Mitras Analysis of News : 19-6-2017

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1.Why are farmers protesting despite bumper harvests? (Live Mint)

2.Practical matters (Down to Earth)

 

1.Why are farmers protesting despite bumper harvests? (Live Mint)

 Synoptic line: It throws light on the problems ailing with farmers. (GS paper II)

Overview

  • In a year when farm growth has crossed the 4% mark and official statistics show a record increase in production, one would have expected farmers to celebrate. Instead, farmers in states such as Madhya Pradesh and Maharashtra are out on the streets protesting.

Why such a paradox?

  • The answer might lie in several structural changes that India’s farm economy and polity have witnessed over the past few years.
  • Three key factors stand out: rising price risks faced by farmers, especially horticultural producers, lack of adequate policy support, and a sense of betrayal among the land-owning community which had pinned its hopes.
  • In response to rising demand, the Indian farmer has now begun producing fruits and vegetables in much greater quantities than before, with horticultural output exceeding that of food grains for the fifth straight year.
  • This change, however, has not been accompanied either by investments in warehousing facilities for perishables or by price support measures for fruits and vegetables, which could have minimized price risks that horticultural producers face today.
  • Unlike wheat or rice, prices of items such as tomatoes or onions can crash sharply when there is a bumper crop. As the chart below shows, rising horticultural output has been accompanied by rising volatility.
  • Moreover, for the average Indian farmer who has no insurance against such fluctuations, demonetisation might have actedas the proverbial last straw which broke her back.
  • Even in case of food grains, where minimum support prices (MSPs) offer a floor price, the government has kept prices on a tight leash.
  • In nominal terms, the MSP for rice rose at an annual rate of 4% between 2014-15 and 2016-17 after rising at an annual pace of 6.3% over the previous five years. The MSP for wheat rose at an annual pace of 5.1% between 2014-15 and 2017-18 after rising at an annual pace of 5.3% over the previous five years.
  • To compound farm woes, export earnings have also collapsed, thanks to a turn in the global commodity cycle.

Conclusion

  • The lack of supportive prices and the consequent slowdown in farm earnings seems to have upset the land-owning class the most.
  • With bleak job prospects outside agriculture, and low returns from farming, the land-owning class appears to be getting restive.

Question:  What type of interventions are needed to be conducted in the agriculture sector in order to make it more lucrative?

 

2.Practical matters (Down to Earth)

 Synoptic line: It throws light on the India’s increasing demand for power supply and harnessing renewable energy sourced power. (GS paper III)

Overview

  • India’s demand for electricity is seeing a steady rise. With an increasing number of villages being connected to the grid, this demand is only set to accelerate in the coming years. Currently, around 80 per cent of India’s electricity supply comes from coal-based power. But the sector has been facing a difficult time over the past few years.
  • Despite growth in renewables, coal-based power will continue to fulfill a large share of India’s power needs. Instead of resisting the new environmental norms, power plants would do well to clean up their act.
  • The energy needs of consumers in remote villages, where the grid has just reached, as well as in rich urban areas are not being met since power distribution companies (discoms) do not have money to buy sufficient power from generating companies. This resulted in millions have no electricity; an equally large number gets limited supply and practically everyone else suffers from periodic power cuts.

Main concern

  • The plant load factor (PLF) or efficiency of power generation companies has steadily declined. Due to the inability of distressed discoms to buy power, power plants are not generating electricity as per their capacity.
  • According to the Central Electricity Agency’s (CEA) draft Electricity Policy, no additional coal-based capacity is required during 2017-22, if renewable energy capacity grows to 175 GW. If another 50 GW of coal-based power, which is currently under construction, is commissioned, the PLF of the sector will decline to 48 per cent by 2022.
  • Renewable energy sources, such as wind and solar, do not provide stable supply. The draft electricity policy states that 63 per cent of electricity will be supplied by coal power plants until 2021-22. There is variability; renewable energy will supply only 20 per cent so the coal will remain the backbone of India’s electricity supply for years to come.
  • Despite these conditions, the idea that renewables may replace coal-based power to meet all of India’s growing needs in the near future is wishful thinking.

Pollution matters

  • According to World Health Organization’s Global Urban Ambient Air Pollution Database, four of the 10 most polluted cities in the world are in India. With increasing power generation from coal, the pollution load will only increase, if left unchecked. Coal-based power comes at a heavy cost to the environment and human health. Of all emissions from the industrial sector in India, coal-based power plants account for 60 per cent of particulate matter (PM), 45 per cent of sulphur dioxide (SO2), 30 per cent of oxides of nitrogen (NOx) and 80 per cent of mercury (Hg). The air quality of most Indian cities is appalling.
  • The government has taken steps to ensure healthy air; government has announced new environmental norms with more stringent emission limits for coal-based power plants in 2015. These norms have already come into effect for upcoming power plants since January 2017. Existing power plants will have to comply with these norms from December 2017.
  • But the power sector has raised a number of issues. The power industry complained that the cost of pollution control would be very high, which a country like India can ill afford, cheap electricity is required to lift the poor out of poverty and improve their quality of life. However, the poor bear the highest cost of pollution in terms of impact on health, access to water and livelihood.
  • Major complaint by the industry is that the deadlines are too tight. Existing plants will need to comply from December 2017. This means that the existing plants got almost 30 months to install new equipment. Delhi-based non-profit Centre for Science and Environment (CSE) says compliance with the new norms is the most easily manageable factor of all concerns that plague the coal-based power sector.
  • CSE research shows the plants could have easily fixed their PM and NOx problems and a sufficient number could have been close to flue-gas desulfurization (FGD) installation. For instance, equipment such as the low NOx burner typically requires a month for installation. An electrostatic precipitator (ESP) requires three to six months. Even the FGD, which requires the longest time of around two years, could have easily been installed by the deadline.
  • The ultimate impact on the consumer will be a little higher because of discom losses. But the increase in consumer tariff is not likely to be more than 10 per cent. In comparison, nationwide tariffs have gone up by an average of 8 per cent per annum over the last 5 years. The tariff impact should be calculated based on the average investment of the entire coal-based power generation fleet, and not on the maximum investment that some plants need to make.
  • The Central Electricity Regulatory Commission (CERC) must clarify if the investments made for pollution control equipment and upgrades can be included in tariff calculations for plants that have power purchase agreements.

Learnings from China

  • India can learn from China’s implementation of tighter norms for its coal power sector. It established national norms in 2012, and gave new plants just five months to comply. Old plants were given three years. The rationale for such short deadlines was that stake-holders were already discussing pollution control by power plants and the plants knew that new norms were imminent.
  • As pollution levels grew to alarming levels, China introduced even tighter norms for key critical regions with shorter timelines. In such cases, extending timelines is acceptable, but it should be subject to firm commitments and penalties. Based on China’s timelines and feedback from equipment manufacturers, regulators should demand that ESP upgradation be finished in the next two years and FGD installation by 2020.

Way ahead

  • India ranks among the world’s most advanced emerging economies and with the growth of India’s economy, demand for energy is also growing.
  • There has been a quantum increase in the installed power production capacity in our country since independence from both non-renewable and renewable sources. Indian power sector needs to plug the gap between demand and supply through renewable and non-renewable sources as well as proper transmission and distribution channels.
  • With the United Nations declaring 2014 to 2024 as the decade of sustainable energy, India has a chance to stamp out energy shortages via sustainable sources. Increasing capacity generation and overcoming transmission and distribution losses can go a long way in making India lead on the path of economic development and would also ensure a better life for the citizens of the country.

Question:  What prospects does renewable energy and climate resilient energy solutions hold for India’s achievement towards SDG?

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