Two years ago, the central government announced that India has become a power surplus country, and all the villages have been electrified. However, since then, several issues have come up in the sector, and a few others remain to be addressed.
The country continues to face both energy deficit and peak deficit, although at a marginal level. In 2017-18, energy deficit in the country was 0.7%, and peak deficit was 2%. However, the deficit situation is exaggerated in certain states, and the north-eastern region, in particular.
The capacity utilisation of thermal power plants (also called Plant Load factor or PLF) has declined from 78% in 2009-10 to 61% in 2018-19. Low PLF implies that thermal plants have been lying idle, which could be due to non-availability of fuel, surplus capacity (in certain regions of the country), low demand for power, or demand being met through other sources. One of the key reasons behind poor capacity utilisation of thermal power plants is the planned shift in the energy mix.
With renewable energy seeing a push through government policies, its tariff has decreased significantly. This poses a challenge to the existing thermal capacity, which is witnessing subdued demand, and poor capacity utilisation as a consequence. The renewable energy market is still developing. However, its growth trajectory may affect the thermal sector, where plants are already operating at lower capacities and facing insolvency, in certain cases.
Capacity to buy still remains weak as discoms are in poor financial health The poor financial health of discoms has a significant impact on the power sector. Their poor finances imply that they are unable to buy power, and invest in the transmission and distribution infrastructure (including investment for renewable energy). This affects retail consumers and power producers. Consumers do not get good quality of power, and power producers are unable to sell power in the market, thereby facing losses, and default on their loans.
As per the Standing Committee on Energy, as on June 2017, there were 34 stressed thermal power plants with an outstanding debt of Rs 1.74 lakh crore. These thermal power plants are becoming NPAs due to non-availability of coal at power plants, lack of long term power purchase agreements with discoms, and failure of discoms in making timely payments. With respect to renewable energy, the rapidly falling price of power generation due to technological advancements may pose risk to projects which were set up earlier at higher costs. As per the Ministry of Power, the aggregate overdue of discoms to all generators is Rs 54,599 crore, as on July 31, 2019.
While UDAY addressed the outstanding debt of discoms partially, they have not been able to achieve all the goals they were mandated to, under the scheme. Aggregate Technical and Commercial Losses (includes theft and billing issues) are at 20%, as opposed to the target of 15% by 2018-19. The gap between cost of supplying power and the average revenue realised is Rs 0.25/unit, as opposed to the target of being eliminated. Note that one of the key reasons for this revenue gap is the under-pricing of tariff for agricultural and residential consumers. Further, the RBI has noted that UDAY will increase the liabilities of the states, who are taking on the losses of the state discoms.
Rural electrification numbers have improved, but the quality of supply is questionable
In April 2018, the central government announced that all villages have been electrified. Under the Saubhagya scheme, 18,374 households remain to be electrified as on March 31, 2019. However, continuous supply of electricity continues to remain a challenge. Data also shows that about 53% of the villages receive electricity for less than 12 hours in a day for domestic use. Further, supply to rural areas has to be carried out by discoms, many of which are in poor financial health.
Overview of the Power Sector With India looking at rapid industrialisation and urbanisation over the next three decades, the demand for power in the country is going to increase. The power generation situation in the country has improved in the last few years. In June 2017, the Minister of Power announced that India has become a power surplus country, with no shortage of electricity or coal.[1] Currently, India produces a majority of its energy from thermal sources. However, with the commitment to the Paris Agreement (on climate change), there has been a push towards increasing the renewable generation capacity in the country. With solar and wind power becoming cheaper, cleaner sources of energy have also become affordable.
However, the sector continues to face several issues. Access to power and the quality of power supplied to consumers is still poor. India also continues to face both energy deficit (0.7%) and peak deficit (2%). The deficit situation is worse in certain states such as Jammu and Kashmir, and the north-eastern states. Further, data shows that, in 2018, about 53% of the villages received electricity for domestic use for less than 12 hours in a day.[2] Despite all villages being electrified, continuous supply of electricity continues to remain a challenge.
Another key issue is the poor financial health of the electricity distribution companies, which is affecting their ability to buy power and improve the supply network. While their debt to banks was addressed to a certain extent by UDAY, the debt they owe to power plants is also a concern. As per the Standing Committee on Energy, as on June 2017 (post-UDAY period), there were 34 stressed thermal power plants with an outstanding debt of Rs 1.74 lakh crore.[3]
These trends suggest that surplus power capacity, or electrifying villages may not imply continuous, and good quality power supply across the country. In the first budget of the 17th Lok Sabha, the central government mentioned that a package of power sector tariff and structural reforms will be announced soon.
How are the stations ranked? The total score is out of 1000 and each component (Process Evaluation, Direct Observation, Citizen Feedback) weighs 33.33% of the total score.
Background: Railways have been conducting third party audit and cleanliness ranking of 407 major stations annually since 2016. This year the survey was expanded to include 720 stations and suburban stations were also included for the first time.
Key highlights and findings of the report: Top three cleanest railways stations are from the western state of Rajasthan- Jaipur, Jodhpur and Durgapura.
Top three railway zones- North Western Railway followed by South East Central Railway and East Central Railway.
Andheri, Virar and Naigaon railway stations were the top three among 109 suburban stations.
Efforts in this regard: Cleanliness programme is being conducted over 6500 stations across Indian Railways to showcase the efforts putting in by Indian Railways to keep trains, stations and railway premises clean.
Indian Railways has also banned single use plastic across its premises today onwards.
What is it? The ‘Mo Sarkar’ was launched at all police stations across the State along with 21 district headquarters hospitals and three government-run medical college hospitals at Cuttack, Berhampur and Sambalpur.
The programme will be effective at all the 30 district headquarters hospitals of the State by October 30.
The objective of the programme is to provide service with dignity to people who are coming to government offices for different purposes.
How it works? The phone numbers of people who are coming to government offices will be collected randomly with the purpose to improve the governance system by collecting feedback on behaviour and professionalism of government officers.
The Chief Minister, Departmental Minister, Director General of Police (in case of police stations) and Departmental Minister, Secretary and Director (in case of hospitals) will call on random numbers to collect feedback.
The employees will be ranked as good or bad on the basis of the feedback and those with good rank will get out-of-turn promotion and action will be taken against employees with bad rank.
Key facts: Under the new system, the AP government, one Village Secretariat has been set up for every population of 2,000, with each one comprising close to a dozen village officials (from different departments like police, revenue, etc).
The idea behind it, according to the state government, is to ensure that its services reach people on the ground, and also to strengthen the existing Panchayat Raj system.
Village Secretariats would act as a bridge between the government and the people by rendering over 500 types of services at their doorstep. These institutions would showcase government programmes and make pictorial representations of government schools and hospitals under the caption ‘then and now’ to show how reforms have changed their functioning.
Criticism: While the ruling YSR Congress Party (YSRCP) has maintained that this will make government services more accessible, the system, however, is in complete contrast to the earlier trajectory of the state, which had been pushing for e-governance or online services instead under former chief minister N. Chandrababu Naidu.
What is the dispute all about? On September 20, 1948, a corpus of £1 million and one guinea had been transferred by the 7th Nizam of Hyderabad’s finance minister, Nawab Moin Nawaz Jung, from a government bank account to another in London held by Pakistan’s then high commissioner to the UK, Habib Ibrahim Rahimtoola. This was during the Indian annexation of the princely state of Hyderabad.
The grandson of the 7th Nizam, Turkey-based Mukkaram Jah, and his younger brother Muffakham Jah have laid claim to the fund, saying it had been gifted to them in a trust set up by their grandfather on April 24, 1963. The Pakistan government, on the other hand, says it was a payment made by the erstwhile princely state to Pakistan for arming Hyderabad when it was about to be invaded by India.
On July 8, 1954, the 7th Nizam together with the state of Hyderabad issued a writ before the UK high court against Pakistan and Rahimtoola, asking for the £1 million to be returned to them.
On July 19, 1955, Rahimtoola got the writ set aside on the premise that the English courts were interfering with Pakistan’s sovereign immunity. The money has stayed frozen in a British bank account ever since and grown to £35 million in the span of seven decades.
Pakistan’s arguments: Referred to as the Arms for Money Argument, these funds were transferred to compensate/reimburse/indemnify Pakistan for assistance provided in procuring/facilitating the supply and/or transportation of weapons. The funds were transferred in order to keep them out of the hands of India, referred to by the judge as the Safeguarding Argument.
The facts of this case were such as to render it non-justiciable because the original transfer was governmental in nature and that India’s annexation of Hyderabad in 1948 was an unlawful act, which tainted India and Nizam VIII’s claim.
What did the court say? The fund was held by Pakistan through her high commissioner in the UK on trust for Nizam VII and his successors in title. The fund was not held by Rahimtoola personally, nor did either Pakistan or Rahimtoola have any beneficial interest in the fund.
What next? Now, India and the titular 8th Nizam and his brother, who are the grandsons of the 7th Nizam, have a confidential settlement on how to split the money.
Indian annexation of Hyderabad: Operation Polo is the code name of the Hyderabad “police action” in September 1948, by the newly independent India against the Hyderabad State. After the integration, the Nizam was retained as the head of state in the same manner as the other princes who acceded to India.
What is CAATSA? Enacted in 2017, it is a US federal law that imposed sanctions on Iran, North Korea and Russia.
Includes sanctions against countries that engage in significant transactions with Russia’s defence and intelligence sectors. The Act empowers the US President to impose at least five of the 12 listed sanctions on persons engaged in a “significant transaction” with Russian defence and intelligence sectors.
What is S-400? It is an air defence missile system that can take down enemies’ aircraft in the sky from the surface itself.
It is known as Russia’s most advanced long-range surface-to-air missile defence system, capable of destroying destroying hostile strategic bombers, jets, missiles and drones at a range of 380-km.
Why does India want S-400? S-400 would be like a “booster shot” in the Indian Air Force’s (IAF) arm. India needs to be well-equipped against neighboring threats. Pakistan has over 20 fighter squadrons, with upgraded F-16s, and inducting J-17 from China in large numbers. China has 1,700 fighters, including 800 4-Gen fighters.
What are ETFs? Exchange Traded Funds (ETFs) are mutual funds listed and traded on stock exchanges like shares. Index ETFs are created by institutional investors swapping shares in an index basket, for units in the fund.
Usually, ETFs are passive funds where the fund manager doesn’t select stocks on your behalf. Instead, the ETF simply copies an index and endeavours to accurately reflect its performance. In an ETF, one can buy and sell units at prevailing market price on a real time basis during market hours.
Benefits and significance of ETFs: ETFs are cost efficient. Given that they don’t make any stock (or security choices), they don’t use services of star fund managers.
They allow investors to avoid the risk of poor security selection by the fund manager, while offering a diversified investment portfolio. The stocks in the indices are carefully selected by index providers and are rebalanced periodically. They offer anytime liquidity through the exchanges.
What you need to know about BHARAT 22? Bharat 22 consists of 22 stocks of CPSE’s, PSB’s & strategic holding of SUUTI. Bharat 22 is a well Diversified portfolio with 6 sectors (Basic Materials, Energy, Finance, FMCG, Industrials & Utilities). ICICI Prudential AMC will be the ETF Manager and Asia Index Private Limited (JV BSE and S& P Global) will be the Index Provider.
What are Single-use plastics? They are disposable plastics meant for use-and-throw.
These comprise polythene bags, plastic drinking bottles, plastic bottle caps, food wrappers, plastic sachets, plastic wrappers, straws, stirrers and Styrofoam cups or plates.
Are these measures sufficient? Banning its usage while is a welcome move to save the environment, it is only one side of the story.
Along with any move to impose a ban, there should also be equal emphasis on recycling and waste management. There is a need for a very comprehensive waste collection, segregation and waste management eco-system to be in place, which could take multi- billion dollar investment.
While there is increased awareness in urban areas, the challenge will be to find a suitable cost effective alternatives in tier II and tier III towns and remote locations.
Why these measures are necessary? 25,940 tonnes of plastic waste is generated every day in the country, with 40 per cent plastic waste being uncollected and 60 million tonnes of solid waste generated in one year.
According to World Wildlife Fund (WWF), plastic is harmful to the environment as it is non-biodegradable, takes years to disintegrate.
Single-use plastics slowly and gradually break down into smaller pieces of plastic known as microplastics. It can take thousands of years for plastic bags to decompose, thus contaminating our soil and water in the process. The noxious chemicals used to produce plastic gets transmitted to animal tissue, and finally, enter the human food chain.
Government measures in place: Extended Producer Responsibility (EPR) scheme was introduced in the Plastic Waste Management (PWM) Rules, 2011, and was largely redefined in PWM 2016, wherein producers, importers and brand owners were asked to take primary responsibility for collection of used multi-layered plastic sachets or pouches or packaging.
Challenges ahead for India: The government has not put in place a clear roadmap with timelines to meet the 2022 deadline for eliminating single-use plastics.
The guidelines do not specify that states and union territories must phase-out single-use plastics by 2022. Without a clear roadmap, that target date of 2022 is now more aspirational in nature.
Facts for Prelims: Swachhata Hi Seva India Plog Run- To propagate the idea of shunning plastics, the Fit India Plog Run has been launched. Plogging involves picking up litter while jogging.
Context: In a special homage to Mahatma Gandhi on his 150th Birth Anniversary, students from Delhi & NCR region have created two world records.
The first world record was in the category of ‘environmental sustainability lessons to the largest number of students at one place’. Close to five thousand children participated in this world record.
Second record pertains to ‘the largest number of assembly & lighting of Solar lamps’. The number of participants in this record is more than five thousand.