GS PAPER III
National Mission on Edible Oils – Oil Palm (NMEO-OP)
Why in News
To encourage palm oil production in India, the Centre has approved a mission named ‘National Mission on Edible Oils – Oil Palm’.
National Edible Oil Mission-Oil Palm (NEMO-OP)
- The National Edible Oil Mission-Oil Palm (NMEO-OP) aim for self-reliance in edible oil involves investment of over Rs. 11,000 crore.
- Other objective of the scheme is to harness domestic edible oil prices that are dictated by expensive palm oil imports.
- The special emphasis of the scheme will be in India’s north-eastern states and the Andaman and Nicobar Islands due to the conducive weather conditions in the regions.
Significance of National Edible Oil Mission-Oil Palm (NEMO-OP)
- The NEMO-OP project will boost the cultivation of oil palm to 10 lakh hectares by 2025-26 and 16.7 lakh hectares by 2029-30, spread across 19 Southern and the North-Eastern States.
- The government is targeting to gear up the domestic production of palm oil by over three times to 11 lakh tonnes by 2025-26 to the dependency of country’s imports.
- This scheme will provide financial assistance to the palm oil farmers to boost the productivity and will get remuneration under a price and viability formula.
India in edible oil
- India is the leading importer of edible oil in the world, with a share of 20.7%, followed by the European Union with 13.5% share and China with 12.8%.
- In 2016-17, the total domestic consumption of palm oil by India was 9.3 million MT, with 98.97% of it imported from Malaysia and Indonesia which means India was producing domestically only 1.027of its requirement.
- As the second-largest consuming country, India needs about 25 million tonnes of edible oil a year to meet its domestic requirements.
- About 10 million tonnes of edible oil is produced domestically from primary i.e., soybean, rapeseed and mustard, groundnut, sunflower, safflower and niger and secondary sources i.e., palm oil, coconut, rice bran, cotton seeds and tree borne oilseeds.
- The remaining 60% of requirement imported from foreign nations.
- With India viewing cheaper and greater imports in June 2021 to cut domestic edible oil prices, the cost of palm oil rose from $527.50/MT on May 5, 2020, to $971/MT on June 29 in the international market. This steep hike led to rise in prices of edible oils in India.
- Farm size one of the biggest challenges in the palm-oil production.
- The largest exporters of palm oil are Indonesia and Malaysia.
- In Indonesia, plantations usually span over 4,000-5,000 hectares with a processing plant on the site.
- They are usually owned by corporations and make up nearly 70 per cent of the area under oil palm.
- Water-intensive crop:
- Another vital difference is related to water availability.
- Oil palm is a water-intensive crop and is more suited for cultivation in rain abundant regions.
- In oil palm growing regions of Andhra Pradesh where the annual rainfall is between 800 and 1,000 mm, irrigation needs are met through groundwater.
- Intervention of private entity:
- India needs to attract corporate bodies towards palm oil production and derive maximum benefit of 100% foreign direct investment.
- Usage of useless/barren lands:
- The wasteland, degraded land, and other lands of state can be given on lease, rent or bought by private entrepreneurs, cooperative bodies or joint ventures for oil palm plantation.
- Combine farming:
- A combination of individual farming, contract farming and captive plantation can boost oil palm cultivation in the country.
- Incentives for palm-oil farming:
- Farmers need to be nudged and incentivised to cultivate oil palm and oilseeds.
- For oil palm, they should be compensated at least for six years for their land against the potential loss and should also be provided with a one-time irrigation subsidy.
- It will help India to save foreign exchange to empower our own country’s farmers.
- Currently, India produces 37.31 million tonnes of oilseeds from 28.82 million hectares of land.
- Even if 10% of the area of cultivation is diversified for palm oil plantation, the oil produced can be increased eight times.
- Providing incentives and subsidies to India can reduce its dependence on imports from Malaysia and Indonesia. The need of the hour is to minimise our dependence on imported edible oil.
- India has identified a potential area of one million hectares for palm cultivation, and this has to be consistently increased, which will be a decisive step towards ‘Atmanirbhar Bharat’ in edible oil.
GS PAPER III
Why in News
Recently, 4 new sites of India have been added in the Ramsar List.
- India added other milestones as four more new sites have been added in the Ramsar List – two each from Haryana and Gujarat – were recognised as wetlands of international importance under the Ramsar Convention.
- India has now 46 such sites.
- Sultanpur National Park in Gurgaon, Bhindawas Wildlife Sanctuary in Jhajjar (both in Haryana), Thol and Wadhwana from Gujarat now become a part of Ramsar convention.
Bhindawas Wildlife Sanctuary
- This Wildlife Sanctuary is a human-made freshwater wetland.
- It is the largest in Haryana and over 250 bird species use the sanctuary throughout the year as a resting and roosting site.
- The site have more than 10 globally threatened species including the endangered Egyptian Vulture, Steppe Eagle, Pallas’s Fish Eagle, and Black-bellied Tern.
Sultanpur National Park
- The Sultanpur National Park has more than 220 species of resident, winter migratory and local migratory waterbirds at critical stages of their life cycles.
- More than 10 of these are globally threatened.
Thol Lake Wildlife Sanctuary
- The Thol Lake Wildlife Sanctuary in Gujarat lies on the Central Asian Flyway and more than 320 bird species can be found here.
- It has more than 30 threatened aquatic bird species, such as the critically endangered White-rumped Vulture and Sociable Lapwing, and the vulnerable Sarus Crane, Common Pochard and Lesser White-fronted Goose.
- The Wadhvana Wetland in Gujarat is internationally important for its birdlife as it provides wintering ground to migratory waterbirds, including over 80 species that migrate on the Central Asian Flyway.
- The Ramsar Convention on Wetlands is an intergovernmental treaty signed on 2nd February 1971 in the Iranian city of Ramsar, situated on the southern shore of the Caspian Sea.
- In India, it came into force on 1st February, 1982. Those wetlands which are of international importance are declared as Ramsar sites.
- In 2020, Ramsar declared 10 more wetland sites from India as sites of international importance.
- There are three types of sites: Cultural, Natural, and Mixed.
- Natural wetlands are permanently or seasonally saturated in water and create habitats for aquatic plants.
- They retain large volumes of water and their slow release makes them important for combating extreme weather conditions like floods and droughts.
- Termed ‘kidneys of landscape’, wetlands contribute to water purification, water regulation, biodiversity, aesthetics and recreation.
- India has maximum wetlands in South Asia – 7.7 lakh – covering the country’s 4.6 per cent geographical area, according to a report of NGO Wetland International.
World Wetlands Day
- World Wetlands Day is observed every year on February 2.
- Objective to celebrate this day is to raise global awareness about the vital role of wetlands for people and our planet.
- This day also marks the date of the adoption of the Convention on Wetlands on February 2, 1971, in the Iranian city of Ramsar on the shores of the Caspian Sea.
GS PAPER III
Secondary Loan Market Association (SLMA)
Why in News
In the first step towards building a secondary loan market in India, 10 banks including State Bank of India (SBI) and ICICI Bank came together to set up the ‘Secondary Loan Market Association (SLMA)’.
- The SLMA has been set up as a self-regulatory body following the recommendation of a Reserve Bank of India (RBI) task force on developing the secondary loan market.
- Apart from SBI and ICICI Bank, it includes Canara Bank, Standard Chartered Bank, Kotak Mahindra Bank, Deutsche Bank, Bank of Baroda, Punjab National Bank, Axis Bank and HDFC Bank.
- It will build an online system for the standardization and simplification of primary loan documentation, and standardization of the purchase and sale/assignment documentation and other trading mechanisms for the secondary loan market.
- Bloomberg data shows that the volume of rupee syndicated loans stood at ₹0.94 trillion till July 2021, ₹2.18 trillion in 2020, and ₹1.68 trillion in 2019, which is expected to go up with the debut of the SLMA.
- RBI data shows 96,303 borrowers have an aggregate credit exposure of ₹5 crore and above, with 266 of them having an aggregate exposure of ₹5,000 crore or above.
Benefit to Lenders
- The SLMA will help banks manage loan portfolios to comply with regulatory capital requirements.
- Banks can sell specific loans which could open up more lending opportunities.
- It also helps banks manage asset-liability mismatches, adhere to RBI’s large exposure framework and trim concentration risk.
- It also provides opportunities for small banks to participate in highly creditworthy lending exposures at the time of origination.
- In case of potentially stressed borrowers, the secondary market helps banks reduce the overall recovery cost as the lenders can go for an immediate realization of value even before a default.
Benefits to Companies
- The secondary market helps larger borrowers widen their lender base, avoiding funding uncertainties associated with having banking relationships with a few lenders.
- It also helps them gain better access to market participants with different risk appetites by multiple trenching of loans.
- The secondary market for corporate loans also helps the borrower by enabling a single point of contact for their borrowing needs and provides a mechanism to retire the existing loans and avail of funds/debt at a lower cost.
Secondary Loan Markets abroad
- According to the RBI task force report, the annual secondary loan trade volumes in the US were as high as $720 billion in 2018.
- In terms of traded asset classes, the market in the US can be segregated into leveraged loans constituting 46%, investment grade loans constituting 38%, and middle market loans constituting the remaining 16% of the traded loans.
- India follows the model of the Asia Pacific Loan Market Association, which had traded volumes of $71.2 billion in the first quarter of 2019.
GS PAPER III
United Nations Conference of Parties (COP)
Why in News
The President of United Nations Conference of Parties (COP) stated that India would consider more ambitious emissions targets.
- President of United Nations Conference of Parties (COP) is visiting India as part of a larger international tour building consensus among nations for concrete outcomes ahead of the 26th round of climate talks.
- India is on track to overachieve its Nationally Determined Contribution (NDC).
- A major theme building ahead of the climate talks to be held in Glasgow, Scotland in November is the question of how many nations can commit to a net0zero targets and by when.
- Net-zero or carbon neutrality is when more carbon is sucked out from the atmosphere or prevented from being emitted than what a country emits and is critical to ensuring that the planet does not heat up an additional half a degree by 2100.
- A little over 120 countries have committed, with varying degrees of firmness, to reaching carbon neutrality by 2050.
- Five countries have net zero pledges set for after 2050, including Australia and Singapore, which have not set a firm target yet.
- China, the world’s biggest emitter, has committed to peaking its emissions before 2030 and achieving net zero by 2060.
- The United States has said it would achieve net zero by 2050 and nearly halve emissions by 2030.
- India is among the major countries that have not committed to a 2050 plan but has said it is one of the countries that has delivered on one of the 2015 Paris Agreements main goals that is taking steps to ensure that its emissions do not put the globe on a road to heating one degree more than present by the turn of the century.
- Further, India’s position is that it has among the lowest per capita emissions, is not responsible for the climate crisis, which the science establishes is due to historical emissions by developed countries, and cannot compromise on ensuring economic growth of its vast citizenry.
- India’s NDC includes reducing the emissions intensity of GDP by 33%–35% by 2030 below 2005 levels; increase the share of non-fossil-based energy resources to 40% of installed electric power capacity by 2030, with help of transfer of technology and low-cost international finance including from Green Climate Fund and to create an additional (cumulative) carbon sink of 2.5–3 GtCO2e through additional forest and tree cover by 2030.
- It has committed to installing 450 GW of renewable energy by 2030 of which 100 GW is reportedly installed.
- A thorn of contention is the over-$100 billion that was to have come to developing countries from developed ones for clean energy investments and mitigation that continues to be outstanding.
- Delivering the $100 billion a year is a matter of trust. Germany and Canada will be setting out a delivery plan until 2025 and have it in place before COP 26.
- For the years beyond 2025, that will certainly require trillions of dollars, much is expected to come from the private sector.
GS PAPER III
Global merchandise trade
Why in News
As per the WTO’s Goods Trade Barometer, Global merchandise trade is continuing its robust recovery from the shock of the COVID-19 pandemic, which hit a record high in its latest reading.
- According to the Trade Organisation (WTO), latest barometer reading of 110.4 is the highest on record since the indicator was first released in July 2016, and up more than 20 points year-on-year.
- The reading will augur well for India, as the country’s exports are recording healthy growth rates.
- The rise in the barometer reflects both the strength of current trade expansion and the depth of the pandemic-induced shock in 2020.
- The reading suggests that goods trade will see an even larger year-on-year rise in the second quarter.
- However, it said the outlook for world trade continued to be overshadowed by risks such as regional disparities, continued weakness in services trade, and lagging vaccination timetables.
World Trade Organisation
- The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations.
- The goal is to help producers of goods and services, exporters, and importers conduct their business.
- It is created in 1995 that oversees the global trade rules among nations.
- It superseded the 1947 General Agreement on Tariffs and Trade (GATT) created in the wake of World War II.
- The main objective of the WTO is to provide open lines of communication concerning trade among its members.