SC relaxes March 31 deadline for automakers to sell BS-IV vehicles

Paper: II

For Prelims:  BS Norms.

For Mains: Government Policies and Interventions for Development in various sectors and Issues arising out of their Design and Implementation.

Context of News:

  • In a relief to automobile dealers, the Supreme Court on March 27Th allowed the sale of BS IV compliant vehicles for 10 days, except in Delhi-NCR, after the ongoing countrywide lockdown over the corona virus pandemic is lifted.
  • The apex court, which had earlier fixed the deadline of March 31, 2020 for sale of BS IV compliant vehicles across the country, passed the order on a plea by Federation of Automobile Dealers’ Association (FADA), seeking extension of time for sale of inventory amid   corona virus scare and economic slowdown.

About BS Norms:

  • Bharat Stage (BS) emission norms are standards instituted by the government to regulate output of air pollutants from motor vehicles. Bharat Stage (BS) emission norm is a standard instituted by the government to regulate the discharge of air pollutants from motor vehicles. The BS-IV norm has been in force since April 2017.
  • India has decided to switch to the world’s cleanest petrol and diesel from April 1 as it leapfrogs straight to Euro-VI emission compliant fuels from Euro-IV grades now – a feat achieved in just three years and not seen in any of the large economies around the globe.
  • Bharat Stage VI is the most advanced emission standard for automobiles and is equivalent to Euro-VI norms currently in place across countries in Europe. Considering concerns over rising air pollution levels in India, the Union government had in 2017 decided to leapfrog directly from BS-IV norms for petrol and diesel vehicles to BS-VI emission standards to reduce vehicular pollution. Accordingly, the automobile industry was asked to comply with the directive before the deadline.
  • How will the vehicles change with BS-VI?
  • With the introduction of the new norms, on-board diagnostics (OBD) become mandatory for all vehicles. The OBD unit will be able to identify likely areas of malfunction by means of default codes stored on a computer, thus ensuring that the sophisticated emission control device, which is fitted in a BS-VI vehicle, runs at optimum efficiency throughout the life of the vehicle.
  • As far as two-wheelers is concerned, manufacturers have to introduce a fuel injection system, which will be a first in India. Under the new norms, the difference in carbon emission between diesel and petrol engines will reduce substantially.

 

What Court Said?

  • A bench of Justices Arun Mishra and Deepak Gupta, which heard the matter through video-conferencing, made it clear however that no BS IV vehicles will be allowed to be sold in Delhi-NCR from April 1, 2020.
  • Supreme Court said that only 10 per cent of the unsold inventory of BS IV vehicles can be permitted to be sold during this 10-day period after the lockdown, which has been enforced since March 24.
  • The top court made it clear that BS IV compliant vehicles which have already been sold but not registered due to lockdown can be registered after the restrictions are lifted. It asked the automobile dealers to submit on affidavit the details of sold and unsold inventories, within one week.
  • The top court said that it cannot keep extending time for BS IV vehicles and dealers should be ready to sacrifice and do something for the country’s environment. People might have faced hardship in registering their vehicles sold before March 31 due to the lockdown and therefore time till end of April or May, be provided.

Policy-related challenges:

  • Confusion in Policy:
  • The petroleum and natural gas ministry told the Supreme Court that vehicles not complying with BS-VI standards won’t be allowed to ply on Indian roads. This created a major confusion, given that the ministry of road transport and highways had notified that auto makers would get three months to exhaust their stock of BS-IV-compliant vehicles after the new norms are enforced. The apex court has said that manufacturers won’t be allowed to register BS-IV-compliant vehicles after 31 March 2020.
  • Effect on Coast of Vehicle:
  • India will start to implement the BSVI emission regulations from 1st April 2020 which will be in par with the Euro-VI norms. With the new emission norms coming in, the technology will also have to be upgraded in order to keep the emissions in check, particularly the new diesel engine vehicles, it will be effortless for petrol engines to meet the BSVI emission norms with mostly upgraded Electronic control unit (ECU). The ECU is the one who controls the electrical system and the various other sub-systems in the vehicle.
  • For diesel cars ,it require a massive change in their technology in order to reduce their overall emissions. The new upgrades to diesel cars are going to increase the prices of diesel cars even further. The price gap between diesel cars and petrol cars are said to be around 2.5 lakhs if it takes into consideration all the features.

Way Forward:

  • The newly introduced BS-VI norms are going to bring a radical change in the Indian automobile sector industry. India will also get low emission producing and more fuel-efficient vehicles soon. Diesel engines will be more expensive as compared to that of petrol engines because they need more adjustment and after-treatments in order to stay clean. So, this will make sure to attract the original equipment manufacturers (OEM) towards hybrid fuels and another environment friendly alternative technology solution providing companies are also going to benefit a lot from the transition.
  • In case of fuel specifications in terms of BSVI the main understanding is that the consequence of the fuel effects on the emission of controlled air pollutants has reduced because of the recent advancements in the engine after treatment technologies. The modern age engines usually require very low sulphur content in the fuel in order to maintain a strong performance during their need. The efforts put in for the transition from BSIV to BSVI can incredibly help in the reduction of air pollution from automobiles.

IMF chief: We have entered recession

Paper: III

For Prelims:  Recession.

For Mains: Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment.

 

Context of News:

  • The corona virus pandemic has driven the global economy into a downturn that will require massive funding to help developing nations, IMF chief Kristalina Georgieva said on March 27th.
  • IMF chief said that; it is clear that world have entered a recession that will be worse than in 2009 following the global financial crisis.

Briefing of IMF:

  • The key to recovery in 2021, IMF chief said, is only if the international community succeeds in containing the virus everywhere and prevent liquidity problems from becoming a solvency issue.
  • IMF also said that the first step in this long battle of fight against corona virus and checking economy slump is containment of virus spread, Containment is very necessary to come out of this period and step in to recovery. Until the virus is not contained, it would be very difficult to go to the lives we love.
  • A key concern about a long-lasting impact of the sudden stop of the world economy is the risk of a wave of bankruptcies and layoffs that not only can undermine the recovery. But can erode the fabric of our societies.
  • The IMF chief said 81 emergency financing requests, including 50 from lower-income countries, have been received. She said current estimate for the overall financial needs of emerging markets is 2.5 trillion dollars.

Where India stands in this Recession according to Moody?

  • Moody’s cuts India’s GDP growth outlook for year 2020 to 2.5%. Moody’s also slashed growth forecast for China to 3.3% in 2020, followed by 6.0% growth in 2021.
  • The rating agency said in India, credit flow to the economy already remains severely hampered because of severe liquidity constraints in the bank and non-bank financial sectors.
  • Moody’s said the G-20 economies will experience an unprecedented shock in the first half of this year and will contract in 2020 as a whole, before picking up in 2021

   Difference between Recession and slowdown:

  • Recession:
  • In economics, a recession is a business cycle contraction when there is a general decline in economic activity. Recessions generally occur when there is a widespread drop in spending (an adverse demand shock).
  • A recession is marked by declines in real GDP, which is an inflation-adjusted measure that reflects the value of all goods, and services produced by the economy in a given year. In a recession, drops in employment, income, manufacturing and retail sales accompany declining real GDP. A mere slowdown, on the other hand, means that the economy is still growing, but at a reduced rate.
  • Slowdown:
  • Reduction in growth automatically leads to hampering of development goals and poor development indices contribute to slow economic development.
  • Financial stress among rural households and sluggish job creation are among the key drivers of the slowdown, while a credit crunch among non-bank financial institutions (NBFIs), the major providers of retail loans in recent years, has exacerbated the weaker conditions.

Way Forward:

  • Government need to follow a Keynesian approach (increasing public expenditure to spur demand):
  • Increase public expenditure in investing in agriculture — in infrastructure, inputs, extension, marketing and storage and training — and in providing profitable prices to farmers.
  • It should also raise funds for the Mahatma Gandhi National Rural Employment Guarantee Act to push up demand.
  • Investment in SHE (Skill, Education and Health):
  • Increasing additional jobs for ensuring basic health and good quality education up to the secondary level to all so that any meaningful skill formation is possible should be another aim.
  • It should raise public employment by filling all vacant sanctioned posts in the Central and State Governments, which would be around 2.5 million jobs.
  • The government should also focus on promoting labour-intensive sectors such as gems and jewellery, textiles and garments and leather goods.
  • The human capital formation will give a big push to start-ups and MSMEs.
  • Cyclical fix:
  • Cyclical slowdown can be dealt with counter-cyclical policy response.
  • Counter-cyclical policy means encouraging spending during downturns and tightening credit during inflationary periods.