Daily Current Affairs for 04th August 2022

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Yuan Wang 5

GS paper 2: Bilateral Groupings, Agreements involving India and/or affecting India’s interests
Important for
Prelims exam: Yuan Wang 5
Mains exam: China’s presence in Indian ocean region and india’s concern

Why in news

India has objected to a Chinese vessel’s expected docking at Sri Lanka’s Hambantota port on August 11.

Why india has objected to this

• India says that the Yuan Wang 5 has capabilities to snoop on Indian installations along the southern coast.
• The vessel’s slated arrival has created turbulence in the Indian Ocean waters at a time when India has been at the forefront of bailing Sri Lanka out of the economic crisis it finds itself in.
• It is worth noting that the vessel, which is among China’s most advanced ships, has an aerial reach that surpasses 750 km.
o This would bring into its radar the nuclear power plants at Kalapakkam and Koodankulam as well as the atomic research centre, raising fears of potential snooping.
• India fears that with its strategic location at Hambantota, which is also close to international shipping lanes, the Chinese ship will gain access to Southern Indian ports in the states of Kerala, Tamil Nadu and Andhra Pradesh.
• Vital installations along the coast could be vulnerable to Chinese surveillance.
What does this mean for India-Sri Lanka relations?
• Sri Lanka appears to be caught between a wall and a hard place in managing its ties with both nations(India and China both helping Srilanka out of the ongoing economic crisis) and neighbours that it depends on in a time of crisis.
• This is not the first time, and possibly not the last, that there has been turbulence in the Indian Ocean due to Chinese vessels’ port call at Sri Lanka.
o In 2014 too, India’s relations had strained with its southern neighbour after it permitted China’s submarine Changzheng 2 and warship Chang Xing Dao to drop anchor at Colombo.
• India sees Sri Lanka’s move as a violation of agreements that say that the two countries will not allow their respective territories to be used for activities prejudicial to each other’s unity, integrity and security.
• While the Rajapaksas are generally blamed for welcoming China, current President Wickremesinghe is known for leasing the Hambantota port to China for 99 years.
o However, the Ranil Wickremesinghe administration has laid blame at the feet of the previous government, claiming they gave the nod for the spy ship to dock in Sri Lanka.
China’s Stand on this matter
• China’s mouthpiece Global Times claimed that this would be a regular port that was already permitted by the Sri Lankan Defence forces.
• It claimed that the Yuan Wang 5 was not a military ship but a research vessel.
• Chinese experts said “Even if it is a military vessel, it is normal if the call complies with the relevant laws of the country hosting the port.”
• Chinese experts painted the port call as a service to Sri Lanka, which can earn ‘some’ foreign exchange by refuelling the vessel and helping it obtain supplies.

Fair and Remunerative Price (FRP)

GS paper 3: Issues related to Minimum Support Prices
Important for
Prelims exam: FRP
Mains exam: Government support to sugarcane farmers and steps to double income of farmers

Why in news

The Cabinet Committee on Economic Affairs chaired by Prime Minister has approved Fair and Remunerative Price (FRP) of sugarcane for sugar season 2022-23 (October – September) at Rs. 305/qtl for a basic recovery rate of 10.25%

What is FRP?

• With the amendment of the Sugarcane (Control) Order, 1966 on 22.10.2009, the concept of Statutory Minimum Price (SMP) of sugarcane was replaced with the ‘Fair and Remunerative Price (FRP)’ of sugarcane for 2009-10 and subsequent sugar seasons.
• The cane price announced by the Central Government is decided on the basis of the recommendations of the Commission for Agricultural Costs and Prices (CACP) in consultation with the State Governments and after taking feedback from associations of the sugar industry.
• Factors considered for announcing FRP-The amended provisions of the Sugarcane (Control) Order, 1966 provides for fixation of FRP of sugarcane having regard to the following factors:-
o cost of production of sugarcane;
o return to the growers from alternative crops and the general trend of prices of agricultural commodities;
o availability of sugar to consumers at a fair price;
o price at which sugar produced from sugarcane is sold by sugar producers;
o recovery of sugar from sugarcane;
o the realization made from the sale of by-products viz. molasses, bagasse and press mud or their imputed value
o reasonable margins for the growers of sugarcane on account of risk and profits
• Under the FRP system, the farmers are not required to wait till the end of the season or for any announcement of the profits by sugar mills or the Government.
• The new system also assures margins on account of profit and risk to farmers, irrespective of the fact whether sugar mills generate profit or not and is not dependent on the performance of any individual sugar mill.
• In order to ensure that higher sugar recoveries are adequately rewarded and considering variations amongst sugar mills, the FRP is linked to a basic recovery rate of sugar, with a premium payable to farmers for higher recoveries of sugar from sugarcane.
o Sugar recovery is the ratio between sugar produced versus cane crushed, expressed as a percentage.
o The higher the recovery, the higher is the FRP, and higher is the sugar produced.
o Accordingly FRP for 2022-23 sugar season has been fixed at Rs. 305/qtl for a basic recovery rate of 10.25%, providing a premium of Rs. 3.05/qtl for each 0.1% increase in recovery over and above 10.25%, and reduction in FRP by Rs. 3.05/qtl for every 0.1% decrease in recovery.
o However, the Government with a view to protect the interest of sugarcane farmers has also decided that there shall not be any deduction in case of sugar mills where recovery is below 9.5%.
o Such farmers will get Rs. 282.125/qtl for sugarcane in ensuing sugar season 2022-23 in place of Rs. 275.50/qtl in current sugar season 2021-22.
• The central government announces the FRP annually before the start of the sugarcane crushing season. It is the threshold price that mills are legally bound to pay to cane growers for the cane procured from them.
o However, many state governments, including Uttar Pradesh and Tamil Nadu, have their own cane pricing policy and they announce their sugarcane rates, which are known as state advised price or SAP, which is over and above the FRP

The A2 + FL cost of production of sugarcane (i.e actual paid out cost plus imputed value of family labour) for the sugar season 2022-23 is Rs. 162/qtl. This FRP of Rs. 305/qtl at a recovery rate of 10.25% is higher by 88.3% over cost of production, thereby ensuring the promise of giving the farmers a return of more than 50% over their cost. The FRP for sugar season 2022-23 is 2.6% higher than current sugar season 2021-22.

The A2 + FL cost of production of sugarcane (i.e actual paid out cost plus imputed value of family labour) for the sugar season 2022-23 is Rs. 162/qtl. This FRP of Rs. 305/qtl at a recovery rate of 10.25% is higher by 88.3% over cost of production, thereby ensuring the promise of giving the farmers a return of more than 50% over their cost. The FRP for sugar season 2022-23 is 2.6% higher than current sugar season 2021-22.

Salient measures taken by the Government for Sugar Sector

• FRP of sugarcane is fixed to ensure a guaranteed price to sugarcane growers.
• Government has increased FRP by more than 34% in the past 8 years.
• Government has also introduced the concept of Minimum Selling Price (MSP) of sugar to prevent fall in ex-mill prices of sugar & accumulation of cane arrears.
• Financial assistance of more than Rs. 18,000 crore extended to sugar mills to facilitate export of sugar, for maintaining buffer stocks, to augment ethanol production capacity & for clearance of farmers’ dues.
• Diversion of surplus sugar for production of ethanol led to improved financial conditions of sugar mills. As a result, they are able to clear cane dues early.
Further, due to various others measures taken for the Sugar Sector during past few sugar seasons which inter-alia included
o introduction of high yielding varieties of sugarcane,
o adoption of drip irrigation system,
o modernization of sugar plant and other R&D activities,
the area of sugarcane cultivation, production of sugarcane, cane crushed, sugar production & its recovery percentage and the payment to farmers have increased considerably.

Sugarcane production in India

• India is the largest producer & second largest exporter of sugar in the world.
• India has surpassed Brazil in the sugar production in the current sugar season.
• With the increase in the production of sugar, India apart from meeting its requirement for domestic consumption has also consistently exported sugar which has helped in reducing fiscal deficit.
• In last 4 sugar seasons 2017-18, 2018-19, 2019-20 & 2020-21, about 6 Lakh Metric Tonne (LMT), 38 LMT, 59.60 LMT & 70 LMT of sugar has been exported.
• About 100 LMT of sugar has been exported till 01.08.2022 in the current sugar season 2021-22 & exports are likely to touch 112 LMT.

How Sugar industry contributing in energy sector

• India’s 85% requirement of crude oil is met through imports.
• But with a view to reduce import bill on crude oil, to reduce pollution & to make India Atmanirbhar in petroleum sector, Government is pro-actively moving ahead to increase production & blending of ethanol with petrol under the Ethanol Blended with Petrol programme.
• Government is encouraging sugar mills to divert excess sugarcane to ethanol which is blended with petrol, which not only serves as a green fuel but also saves foreign exchange on account of crude oil import.
• In sugar seasons 2018-19, 2019-20 & 2020-21, about 3.37 LMT, 9.26 LMT & 22 LMT of sugar has been diverted to ethanol.
• In the current sugar season 2021-22, about 35 LMT of sugar is estimated to be diverted & by 2025-26 more than 60 LMT of sugar is targeted to be diverted to ethanol, which would address the problem of excess sugarcane as well as delayed payment issue because farmers would get timely payment.
• Government has fixed a target of 10% blending of fuel grade ethanol with petrol by 2022 & 20% blending by 2025.

What are the concerns behind FRP?

• FRP would adversely affect the financial health of the sugar factories in times of low sugar prices where the companies has to pay the MSP even though the sugar prices are low.
• The FRP are not market-based and are priced at artificially inflated levels by governments.
o This, in turn, puts pressure on the sugar mills who have to purchase the crop from the farmers at these inflated FRPs.
• And while the government has raised ethanol prices dramatically to help sugar mills find an alternative source of demand to pay for the excessively priced sugarcane, once oil prices fall to reasonable levels, oil PSUs won’t be able to afford the ethanol.

Ramsar sites

GS paper 3: Conservation, Environmental pollution and degradation and Environmental Impact Assessment
Important for
Prelims exam: Ramsar sites, Ramsar Convention
Why in news
India adds 10 more wetlands designated as Ramsar sites to make a total 64 sites covering an area of 12,50,361 ha in the country.

Ramsar Convention on Wetlands

• The Convention on Wetlands is the intergovernmental treaty that provides the framework for the conservation and wise use of wetlands and their resources.
• The Convention was adopted in the Iranian city of Ramsar in 1971 and came into force in 1975. Since then, almost 90% of UN member states, from all the world’s geographic regions, have acceded to become “Contracting Parties”.
• Under the “three pillars” of the Convention, the Contracting Parties commit to:
o work towards the wise use of all their wetlands;
o designate suitable wetlands for the list of Wetlands of International Importance (the “Ramsar List”) and ensure their effective management;
o cooperate internationally on transboundary wetlands, shared wetland systems and shared species.
Significance of Ramsar designation
• Acquiring this label helps with a locale’s tourism potential and its international visibility.
o Being designated a Ramsar site does not necessarily invite extra international funds.

What are Wetlands?

• A wetland is a distinct ecosystem that is flooded by water, either permanently (for years or decades) or seasonally (for weeks or months).
• Flooding results in oxygen-free (anoxic) processes prevailing, especially in the soils.
• The primary factor that distinguishes wetlands from terrestrial landforms or water bodies is the characteristic vegetation of aquatic plants, adapted to the unique anoxic hydric soils.
• Wetlands are considered among the most biologically diverse of all ecosystems, serving as home to a wide range of plant and animal species.
Significance of Wetlands
• Wetlands provide a wide range of important resources and ecosystem services such as food, water, fibre, groundwater recharge, water purification, flood moderation, erosion control, and climate regulation.
• They are, in fact, a major source of water and our main supply of freshwater comes from an array of wetlands that help soak rainfall and recharge groundwater.
• They provide many societal benefits: food and habitat for fish and wildlife, including threatened and endangered species; water quality improvement; flood storage; shoreline erosion control; economically beneficial natural products for human use; and opportunities for recreation, education, and research, etc.
Ten newly added Ramsar sites
The 10 new sites include: Six (6) sites in Tamil Nadu and One (1) each in Goa, Karnataka, Madhya Pradesh and Odisha. Designation of these sites would help in conservation and management of wetlands and wise use of their resources.
• Koonthankulam Bird Sanctuary- Tamil Nadu
• Satkosia Gorge- Odisha
• Nanda Lake- Goa
• Gulf of Mannar MarineBiosphere Reserve- Tamil Nadu
• Ranganathituu BS- Karnataka
• Vembannur Wetland Complex- Tamil Nadu
• Vellode Bird Sanctuary- Tamil Nadu
• Sirpur wetland- Madhya Pradesh
• Vedanthangal Bird Sanctuary- Tamil Nadu
• Udhayamarthandapuram Bird Sanctuary- Tamil Nadu

e-Invoicing under GST

GS paper 3: Issues related to planning, Mobilization of resources, Growth, Development and Employment
Important for
Prelims exam: GST
Mains exam: GST collection and reforms to make it easy
Why in news
In a step to ensure better flow of data on taxpayers to the authorities and higher compliance, the turnover threshold for e-invoicing has been halved to Rs 10 crore effective October 1 this year under the Goods and Services Tax (GST) regime.

Recent change in the threshold for e-invoice?

• Businesses with annual turnover of Rs 10 crore or more will have to generate e-invoices for business-to-business (B2B) transactions from October 1 this year.
o The existing threshold for this is Rs 20 crore.
• The GST Council approved the standard of e-invoice in its 37th meeting held on September 20, 2019.
o E-invoicing for B2B transactions was made mandatory for companies with turnover of over Rs 500 crore from October 1, 2020,
o which was then extended to those with turnover of over Rs 100 crore effective January 1, 2021.
o From April 1, 2021, companies with turnover of over Rs 50 crore were generating B2B e-invoices.
o The threshold was brought down to Rs 20 crore beginning April 1, 2022.
o The CBIC now plans to further lower the threshold for e-invoice generation to Rs 5 crore.
What is e-invoice generation under GST?
• The e-invoice system is for GST registered persons to upload all B2B invoices to the Invoice Registration Portal (IRP).
• The IRP generates and returns a unique Invoice Reference Number (IRN), digitally signed e-invoice, and QR code to the user.
• After following the e-invoicing process, the invoice copy (with QR Code containing inter alia, IRN) issued by the notified supplier to the buyer is commonly referred to as the ‘e-invoice’.
o SEZ units, insurance, banking(including NBFCs), goods transport agencies (transporting goods by road in goods carriages), passenger transport services, and multiplex cinema admissions are exempt from the e-invoice system.
• E-invoice does not mean generation of invoices from a central portal of the tax department, rather, it is the generation of invoice in a standard format so that an invoice generated on one system can be read by another system, and then reporting of e-invoice to a central system.
Significance of lowering of thresholds for e-invoice
• This will help to curb the actions of unscrupulous taxpayers and reduce cases of fraud as the tax authorities will have access to data in real time.
• The aim behind adoption of the e-invoice system by tax departments is to acquire the ability to pre-populate the return and to reduce reconciliation problems.
• Tax experts said the lowering of the threshold will help curb tax evasion.
• The move to reduce the turnover threshold and increase the ambit of e-invoicing is mainly aimed at resolving mismatch errors and checking tax evasion. Considering the timelines, concerned businesses will have to ramp up their IT systems to comply with the e-invoicing norms..
• The reduction of the e-invoicing threshold will further expand the GST tax base and provide more data to tax authorities, enabling better compliance.
• The progressive reduction of the e-invoicing threshold indicates that over a period of time, e-invoicing will become mandatory for all categories of GST taxpayers.
• Businesses would now need to tweak their systems to incorporate the changes, else they may run the risk of their invoices not being accepted by other businesses and hence, lead to issues in availing input tax credit.
• As of now e-invoicing compliance amidst already liable taxpayers is only 40%, which means that on average only 4 out of 10 liable invoices are e-invoicing-compliant. This change has a big impact on the recipients of goods or services also.
o In case their suppliers are liable to generate e-invoices and have not provided them with one, then the GST-Input Tax Credit on such invoices shall be denied to the recipients. Hence it is important for the recipients to check whether their suppliers are e-invoicing complaints also.
• This has been done to widen the net of GST digitisation and to capture transaction details at the invoicing stage itself, which will help further prevent GST evasion.

Nationally Determined Contribution(NDC)

GS paper 3: Biodiversity Conservation, Environmental pollution and degradation and Environmental Impact Assessment
Important for
Prelims exam: NDC
Mains exam: India’s commitment to sustainable development and climate protection
Why in news
The Union Cabinet chaired by the Prime Minister has approved India’s updated Nationally Determined Contribution (NDC) to be communicated to the United Nations Framework Convention on Climate Change (UNFCCC).

What is Nationally Determined Contribution(NDC)

• An NDC, or Nationally Determined Contribution, is a climate action plan to cut emissions and adapt to climate impacts. Each Party to the Paris Agreement is required to establish an NDC and update it every five years.
• NDCs are where countries set targets for mitigating the greenhouse gas emissions that cause climate change and for adapting to climate impacts.
• The plans define how to reach the targets, and elaborate systems to monitor and verify progress so it stays on track. Since climate finance is key to implementing the plans, NDCs ideally also detail a financing strategy.
• The Paris agreement asks countries to update their NDCs every five years.
o But given the large gap between the emissions cuts required to limit global warming to 1.5°C and the emissions reductions currently planned, the Glasgow Climate Pact in November 2021 called on all countries to revisit and strengthen the targets in their NDCs in 2022.

India’s position on NDCs

• India submitted its Intended Nationally Determined Contribution (NDC) to UNFCCC on October 2, 2015.
• The 2015 NDC comprised eight goals; three of these have quantitative targets upto 2030 namely,
o cumulative electric power installed capacity from non-fossil sources to reach 40%;
o reduce the emissions intensity of GDP by 33 to 35 percent compared to 2005 levels and
o creation of an additional carbon sink of 2.5 to 3 billion tonnes of CO2 equivalent through additional forest and tree cover.
• As per the updated NDC,
o India now stands committed to reduce Emissions Intensity of its GDP by 45 percent by 2030, from 2005 level and
o Achieve about 50 percent cumulative electric power installed capacity from non-fossil fuel-based energy resources by 2030.
• India’s updated NDC has been prepared after carefully considering our national circumstances and the principle of common but differentiated responsibilities and respective capabilities (CBDR-RC).
Significance of updated NDC
• India’s updated NDC reaffirms our commitment to work towards a low carbon emission pathway, while simultaneously endeavoring to achieve sustainable development goals.
• Updated NDC captures the citizen centric approach of LiFE(Lifestyle for the Environment) movement to combat climate change.

Lifestyle for the Environment (LiFE) Movement

The Indian PM proposed the LiFE Movement to the United Nations Climate Change Conference of the Parties (COP26) in Glasgow in 2021. The introduction of the LiFE Movement will begin the ‘LiFE Global Call for Papers,’ which will solicit ideas and suggestions from academics, universities, and research institutes, among others.
• The idea of LiFE promotes an environmentally conscious lifestyle that focuses on ‘mindful and deliberate utilisation’ instead of ‘mindless and wasteful consumption.
• The LiFE Movement is a global effort dedicated to improving human sustainability and environmental protection.
• The LiFE Movement aims to bring positive change in the environment by collective action.

• The updated NDC also represents the framework for India’s transition to cleaner energy for the period 2021-2030.
• The updated framework, together with many other initiatives of the Government, including tax concessions and incentives such as Production Linked Incentive scheme for promotion of manufacturing and adoption of renewable energy, will provide an opportunity for enhancing India’s manufacturing capabilities and enhancing exports.
o It will lead to an overall increase in green jobs.
• India’s NDC does not bind it to any sector specific mitigation obligation or action.
• India’s goal is to reduce overall emission intensity and improve energy efficiency of its economy over time and at the same time protect the vulnerable sectors of the economy and segments of our society.

What are the concern related to updated NDC

• In his speech in COP26 at glasgow PM of India had laid out five commitments, or Panchamrit, as the government references it, namely:
o India will increase its non-fossil energy capacity to 500 GW (gigawatt) by 2030;
o It will meet 50% of its energy requirements from “renewable energy” by 2030;
o India will reduce the total projected carbon emissions by one billion tonnes from now till 2030;
o India will reduce the carbon intensity of its economy by more than 45%; and
o It will achieve the target of “net zero” by the year 2070, when there will be no net carbon dioxide emitted from energy sources.
• But the updated NDC only mentions two of these promises.
• Experts said that while the NDCs reflected India’s commitment to sustainable development they were a climbdown from the ambition India had expressed at Glasgow.
• Experts suggested that A reiteration of the renewables focus would have provided a fresh impetus for the renewables sector.[/fusion_text][/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]

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