the demand growth envisaged in the 18th EPS failed to materialise.

o Third, in 2015 the Centre announced an ambitious target of 175 gigawatts of renewable power by 2022, offering a slew of concessions to renewable energy developers, and aggravating the burden of DISCOMs.

Incidentally, China benefited by as much as $13 billion in the last five years from India’s solar panel imports.

Draft Electricity Act(Amendment) Bill 2020

It is against this backdrop that we must examine the proposals in the Electricity Act 2020. First, the amendment proposes sub-franchisees, presumably private, in an attempt

to usher in markets through the back door.o Going by past privatisation experiments, private sub-franchisees are likely to

cherry-pick the more profitable segments of the DISCOM’s jurisdiction.o The Electricity Bill 2020 containing the proposed amendments is silent on

whether a private sub-franchisee would be required to buy the expensive


power (averaging out the idle fixed costs) from the DISCOM or procure cheaper power directly from power exchanges.

o If it is the first, the gains from the move are doubtful since the room for efficiency improvements is rather restricted in the already profitable regions attractive to sub-franchisees. If it is the second, DISCOMs will then be saddled with costly power purchase from locked-in PPAs and fewer profitable areas from which to recover it.

Second, the amendment proposes even greater concessions to renewable power developers, with its cascading impact on idling fixed charges, impacting the viability of DISCOMs even more.

Third, and the most controversial amendment proposed, seeks to eliminate in one stroke, the cross-subsidies in retail power tariff.

Viability of Electricity Distribution companies (Discoms)

Cost reflective Tariff: To eliminate the tendency of some Commissions to provide for regulatory assets, it is being provided that the Commissions shall determine tariffs that are reflective of cost so as to enable Discoms to recover their costs.

Direct Benefit Transfer: It is proposed that tariff be determined by Commissions without taking into account the subsidy, which will be given directly by the government to the consumers.

o This means each consumer category would be charged what it costs to service

that category.o Rural consumers requiring long lines and numerous step-down transformers

and the attendant higher line losses will pay the steepest tariffs.o Disingenuously, the proposed amendments envisage that State governments

will directly subsidise whichever category they want to, through direct benefit transfers. Cross-subsidy is a fact of life in even private industries, soap, newspapers, or even utilities such as telecom.

o There is undoubtedly a case for reducing the steep cross-subsidies in electricity. But eliminating them in one stroke when State governments are already struggling with direct power subsidies is bound to be ruinous to their finances, not to mention the myriad problems with Direct Benefit Transfer.

Doing away with multiple Selection Committees: It is proposed to have one Selection Committee for selection of Chairpersons and Members of the Central and State Commissions and uniform qualifications for appointments of Chairperson and Members of Central and State Electricity Regulatory Commissions.

o Fourth, State regulators will henceforth be appointed by a central selection committee, the composition of which inspires little confidence in its objectivity, jeopardising not only regulatory autonomy and independence but also the concurrent status of the electricity sector.

Establishment of Electricity Contract Enforcement Authority: A Central Enforcement Authority headed by a retired Judge of the High Court is proposed to be set-up with powers of the Civil Court to enforce performance of contracts related to purchase or sale or transmission of power between a generating, distribution or transmission companies.


o Whose members and chairman will again be selected by the same selection committee referred to above.

o The power to adjudicate upon disputes relating to contracts will be taken away from State Electricity Regulatory Commissions and vested in this new authority, ostensibly to protect and foster the sanctity of contracts.

o This is to ensure that States saddled with high-priced PPAs and idling fixed costs, yet forced to keep increasing the share of renewables in their basket, have no room for manoeuvre.

When the country is reeling under the economic impact of the novel coronavirus crisis, the Electricity Bill 2020 is indeed a disingenuous document drafted to shift the burden imposed by the short-sighted policies of the Centre onto hapless States, with serious consequences for the nation’s energy security.

Personal Notes


Title 3. A matter of relief - (Page number 06)Syllabus Mains: GS Paper III – EconomyTheme Economic GrowthHighlights

Government’s Economic Package- A Debate

Concerns with the Economic PackageEconomic Package- More on monetary side rather than Fiscal Policy sideThe Government has announced the total economic stimulus package of Rs 20 lakh crores. However, some of the economists have pointed out that the total fiscal support extended by the Government amounts to mere Rs 1 lakh crores (less than 1% of GDP).The huge difference between the benefits and the actual cost is on account of number of reasons:

1. Most of the support extended by the Government is in form of bank guarantees on the loans extended by the Banks and hence the fiscal support of the Government is lower than the economic package. For example, the Government has announced collateral free loans of Rs 3 lakh crores to MSMEs wherein the Government would act as guarantor. So, the overall fiscal support is not Rs 3 lakh crores but depends upon the extent of loan defaults.

2. The Government's package of Rs 20 lakh crore also includes the Rs 8 lakh crores liquidity injection measures introduced by the RBI. These measures do not entail any fiscal support of the Government.

3. Some of the announcements made by the Government simply include the frontloading of budget announcements. Case in point is the Rs 17,000 crores under PM-KISAN Scheme, which in anyway was required to the spent for the financial year.

Why is it concerned to be a problem?According to an assessment by the National Institute of Public Finance and Policy (NIPFP), the way things are going, India’s GVA will contract by a whopping 13% this year under the Base case scenario. The Base case scenario refers to a scenario where governments (both Centre and states) bring down their expenditure in line with their falling revenues to maintain their fiscal deficit target. This report has highlighted that only if the government spends 3% of the GDP over and above what it promised to do in the Union Budget 2020-21, will the economic growth stay in the positive territory. Else the Indian economy will contract. Hence, to lift GDP growth, the governments would have to spend more and counteract the natural downward spiral of the economy.

Economic Package- More on Supply Side rather than Demand sideThe main pillar of the Economic package rests on boosting the supply side of the economy i.e. boosting the production--> Creation of employment opportunities--> increase in income levels--> Increase in demand--> Increase in the GDP growth. (Indirectly boost demand in economy).

Why is it concerned to be a problem?The consumption expenditure accounts for 60% of India's GDP and hence it is considered to be major driver of India's GDP. Hence, some of the economists have pointed out that boosting consumption expenditure by higher government expenditure in creation of infrastructure, reducing the tax rates, direct cash transfers to the poor and vulnerable sections etc.


The other side of the Debate- A Pragmatic and Prudent approach of Government1. According to some of the estimates, the Banks within India are sitting on surplus cash of

around Rs 8 lakh crores. These Banks are apprehensive of extending loans to some of the critical sectors such as MSMEs, NBFCs etc. due to the fear of increase in the NPAs. So, the question which arises here is "How to incentivise/ nudge the Banks to extend the loans to these sectors"?. The answer is simple. Give Government guarantee on the repayment of the loans extended by the Banks to certain critical sectors such as MSMEs, NBFCs, MFIs, HFCs etc. The sovereign guarantee extended by the Government would nudge the Banks to give their surplus cash in the form of loans to these sectors.Hence, a major part of the first set of economic packages has been geared towards the sovereign guarantee to be extended to the Bank loans given to MSMEs, NBFCs and so on. Now, this is considered to be a smart move by the Government. The Government is fiscally constrained to provide direct fiscal stimulus package due to higher Fiscal deficit. Hence, extension of sovereign guarantee on the loans extended by the Banks would serve dual purpose. On one hand, it would lead to greater credit creation within the economy leading to improvement in supply, increase in employment creation and overall push to demand for Goods. On the other hand, it would enable the Government to efficiently manage its Fiscal deficit.

2. Many of the economists have pointed out that the credit provided under the package is not a stimulus. However, this can be counter-argued in two ways. First, the credit becomes a stimulus here because it is provided without any collateral wherein the government is acting as guarantor. Second, in absence of the support extended by the Government, the credit would not have improved.

3. The Government has done well to increase the allocation to MGNREGA programme by an additional Rs 40,000 crores which would go a long way in boosting employment opportunities and demand in rural areas.

Personal Notes


Title 4. Stimulus to cost only about 1% of GDP (The Hindu Pg. No. 15)Syllabus Mains: GS Paper III – EconomyTheme Economic StimulusHighlights

Context: With the announcement of the final tranche of Atmanirbhar Bharat Abhiyan, the

COVID-19 relief package, a pattern to the government’s approach is visible.

Estimates of the total package: The much-hyped ₹20-lakh crore economic package announced by Prime Minister

Narendra Modi will have a minimum impact on the fiscal cost, estimated at about 1% of the Gross Domestic Product (GDP).

According to estimates by several brokerages, the Centre’s fiscal burden is seen ranging between 0.8% and 1.2% of the GDP.

Regulatory in natureo Most of the relief is either regulatory in nature or reflecting in its contingent

liabilities rather than explicit budgetary support May not be helpful in short term, but definitely in long term.

o As a result, the package may fall short of mitigating the near-term existential crisis for businesses and workers, but is better designed to improve India’s medium-term growth potential and attract long-term risk capital.

Personal Notes


Title 5. Preparing for a syndemic (The Hindu Pg. No. 07)Syllabus Mains: GS Paper II – Social issuesTheme HealthHighlights

Preparing for a syndemicContext

Even as there are more than 100 vaccine candidates under development, the WHO recently cautioned that COVID 19 may well become another endemic like HIV and may never ‘go away’.

‘Given the prevailing uncertainty should we expect it become a ‘Syndemic’ and prepare accordingly?’ , is the question that is bothering policy makers and health professionals worldwide.

What is a Syndemic? A Syndemic is a situation where 2 or more epidemics co-exist and exacerbate the

occurrence of one another. Different from co-morbidity (biological), a syndemic is a disease state that is more

structural in nature severely affecting the disease burden at the community level driven by the social, economic, environmental, and political context of the population.

For eg: HIV and drug abuse While HIV patients being more vulnerable to TB infections due to weakened immunity

is an example of co-moridity, the HIV patients classified as high-risk groups for TB infection is an example of syndemic as vulnerability to infection is not only due to weakened immunity but also discrimination.

Prevalence of NCDs and mental disorders (Obesity and Depression) Covid 19 Syndemic: COVID 19 that requires isolation and social distancing may induce

depression in the affected population.

Personal


Notes

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tinglado-mediafiles.s3.amazonaws.com · Web viewThe World Meteorological Organisation (WMO, 1976) uses the term 'Tropical Cyclone’ to cover weather systems in which winds exceed