UPSC Essentials | Mains answer practice — GS 3 : Questions on Import policy and renewable energy (Week 54)

QUESTION 2

India’s energy landscape is undergoing a transformation with a growing emphasis on renewable sources while phasing out coal-based energy generation. Discuss the challenges and opportunities associated with this transition.

General points on the structure of the answers

Introduction

QUESTION 1: Discuss the significance of integrating import policy with minimum support policy for agricultural commodities in India.

Introduction:

— India’s agricultural imports in 2023-24 fell by 8%, from $35.7 billion in 2022-23 to $32.8 billion in 2023-24.

— The average annual growth rate (AAGR) of agricultural imports over the last decade appears to have dropped, from 14% between 2004-05 and 2013-14 to 9% between 2014-15 and 2023-24.

— The drop in the value of agricultural imports in 2023-24 was mostly attributable to edible oils, which fell by 28.5%, from $20.8 billion to $14.9 billion in one year.

Body:

— India imports roughly 55 to 60 per cent of its edible oil consumption. Palm oil accounts for over 50 per cent, followed by soybean and sunflower.

— The main factor contributing to the decline in import values is the decrease in palm oil prices in international markets.

— India’s agricultural imports include edible oils, pulses, fresh fruits and vegetables (F&V), sugar, spices, cashew, and a variety of other goods.

— The import of pulses fell from a high of $4.2 billion in 2016-17 to $1.9 billion in 2022-23, then doubled to $3.7 billion in 2023-24.

— To provide strong protection for native pulse production, the Indian government imposed a 30% import tariff on lentils, pigeon pea/tur, and chickpea, followed by quantity limitations.

— Import constraints, along with sluggish development in domestic output, are driving rising inflation.

— The Reserve Bank of India deserves credit for broadly keeping consumer price inflation within its authorised range of 4+/- 2 per cent.

— The RBI has been working closely with the government, particularly the Ministry of Finance, to ensure that India’s GDP growth is high while inflation remains below mandated bounds.

What is a sensible trade policy that works well with domestic MSP policy?

(i) Instead of a sudden drop to zero import duty, it could have been more calibrated.

(ii) It must ensure that the landed price is not below the MSP of major pulses.

(iii) If domestic prices fall below MSP, NAFED should conduct large-scale acquisition at MSP to replenish its buffer stockpiles.

(iv) A similar policy must be implemented in the case of edible oils/oilseeds, guaranteeing that the landed price of edible oils does not fall below the domestic MSP of oilseeds transformed into oil.

(v) The fundamental lesson is that trade policy, particularly import liberalisation, must be well integrated with domestic MSP policy. This is significant for pulses and oilseeds, which require less water and fertiliser.

(Source: Import policy must be well-integrated with minimum support policy by Ashok Gulati and Ritika Juneja)

Points to Ponder

National Edible Oil Mission-Oil Palm (NEOM-OP)

What is MSP?

Agricultural imports

Related Previous Year Questions

What are the present challenges before crop diversification? How do emerging technologies provide an opportunity for crop diversification? (2021)

What are the challenges and opportunities of the food processing sector in the country? How can the income of the farmers be substantially increased by encouraging food processing? (2020)

QUESTION 2: India’s energy landscape is undergoing a transformation with a growing emphasis on renewable sources while phasing out coal-based energy generation. Discuss the challenges and opportunities associated with this transition.

Body:

— Commodity costs, particularly those for energy, have risen globally since the pandemic began and following the Ukraine-Russia crisis in recent months.

— Several policy efforts have been implemented in India’s coal sector, including the National Coal Index (NCI). This index was established to serve as a benchmark for revenue-sharing contracts that are executed following commercial coal mining auctions.

— The NCI has to be introduced since the wholesale price index (WPI) for coal excludes imported coal.

— This result demonstrates the need of growing domestic coal output in order to lessen the domestic economy’s sensitivity to price volatility on overseas markets.

— Anticipating these issues, a major push to allow commercial mining has been made to encourage the private sector to generate more coal.

Challenges and opportunities associated

— The financial community must be made aware of the necessity to enhance domestic coal output to meet rising energy demand.

— The Ministry of Power identified the need to enhance coal-based power in the country in its draft National Electricity Policy, which was released in May 2021, before the current situation. This policy has yet to be finalised. It should explicitly state the importance of indigenous coal-fired generation.

— Aside from the government, the industry should raise this issue with the financial community in order to promote a more comprehensive approach to environmental, social, and governance (ESG) requirements.

— The necessity for a regulator to address the challenges that arise as the private sector plays a greater role. There are various issues in which new private commercial miners might require assistance.

— It is necessary to increase domestic coal output while also broadening the production base. This must be combined with efforts to increase the quality of coal produced.

— The coal sector bears an unfair financial burden as a result of several cross subsidies.

(Source: We need an orderly transition from coal to renewables by Rakesh Kacker and Nidhi Srivastava)

Points to Ponder

National Coal Index (NCI)

What is the wholesale price index (WPI)?

Related Previous Year Questions

Environmental Impact Assessment studies are increasingly undertaken before a project is cleared by the Government. Discuss the environmental impacts of coal-fired thermal plants located at coal pitheads. (2014)

What are the consequences of Illegal mining? Discuss the Ministry of Environment and Forests’ concept of GO AND NO GO zones for coal mining sector. (2013)

Previous Mains Answer Practice

UPSC Essentials: Mains answer practice — GS 1 (Week 53)

UPSC Essentials: Mains answer practice — GS 1 (Week 52)

UPSC Essentials: Mains answer practice — GS 2 (Week 52)

UPSC Essentials: Mains answer practice — GS 2 (Week 53)

UPSC Essentials: Mains answer practice — GS 3 (Week 53)

UPSC Essentials: Mains answer practice — GS 3 (Week 52)

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