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Indian Express 26/06/2020

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1) Cash or in kind – The Food Security dilemma

Source – Indian Express

Syllabus – GS 2 – Government policies and interventions for development in various sectors and issues arising out of their design and implementation

Context – The current pandemic has reignited the debate – which is better for ensuring food security under National Food Security Act – Cash transfer or in kind (food distribution via PDS).

Current mechanism under Public Distribution System

Arguments for In-Kind distribution of Food via PDS 

  1. Farm income ensured– Since food for distribution under PDS is procured from farmers under Minimum Support Price, in-kind food distribution to citizens ensure assured farm income for farmers.
  2. No transaction cost for individuals – Government procures, stores and distributes food which makes transaction cost for individual almost negligible. Whereas cash transfer would involve going to bank, getting operational account, then going to market etc which adds to transaction cost of individuals.
  3. Underdeveloped Rural Market– Lack of infrastructure, transport and high physical distance between villages and markets creates barriers for rural population deriving benefit from Fair Price Shops.
  4. No inflationary pressure – In kind distribution does not create inflation in market which is done by cash transfer.
  5. No misuse of cash – Individual’s may always not act in their best interest and getting cash would mean it can be misused by householders given the social situations. Example – In patriarchal society, man exercises more power over women and children in terms of resource use. So it can be used for alcohol or drug abuse rather than getting food.
  6. Food availability in pandemics – In current lockdown, when markets have remain closed for more than a month, fair prices shops have proved to be a boon in ensuring food availability for vulnerable sections.

Arguments against in-kind food distribution and for cash transfer

  1. PDS has inherent issues – Corruption, leakage of grain in open market, exclusion-inclusion errors have been pointed out by Shanta Kumar Committee in current PDS system. Thus, transfer will be a permanent solution for such unethical acts.
  2. Cash gives autonomy – Cash transfers gives more autonomy to individuals who can buy food based on their need and nutritional requirement unlike current regime in which only cereals and coarse grains are provided based on quantity prescribed under NFSA.
  3. Reduced fiscal burden –Government’s fiscal burden has highest share from food subsidy which involves procurement, storage (excessive storage also) and distribution cost. Cash transfers will reduce the fiscal burden which then can be utilized for improving rural markets, strengthening infrastructure and for other capital expenditures.

Way Forward – An evidence based policy is required to solve this dilemma which should focus on making individuals – agency for their own welfare rather than making them dependent on state.

2)Ease or doing business versus Ease of living 

Source – Indian Express

Syllabus – GS 3 – Inclusive growth and issues arising from it

Context – The lockdowns following COVID-19 have caused many people to introspect about the purposes of their lives, and the purposes of the enterprises they serve. It has also provided an opportunity to reset the course of economies.

Importance of ease of doing business – It provides growth of whole society by lifting standard of living for all and thus is directly related to the ease of living.

Issues with Ease of doing business

  1. Exploitation of labor for profit– More business and industries does not mean the have-nots exploitation will stop and a vicious cycle is created where societal harm is ignored for wealth creation.
  1. Focus on profit not on public service– The creditors and owners of firm invest capital to gain more profit and in turn they adopt unethical practices to increase revenue and profit margin of the company.  For instance – Doctors who prescribe tests and medicines that patients do not really need to increase the revenues of hospitals and sales of pharmaceutical companies (and improve their own bonuses) are placing the needs of business owners above those of the public they serve.
  2. Entrepreneurship– In India, the tradition of handing business and giving priority to family members and relatives in all deals is still prevalent. This, unethical act called nepotism hinders creation of entrepreneurs at grass-root level.
  3. Environmental cost– The focus on increasing profit by neglecting the externalities created by industries has led to challenge of global warming and pollution. This particularly impacts the poor most as they are at receiving end whenever disaster occurs, or health cost rises because of environmental pollution.

Suggested solution – All professional institutions including businesses, are built on three fundamental structures— mission, standards, and identity which needs to be reoriented in post-corona world.

  1. Mission – It is the purpose of the institution in society. The purpose of any organization needs to be overall welfare of society with accruing limited profit based on Gandhian Doctrine of Trusteeship.
  1. Standards-The standards can be voluntarily determined and applied by the professionals themselves. Otherwise, they must be imposed on them by the public they claim to serve through government regulations.
  1. Identity – Identity, comprises of a person’s own values and traits, adding up to “a person’s deeply felt convictions about who she is, and what matters most to her existence as a worker, citizen, and a human being”. Thus, individuals need to think and rethink about their values and whose interest those values serve – are they selfish or for well-being of all.

Way Forward – In post-Covid world, growth of business must not be at expense of societal well-being. This requires active participation of all stakeholders to reshape the mission, standards and identity of individuals as well as organizations.

3)

One Sun One World One Grid

  • 26 Jun 2020
  • 6 min read

This article is based on “Global solar grid could cause sun burns” which was published in The Financial Express on 25/06/2020. It talks about the challenges associated with the concept of One Sun One World One Grid.

In recent years, India has leveraged forums like the G20 and the UNFCCC to collaborate with major powers in new areas of growth and in bringing about global reforms. One such initiative is One Sun One World One Grid’ (OSOWOG).

Under OSOWOG vision, India seeks to replicate its global solar leadership (International Solar Alliance) by encouraging the phased development of a single globally connected solar electricity grid to leverage the multiple benefits (Low cost, Zero pollution) of solar energy.

The underlying logic behind OSOWOG is that a grid spread across multiple time zones could balance intermittent renewables with other renewables: the setting sun in one part of the grid is made up for by solar, wind or hydropower produced in a distant place.

OSOWOG seems to be a brilliant idea in pursuit of sustainable development.However, it faces certain challenges in its implementation.

Prospects For India

  • Parity with Great Powers: This ambition puts India alongside other major powers and their super-grid projects such as China’s Global Energy Interconnection project, Europe’s gold-standard power pools.
    • Also, OSOWOG will provide an opportunity for India to move onto the centre stage globally, accelerating the energy system decarbonisation to help solve the global climate crisis.
  • Climate Mitigation: OSOWOG assumes more importance in backdrop of the USA’s withdrawal from the Paris climate deal.
    • Also, OSOWOG will help to mitigate ill effects on climate by providing clean and renewable energy sources.
    • Further, enabling member countries to fulfill their Nationally Determined Contributions (NDCs) towards reducing global warming.
  • Balancing China: OSOWOG will provide a strategic rebalance in favour of India and will control the increasing Chinese dominance in Asian subcontinent, providing a better alternative to developing countries.
  • Bridging Current Account Deficit: India is currently importing around $250 billion of fossil fuel annually (oil, diesel, LNG, coking and thermal coal).
    • OSOWOG can help India meet its needs and subsequently promote sustainable renewable energy exports and may improve the current account deficit and reduce imported inflation pressures.

Issues with the Idea

  • Development in Battery Technology: With development in electricity storage technologies, reduces the viability of the need to follow the sun along any latitude, nor worry about day and night.
  • Easy Installation of Microgrids: Large capital expenditures are no longer necessary, as anyone can install rooftop solar or set up a microgrid (“distributed generation”).
  • Vulnerability of Grids: Electricity Grid is vulnerable to accidents, weather, and cyber-attacks that are prone to increase and disrupt the electricity supply on mass scale.
  • Transmission Losses: Solar generation is at less than 20% efficiency, in addition there will be major transmission losses on such scale.
  • Dependency on China: India is dependent on Chinese imports for solar equipment, such as solar cells, panels, etc.
  • Problem with Interconnectedness: This project’s success hinges on trust, not just transmission lines, between grid participants.
    • Interconnected grids give countries the power to bring other economies to a grinding halt; this is the single biggest hurdle to integration.

Way Forward

  • Creation of Supranational Rule-Based Organisation: Institution building is key to fulfilling the ambitions of a multi-country grid project.
    • In this context, ISA can act as an independent supranational institution to take decisions about how the grid should be run and conflicts settled.
  • Promoting MicroGrids: Along with prioritizing designing microgrids, public policy attention is needed for developing battery technologies at scale for local applications.
  • Constructively Engaging with China: Given India’s dependence on Chinese imports, OSOWOG will have to find ways of engaging with Chinese ambitions in a constructive manner rather than in a zero-sum way.
    • Also, there is a pressing need to build its domestic capacity in solar equipment under the Make in India program.

Establishing a global solar grid is a novel idea, especially in context of climate change. However, underlying issues in its implementation needs to be addressed first. Apart from it, India can explore the possibility of establishing a federation of regional grids like SAARC grid.

Mains Answer“One Sun One World One Grid seems to be a brilliant idea in pursuit of sustainable development, but faces certain challenges in its implementation.” Discuss the feasibility of this idea.

4)

Money Laundering and the Illegal Wildlife Trade

Why in News

Recently, the Financial Action Task Force (FATF) has released the first global report on the Illegal Wildlife Trade (IWT) namely, “Money Laundering and the Illegal Wildlife Trade”.

  • The report comes amid increasing international concern that the crime could lead to more zoonotic diseases in the future.
  • The report has also described IWT as a “global threat”, which also has links with other organised crimes like modern slavery, drug trafficking and arms trade.

Key Points

  • Transnational Organised Crime:
    • The parties involved in the IWT are usually engaged in other major transnational organised crime that fuels corruption, threatens biodiversity, and can have significant public health impacts.
    • The illegal trade is estimated to generate revenues of up to $23 billion a year.
    • According to the 2016 UN World Wildlife Crime report, criminals are illegally trading products derived from over 7,000 species of wild animals and plants across the world.
  • Origin and Route of IWT:
    • Usually, the countries that are rich in biodiversity and/or where there may be weaker law enforcement oversight and criminal justice are treated as source countries for IWT.
    • Similarly, most parties involved in such crime transit the wildlife through other countries to blur the exact end destination.
    • Transit countries typically include trade and transport hubs or countries with higher levels of corruption. The laundering of the proceeds occurs across source, transit and destination countries.
  • Methods Used for IWT:
    • It has been observed that the criminals are relying on “established” methods to launder proceeds from IWT, including mobile or social media-based payments, third party payments and the placement and layering of funds through the formal financial sector.
    • The accounts of innocent victims are also used for high-value payments to avoid and evade detection.
    • IWT also uses shell and front companies to conceal payments and launder their money.
      • Shell company is an inactive company used as a vehicle for various financial manoeuvres or kept dormant for future use in some other capacity.
      • A front organization is any entity set up by and controlled by another organization, such as, organized crime groups, banned organizations, religious or political groups, advocacy groups, or corporations.
    • Also, legitimate pet stores and private zoos, farms or parks are often used to facilitate the illicit pet trade in many countries (such as Asia and the Americas) and are used to justify trading, breeding, or otherwise exploit protected wildlife.
    • Additionally, the role of online marketplaces and mobile, social media-based payments and darknets have facilitated the fast and movement of illegally traded animals.
  • Link with Zoonotic Diseases:
    • The spread of zoonotic diseases underlines the importance of ensuring that wildlife is traded in a legal, safe and sustainable manner and that countries remove the profitability of illegal markets.
    • The exact connection between the trading of pangolins and its scales to the Covid-19 outbreak is yet to be established but it has been noted that the price of pangolins has increased between 100% to 600% mark-up.
      • Further, India has also been a source country for illegal pangolin trading.

Challenges with IWT

  • The lack of the required knowledge, legislative basis and resources to assess and combat the threat posed by the funds generated through the illegal trade is one of the major issues with IWT. This limited focus on the financial side of IWT has largely prevented jurisdictions from being able to identify and sanction IWT networks.
  • IWT makes other industries more vulnerable to misuse which includes traditional medicine, décor and jewellery and fashion.

Recommendations

  • The countries should consider implementing the good practices which include providing all relevant agencies with the necessary mandate and tools; and cooperating with other countries, international bodies and the private sector.
  • The legislative changes are necessary to increase the applicability of anti-money laundering laws to the illegal wildlife trade-linked offences.
    • India amended the Prevention of Money Laundering Act in 2012 removing a value threshold — of ₹30 lakh and above — that was earlier applicable to the wildlife trade predicates.
  • It has suggested treating IWT as money laundering offences since the proceeds enter the global market through money laundering and also money laundering offences carry more severe penalties in many countries.

Way Forward

  • The illegal wildlife trade is devastating our wildlife and putting the global ecosystem at risk.
  • The world needs to ensure the survival of endangered species and also needs to build strong public-private partnerships to prevent, detect and disrupt IWT, following the money that fuels it and the organised crime gangs, poachers and traffickers behind it.

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